Port & Terminal Infrastructure: Building Competitiveness ...
Transcript of Port & Terminal Infrastructure: Building Competitiveness ...
Port & Terminal Infrastructure: Building Competitiveness through Connectivity
Innovative Logistics Consultancy –
Solutions for Your SuccessChennai, February 17th,2009
By:
Poul V. Jensen
Managing Director
TransCare Logistics India Pvt. Ltd.
Building Competitiveness through Connectivity
1. TransCare Introduction
2. Logistics Costs
2.1. Case Study
3. Transaction Costs in the Indian Scenario
3.1. Elements of Cost
3.2. Analysis of Findings
Content
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3.2. Analysis of Findings
4. Shape of Investments Needed
4.1. Logistics Industry?
4.2. Connectivity
5. Conclusion
Foundation 1993 as Management Consultants for logistics and transportation
Specialization Improvement of efficiency in logistics systems
• Process-oriented infrastructure planning
• Transportation
• Supply Chain Management
Company Profile
1. TransCare Introduction
© TransCare Logistics India Pvt. Ltd.
• Supply Chain Management
Approach Pragmatic concepts with tangible economic benefits
Facts Over 1000 successful projects with more than 400 clients
Team 60 international experts in the locations
• Wiesbaden (GER)
• New Delhi (IND)
• Moscow (RUS)
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Service Portfolio
1. TransCare Introduction
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Technical & Operation Consultants
• Business Plan
• Market Entry Strategy
• Market Assessment
• Feasibility Study
• Economic Feasibility
• Benchmarking
• Commercial Due
Diligence
• M&A Support
• Logistics Audit
• Process Optimization
• Network Optimization
• Implementation
Support
• Reverse Logistics
• Supply Chain
Restructuring
• Network Planning
Management Consultants
Global Supply Chain Consultants
• Port Planning
• SEZ/FTWZ Planning
• Warehouse / Logistics
Park Planning
• Terminal Design
• Location Analysis
• Operation Simulations
• Transport Logistics
• Tender Management
Building Competitiveness through Connectivity
1. TransCare Introduction
2. Logistics Costs
2.1. Case Study
3. Transaction Costs in the Indian Scenario
3.1. Elements of Cost
3.2. Analysis of Findings
Content
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3.2. Analysis of Findings
4. Shape of Investments Needed
4.1. Logistics Industry?
4.2. Connectivity
5. Conclusion
2.1. Case Study
Components Factory I (85%)
Components Factory II (15%)
N. Euro PortConsolidation, Seaport
2. Logistics Costs
Source: TC Research on Service Providers
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India PortCFS India
(Inland Terminal)
N.Euro Port – India Port
Consolidation/Assembly
North
West
South
2.1. Case Study
*per unit costs
Distance (%)
Time (%)
Cost (%)
Origin – India Port 89 76 61
India Port – Destination 11 24 39
2. Logistics Costs
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• Skewed ratio cost vs activity
• Reasons: Inefficient processes, immature logistics systems, high prices, passenger focused rail schedules, lack of intermodal options
• Indian Trade potential not FULLY realized, uncompetitive
� Supply: Cargo owners forced to deal with delays and unreliable services
� Demand: Indian consumers face higher prices & late deliveries
� Unnecessary costs and development paradigms retard trade
Encourage competitiveness through-out the supply chain
Building Competitiveness through Connectivity
1. TransCare Introduction
2. Logistics Costs
2.1. Case Study
3. Transaction Costs in the Indian Scenario
3.1. Elements of Cost
3.2. Analysis of Findings
Content
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3.2. Analysis of Findings
4. Shape of Investments Needed
4.1. Logistics Industry?
4.2. Connectivity
5. Conclusion
3.1. Elements of Cost
3. Transaction Costs in the Indian Scenario
�Total handling charges as published
�This will include Pilotage charges and port THC
Real Cost – Cost of Service
�TEU converted charges for use of port infrastructure
Real Cost – Cost of Use
TRANSACTION COST
A
B
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�TEU converted charges for use of port infrastructure
� Includes Berth hire, Anchorage, and Port detention charges
�TEU converted opportunity loss
�Delay due to port inefficiency, procedural complexities etc
Time Cost
TRANSACTION COST
C
�TEU converted loss of ‘time value of money”
�Delay in receiving duty drawbacks, remittance by banks
External Transaction Cost
D
3.2. Analysis of Findings (1/2)
3. Transaction Costs in the Indian Scenario
43% 43%
33%
55%
59%58%
48%
44.6%
% of Unnecessary Costs to Total Transaction Cost
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Source : TC Analysis
Almost 45% of total port related cost for cargo owner is in fact “unnecessary” cost on all India Basis (Major Ports)
33%
29%
JNPT CCTPL TPT KOPT COPT Kandla Haldia Vizag All India
3.2. Analysis of Findings (2/2)
3. Transaction Costs in the Indian Scenario
40,9%
Components of Transaction Costs
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36.4%
2.6%
16.4%3,7%
Real Cost – Cost of Service Real Cost – Cost of Use Time Cost
Necessary Costs Unnecessary Costs
Unnecessary Time Costs are the dominant share of Transaction Costs
Chapter Summary
Unnecessary costs in the Indian scenario must be further analyzed and dealt with
• Reducing unnecessary transaction cost at Indian ports could potentially halve the total cost a cargo owner pays
• Initiatives for improvements can now be targeted to eliminate unnecessary costs
3. Transaction Costs in the Indian Scenario
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unnecessary costs
• Current economic conditions: even more focus on trade shifting to lowest cost areas. India must act now to proactively tap into this opportunity
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India can and MUST reduce Unnecessary Costs, in order to increase competitiveness
Building Competitiveness through Connectivity
1. TransCare Introduction
2. Logistics Costs
2.1. Case Study
3. Transaction Costs in the Indian Scenario
3.1. Elements of Cost
3.2. Analysis of Findings
Content
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3.2. Analysis of Findings
4. Shape of Investments Needed
4.1. Logistics Industry?
4.2. Connectivity
5. Conclusion
4.1. Logistics Industry?
Indian
Ports / IWT / Coastal Shipping
• Ministry of Shipping
• IWAI
• TAMP
• NMDP
• Ministry of Railways
• CONCOR
• Dedicated Freight Corridor
Railways
Container Freight Stations
• Ministry of Commerce & Industry
• State/ District Land Authorities
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Indian Logistics
AviationHighways /
Roads
• Ministry of Civil Aviation
• AAI
• Air Cargo Policy
• Ministry of Shipping
• NHAI, State Authorities
• NHDP
• National Road Transport Policy• Ministry of Finance
(Not working on Sundays)
Customs Department
Numerous Government entities for industry & investors to deal with. No umbrella Logistics Authority. No Unified Logistics Master Plan.
4.2. Connectivity: Investments in Hinterlands (1/3)
Shipping Lines / Ports
Logistics Infrastructures
Hinterland Areas
4. Shape of Investments Needed
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Aggregated Container Volumes
Mix of Containers & Break bulk
Fragmented Break Bulk Volumes
4.2. Connectivity: Road & Rail “Backbone” (2/3)
Consolidation of volumes
• Develop a dedicated railway corridor
from Erode to Nagpur
“The Backbone of India“
• Container terminal & Shuttle service
Ports – Erode
• Sea ports to be shareholders
4. Shape of Investments Needed
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• Sea ports to be shareholders
� of the terminal
� of the “Backbone” infrastructure
• Partners:
� Ter minal operators of the Port
� Private container railway operators
� Other Ports....
• Key word: Reliability
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Cochin
Erode
Integration poses opportunity for all parties
4.2. Connectivity: IWT & Coastal Shipping (3/3)
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IWT and Coastal shipping not to be viewed in isolation –rather as integrated parts of supply chains
Conclusion
Supply Chain oriented investment required - holistic planning
• A single body with the mandate for India’s Logistics Master Planand its Integrated Implementation
� Currently many power centers (Ministries, State Govt., Authorities) involved in regulation, enforcement, infrastructure planning
� All sub-nodes within India growing independently without integrated guiding
4. Shape of Investments Needed
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� All sub-nodes within India growing independently without integrated guiding principles � super optimization of individual, sub-optimization of whole
� Planning Commission has advisory role � expand role, introduce task force.
• Connectivity to be developed
� provide options to cargo owners
� decrease burden on land evacuation
� many further ‘intangible benefits’ (environment, traffic accidents, de-bottlenecking, etc)
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An integrated, supply-driven strategy to be developed,focusing on ease of intermodal cargo movement.
Building Competitiveness through Connectivity
1. TransCare Introduction
2. Logistics Costs
2.1. Case Study
3. Transaction Costs in the Indian Scenario
3.1. Elements of Cost
3.2. Analysis of Findings
Content
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3.2. Analysis of Findings
4. Shape of Investments Needed
4.1. Logistics Industry?
4.2. Connectivity
5. Conclusion
Conclusion
� India must think holistically when developing logistics
� Think supply chains, think cargo owners
� regulations, transport policies, infrastructure planning and development
� To build competitiveness & trade advantage, India cannot afford to make standalone development plans for separate modes of transport
5. Conclusion
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� India must reduce Unnecessary Costs, to promote connectivity and increase its competitiveness
� An integrated, supply chain driven strategy to be developed focusing on ease of intermodal cargo movement.
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Indian Logistics Master Plan required
Achieve integration and connectivity, amplify Indian trade