The cement industry is expected to move about 407 million tonnes of cement and another 35 to 40 per cent of this tonnage as input materials, which makes it imperative to develop multi-modal transport systems, rail, road, coastal shipping and IWT. The ICR team connects with NA Vishwanathan, Secretary, Cement Manufacturers Association, to find out the challenges on various fronts and finds out the recommendations that could enhance the economy and efficiency of the logistics involved. Excerpts from the interview.
What is your take on the need to develop multi-modal transport systems to meet the logistics challenges in the cement industry?
It is the need of the hour to develop multi-modal transport systems, rail, road, coastal shipping and IWT, for movement of cement and clinker as it is not possible for rail and road transport alone to cater to the steeply increasing transportation requirement of the industry due to practical constraints and also because the existing infrastructure are already at their saturation level.
The rail coefficient has considerably dipped, from 57 per cent to 35 per cent. Are there any constructive steps being initiated to counter this?
The rail-coefficient has gradually declined from 57 per cent to 35per cent now for cement because the end-cost in case of rail transportation has become costlier than the road transport. Apart from this, the infrastructure constraints at terminals, uncertain and inadequate availability of wagons, particularly during peak period, discourage the movement of cement by rail. CMA has been making a number of suggestions to the railways for enhancing the rail-share for cement.
The current wagon procurement scheme seems to be skewed in favour of the railways. Would you agree?
It is true that the wagon procurement scheme is skewed in favour of the railways. A number of cement companies have gone in for or evinced keen interest in the past for the wagons procurement scheme. However, they find that the investments on this scheme are not viable and the freight concession announced is just for 10-15 years, whereas the life of the wagon is 30-35 years. Therefore, it does not make good business sense to invest money on such schemes.
If the railways are really serious, they have to announce the scheme only after incorporating the views and suggestions of the major customers like cement, in the scheme, which is presently not being done.
Is there any scope of incentivising the promotion of bulk movement which stands at a dismal two per cent of the total installed capacity?
The future is for bulk movement. CMA and cement industry have been making constructive efforts through viable and practical suggestions to the railways, from time to time, on to how to encourage the bulk movement of cement. Although the railways are evincing interest for the bulk movement, nothing concrete in the form of any scheme which could be acceptable and viable to the industry, has been coming forth.
What are the major issues of integrating one mode of transport to other modes, for better movement of materials?
For integrating one mode of transport to other modes, multi-modalism is the only way. This can be done if the railways or any other transport authority takes the entire responsibility of the safe receipt of the product at its destination with only one freight.
What are the problems faced by the industry in last mile delivery?
The major problems being faced by the industry in the last mile delivery are concerning (a)Infrastructure constraints at rail terminals.
(b)Non-availability of trucks for onward movement of the material at terminals.
(c)Movement restrictions imposed by state authorities in mega cities.
(d)Labour problems for loading and unloading of material.
How do you assess the potential of coastal shipping and IWT?
There is a lot of potential both for coastal shipping and IWT. Already, movement by coastal shipping by a few cement plants has been taking place. IWT has so far, not taken off due to a number of factors. If the following issues are taken into account, IWT would certainly get a boost:
- Necessary infrastructure needs to be created at the identified IWT terminals/jetties so as to integrate with other modes of transportations viz. road and rail.
- Wherever cargo specific / mode specific concession is applicable, the same may be made for IWT at par with the other modes.
- If the waterway passes through more than one state, taxes/cess/duties, etc, need to be rationalised and collected at a single point.
- Wherever port-hinterland connectivity exists through waterways, multi-modal transportation concept may be followed up to the riverine ports/terminals.
- Wherever waterway advantages exist, the Ro-Ro facility should be encouraged to de-congest the cities (e.g. Kolkata, Mumbai, etc.)
How business / investor friendly are the freight-related policies?
The current freight-related polices of the railways leave a lot to be desired in terms of customer-friendliness. Under the extant Dynamic Freight-Related Policies, the railways keep on increasing the busy season charge, development charge, penalty/wharfage, etc. This makes the overall transportation cost by rail unviable for a majority of market centres. CMA and the cement industry have been requesting the railways to completely scrap their Dynamic Freight-Related Policies and also make their other policies clear, transparent and customer-friendly, to give a boost to the rail-coefficient for cement. Further, schemes should be framed in such a way that they leave no scope at all for interpretation as per the convenience of the Zonal Railways/Field Officers.
What is your take on the need for a regulatory mechanism to rationalise all rail matters including tariff and demurrages?
CMA and cement industry will welcome the establishment of a regulatory mechanism to rationalise all rail matters including tariff and demurrages, to avoid regular and frequent increases (direct or indirect) in the overall transportation cost.
Cement being the third largest revenue earner for Indian railways, should preferential treatment be given to the industry?
Cement is now the second largest revenue earner for the railways, even with 35 per cent rail-coefficient. However, when it comes to the allotment of wagons, particularly during the peak period, the cement industry has not been accorded any preference or priority over fertiliser and food grains, and this completely jeopardises the industry´s movement plan. Since the cement industry is an essential commodity needed for the growth of the economy, it should be treated at par with fertiliser and food grains, so far as allotment of wagons is concerned.
What are your views about outsourcing logistics functions?
There is no harm in outsourcing logistics functions, provided it makes business sense and is viable to the user industry.
How do you view the potential of collaborating with other players in the industry to set up terminals?
The terminals are to be developed by providing all basic infrastructure facilities for faster evacuation of material. However, presently most of the terminals are lacking facilities resulting in the industry being rendered to pay huge wharfage/demurrage charges to the railways by the industry. Although there is potential for collaborating with other players in the industry to set up terminals, there are significant challenges too; this can better be highlighted by the concerned cement companies, on a case- to- case basis.