Wallenius Wilhelmsen Logistics Naresh Kundlas, WWL India 09 - 01- 2015 Short Sea Ro-Ro Shipping – A smarter solution to India’s Logistics needs
Agenda 1. Increase in Production of Finished Vehicles within India 2. Challenges in Domestic Movement of Cargoes 3. Seeing the whole picture and developing solutions
Distribution of Finished Vehicle Logistics in India
Distribution of finished vehicle logistics in India Auto production in India is expected to grow with 10% per year and reach 4 million units in 2016 Development passenger vehicle production, 2006-2016F Million units Passenger Vehicles 4.5 4 Delhi 4 3.5 3.3 3.2 3.1 3.1 Kandla 3 Haldia, Calcutta 3 10% Mundra CAGR 2.4 Paradip 2.5 Mumbai Pune 2 1.8 1.8 vishakapattinam 1.5 1.5 1.3 Mangalore 1 Ennore Chennai 0.5 0 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 2015- 16 In million units Actual Production Source: Society of Indian Auto manufacturers (SIAM) website 4
Distribution of finished vehicle logistics in India Production of commercial vehicles will pick up with investment in Mining and renewal of urban transport The resumption of mining Production of commercial vehicles, 2006-2016 and infrastructure spending should lead to 1.2 improvement in this segment 9 – 10% CAGR 1 Expecte 0.93 d 0.91 0.83 0.83 6.72 0.77 0.76 0.8 % 0.7 CAGR 0.57 0.6 0.55 0.52 0.42 0.39 0.4 0.2 0 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 06 07 08 09 10 11 12 13 14 15 16 17 Actual Production in million units Source: Society of Indian Auto manufacturers (SIAM) website 5
Present Domestic Movement of Cargoes
Present Domestic movement of cargoes Majority of the Finished vehicles are transported by Road 97% of Finished Vehicles are transported by road on Over length carriers. This creates congestion, High CO2 Emissions and is not sustainable. Dedicated Freight Corridor by Rail- Delhi to Mumbai and Delhi to Kolkata expected only in 2018-19. No Visibility on DFC Delhi to Chennai and West to South. There are Private initiatives to invest in Rail and increase Share However very minimal.
Present Domestic movement of Cargoes Effect of Increase of Trips CO2 emissions increase by 40 % Congestion on Roads Increase Accidents on Roads- Increase Fuel Usage 17% ( 23800) of total Deaths caused by trucks/ trailers . As per Open Government data platform statistics 8
Seeing the whole picture and developing solutions Prime Minister Vision 9
Finished Vehicle distribution in India India may be facing a serious trucking capacity shortage Assume an avg. Reduction in truck capacity of 22% 2 503 685 2013-14 75 111 Approx. 1041 2 428 574 48% «truck years» lost 28 028 26 206 2 678 943 in refurbishment 2014-15 113 000 9 028 2 565 943 8 247 20 075 46% 2 866 469 19 000 +20.92% 1 075 2015-16 120 910 2 745 559 3 067 122 2016-17 130 583 19 000 19 000 19 000 2 936 539 17 959 Passenger Vehicles Sold By rail By road Number of cars transported by road will grow significantly from 2013-14 to 2016-17. 2013-14 2014-15 2015-16 2016-17 Rail will be increasing, but volumes will still Shortage Available (Estimate) be small compared to road. (Source: SIAM and WWL predictions and calculations) 10
Seeing the whole picture and developing solutions
Seeing the whole picture and developing solutions Update on promotion of Coastal Shipping 9 cargoes are highlighted for encouraging coastal solutions. Auto mobiles and CV are included. We are pushing for Construction Equipment • The 25% import duty has been waived till May 2015. We are pushing for this to go. • We are seeking a solution that allows the line to transport T/S and export cargo on same vessel for sustainability. • Reduce port costs (Wharfage and Vessel related costs) to encourage coastal shipping • Factories are away from ports so first mile and last mile distance / costs are high • Port connectivity is poor so turnaround time is high for trailers – this needs to be addressed through connected supply chain • GST implementation expected in 2016 12
Seeing the whole picture and developing solutions Cost Comparison Total Logistics Cost comparison= Vessel cost +Wharfage+ First Mile + Last Mile Delhi NCR Region Chennai Nellore Guntur Pondichery Madurai Road 15136 14630 13831 14221 14634 Delhi NCR Region Rail 15136 14630 13831 14221 14634 Coastal 18209 20083 21770 20027 20454 Difference 3073 5453 7939 5806 5820 Chennai Region Rajkot Baroda Ahmedabad Jaipur Delhi 13073 12412 11737 13167 14912 Road Chennai Region 13073 12412 11737 13167 14912 Rail Coastal 12833 14219 13533 17145 18248 Difference -239 1807 1796 3978 3336 13
Seeing the whole picture and developing solutions Cost comparison – If No return coastal Cargo Total Logistics Cost comparison= Vessel cost +Wharfage+ First Mile + Last Mile Delhi NCR Region Chennai Nellore Guntur Pondichery Madurai Road 0 0 0 0 0 Delhi NCR Region Rail 0 0 0 0 0 Coastal 0 0 0 0 0 Difference 0 0 0 0 0 Chennai Region Rajkot Baroda Ahmedabad Jaipur Delhi Road 13073 12412 11737 13167 14912 Chennai Region Rail 13073 12412 11737 13167 14912 Coastal 19628 21014 20328 23940 25043 Difference 6556 8602 8591 10773 10131 14
Cost Comparison of Rail, Road and Coastal shipping Conclusions To start a coastal service we need OEM commitments for volume and Government commitment for creating the right eco system to make coastal shipping sustainable We need to give the government our wish list to achieve our objectives Combination of Road / Rail / Coastal will reduce carbon emissions and capacity / cost constraints in the near term. 15
Thank you
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