container operations in india

Logistics infrastructure for container operations in India –models for shared resources

Narayan Rangaraj IEOR group, IIT Bombay

Deepika Taneja IEOR group, IIT Bombay

Jacques Burrus University of California, Berkeley

August 8, 2006 IIT, Bombay


Presentation Plan

Introduction Existing Scenario New Scenario Container Movement By RailOperational and pricing Issues

Ongoing work at IIT Bombay


Introduction

Container movement by rail in India now open to private operatorsEnd of monopoly of Concor (although rail movement still to be done by Indian Railways alone)Many players have formally entered the sector

Mapping outDifferent operational requirementsDifferent possibilities in infrastructure provisioningComparable scenarios in other parts of the worldSome models for shared resources


Existing Scenario

Concor– High performing public sector enterprise– Network of terminals and ownership of rolling

stock– Strategic alliance with Indian RailwaysBut– Not satisfactory to industry in terms of supply– Different customer segments– Providing competitive service in a viable sector


New Scenario

Apart from Concor 13 companies have signed up for rail based services

Rs.50 crore route category (all India operation, including JNPT to NCR) Three Rs.10 crore route categories

JNPT/Mumbai to hinterland except NCR [No sign up here!]Pipavav, Mundra, Chennai/Ennore, Vizag and Kochi with hinterland Kandla, New Mangalore, Tuticorin, Haldia/Kolkata, Paradipand Mormugao with their hinterland


Contd… New scenario

The 10 companies in the Rs.50 crore categories:Adani LogisticsCentral Warehousing CorporationConcorDinesh/ETA (Emirates Trading agency)Gateway Distriparks LtdHind Terminals (MSC Group), India Infrastructure & Logistics (Joint venture of APL & Hindustan Infrastructure & Logstics)Reliance Energy Ltd (Anil Ambani group)SICAL Logistics.


Contd… New scenario

The 4 companies in Rs.10 crores categories:Delhi-Assam roadways corporation ltd.Bothra ShippingJM Baxi & CoPipavav Rail Corporation ltd.


CONCOR vis a vis other players

Entry barriers and the role of CONCORConcor has ICDs, CFSs and terminals with rail

accessConcor has wagons (flats) required for train

formationCONCOR tie up with three/seven/ten/all

players ?


Container movement by Rail

Terminal operationsTerminal with rail sidingShunting operations to form trainsProvisioning of railway locomotives

Destination-wise aggregation of cargoTrain loads to be formed to one or more destinations (two point bookings?)Stacking of containers destination-wise


Container movement by Rail

Train formation and certificationShuntingTrain examination and certification

Fleet managementNetwork operation and fleet sizingEmpty return management

Cargo monitoring Customer interface and railway interfaceCo-ordination of trucking and handling activities


The economy of scale advantage, but …

Rail movement of containers cost effective beyond 700 km

ButAggregation requiredRelying on Indian Railways, the sole moverNew activities to do directly and indirectly with train movementestimate aggregate demand and plan services and related assets to meet a big part of that demand


Three scenarios for asset use (terminal)

Asset lease from Concor or any other big player Only for occasional use

Medium and long term contracts Will permit ramp-upWill ensure some service level to customers in terms of asset availability

Dedicated Larger players with own requirements


Rolling stock assets

Containers– Part of international scheme of leasing of containers

Rail wagons/flats– Manufacturing constraint in India– Import possibilities, especially for wheel sets– To be dedicated to the user (unlike Own Your Wagon

scheme)

Locomotives– To be leased from Indian Railways


Operational and Pricing Issues for operators

Network plan (e.g. VSKP, Nagpur, NCR, Kolkata)Service planning

Frequency of service (scheduled services)On demand services

Short Term PricingReserving some capacity for last minute customers

Long Term CommitmentsTie-ups with shipping lines


Issues in medium term contracts

Asset availability (e.g. terminal siding availability)versus

Uncertain demand

How does an asset provider allot capacity to multiple players based on specified service requirements?

How does scale economy translate to detailed service requirements for individual chunks of demand?


Suggestion from private players

Working schedules, and penalty for delays in running trains and in supply of locomotives running scheduled services A once-a-year increase in haulage charges based on input costsNot to be forced to run double stack containers on double stack routesBringing down wagon maintenance timeLocomotives made available at two hours notice


Some strategic and industry structure issues

Many integration possibilitiesShipping lines Trucking companiesRail companies Manufacturers

Right level of investment network wide or at a given location

– There may be growth possibilities, but not for n players to each invest in dedicated infrastructure

Interaction of railways with different users– Participation of players in railway infrastructure?– Time sensitive, high value cargo require contracts with

railways


Similar scenarios

Airport operation world-over– Agreements to share landing slots, parking slots,

airspace etc.– Ground resources– Ticketing, etc.

Air Cargo terminalsWarehousing for multiple users


Ongoing work at IIT Bombay

Research Project “Pricing decisions of a Third party Logistic Service Provider”Research Project “The Role of Contracts between Shippers and Carriers in enhancing Supply Chain Effectiveness”A Technical Note on “Dynamic Pricing for Scheduled Containerized Transportation”


Acknowledgements

Rajiv DandotiyaG.RaghuramIndian RailwaysCONCORJ.M.Baxi

Documents

container operations in india