India’s focus on multimodal transport will have definitive impact on logistics sector: TCI MD

The national logistics policy says that if the Indian logistics cost has to come down, multimodal is going to be critical

As India focusses more on multi-modal transportation, logistics players are having to reinvent themselves, especially the large old-timers. Against this backdrop, Vineet Agarwal, Managing Director of Transport Corporation of India sat down with DH’s Lavpreet Kaur to talk about the key drivers of the profit for the company, key areas of focus and major challenges that stand ahead of the logistics industry.

Edited excerpts.

How do you see the National Logistics Policy helping your sector?

Clearly, the national logistics policy is saying that if the Indian logistics cost has to come down, multimodal is going to be critical. So in that context, we've seen that there is some infrastructure spend that is concentrated towards multimodal logistics, which is rail and coastal shipping. However, a lot needs to be done on both the coastal shipping as well as the inland waterways from a government perspective, which includes simplifying recruitment of people, having the right kind of infrastructure in these places. It is very difficult to find shipyards to build ships domestically or repair them. So, that infrastructure is needed to ensure this shift.

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As a coastal shipping service provider, we have six ships and we are in the process of looking to buy more ships.

How is the Indian government’s focus on raising Indian Railway’s share in the freight operation going to impact the industry and also you?

So the government had already started this process with the construction of the dedicated freight corridor (DFC). Parts of that corridor are now operational, however, a lot of it is still pending. Apart from that, the government is also looking at how they can make freight movement easier in the country whether you have separate tracks for it or privatise certain areas of that freight movement There is an impetus to shift towards rail. So, road transport growth will start tapering over time and railways will start going up. Moving from road to rail or sea, costs will come down significantly as well as it will green logistics.

We as a company formed a joint venture with Concor a few years ago, and we're using the opportunity to grow in the rail container logistics space. So both on the rail, container movement and the rail, automotive movement, we are quite active.

What is your current market share, and do you plan to improve it? Are you exploring any new areas of logistics?

We move about 2.5 per cent of India's GDP by the value of cargo every year. Now, that doesn’t necessarily mean the volume is the same because we also do a lot of high-value cargo. So, you know, when trains or automotive cars or electronic equipment. As far as new segments are concerned, we have already entered into cold chain logistics, we are doing automotive logistics and chemical logistics for a lot of clients.

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Who are the biggest users of TCI's cold storage warehousing services and how have you fared on that front?

We work regularly with quick service restaurants (QSRs) and fast delivery companies that require a certain amount of warehouse management. Besides, pharmaceuticals, food input products, like yeast, vegetables and fruits, require cold chains before they're supplied to restaurants or hotels or stores. We also do some specialty chemicals that require a cold chain. There are some chemicals that we kept in a temperature control because you know the ambient temperature in India is quite hot.

What are some major challenges that stand ahead for the logistics industry?

Challenges are continuously there in our industry…something new always keeps coming up. The EXIM (export-import) market is slightly down. Other than that, inflation still remains a bit of a challenge. Though it has come down, the impact will take a few months. Even consumer trends are slightly weaker because of inflation. The industry is highly fragmented and that is not going to go away so easily. But at least improvement in the quality of the life of operators etc in the segment is something that can happen much faster and it started to happen also.