Logistics

Shift to rail freight, modern logistics can lower cost, prevent pollution: NITI Aayog-RMI report

Our Bureau New Delhi | Updated on June 09, 2021

‘By 2050 logistics cost, energy consumption can be cut by half’

Increasing the share of rail transport, optimising truck use, promoting use of fuel-efficient vehicles and using alternative fuels in freight movement can lower logistics costs andIndia’s cumulative energy consumption by 50 per cent between 2020 and 2050 under a business-as-usual scenario.

Under such a scenario, cumulative energy consumption is pegged at 5.8 billion tonnes of oil equivalent (TOE), said a report by NITI Aayog, RMI and RMI India titled Fast Tracking Freight in India: A Roadmap for Clean and Cost-Effective Goods Transport.

Modernised warehouses, use of big data, technology adoption, standardisation of cargo, and use of larger trucks will lower logistics costs. Several countries such as the US and Australia which have increased the share of rail transportation over a period and how furniture major IKEA, among others, has slashed logistics costs.

Innovation

For instance, IKEA increased the load capacity of one of its products, Glimma tea candles, by 30 percent by simply rearranging them to increase packing density and reducing excess air. With a new packaging design for the candles, IKEA was able to pack more units. But since the truck reached its maximum weight carrying capacity before its volume was full, IKEA started filling the rest of the space with lightweight products such as pillows and mattresses, noted the report. India can save 10 giga tonnes of CO2, 500 kilotonnes of particulate matter and 15 million tonnes of nitrogen oxide (NOx ) caused by freight transport by 2050 by promoting rail transport and reducing road traffic, among others, it said.

Cost cutting

Transport costs can be reduced by improved modal share, trucking efficiency, and reducing fuel costs. Improved freight movement increases employment opportunities for less developed regions or disadvantaged social groups through direct jobs such as freighters, managers, and shippers. More importantly, improved connectivity through the development of infrastructure can lead to the creation of manufacturing jobs as well as supporting service sector jobs such as insurance and finance. Overall, this can help reach the Ministry of Commerce and Industry’s target to increase employment in the logistics sector by two crore by 2022.

Development of freight-specific infrastructure can provide robust connectivity between major agricultural, industrial, and cultural centres in India, creating economic benefits, it added.

As India’s freight activity grows five-fold by 2050 and about 400 million citizens move to cities, a whole system transformation can help uplift the freight sector. “This transformation will be defined by tapping into opportunities such as efficient rail-based transport, the optimisation of logistics and supply chains, and shifts to electric and other clean-fuel vehicles. These solutions can help India save ₹311-lakh crore cumulatively over the next three decades,” stated Clay Stranger, Managing Director, RMI.

Published on June 09, 2021

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