Logistics costs come down by one per cent

With the railways building a massive dedicated freight corridors to provide better rail connectivityto Northern and Western parts of

thecountry, Logistics costs in the country have come down by one per cent. The cost was hovering between 7 and 8 per cent during

2021-22, which has now come down from 8 to 9 per cent during 2011-12. These statistics were shared in a report by think tank

National Council of Applied Economic Research (NCAER) and the Department for Promotion of Industry and Internal Trade

(DPIIT).

While this 1 per cent decline in logistics cost may look paltry, it has significant implications on the country’s manufacturing sector,

export competitiveness and global positioning.Railways have not taken steps to build a freight corridor for southern India and with

the result ninety per cent of the cargo is evacuated by expensive road transport in all the east coast ports. Railways are

dragging their feet on implementing the third railway line from Kolkata to Chennai while the rail infrastructure from Mumbai to

Chennai remains in the 18 th century mode. The additional railway line from Kolkata to Chennai was sanctioned way  backin 2012

but hardly 20 per cent of the distance has been covered indicating lack of political patronage for railway projects in certain

parts of the country.

A significant contribution towards further bringing down the logistics cost has been by the Indian Railways, in the form of initiatives

to increase freight carrying capacity, improved speed of freight trains, reduce freight costs, creation of dedicated freight corridors,

last-mile connectivity between railheads, roads and ports, PM Gati Shakti, industry status for logistics, multimodal connectivity,

digital initiatives in logistics, City Logistics Plans, Multimodal Logistics Parks, and creation of storage infrastructure are further

expected to reduce logistics costs.

The centre got report prepared by the NCAER with the guidance of the Asian Development Bank (ADB) and task force members in order to set framework and benchmark for understanding the logistics costs in India. The report would form the basis of (a) a baseline aggregated logistics cost estimate and (b) a framework for long-term logistics cost calculation. It was reviewed by external experts from the World Bank Group. Developing of frame work for calculating logistics costs is a wonderful step and shows the intent of all stakeholders to reduce costs.