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

¾ Introduction
¾ Existing Scenario
¾ New Scenario
¾ Container Movement By Rail
¾ Operational and pricing Issues

¾ Ongoing work at IIT Bombay

August 8, 2006 IIT, Bombay

 Introduction

Container movement by rail in India now open to private

operators
¾ End of monopoly of Concor (although rail movement
still to be done by Indian Railways alone)
¾ Many players have formally entered the sector
Mapping out
¾ Different operational requirements
¾ Different possibilities in infrastructure provisioning
¾ Comparable scenarios in other parts of the world
¾ Some models for shared resources

August 8, 2006 IIT, Bombay

 Existing Scenario

z Concor
– High performing public sector enterprise
– Network of terminals and ownership of rolling
stock
– Strategic alliance with Indian Railways
But
– Not satisfactory to industry in terms of supply
– Different customer segments
– Providing competitive service in a viable sector

August 8, 2006 IIT, Bombay

 New Scenario

¾ Apart from Concor 13 companies have signed up for

rail based services
¾ Rs.50 crore route category (all India operation, including
JNPT to NCR)
¾ Three Rs.10 crore route categories
¾ JNPT/Mumbai to hinterland except NCR [No sign up here!]
¾ Pipavav, Mundra, Chennai/Ennore, Vizag and Kochi with
hinterland
¾ Kandla, New Mangalore, Tuticorin, Haldia/Kolkata, Paradip
and Mormugao with their hinterland

August 8, 2006 IIT, Bombay

Contd… New scenario

The 10 companies in the Rs.50 crore categories:

¾ Adani Logistics
¾ Central Warehousing Corporation
¾ Concor
¾ Dinesh/ETA (Emirates Trading agency)
¾ Gateway Distriparks Ltd
¾ Hind Terminals (MSC Group), India Infrastructure &
Logistics (Joint venture of APL & Hindustan
Infrastructure & Logstics)
¾ Reliance Energy Ltd (Anil Ambani group)
¾ SICAL Logistics.

August 8, 2006 IIT, Bombay

Contd… New scenario

The 4 companies in Rs.10 crores categories:

¾ Delhi-Assam roadways corporation ltd.
¾ Bothra Shipping
¾ JM Baxi & Co
¾ Pipavav Rail Corporation ltd.

August 8, 2006 IIT, Bombay

CONCOR vis a vis other players

Entry barriers and the role of CONCOR

Concor has ICDs, CFSs and terminals with rail
access
Concor has wagons (flats) required for train
formation
CONCOR tie up with three/seven/ten/all
players ?

August 8, 2006 IIT, Bombay

 Container movement by Rail

¾ Terminal operations
¾ Terminal with rail siding
¾ Shunting operations to form trains
¾ Provisioning of railway locomotives
¾ Destination-wise aggregation of cargo
¾ Train loads to be formed to one or more
destinations (two point bookings?)
¾ Stacking of containers destination-wise

August 8, 2006 IIT, Bombay

 Container movement by Rail

¾ Train formation and certification

¾ Shunting
¾ Train examination and certification
¾ Fleet management
¾ Network operation and fleet sizing
¾ Empty return management
¾ Cargo monitoring
¾ Customer interface and railway interface
¾ Co-ordination of trucking and handling activities

August 8, 2006 IIT, Bombay

The economy of scale advantage,
but …

z Rail movement of containers cost effective beyond

700 km
But
z Aggregation required
z Relying on Indian Railways, the sole mover
z New activities to do directly and indirectly with train
movement
z estimate aggregate demand and plan services and
related assets to meet a big part of that demand

August 8, 2006 IIT, Bombay

 Three scenarios for asset use
(terminal)

¾ Asset lease from Concor or any other big player

¾ Only for occasional use
¾ Medium and long term contracts
¾ Will permit ramp-up
¾ Will ensure some service level to customers in terms of
asset availability
¾ Dedicated
¾ Larger players with own requirements

August 8, 2006 IIT, Bombay

Rolling stock assets

z Containers
– Part of international scheme of leasing of containers
z Rail wagons/flats
– Manufacturing constraint in India
– Import possibilities, especially for wheel sets
– To be dedicated to the user (unlike Own Your Wagon
scheme)
z Locomotives
– To be leased from Indian Railways

August 8, 2006 IIT, Bombay

 Operational and Pricing Issues for
operators

¾ Network plan (e.g. VSKP, Nagpur, NCR, Kolkata)

¾ Service planning
¾ Frequency of service (scheduled services)
¾ On demand services
¾ Short Term Pricing
¾ Reserving some capacity for last minute customers
¾ Long Term Commitments
¾ Tie-ups with shipping lines

August 8, 2006 IIT, Bombay

Issues in medium term contracts

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

versus
z 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?

August 8, 2006 IIT, Bombay

 Suggestion from private players

z Working schedules, and penalty for delays in running

trains and in supply of locomotives running
scheduled services
z A once-a-year increase in haulage charges based on
input costs
z Not to be forced to run double stack containers on
double stack routes
z Bringing down wagon maintenance time
z Locomotives made available at two hours notice

August 8, 2006 IIT, Bombay

Some strategic and industry structure
issues

z Many integration possibilities

Shipping lines Trucking companies
Rail companies Manufacturers
z 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
z Interaction of railways with different users
– Participation of players in railway infrastructure?
– Time sensitive, high value cargo require contracts with
railways

August 8, 2006 IIT, Bombay

Similar scenarios

z Airport operation world-over

– Agreements to share landing slots, parking slots,
airspace etc.
– Ground resources
– Ticketing, etc.
z Air Cargo terminals
z Warehousing for multiple users

August 8, 2006 IIT, Bombay

 Ongoing work at IIT Bombay

¾ Research Project “Pricing decisions of a

Third party Logistic Service Provider”
¾ Research Project “The Role of Contracts
between Shippers and Carriers in enhancing
Supply Chain Effectiveness”
¾ A Technical Note on “Dynamic Pricing for
Scheduled Containerized Transportation”

August 8, 2006 IIT, Bombay

 Acknowledgements

Rajiv Dandotiya
G.Raghuram
Indian Railways
CONCOR
J.M.Baxi

August 8, 2006 IIT, Bombay