Economy & Market

How logistics value adds to the country’s GDP

Published

8 years ago

January 12, 2018

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Supply creates its own demand, at least that is entirely true for India, where we run a constrained system. Logistics could add a full percentage point to GDP.

If more rail-rakes are allocated to the coal sector, one would assume that more coal rakes would move. But not so; the logistics puzzle, especially when we deal with multi-commodity, multi-zonal rail movement under constraints ranging from line capacity and safety norms on one hand and zonal coordination on locomotives and crew, guard, on the other, is far more complex to comprehend.

So against the first quarter 2018, in the second quarter India moved less coal rakes although the clear allocation was to move more coal rakes. The overall movement of rakes across all commodities also came down in the second quarter over the first quarter of 2018. This clearly shifted many commodities from rail to road, thus raising the cost of the system and therefore impacted GDP.

Why is it so? Three factors came in the way:

Empty movement increased as out of turn rakes moved into coal which were earlier moving to other commodities, increased the empty rake run. Every rake moving an extra empty run reduced the overall rake movement with load.
Optimising rake movement with constraints need multi-commodity handshakes, a rake moving the first leg with iron ore could end up with coal in the second leg and slag i the third leg. When the allocation changes to coal in the first leg, the whole optimisation puzzle changes to new constraints and new solutions.
Inter-zonal and intra-zonal coordination for maximising rake movement precludes exchange of information so as to deliver one single objective function, which is maximising overall movement. When this objective function is changed to maximising coal rake movement, the coordination needs to move at two levels, which at times becomes impossible to handle as constraints increase.

India’s GDP is tied to higher production and output in the core sector, which can only happen if more commodities move; among all, coal, iron ore, steel, clinker, slag, cement and manufactured goods constitute the bulk. If one happens without the other, we create disparities of several kinds.
So the logistics spillover to road movement is a reality, but this surely comes at a cost. In the US, where 70 per cent of the movement is by road, no one moves bulk goods by road, other than the first or the last mile, this is sheer factor-advantage that cannot be relegated to wasteful economics.
Raising cost of movement due to a switch to road displaces factor advantages and raises the cost of the overall system. It impacts GDP as costs rise, it reduces consumption or when firm profits are impacted, the alternatives are not necessarily those that would add to the GDP.
Logistics is one of the most value adding components of GDP, this is better understood if we replace the country GDP with the firm GDP, which is net value added for the firm. When you raise cost of the system, the value added comes down whereas when you aid the flow, the value gets unlocked in higher EBIDTA.
Going back to our coal movement example, by attempting to increase the flow of coal, we ended up improving neither the coal movement nor the overall movement of all other commodities by rail and created the spillover effects in road, which added to overall cost of the system, thus impacting GDP negatively.
Spillover effects are generally negative to GDP, shifting from rail to road for bulk materials is one of them.
Is this a solvable puzzle? Of course it is, surely the puzzle would get sorted out but a lost GDP will remain a lost opportunity forever.
It is like the sale loss, could it be ever made up, I am not sure. To look at it differently if we would have added all the lost opportunities of moving stuff, the loss in value added would have knocked out a full percentage point from GDP.
Moving stuff efficiently is logistics, not just moving stuff any which way we can. The former adds to the net value added, whereas the latter destroys value.
By shifting rail to road for bulk goods, we could be doing the same for GDP.
The logic similarly could be extended to road as well, if we think by adding more vehicles we can move more stuff efficiently, we would be making the same mistake.
Optimisation is about solving these inter-connected puzzles, but the best we can do is demonstrating that we are keen to exchange more information and remove barriers that come in the way of transparent data.
Exchange of information in a constrained based system and along organisational interfaces where conflicting objective functions clash with each other, is one area of development in India. While digital information systems have improved and we have far higher transparency, we still lack the organisational reinforcements needed to deal with this.

One such neglected area is the inbound transportation versus the outbound transportation and the synergies mostly are never fully harnessed as the two are looked after by two different organisations. This is far more acute sometimes within the same supply chain where multiple commodities are moved using the same infrastructure and the missing synergies are not fully captured and acted on. Horizontal collaboration within supply chains where the same route is frequented by different commodities has a lot of scope to improve efficiency but the sharing of advantages is not fully garnered due to lack of organisational effort. This is not about technology, but the softer areas of barrier-less organisation must follow through with the efforts needed to transform.

Logistics, remains one of the most neglected functions in India, but things need to change fast as supply bottlenecks would continue to constrain the system.

Logistics alone could add a percentage point to GDP, such is the potential.

Infrastructure holds the center piece for logistics, but it is not the only piece of the puzzle. Factors that bring in efficiency and reduces wastes in the system is where the logisticians play the most important role. Simple things like empty haulage, return loads, less stops on the road, optimised loading programme, ease of movements at check points, multi-modal movements, last mile and the first mile connectivity are few of the areas where substantial gains could be achieved.

Logistics is no more the just the tail, it is time it starts to wag the dog.

ABOUT THE AUTHOR: Procyon Mukherjee, Chief Procurement Officer of Lafarge Holcim

Economy & Market

TSR Will Define Which Cement Companies Win India’s Net-Zero Race

Published

4 days ago

April 27, 2026

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Jignesh Kundaria, Director and CEO, Fornnax Technology

India is simultaneously grappling with two crises: a mounting waste emergency and an urgent need to decarbonise its most carbon-intensive industries. The cement sector, the second-largest in the world and the backbone of the nation’s infrastructure ambitions, sits at the centre of both. It consumes enormous quantities of fossil fuel, and it has the technical capacity to consume something else entirely: the waste our cities cannot get rid of.

According to CPCB and NITI Aayog projections, India generates approximately 62.4 million tonnes of municipal solid waste annually, with that figure expected to reach 165 million tonnes by 2030. Much of this waste is energy-rich and non-recyclable. At the same time, cement kilns operate at material temperatures of approximately 1,450 degrees Celsius, with gas temperatures reaching 2,000 degrees. This high-temperature environment is ideal for co-processing, ensuring the complete thermal destruction of organic compounds without generating toxic residues. The physics are in our favour. The infrastructure is not.

Pre-processing is not the support act for co-processing. It is the main event. Get the particle size wrong, get the moisture wrong, get the calorific value wrong and your kiln thermal stability will suffer the consequences.

The Regulatory Push Is Real

The Solid Waste Management (SWM) Rules 2026 mandate that cement plants progressively replace solid fossil fuels with Refuse-Derived Fuel (RDF), starting at a 5 per cent baseline and scaling to 15 per cent within six years. NITI Aayog’s 2026 Roadmap for Cement Sector Decarbonisation targets 20 to 25 per cent Thermal Substitution Rate (TSR) by 2030. Beyond compliance, every tonne of coal replaced by RDF generates measurable carbon reductions which is monetisable under India’s emerging Carbon Credit Trading Scheme (CCTS). TSR is no longer a sustainability metric. It is a financial lever.

Yet our own field assessments across multiple Indian cement plants reveal a sobering reality: the primary barrier to scaling AFR adoption is not waste availability. It is the fragmented and under-engineered pre-processing ecosystem that sits between the waste and the kiln.

Why Indian Waste Is a Different Engineering Problem

Indian municipal solid waste is not the material that imported shredding equipment was designed for. Our waste streams frequently exceed 40 per cent to 50 per cent moisture content, particularly during monsoon cycles, saturated with abrasive inerts including sand, glass, and stone. Plants relying on imported OEM equipment face months of downtime awaiting proprietary spare parts. Machines built for segregated, low-moisture waste fail quickly and disrupt the entire pre-processing operation in Indian conditions.

The two most common failures we observe are what I call the biting teeth problem and the chewing teeth problem. Plants relying solely on a primary shredder reduce bulk waste to large fractions, but the output remains too coarse for stable kiln combustion. Others attempt to use a secondary shredder as a standalone unit without a primary stage to pre-size the feed, leading to catastrophic mechanical failure. When both stages are present but mismatched in throughput capacity, the system becomes a bottleneck. Achieving the 40 to 70 tonnes per hour required for meaningful coal displacement demands a precisely coordinated two-stage process.

Engineering a Made-in-India Answer

At Fornnax, our response to these challenges is grounded in one principle: Indian waste demands Indian engineering. Our systems are built around feedstock homogeneity, the holy grail of kiln stability. Consistent particle size and predictable calorific value are the foundation of stable kiln combustion. Without them, no TSR target is achievable at scale.

Our SR-MAX2500 Dual Shaft Primary Shredder (Hydraulic Drive) processes raw, baled, or loosely mixed MSW, C&I waste, bulky waste, and plastics, reducing them to approximately 150 mm fractions at throughputs of up to 40 tonnes per hour. The R-MAX 3300 Single Shaft Secondary Shredder (Hydraulic Drive), introduced in 2025, takes that primary output and produces RDF fractions in the 30 to 80 mm range at up to 30 tonnes per hour, specifically optimised for consistent kiln feeding. We have also introduced electric drive configurations under the SR-100 HD series, with capacities between 5 and 40 tonnes per hour, already operational at a leading Indian waste-processing facility.

Looking ahead, Fornnax is expanding its portfolio with the upcoming SR-MAX3600 Hydraulic Drive primary shredder at up to 70 tonnes per hour and the R-MAX2100 Hydraulic drive secondary shredder at up to 20 tonnes per hour, designed specifically for the large-scale throughput that higher TSR ambitions require.

The Investment Case Is Now

The 2070 Net-Zero target is not a distant goal for India’s cement sector. It starts today, with decisions being made on the plant floor.

The SWM Rules 2026 are already in effect, requiring cement plants to replace coal with RDF. Carbon credit markets are opening up, and coal prices are not going to get cheaper. Every tonne of coal a cement plant replaces with waste-derived fuel saves money on one side and generates carbon credit revenue on the other. Pre-processing infrastructure is no longer just a compliance requirement. It is a business investment with a measurable return.

The good news is that nothing is missing. The technology works. The waste is available in every Indian city. The government has provided the policy direction. The only thing standing between where the industry is today and where it needs to be is the commitment to build the right infrastructure.

The cement companies that move now will not just meet the regulations. They will be ahead of every competitor that waits.

About The Author

Jignesh Kundaria is the Director and CEO of Fornnax Technology. Over an experience spanning more than two decades in the recycling industry, he has established himself as one of India’s foremost voices on waste-to-fuel technology and alternative fuel infrastructure.

Concrete

WCA Welcomes SiloConnect as associate corporate member

Published

3 weeks ago

April 13, 2026

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The World Cement Association (WCA) has announced SiloConnect as its newest associate corporate member, expanding its network of technology providers supporting digitalisation in the cement industry. SiloConnect offers smart sensor technology that provides real-time visibility of cement inventory levels at customer silos, enabling producers to monitor stock remotely and plan deliveries more efficiently. The solution helps companies move from reactive to proactive logistics, improving delivery planning, operational efficiency and safety by reducing manual inspections. The technology is already used by major cement producers such as Holcim, Cemex and Heidelberg Materials and is deployed across more than 30 countries worldwide.

Concrete

TotalEnergies and Holcim Launch Floating Solar Plant in Belgium

Published

3 weeks ago

April 13, 2026

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TotalEnergies and Holcim have commissioned a floating solar power plant in Obourg, Belgium, built on a rehabilitated former chalk quarry that has been converted into a lake. The project has a generation capacity of 31 MW and produces around 30 GWh of renewable electricity annually, which will be used to power Holcim’s nearby industrial operations. The project is currently the largest floating solar installation in Europe dedicated entirely to industrial self-consumption. To ensure minimal impact on the surrounding landscape, more than 700 metres of horizontal directional drilling were used to connect the solar installation to the electrical substation. The project reflects ongoing collaboration between the two companies to support industrial decarbonisation through renewable energy solutions and innovative infrastructure development.