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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
August 8, 2006 IIT, Bombay
Presentation Plan
Introduction Existing Scenario New Scenario Container Movement By RailOperational and pricing Issues
Ongoing work at IIT Bombay
August 8, 2006 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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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.
August 8, 2006 IIT, Bombay
Contd… New scenario
The 4 companies in Rs.10 crores categories:Delhi-Assam roadways corporation ltd.Bothra ShippingJM Baxi & CoPipavav Rail Corporation ltd.
August 8, 2006 IIT, Bombay
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 ?
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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?
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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
August 8, 2006 IIT, Bombay
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”
August 8, 2006 IIT, Bombay
Acknowledgements
Rajiv DandotiyaG.RaghuramIndian RailwaysCONCORJ.M.Baxi