 Trans-Rak International's car customised container |
Allcargo Global Logistics Ltd (AGL) is investing an initial INR3,400 million (USD86.4 million) into the establishment of 10 logistic parks in India.
The multimodal transport solutions provider is building rail-based logistics parks in Ahmedabad, Bangalore, Nagpur, Pithampur, Chennai, Delhi, Mumbai and Hyderabad to enable an efficient supply chain for India's automotive industry.
Construction has already started at the Pithampur and Hyderabad logistic parks and an existing Chennai facility will be expanded. AGL anticipates all 10 parks will be finished in the next two years.
AGL managing director Shashi Kiran Shetty says the company will develop the logistics parks in phases.
"In the first phase, we would require around 50 forklifts and 10 reachstackers. Currently, AGL operates three container freight stations at JNPT, Mundra and Chennai."
AGL recently acquired 200 customised car containers from Trans-Rak International which it will be trialing soon. The containers have special fitments that move hydraulically and can carry four to five cars by road, rail and sea.
According to AGL, one in every 10 cars transported on India's roads is damaged, resulting in delays and added costs. Trans-Rak's containers boast "zero defect" in transporting cars.
Shetty says the investment is a logical business extension that addresses the skewed dependence of cars on road transportation in India.
"Besides cars, these containers have the flexibility of carrying general cargo as well."
AGL plans to operate container trains in partnership with rail license-holders to reduce transit times and enable automobile companies to reduce inventory costs. It is currently talking with Indian automobile manufacturers about using the Trans-Rak system to transport their finished products.
According to Shetty, logistics costs in India's automobile industry account for 2% to 3% of sales, while in the auto components industry, it's around 3% to 4%. The Indian auto logistics industry is estimated to be worth INR34.71 billion (USD882.1 million) for the current financial year.
Shetty explains that the Indian logistics industry is at an inflection point.
"[It's] expected to reach a market size of over USD125 billion in 2010. As a result of the under-developed trade and logistics infrastructure, the logistics cost of the Indian economy is over 13% of GDP, compared to less than 10% of GDP in almost the entire Western Europe."
He says transporters with fleets smaller than five trucks account for over two-thirds of the total trucks owned and operated in India and make up 80% of revenues. The freight forwarding segment is also represented by thousands of small customs brokers and clearing and forwarding agents, who cater to local cargo requirements.