BBO – Basics of Freight Management- I

Block 1 Concept of Logistics

Unit 1 Introduction to Logistics

Unit 2 Objectives, Concept of Logistics
Unit 3 Types of logistics
Unit 4 Concept of Logistics Management
Unit 5 Difference between Logistics and Supply Chain
Unit 6 Logistics and Competitive Advantage
Unit 7 Logistics in Organised Retail in India
Block 2 Transportation in Logistics:
Significance of transportation in Logistics: Utility created by transportation in
Unit 1 Logistics
Unit 2 Transportation as a means of conquering time and space
Unit 3 Features of In-bound, Out-bound, local and Medium
Unit 4 Long and continental transportation – Features of Logistics transportation
Block 3 Railways and Logistics Contours:
Features and facilities offered by Railways- Factors influencing growth in Rail
Unit 1 Logistics – Suitability for different Cargo and distance Ranges segments
Innovative schemes / facilities to popularize rail logistics in India. Railway
Unit 2 infrastructure in India and Freight movement
Share of Railways in Cargo movement in India and world-wide. Railways and
Logistics Economics- Freight Determination for Cargo in Railways – Freight levels
Unit 3 and rail-cargo elasticity
Route Scheduling – Cargo consolidation – Arrangements for pooling at rail head
and distribution from rail head – Dedicated Rail-sidings for Bulk users –
Unit 4 Technology, Cost, Speed, Security and Dynamics – Competition with other modes.
Block 4 Roadways and Logistics Contours:
Concept of Less than Truckload & Full Truckload. Roadways as a primary mode
Unit 1 and complementary mode of transportation in Logistics
Unit 2 Features, Facilities and suitability
Unit 3 Innovations in road ways to make it Logistics-friendly
Factors influencing choice – facilities to popularize rail logistics in India – Share of
Unit 4 Railways in Cargo movement and world-wide
Factors influencing growth in Road Logistics – Suitability for different Cargo and
Unit 5 distance Ranges segments – Innovative schemes
BLOCK-I: CONCEPT OF LOGISTICS
In this block we will learn the following;

Unit 1 Introduction to Logistics

Unit 2 Objectives, Concept of Logistics

Unit 3 Types of logistics

Unit 4 Concept of Logistics Management

Unit 5 Difference between Logistics and Supply Chain

Unit 6 Logistics and Competitive Advantage

Unit 7 Logistics in Organised Retail in India

UNIT -1 INTRODUCTION TO LOGISTICS

STRUCTURE

1.1 Introduction
1.2 History of logistics
1.3 Importance of logistics
1.4 Summing Up
1.5 Model Examination Questions

INTRODUCTION

Logistics is a process of planning, implementing & controlling the efficient, effective flow &
storage of goods, services & related information form point of origin to the point of consumption
for the purpose of conforming to the customer requirements.

Logistics is concerned with both materials flow and information flow. While the materials flow
from the supplier to consumer, the information flows the other way round. It is not only
concerned with inventory and resource utilization, customer response also falls under the ambit
of logistics.

Logistical functions / Components of Logistics / Elements of Logistics / Logistic Mix

 Information management – Forecasting & order management are two areas of logistical
work dependent on information.
 Transportation – Transportation is the most visible of all elements of logistics & high
contributor to logistics expenditure. Costs of transportations are movement costs,
preservation costs, cost of idle assets, administration cost. Design of logistics system
consider total cost rather than elemental cost of transportation
 Warehousing – it plays a much higher role from logistics viewpoint. It provides
economic & service benefits to logistical system. Economic benefits are movement
consolidation, break-bulk, cross-dock, processing / postponement & stock piling. Service
benefits are spot stocking, assortment, mixing & production support.
  Material handling
 Packaging

INFORMATION SYSTEMS

Internal & External Information flow

NETWORK DESIGN- WARE HOUSING-

Suppliers, operations, Storage, Handling,
warehouses. LOGISTICS Packing & Distribution
FUNCTIONS

TRANSPORTATION INVENTORY

Water, Road, Rail, Pipeline & When to order? How much

Air to order? Just In Time

HISTORY OF LOGISTICS

Origin

So where does the word ‘logistics’ come from? Well, it all began in Greece with the word
“logos”. “Logos” basically meant reason/ratio. From there, the Greeks evolved the word into
“logistiki”, which essentially translated to financial organisation.

As Western language emerged and early French took hold, the common means of words being
adapted and revised occurred. Effectively, ‘logistiki’ became ‘loger’; which essentially meant
‘lodge’. As our language further evolved and took shape, it arrived at “logistics”, describing the
management of the flow of goods and resources from an organisation.
Military logistics

It’s believed that logistics essentially became what is primarily thanks to ancient militaristic
operations. Military logistics focused on the process of managing the transport of
ammunition/weaponry and provisions to troops.

It was the military logistics of Alexander the Great that earned him the title of quite possibly
being the greatest logistics genius of all time. This was due to the way in which he utilised his
knowledge of the terrain, location of enemies, and the approach he took in regards to moving
provisions.

It would be his near-flawless logistical planning that ultimately attributed to his empire’s
successful expansion to the lands of Eastern Asia.

Logistics now

Logistics, as we know it now, falls much more in line with the commercial side of transporting
goods. Whether it’s across countries, states or suburbs, logistics exists in some form for almost
any conceivable distance. Even when you think of space exploration, the fact that tools and
equipment need to be transported as part of such endeavours, logistics has ultimately moved
outside our own atmosphere.

With new technologies, logistics continues to be improved upon. Companies such as Amazon in
the US are considering investing in drones to deliver goods to customers, and Domino’s even did
this as part of a marketing stunt for its brand.

Military logistics continues to this day as well, only technology has made the process far quicker
and effective. But there is no doubt that much of what Alexander the Great employed has been
adapted and refined to this day.

As the future of logistics is ahead of us, it could involve drones, blimps, cleaner energy or even a
possible reduction in the need to move items from point A to point B. The latter being due to the
ever-increasing popularity of viewing media online – so things such as physical DVDs, Blu-
Rays, CDs and video games could reduce substantially provided Australia’s internet
infrastructure improves substantially over the coming decades. On the flipside, however, our
increased reliance and use of online services could, in turn, increase the demand for foods and
beverages to be home delivered, thus opening up newer logistics market there.

IMPORTANCE OF LOGISTICS

Importance of Logistics

 Logistics is the bedrock of trade & business

 It leads to customer satisfaction
 Integrated logistical activities
 Competitive edge
 Supports critical functions like operations & marketing

IMPORTANCE OF LOGISTICS MANAGEMENT IN INDIA

 Liberalization and opening our door to competition

 Global business has long supply & distribution lines
 Changing Indian customer, aware, demanding and less brand loyal
 Competition ensures that product differentiation in terms of quality is difficult
 Product life cycles are shrinking
 Our markets are shifting from sellers’ to buyers’
 Many consumer products are moving into commodities market
 India is a large country. Large distances separate production and consumption centers.
Essential commodities have to travel from Food Corporation warehouses to consumers
through PDS.
 Logistics performance has not been impressive
 Fruits and vegetables are grown at various places but do not enjoy access to market

SUMMING UP

In simple terms, logistics can be seen as a link between the manufacturing and marketing
operations of a company. The traditional organizations used to think of them separately, but
there is a definite value addition in integrating the two due to the interdependence and feedback
channel between the two.
The level of coordination required to minimize the overall cost for the end consumer gets
tougher to achieve as the number of participants in a supply chain increase, as an extremely
efficient flow of material and information is required for optimization.

Logistics cover the following broad functional areas: network design,

transportation and inventory management.
Manufacturing plants, warehouses, stores etc. are all facilities which form key components in the
network design. Transportation: the cost and consistency (reliability) required out of the
transportation network determines the type and mode of the movement of goods and also affects
the inventory.

Buffer (or safety) stock is the reserve stock held to safeguard against shortages or unexpected
surge in demand, to avoid “stock-outs”. Fewer inventories with negligible stock-outs — the
hallmark of an efficient logistical system.

MODEL EXAMINATION QUESTIONS

1. Write a note on logistics

2. Explain the functions of logistics in detail
3. State the importance of logistics & logistics management
4. Give a brief history of logistics.
UNIT – 2 OBJECTIVE & CONCEPT OF LOGISTICS

STRUCTURE

2.1 Introduction
2.2 Classification of Logistical Activities
2.3 Objectives of Logistics
2.4 Summing Up
2.5 Model Examination Questions

INTRODUCTION

Logistics management consists of the process of planning, implementing and controlling the
efficient flow of raw-materials, work-in-progress and finished goods and related information-
from point of origin to point of consumption; with a view to providing satisfaction to the
customer.
According to Phillip Kotler, “Market logistics involve planning, implementing and
controlling physical flow of material and final (finished) goods from the point of origin to
the point of use to meet customer requirements, at a profit.”

Points of Comment:
Certain pertinent observations on the concept of logistics are:
(i) The actual work of logistics is supportive in nature. Logistical support is a must for
manufacturing and marketing operations.

(ii) The concept of logistics is based on a total system view of the multitude of functions in
movement of materials and goods from sources of supply to users. Accordingly, it forces
management to think in terms of managing the total system; rather than just one part of it.
OBJECTIVES OF LOGISTICS

1. Operating Objectives

In terms of logistical system design and administration, each firm must simultaneously achieve
at least six different operational objectives. These operational objectives, which are the primary
determinants of logistical performance, include rapid response, minimum variance, minimum
inventory, movement consolidation, quality, and life-cycle support. Each objective is briefly
discussed.

2. Rapid Response

Rapid response is concerned with a firm’s ability to satisfy customer service requirements in a
timely manner. Information technology has increased the capability to postpone logistical
operations to the latest possible time and then accomplish rapid delivery of required inventory.
The result is elimination of excessive inventories traditionally stocked in anticipation of
customer requirements. Rapid response capability shifts operational emphasis from an
anticipatory posture based on forecasting and inventory stocking to responding to customer
requirements on a shipment-to-shipment basis. Because inventory is typically not moved in a
time-based system until customer requirements are known and performance is committed, little
tolerance exists for operational deficiencies

3. Minimum Variance

Variance is any unexpected event that disrupts system performance. Variance may result from
any aspect of logistical operations. Delays in expected time of customer order receipt, an
unexpected disruption in manufacturing, goods arriving damaged at a customer’s location, or
delivery to an incorrect location-all result in a time disruption in operations that must be
resolved. Potential reduction of variance’ relates to both internal and external operations.
Operating areas of a logistical system are subject to potential variance. The traditional solution
to accommodating variance was to establish safety stock inventory or use high-cost premium
transportation. Such practices, given their expense and associated risk, have been replaced by
using information technology to achieve positive logistics Control. To the extent that variances
are minimized, logistical productivity improves as a result of economical operations. Thus, a
basic objective of overall logistical performance is to minimize variance.

4. Minimum Inventory
The objective of minimum variance involves asses commitment and relative turn velocity. Total
commitment is the financial value of inventory deployed throughout the logistical system. Turn
velocity involves the rate of inventory usage over time. High turn rates, coupled with inventory
availability, means that assets devoted to inventory are being effectively utilized. The objective
is to reduce inventory deployment to the lowest level consistent with customer service goals to
achieve the lowest overall total logistics cost. Concepts like zero inventories have become
increasingly as managers seek to reduce inventory deployment. The reality of re-engineering a
system is that operational defects do not become apparent until inventories are reduced to their
lowest possible level. While the goal of eliminating all inventories is attractive, it is important to
remember that inventory can and does facilitate some important benefits in a logistical system.
Inventories can provide improved return on investment when they result in economies of scale in
manufacturing or procurement. The objective is to reduce and manage inventory to the lowest
possible level while simultaneously achieving desired operating objectives. To achieve the
objective of minimum inventory, the logistical system design must control commitment and turn
velocity for the entire firm, not merely for each business location.

5. Movement consolidation

One of the most significant logistical costs is transportation. Transportation cost is directly
related to the type of product, size of shipment, and distance. Many Logistical systems that
feature premium service depend on high-speed, small-shipment transportation. Premium
transportation is typically high-cost. To reduce transportation cost, it is desirable to achieve
movement consolidation. As a general rule, the larger the overall shipment and the longer the
distance it is transported, the lower the transportation cost per unit. This requires innovative
programs to group small shipments for consolidated movement. Such programs must be
facilitated by working arrangements that transcend the overall supply chain.

6. Quality improvement

A fifth logistical objective is to seek continuous quality improvement. Total quality management
(TQM) has become a major commitment throughout all facets of industry. Overall commitment
to TQM is one of the major forces contributing to the logistical renaissance. If a product
becomes defective or if service promises are not kept, little, if any, value is added by the
logistics. Logistical costs, once expended, cannot be reversed. In fact, when quality fails, the
logistical performance typically needs to be reversed and then repeated. Logistics itself must
perform to demanding quality standards. The management challenge of achieving zero defect
logistical performance is magnified by the fact that logistical operations typically must be
performed across a vast geographical area at all times of the day and night. The quality challenge
is magnified by the fact that most logistical work is performed out of a supervisor’s vision.
Reworking a customer’s order as a result of incorrect shipment or in-transit damage is far more
costly than performing it right the first time. Logistics is a prime part of developing and
maintaining continuous TQM improvement.

7. Life-Cycle support

The final logistical design objective is life-cycle support. Few items are sold without some
guarantee that the product will perform as advertised over a specified period. In some situations.
The normal value-added inventory flow toward customers must be reversed. Product recall is a
critical competency resulting from increasingly rigid quality standards, product expiration dating
and responsibility for hazardous consequences. Return logistics requirements also result from the
increasing number of laws prohibiting disposal and encouraging recycling of beverage
containers and packaging materials. The most significant aspect of reverse logistical operations
is the need for maximum control when a potential health liability exists (i.e.. a contaminated
product). In this sense, a recall program is similar to a strategy of maximum customer service
that must be executed regardless of cost. Johnson & Johnson’s classical response to the Tylenol
crisis is an example of turning adversity into advantage. The operational requirements of reverse
logistics range from lowest total cost, such as returning bottles for recycling, to maximum
performance solutions for critical recalls. The important point is that sound logistical strategy
cannot be formulated without careful review of reverse logistical requirements.

SUMMING UP
A logistics company provides warehousing, distribution and transportation to assist
organizations manage the flow of materials in the supply chain. Freight forwarders, customs
brokers and intermediaries that handle the details of importing and exporting goods are types of
logistics companies in the industry. While some companies use an internal logistics department
to manage the supply chain, other organizations rely on third-party experts to ensure the steady
flow of materials in and out of the business.

MODEL EXAMINATION QUESTIONS

1. Note on Objectives of Logistics in detail

UNIT – 3 TYPES OF LOGISTICS

STRUCTURE

3.1 Basic Classification of Logistics

3.2 Classification of Logistical Activities
3.3 Classification of Logistical Activities Based on Number of Parties Involved
3.4 Summing Up
3.5 Model Examination Questions

BASIC CLASSIFICATION OF LOGISTICS

 Procurement Logistics – The process of providing the enterprise with material

resources, the allocation of resources in the warehouses of the enterprise, storage and
delivery into production.
 Industrial Logistics – Materials Management, while passing through its production
units, moving from the primary source of raw materials to finished products.
 Distribution Logistics – A complex of interrelated functions included in the distribution
of material flow between the various wholesale purchases, i.e. in the wholesale trade.
 Transport Logistics – Management of cargo transportation.
 Information Logistics – The part of logistics, which is the link between supply,
production and marketing of products and organizes the data flow, which accompany the
material flow in the process of being relocated

CLASSIFICATION OF LOGISTICAL ACTIVITIES

A. Return Logistics (Reverse Logistics):

In order to increase the sales as well as the market share, many companies advertise that their
goods will perform well over a period of time. The customer is, therefore, led to believe that in
case he buys the product of that company, he is assured of satisfactory performance of the
product. But at the same time, it is very much obvious that the company cannot assure the
satisfactory performance of each and every of its product which is sold in the market. Few of the
products sold may not perform as advertised over the specific period of time.

Such products need to be brought back by the company to confirm good customer service.
Multination Companies (MNCs) to protect their market image and to stall its competitors from
grabbing its customers, recall immediately the defective or substandard product from the market.

Product recall is a critical competency resulting from

 increasingly rigid quality standards

 product expiration dating
 responsibility for hazardous consequences

The company has, therefore, to take into account the defective goods that would be returned
while framing the total logistical system network and calculating the total cost of such a system
of network. Incorporating the goods returned in the total logistical systems network and cost is
called as Return Logistics. Return Logistics requirement’ also result from the increasing number
of laws prohibiting random scrapping and disposal on one hand, while encouraging recycling of
waste such as beverage containers, packaging materials, etc. The most significant aspect of
return logistical operation is the need for maximum control when a potential health liability
exists. E.g.: a contaminated drug in the market is extremely dangerous and the company has to
recall all the stock of contaminated drug.

B. Inbound Logistics

Activities like material handling, warehousing, inventory control, vehicle scheduling & returns
to supplier. It takes care of the procurement style. The task involves – sourcing, order placement,
transportation, receiving. In inbound logistics factors like required deliver time, size of the
shipment, mode of transportation, value of material, inventory level etc. are planned.

Creation of value in a conversion process heavily depends on availability of inputs on time.

Making available these inputs on time at point of use at minimum cost is the essence of Inbound
Logistics. All the activities of a procurement performance cycle come under the scope of
Inbound Logistics.
Scope of Inbound Logistics covers transportation during procurement operation, storage,
handling if any and overall management of inventory of inputs. Several activities or tasks are
required to facilitate an orderly flow of materials, parts or finished inventory into a
Manufacturing complex. They are sourcing, order placement and expediting, transportation,
receiving and storage. Overall, procurement operations are called inbound logistics. Inbound
logistics have potential avenues for reducing systems costs.

Delivery time, size of shipment, method of transport & value of products involved are different
from those of physical distribution cycles. Normally delivery is large as a low cost transportation
mode is chosen. As the value of inventory is low, size of shipment is large & transit inventory
costs are low.

C. Outbound Logistics

Activities associated with collecting, storing & physically distributing the products to the buyers.
It includes distribution of finished goods, order processing, warehousing, material handling,
deliver vehicle operations, scheduling, shipping etc.

Value added goods are to be made available in the market for customers to perceive value.
Finished goods are to be distributed through the network of warehouses and supply lines to reach
the consumer through retailer shops in the market. During conversion value is added to the raw
materials and as a result value of the inventory in this case is very high unlike inputs. Now the
size of shipment, modesof transport and delivery time are different as compared to inputs.
Activities of shipment, distribution performance cycle come under the scope of Outbound
Logistics. They are order management, transportation, warehousing, packaging, handling etc.
CLASSIFICATION OF LOGISTICAL ACTIVITIES BASED ON
NUMBER OF PARTIES INVOLVED

A. Third Party Logistics (3PL)

3PL, Third Party Logistics describes businesses that provide one or many of a variety of logistics
related services. Types of services would include public warehousing, contract warehousing,
transportation management, distribution management, freight consolidation. A 3PL provider
may take over all receiving, storage, value added, shipping, and transportation responsibilities
for a client and conduct them in the 3PL’s warehouse using the 3PLs equipment and employees
or may manage one or all of these functions in the clients facility using the clients equipment, or
anything combination of the above. 3PL can be defined as the “Business of proposing physical
distribution reforms to a client and undertaking comprehensive physical distribution services.”

Third party logistics (3PL), a new business model for physical distribution, originated in
the U.K. & became highly popular in U.S. in the 1990s. 3PL providers offer innovative
alternatives to clients in the form of comprehensive logistics services. Because 3PL requires that
providers have intimate access to the corporate strategy of their clients, relationships are based
long term contracts as a rule

The growing demand for 3PL can be attributed to both demand,& supply side factors.

 faced with deregulation & growing competition, transport companies are seeking new
business opportunities, &
 clients are seeking to outsource their logistics operations cut costs & focus management
resources on core businesses.

B. Fourth Party Logistics

Traditionally, suppliers and big corporations have been meeting the demands by increased
inventory, speedier transportation solutions posting on-site service engineers and many times
employing a third party service provider. Today they need to meet increased levels of services
due to e-procurement, complete supply visibility, virtual inventory management and requisite
integrating technology. Now corporations are outsourcing their entire set of supply chain process
from a single
design, make and run integrated comprehensive supply chain solutions. This evolution in supply
chain outsourcing is called Fourth Party Logistics – the aim being to provide maximum overall
benefit. Thus a fourth party logistics provider is a supply chain integrator that assembles and
manages the resources, capabilities and technology of its own organization with those of
complementary service provider to deliver a comprehensive supply chain solution. It leverages
the competencies of third party logistics providers and business process managers to deliver a
supply chain solution through a centralized point of contact. As the fourth party logistics
provider caters to multiple clients, the investment is spread across clients-thus taking the
advantage of economies of scale.

Cost Effectiveness of Fourth Party Logistics

 Revenue growth by enhanced product quality, product availability, and improved

customer service -all facilitated by the application of leading technology.
 Operating cost reduction can be achieved through operational efficiencies, process
enhancements and procurements. Savings will be achieved by complete outsourcing of
supply chain functions and not just selected components.
 Fixed capital reductions will result from capital asset transfer and enhanced asset
utilization. The fourth party logistics organization will own physical assets through
freeing up the client organization to invest in core competencies.

Emergence of fourth party logistics is a new concept in supply chain outsourcing . With the
rapid advancements of technologies, it will be easier to reap the benefits of fourth party logistics
concept. Thus fourth party logistics is the future of supply chain management.

SUMMING UP

Logistics management ensures the proper and timely distribution, storage and reclamation of
needed materials. It uses a variety of applications from material productions to commodity
delivery to military maneuvers. Logistics management has four main types, each emphasizing a
different aspect of the supply process.

Our role as a third party logistics provider is to ensure that all of these services and others
associated with logistics seamlessly flow together. This requires a great deal of coordination,
organization, and time management, but it is something that we have perfected over the years. If
you are looking for a 3PL provider for your business, feel free to reach out to Overflow for more
information about what we can do for you.

MODEL EXAMINATON QUESTIONS

a. Explain the basic classification of logistics

b. Give the details of classification of logistical activities
c. Write in brief a note on 3PL
d. Give details of 4PL
UNIT –4 CONCEPT OF LOGISTICS MANAGEMENT

STRUCTURE

4.1 Introduction
4.2 Importance of Logistics Management
4.3 Key Activities Involved in Logistics Management
4.4 Summing Up
4.5 Model Examination Questions

INTRODUCTION

“Logistics management is that part of supply chain management that plans, implements, and
controls the efficient, effective forward and reverse flow and storage of goods, services and
related information between the point of origin and the point of consumption in order to meet
customers' requirements.” – Council of Supply Chain Management.

In its’ most basic form, logistics management is the control and supervision of the movement of
goods, however, the scope of logistics management can be far more reaching than that.

The sphere of logistics management involves a multitude of different factors. Transportation

management, freight and inventory management, materials handling, and order fulfillment are
just a few of the factors that must be considered when it comes to logistics management.

Many companies look to third party logistics providers (3PL’s) for help as this somewhat simple
concept can often become very complex and not so easy to execute.
How do you know if a logistics management operation is efficient?

An effective logistics management operation should yield 4 key results:

1. Increase revenue
2. Improve operating cost structure
3. Reduce overall transportation costs
4. Improve customer service

When the stars align and all of your logistics processes are streamlined, you should expect to see
these results where they matter most: your bottom line.

IMPORTANCE OF LOGISTIC MANAGEMENT

Meeting customer demand and providing superior service is one of the most important benefits
of good logistics management. Consumers demand better service and this mandate have ripple
effects up the supply chain, creating a need for shippers to provide fast, accurate and quality
service. Logistics management is responsible for satisfying customer demands.

Logistics management is also important for creating visibility into a company’s supply chain.
Advanced transportation management systems (TMS) analyze historical data and track real-time
movement of goods into and out of a business. Logistics managers can use this information for
process optimization and avoiding potential disruptions. TMS data analysis keeps a company’s
supply chain moving more efficiently, all while gaining operational insight.

Proper logistics management drives increased revenue. Improved customer service can bring a
good reputation to a company’s brand and generate more business, and supply chain visibility
creates opportunity for major cost savings in operations. Logistics management will give a
company control over inbound freight, keep inventory at optimal levels, organize the reverse
flow of goods, and utilize freight moves on the proper transportation modes – all of which can
cut costs significantly.
With the growing complexity of logistics management, many companies select a 3PL to manage
some or all of their logistics functions. 3PLs have expertise and advanced technology to cut costs
and improve processes much more efficiently than companies can in-house.

KEY ACTIVITIES INVOLVED IN LOGISTICS MANAGEMENT

Following is a brief account of key activities involved in logistics management:

(i) Network Design:
Network design is one of the prime responsibilities of logistics management. This network is
required to determine the number and location of manufacturing plants, warehouses, material
handling equipment’s etc. on which logistical efficiency depends.

(ii) Order Processing:

Customers’ orders are very important in logistics management. Order processing includes
activities for receiving, handling, filing, recording of orders. Herein, management has to ensure
that order processing is accurate, reliable and fast.

Further, management has to minimize the time between receipt of orders and date of dispatch of
the consignment to ensure speedy processing of the order. Delays in execution of orders can
become serious grounds for customer dissatisfaction; which must be avoided at all costs.

(iii) Procurement:
It is related to obtaining materials from outside suppliers. It includes supply sourcing,
negotiation, order placement, inbound transportation, receiving and inspection, storage and
handling etc. Its main objective is to support manufacturing, by providing timely supplies of
qualitative materials, at the lowest possible cost.

(iv) Material Handling:

It involves the activities of handling raw-materials, parts, semi-finished and finished goods into
and out of plant, warehouses and transportation terminals. Management has to ensure that the
raw-materials, parts, semi-finished and finished goods are handled properly to minimize losses
due to breakage, spoilage etc. Further, the management has to minimize the handling costs and
the time involved in material handling.
Material handling systems, in logistics management are divided into three categories:
 Mechanized systems
 Semi-automated systems
 Automated systems

(v) Inventory Management:

The basic objective of inventory management is to minimize the amount of working capital
blocked in inventories; and at the same time to provide a continuous flow of materials to match
production requirements; and to provide timely supplies of goods to meet customers’ demands.

Management has to maintain inventories of:

 Raw-materials and parts
 Semi-finished goods
 Finished goods
Management has to balance the benefits of holding inventories against costs associated with
holding inventories like – storage space costs, insurance costs, risk of damage and spoilage in
keeping stocks etc.

(vi) Packaging and Labeling:

Packaging and labeling are an important aspect of logistics management. Packaging implies
enclosing or encasing a product into suitable packets or containers, for easy and convenient
handling of the product by both, the seller and specially the buyer.

Packaging facilities the sale of a product. It acts as a silent salesman. For example, a fancy and
decorative packaging of sweets, biscuits etc. on the eve of Diwali, makes for a good sale of such
items.

Labeling means putting identification marks on the package of the product. A label provides
information about – date of packing and expiry, weight or size of product, ingredients used in the
manufacture of the product, instructions for sale handling of the product, price payable by the
buyer etc.

Labeling is a strong sales promotion tool. The consumer who is persuaded to read the label may,
in fact, try to buy the product; even though he/she had no such premeditation (advance idea).
 (vii) Warehousing:
Storage or warehousing is that logistical activity which creates time utility by storing goods from
the time of production till the time these are needed by ultimate consumers.

Here, the management has to decide about:

 The number and type of warehouses needed and
 The location of warehouses.
The above two decisions depend on the desired level of customer service and the distance
between the supply source and final destination i.e. markets.

(viii) Transportation:
Transportation is that logistical activity which creates place utility.

Transportation is needed for:

 Movement of raw-materials from suppliers to the manufacturing unit.
 Movement of work-in-progress within the plant.
 Movement of finished goods from plant to the final consumers.

Major transportation systems include:

 Railways
 Roadways
 Airways
 Waterways
 Pipelines.

The choice of a particular mode of transportation is dependent on a balancing of following

considerations:
 Speed of transportation system
 Cost involved in transportation
 Safety in transportation
 Reliability of transportation time schedules
 Number of locations served etc.
SUMMING UP

According to Paul Myerson’s book “Introduction to Supply Chain and Logistics Management
Made Easy” there are five tactical characteristics of logistics management – reliability,
responsiveness, agility, cost and assets. Hence, there should be greater emphasis on accuracy of
data collected. Even though there are innovative and world-class technological processes that are
used in logistics, it must be considered that data input is different from information processing.
Hence, a lot depends on timely and regular data feeding and updation. The basic information
should be based on real-time flow of goods and only then can logistics management be utilized
to maximize customer satisfaction and reduce costs.

Thus, logistics management is the key to seamless and integrated supply chain involving
efficient flow of various processes, from freight forwarding and inventory management to
packaging and delivery of goods, by utilizing information, technology and human resources to
attain company’s objectives.

MODEL EXAMINATION QUESTIONS

a. Note on Logistics Management

b. Explain the key activities involved in logistics management
c. State the importance of logistics management
UNIT – 5 DIFFERENCE BETWEEN LOGISTICS &
SUPPLY CHAIN

STRUCTURE

5.1 Introduction
5.2 Introduction – Supply Chain Management
5.3 Objectives of SCM
5.4 Importance of SCM
5.5 Global SCM
5.6 Difference between Logistics & SCM
5.7 Summing Up
5.8 Model Examination Questions

INTRODUCTION

All the activities, associated with the sourcing, procurement, conversion and logistics
management, comes under the supply chain management. Above all, it encompasses the
coordination and collaboration with the parties like suppliers, intermediaries, distributors and
customers. Logistics Management is a small portion of Supply Chain Management that deals
with the management of goods in an efficient way.

Supply Chain Management, it is a broader term which refers to the connection, right from the
suppliers to the ultimate consumer.
INTRODUCTION – SUPPLY CHAIN MANAGEMENT

SCM is oversight of material, information & finances as they move in a process from suppliers
to manufacturer to wholesalers to retailers to consumers. In SCM there are mainly 3 flows: -
Product flow, Information flow, & Financial Flow.

SCM can be defined as “integrated management of all linkages & value added activities from
suppliers to consumers in such a way that enhanced customer value is achieved at lower costs.

OBJECTIVES OF SCM

 To maximize the overall profitability: Supply chain profitability is different between

amount paid to the customer to purchase the product & cost incurred by average to
produce & supply the product to customer at the right time.
 Enhancing customer service: It aims at avoiding any kind of service failure & provides
efficient services to customers thereby leading to customer satisfaction.
 Reduces Inventory cost: Due to efficient SCM, there is a greater coordination &
cooperation among the members which helps to reduce inventory thereby reducing
inventory costs.
 Reduces warehousing & transportation costs: it is through proper planning, storage of
goods & network & by using transportation principles like Economies of Scale &
Economies of Distance.
  Reduce lead time: it is required to convert orders into cash through proper
communication, coordination etc. which takes place in an efficient SCM
 Minimizing Variance: SCM through standardization of activities & processes helps to
reduce variance between actual results & perceived results.
 Ensures on-time delivery to customers:
 Reducing the Working Capital: SCM will help to reduce variance such as inventory cost,
warehousing cost, and transportation cost thereby reducing working capital.

IMPORTANCE OF SCM

 Reduced Inventories along the chain: it is done by each member in the chain & is
possible due to good cooperation & coordination among the members in the chain.
 Better flow of Information: it is among the members of the chain right from suppliers of
raw materials up to the final customers
 Customer satisfaction: SCM helps in customer satisfaction by creating place utility &
providing customers with demanded products at convenient locations
 Competitive Edge: SCM provides competitive edge to company in market by facilitating
availability of goods in all convenient location easily assessable to customer
 Builds Trust: SCM builds trust & cooperation among the members of the supply chain by
sharing true information
 Avoids wastage: Levels of wastage gets reduced which adversely reduces manufacturing
costs, inventory costs, labor costs etc.

GLOBAL SCM

Increased globalization & off-shore sourcing has increased importance of global SCM. Objective
of global SCM are:

 To reduce costs of procurement

 To decrease risk related to purchasing activities

Challenges of Global SCM:

 Supply & value chain trends

 Globalization
  Increased cross border sourcing
 Collaboration for parts of value chain with low-cost providers
 Shared service centers for logistical & administrative function.

Problems of SCM:

 Different currencies & valuation in different countries

 Different tax laws
 Different trading protocols
 Lack of transparency of costs & profits

DIFFERENCE BETWEEN LOGISTICS & SCM

BASIS FOR SUPPLY CHAIN

LOGISTICS MANAGEMENT
COMPARISON MANAGEMENT
The process of integrating the movement The coordination and management of
Meaning and maintenance of goods in and out the the supply chain activities are known
organization is Logistics. as Supply Chain Management.
Objective Customer Satisfaction Competitive Advantage
Evolution The concept of Logistics has been evolved Supply Chain Management is a
 earlier. modern concept.
How many
organizations are Single Multiple
involved?
Supply Chain Management is the
Logistics Management is a fraction of
One in another new version of Logistics
Supply Chain Management.
Management.
Logistics Supply Chain Management
Logistics is the process of planning, Supply chain management (SCM) is
implementing, and controlling procedures the oversight of materials,
for the efficient and effective transportation information, and finances as they
Description
and storage of goods, including services move in a process from supplier to
and related information, from the point of manufacturer to wholesaler to retailer
origin to the point of consumption. to consumer.
Part of Supply Chain Management Management of the Company
Anything and everything to do with Anything and everything to do with a
Entails
transporting goods and services supply chain
Integration and information sharing
Product development
Inventory
Procurement and Manufacturing
Segments Transportation
Logistics
Warehousing
Customer Service
Performance Measurement
May participate in activities such as
Relationship with Does not directly participates in other research and marketing that may
other departments department or segments have a direct impact on the supply
chain

SUMMING UP

Logistics is a very old term, firstly used in the military, for the maintenance, storage and
transportation of army persons and goods. Nowadays, this term is used in many spheres, not
specifically in the military after the evolution of the concept of Supply Chain Management. It
has also been said that SCM is an addition over Logistics Management as well as SCM
comprises of logistics. Both are inseparable. Hence they do not contradict but supplement
each other. SCM helps Logistics to be in touch with the transportation, storage and distribution
team.

MODEL EXAMINATION QUESTIONS

a. Write a note on SCM

b. State the objectives of SCM
c. Give the importance of SCM
d. Note on Global SCM in detail
e. State the difference between Logistics & SCM
UNIT – 6 LOGISTICS & COMPETITIVE ADVANTAGE

STRUCTURE

6.1 Introduction
6.2 Solution through which Companies Gain the Competitive Advantage
6.3 Summing Up
6.4 Model Examination Questions

INTRODUCTION

GAINING COMPETITIVE ADVANTAGE THROUGH LOGISTICS

A firm can gain competitive advantage only when it performs its strategically important
activities (designing, producing, marketing delivering and supporting its product) more
cheaply or better than its competitors.

Value chain activity disaggregates a firm into its strategically relevant activities in order to
understand behavior of costs and existing and potential sources of differentiation. They are
further categorized into two types

(i) Primary – inbound logistics, operation outbound logistics, marketing and sales, and
service

(ii) Support – infrastructure, human resource management, technology development and

procurement

To gain competitive advantage over its rivals, a firm must deliver value to its customers through
performing these activities more efficiently than its competitors or by performing these activities
in a unique way that creates greater differentiation.

Logistics management has the potential to assist the firm in the achievement of both a
cost/productivity advantage and a value advantage. The under lying philosophy behind the
logistics concept is that of planning and coordinating the materials flow from source to user as
an integrated system rather than, as was so often the case in the past, managing the goods flow as
a series of independent activities. Thus under a logistics management regime the goal is to link
the marketplace, the distribution network, the manufacturing process and the procurement
activity in such a way that customers are service at higher levels and yet at lower cost.

Making sure products are made available to customers for a low price is down to logistics
management. The demands of the end customers include receiving goods in a very short time
frame, having the correct orders delivered and therefore companies are able to use these
additional yet essential services as a way of appealing to their market and taking more of the
market share from their competitors.

Concentrating on the three hard objectives for creating logistics that will give the company an
advantage in the marketplace is: quality, cost and time, along with taking control of variability in
logistics, sustainability and dealing with uncertainty. The hard objectives are easy to measure
and a traditionally used in logistics.

The hard objectives are ways of competing to provide the end customers advantages such as
quick delivery and low costs. These are used alongside soft objectives that relate more towards
customer services in order to improve the logistics used by the company. The soft objectives
have to do with customer confidence and security of customer information and these objectives
can be difficult to measure, often relying on surveys completed by the end customers
themselves.

SOLUTION THROUGH WHICH COMPANIES GAIN THE

COMPETITIVE ADVANTAGE

 Shipper Associations / Consortiums: By being a part of a shippers association, a

business can benefit from lower transportation rates due to the competitive negotiations
and economies of scale.
 Transportation Management Systems (TMS): Such platforms allow a business to
manage their data flow more efficiently and allows for visibility of performance and
cost. Keeping an eye on costs, transit times, delivery performance, freight claims, and
compliance will allow for strategic thinking and put a company a step in front of its
competitors.
 Auto-Tender Functionality: This feature allows freight to be tendered directly to
carriers, greatly reducing the time spent scheduling a shipment. When set up using a
 least cost carrier, the savings combined with the efficiency gain provide a great
advantage.
 Advanced Tracking: Visibility and transparency are becoming more and more
important in business. Advanced tracking features have been adopted to give customers
real-time information on where their goods are.

SUMMING UP

Businesses are always searching for a competitive advantage that will set them apart from others
offering a similar product or service. The competitive advantage is gained by offering a
customer services of greater value, lower pricing or greater benefits. Without a distinguishing
advantage, what is the lure for a potential customer to select one provider over the other?
Businesses without a competitive advantage will have a harder time maintaining their relevance
in the market.
In today’s global economy, being adaptive and flexible is the key to staying relevant. Changes to
the logistics industry have been driven by reasons such as the price of oil, labor costs, security,
trade regulations, labor stoppages, vessel capacity and technology. Having the personnel,
practices and tools to proactively adapt to these changes will give a company the competitive
advantage.

MODEL EXAMINATION QUESTIONS

a. State various ways though which companies gain competitive advantage.

b. How can logistics gain competitive advantage
UNIT –7 LOGISTICS IN ORGANIZED RETAIL IN INDIA

STRUCTURE

7.1 Introduction
7.2 Evolution of Retail Logistics
7.3 Functions of Retail Logistics System
7.4 Role of Logistics in Organized Retail Sector
7.5 Summing Up
7.6 Model Examination Questions

INTRODUCTION

The word logistics is derived from the French word “loger” which means “to quarter and supply
troops”. When large number of troops and their equipment move, meticulous planning is
required to move volumes of goods and ammunition in that direction. From a marketing point of
view, customers are satisfied when they get right product at the right place, at the right time and
in the right quantity. Retail logistics system ensures smooth flow of goods to customers through
efficient movement of logistics.

‘Retail logistics’ is the organist process of managing the flow of merchandise from the source of
supply to the customer.

Large retailers deal in a wide variety of products. This has created a need for a systematic
planning of movement of numerous goods until they are delivered to the customer. Retail
logistics ensures that everything is in place to offer better delivery and service at lower prices by
way of efficient logistics and added value.
EVOLUTION OF RETAIL LOGISTICS
FUNCTIONS OF RETAIL LOGISTICS SYSTEM

1. The increased product variety in stores has forced the retailer to follow an effective
logistics system. It takes care of the
a. flow of merchandise from the producer or intermediary to the warehouse,
b. arrangement of transport to the retail units till the merchandise is sold and
delivered to the customers.
2. The system satisfies the customer by taking the right product to the right customer, at the
right place and at the right time. This requires a planned approach right from the starting
point till the point of delivery.
3. Profitability of the present and future are maximized by the logistics system by means of
fulfillment of orders in a cost effective way.
4. It ensures the availability of infrastructure such as warehousing, transport, inventory and
administration. The inter relationship that exists between these elements are effectively
coordinated.
5. Retail logistics system strives to add value for the customer. For this purpose, the cost
elements in the supply chain are brought under the direct control of the retailer.
Depending on sales volume, retailers create central or regional distribution centres. They
decide on major investment in property, plant and equipment with associated overheads.
6. The functions incorporated in the retail logistics are summarized.
a. The physical movement of goods
b. the holding of the goods in stock holding points
c. the holding of goods in quantities required to meet demand from the consumers
d. the management and administration of the process in modern complex
distribution system.

ROLE OF LOGISTICS IN ORGANIZED RETAIL SECTOR

The role of supply chain in the organized retail sector in India should be a shelf- centric
partnership between the retailer and the manufacture for this will create supply chains that are
loss free. This will also give rise to top and bottom line growth. In the organized retail sector in
India the presence of fresh produce (vegetables and fruits) is very small. This is so for the nature
of supply chain is very fragmented. This shows the important role of supply chain in the
organized retail sector in India.
In the organized retail market in India the role of supply chain is very important for the Indian
customer demands at affordable prices a variety of product mix. It is the supply chain that
ensures to the customer in all the various offerings that a company decide for its customers, be it
cost, service, or the quickness in responding to ever changing tastes of the customer.
The infrastructure in India in terms of road, rail, and air links are not sufficient. And so
warehousing plays a major role as an aspect of supply chain operations. To overcome these
problems, the Indian retailer is trying to reduce trans portion costs and is investing in logistics
through partnership or directly. The Indian organized retail sector is growing so the role of
supply chain becomes all the more important. It should become all the more responsive and
adaptive to customers demand. There is also need for the supply chain to be more cost efficient
and collaborative to win the immense competition in this sector.
The role of supply chain in Indian organized retail has expanded over the years with the boom in
this industry. The growth of the Indian retail industry to a large extent depends on supply chain,
so efforts must be made by the Indian retailers to maintain it properly.

SUMMING UP

The role of supply chain in Indian organized retail has expanded over the years with the boom in
this industry. The growth of the Indian retail industry to a large extent depends on supply chain,
so efforts must be made by the Indian retailers to maintain it properly.

Therefore, with the generous use of Global and Local Experiences, Indian retailers are going to
improve their bottom lines with efficient, management of Supply Chain and Logistics. At the
same time, Indian Retailers like future Group with retail stores like Big Bazaar, Pantaloons and
Reliance retail are also going to show the world as to how it can be managed in a more
innovative and efficient manner.

MODEL EXAMINATION QUESTIONS

a. Explain the role of organized retail logistics system

b. State the role of retail logistics system
c. Explain diagrammatically the evolution of retail logistics
BLOCK-II: TRANSPORTATION IN
LOGISTICS
In this block we will learn the following;

Unit 1 Significance of transportation in Logistics: Utility created by transportation in logistics

Unit 2 Transportation as a means of conquering time & space

Unit 3 Features of In-bound, Out-bound, Local & Medium

Unit 4 Long & Continental Transportation – Features of Logistics Transportation

UNIT - 1 SIGNIFICANCE OF TRANSPORTATION IN
LOGISTICS: UTILITY CREATED BY
TRANSPORTATION IN LOGISTICS

STRUCTURE

1.1 Introduction
1.2 Importance Of Transportation
1.3 Transportation Functionality
1.4 Principles Of Transportation
1.5 Participants Of Transportation Decisions
1.6 Role & Perspective Of Each Party
1.7 Utilities Created By Transportation In Logistics
1.8 Summing Up
1.9 Model Examination Questions

INTRODUCTION

Transportation plays a key role in economic success by allowing for the safe & efficient
distribution of goods & services throughout the supply chain. Transportation Hyder Integrated
Logistics & United Parcel Services (UPS) have achieved success because they are able to
provide consistent time-in-transit & thus increase time & place utility of their customer products.

IMPORTANCE OF TRANSPORTATION

 Wider Market: transportation helps to widen the scope of Market & thereby widen the
scope of business.
 Place Utility: Transportation supplies products from surplus area to the scare area thus
creating place utility
  International Division of Labor: In this, each country produces such commodities
which it can produce at lowest, possible cost & then supplies it to other countries with
help of transportation
 Price Stability: Transportation helps to maintain price stability by ensuring proper
balance between demand & supply.
 Industrial Development: Transportation leads to large scale demand & thus the need for
large scale production further leading to industrial development
 Employment Opportunities: setting up more industries leads to employment generation
within the country
 High Standard of Living: due to employment opportunities purchasing power increases
leading to high standard of living
 Distribution of Perishable Goods: Due to efficient transportation system, perishable
goods can be quickly transported from one to another.
 Special Benefits during Emergencies: transportation proves very helpful for supply of
vital requirements during emergencies situations.

TRANSPORTATION FUNCTIONALITY

 Product Movement: Where product is in a particular form transportation is necessary to

move it to the next stage of manufacturing process or physically close to ultimate
customers. A primary transportation function is product movement up & down the value
chain since transportation utilizes time, financial &environmental resources. Major
objective of transportation is to move product from the origin location to prescribed
destination with minimum resource costs, loss & damage expenses must also be
minimized.
 Product Storage: If in-transit product requires storage but will be moved again shortly,
cost of unloading & reloading the product in warehouse may exceed per day charge of
storage in transportation vehicle. In circumstances, where warehouse space is limited
utilizing transportation vehicle may be a viable option.
PRINCIPLES OF TRANSPORTATION

 Economics of Scale: Transportation cost per unit of weight decreases when size of
shipment increases.

 Economics of Distance: Transportation cost per unit of distance decreases as distance

increases. This is referred by tapering principle since rates taper with distance.

PARTICIPANTS OF TRANSPORTATION DECISIONS

 Shipper (originating party): Shipper is the party who wants to transport products to the
market & ultimately to the final customer. They are normally businessman who produce
foods as per the demand.
 Consignee: they are the people to whom goods are sent. They are normally wholesalers,
retailers & customers.
 Carrier: they are service provider or transporters who carry shipment from shipper to
consignee
 Government: Transportation helps in economic prosperity of the society. Government
collects tax on the transactions for the economic development of the country.
 Public: they have a large involvement in transport transactions.

ROLE & PERSPECTIVE OF EACH PARTY

 Shipper & Consignee: They initiate need for transportation. Major objective is to move
goods at the lowest costs. Service expectations include specifies pickup & delivery time,
zero loss & damage, accurate & timely exchange of information.
 Carrier: The objective is to maximize the revenue & minimize the costs.
 Government: It desires stable & efficient transportation environment for economic
development. Government involvement may take in the form of regulations or
ownership.
 Public: They are concerned with transportation expenses & effective as well as
environmental & safety standards. They determine need for the transportation by
demanding goods.
UTILITIES CREATED BY TRANSPORTATION IN LOGISTICS

a. Form Utility.

It refers to the value added to goods through a manufacturing, production or assembling process.
For example, form utility results when raw materials are combined in some predetermined
manner to make a finished product. This is the case, for instance, when a bottling company adds
together syrup, water and carbonation to make a soft drink. The simple process of adding the raw
materials together to produce the soft drink represents a change in product form that adds value
to the product.

In today's economic environment, certain logistics activities can also provide form utility. For
example, breaking bulk and product mixing, which typically take place at distribution centres,
change a product's form by changing its shipment size and packaging characteristics. Thus,
unpacking a pallet of breakfast cereal into individual customer size boxes form utility to the
product. However, the two principal methods in which logistics adds value are in place and time
utility.

The utility of form refers to the specific product or service that a company offers. For example, a
manufacturing firm might offer the raw material of rubber in the form of automobile tires.

A company engages in research to pinpoint exactly what products or services consumers desire
and then attempts to offer what the company's management believes is the best possible form of
the specific product or service that is needed or desired by potential customers.

This aspect of form utility includes offering consumers lower costs, greater convenience or a
wider selection of products. All of these efforts by a company are aimed at maximizing the
perception of the added value the company offers.

b. Place Utility:

Logistics provides place utility by moving goods from production surplus points to points where
demand exists. Logistics extends the physical boundaries of the market area, thus adding
economic value to the goods. This addition to the economic value of goods and services known
as place utility.
Logistics creates place utility primarily through transportation. For example, moving farm
produce by rail or truck from farm areas to markets where customers need this produce creates
place utility. the same is also true when steel is moved to a plant where the steel is used to make
another product. The market boundary extension added by place utility increases competition,
which usually leads to lower prices and increased productivity.

The utility of place refers primarily to making goods or services readily and conveniently
available to potential customers. Examples of place utility range from a retail store's location to
how easy a company's website or services are to find on the Internet.

Increasing convenience for customers can be a key element in attracting business. A company
that offers easy access to technical assistance, for example, offers an added value in comparison
to a similar company that does not offer similar ease of access. Making a product available in a
wide variety of stores and locations is considered an added value addressing the issue of
consumer convenience.

c. Time Utility:

Not only must goods or services be available whenever consumers need them, but they must also
be at that point when customers demand them. This is called time utility or the economic value
added to a good or service by having it at a demand point at a specific time. Logistics creates
time utility through proper inventory maintenance and the strategic location of goods and
services. For example, logistics creates time utility by having heavily advertised products and
sales merchandise available in retail stores at precisely the time promised in the advertising
effort.
To some extent, transportation may create time utility by moving something more quickly to a
point of demand. For instance, substituting air transportation for warehousing adds time utility.
Time utility is much more important today because of the emphasis upon reducing lead time and
minimizing inventory levels through logistics related strategies such as Just In Time (JIT)
inventory control.

The utility of time refers to easy availability of products or services at the time when customers
need or want to purchase them. Addressing the utility of time involves a company's business
plan and the logistical planning of manufacturing and delivery issues.

For service providers, time utility is addressed by seeking to make services available at the times
that they are most necessary or desirable for consumers. It includes considering the hours and
days of the week a company chooses to make its services available. The goal is to offer potential
customers an added value. A time element such as 24-hour availability might be a value that a
company chooses to offer.

d. Possession Utility:

It is primarily created through the basic marketing activities related to the promotion of products
or services. We may define promotion as the effort, through direct and indirect contact with the
customer, to increase the desire to possess a good or to benefit from a service. The role of
logistics in the economy depends upon the existence of possession utility, for time or place
utility make sense only if demand for the product or service exists.

It is also true that marketing depends upon logistics, since possession utility cannot be acted
upon unless time and place utility are provided. Order fulfillment is the critical and other final
step for meeting customer requirements.

The utility of possession refers to the benefit customers derive from ownership of a company's
product once they have purchased it. For example, if a company sells headphones, then it offers
customers an added value in listening to music available through using the headphones to
improve the functionality of a stereo system. Offering favorable financing terms toward
ownership is another way a company might choose to improve the value of possessing its
products.

SUMMING UP

The four types of economic utility are form, time, place and possession. "Utility" in this context
refers to the value, or usefulness, that a purchaser receives in return for exchanging his money
for a company's goods or services. Companies seek to provide maximum customer satisfaction
through addressing as many of the four types of utility as possible.

The concept of economic utility falls under the area of study known as behavioral economics. It
is designed to assist companies in operating a business and marketing the company in a way that
is likely to attract the maximum amount of customers and sales revenues.

MODEL EXAMINATION QUESTIONS

a. State the importance of Transportation

b. Explain the participants of transportation & its role
c. Note on Form Utility
d. Explain Time Utility
e. Write a note on Possession Utility
f. Note on Place Utility
UNIT - 2 TRANSPORTATION AS A MEANS OF
CONQUERING TIME AND SPACE

STRUCTURE

2.1 Characteristics of Utility

2.2 Time Utility
2.3 Space Utility
2.4 Summing Up
2.5 Model Examination Questions

CHARACTERISTICS OF UTILITY

The following are the important characteristic features of utility:

1. Utility has no Ethical or Moral Significance:
A commodity which satisfies any type of want, whether moral or immoral, socially desirable or
undesirable, has utility, i.e., a knife has utility as a household appliance to a housewife, but it has
also a utility to a killer for stabbing some body.

2. Utility is Psychological:
Utility of a commodity depends on a consumer’s mental attitude and assessment regarding its
power to satisfy his particular want. Thus, utility of a commodity may differ from person to
person. Psychologically, every consumer has his likes and dislikes and everyone determines his
own level of satisfaction.

For instance:A consumer who is fond of apples may find a high utility in apples in comparison
to the consumer who has no liking for apples. Similarly a strictly vegetarian person has no utility
for mutton or chicken.

3. Utility is always Individual and Relative:

Utility of a commodity varies in different situations in relation to time and place. Even the same
consumer may derive a higher or lower utility for the same commodity at different times and
different places. For example—a person may find more utility in woolen clothes during the
winter than in summer or at Kashmir than at Mumbai.

4. Utility is not Necessarily Equated with Usefulness:

Utility simply means the ability to satisfy a want. A commodity may have utility but it may not
be useful to the consumer. For instance—A cigarette has utility to the smoker but it is injurious
to his health. However, demand for a commodity depends on its utility rather than its usefulness.
Thus many commodities like opium liquor, cigarettes etc. have demand because of utility, even
though, they are harmful to human beings.

5. Utility cannot be Measured Objectively:

Utility being a subjective phenomenon or feeling of a consumer cannot be expressed in
numerical terms. So utility cannot be measured cardinally or numerically. It cannot be measured
directly in a precise manner. Professor Marshall has however, unrealistically assumed cardinal
measurement of utility in his analysis of demand.

6. Utility Depends on the Intensity of Want:

Utility is the function of intensity of want. A want which is unsatisfied and greatly intense will
imply a high utility for the commodity concerned to a person. But when a wan is satisfied in the
process of consumption it tends to experience a lesser utility of the commodity than before. Such
an experience is very common and it is described as a tendency of diminishing utility
experienced with an increase in consumption of a commodity. In other words, the more of a
thing we have, the less we want it.

7. Utility is Different from Pleasure:

A commodity may have utility but its consumption may not give any pleasure to the consumer,
e.g., medicine or an injection. An injection or medicinal tablet gives no pleasure, but it is
necessary for the patient.

8. Utility is also Distinct from Satisfaction:

Utility and satisfaction, both are though inter-related but they have not been considered as the
same in a strict sense.
TIME UTILITY

The "social-cultural environment" of customers in the current marketing climate is one in which
people often are quite impatient to take possession of the product once they have made the final
decision to buy.

It is important, in a competitive environment, to use every opportunity to streamline your supply

chain and distribution channels to allow a customer to physically obtain the chosen product as
quickly as possible.

In the case of food service items, you can't have the burger ready and have the customers wait
many minutes for the fries, they just won't come to your drive-through next time.

This is one of the reasons why (say some fast food experts) that McDonald's fries are skinnier
and smaller than, say, Harvey's, they are designed to cook faster so McDonald's can serve
customers faster because the McDonald's focus is on the "Fast" in fastfood.

Storing, hoarding and preserving certain goods over a period of time may lead to the creation of
time utility for such goods e.g., by hoarding or storing food-grains at the time of a bumper
harvest and releasing their stocks for sale at the time of scarcity, traders derive the advantage of
time utility and thereby fetch higher prices for food-grains. Utility of a commodity is always
more at the time of scarcity. Trading essentially involves the creation of time utility.

Ensuring a product is available when the customer wants it adheres to time utility. Consumer
demand for products varies depending on the weather, holiday season or everyday wants and
needs. For example, the demand for warm coats increases during the winter, and the demand for
Christmas, Halloween or Easter decorations increases when these holidays approach, while the
demand for soda and other soft drink products may remain the same throughout the year because
customers can drink these products at any time

SPACE UTILITY

The utility of place refers to having the product exist in a location that is easily accessible to the
buyer at the moment in time when their payment transaction is concluded.
If you are selling products in a huge warehouse style store, like Home Depot of Costco, the
utility of "place utility" can be as simple as having the product in boxes on pallets ready to be
picked up and the customer can simply walk directly to the cashier to make payment.

When so many products are sold online, or in a marketing situation which may be partly online,
and partly in a store, it is more and more important to make sure the "place utility" is as
competitive as possible because sometimes the final decision about whether to buy, or not buy,
is made by the customer based on how they can physically get their hands on the product as soon
as possible.

For example, it is no good having a detailed YouTube video of how your low priced air-
conditioner works, if the customer has to drive many miles to find a store with one actually in
stock.

This utility is created by transporting goods from one place to another. Thus, in marketing goods
from the factory to the market place, place utility is created. Similarly, when food-grains are
shifted from farms to the city market by the grain merchants, place utility is created.

Transport services are basically involved in the creation of place utility. In retail trade or
distribution services too, place utility is created. Similarly, fisheries and mining also imply the
creation of place utility. Place utility of a commodity is always more in an area of scarcity than
in an area of scarcity than in an area of abundance e.g., Kashmir apples are more popular and
fetch higher prices in Pune than in Srinagar on account of such place utility.

Place utility is the value consumers put on where they purchase products. Stores make it easier
for the consumers to purchase items, as opposed to driving to a factory or warehouse where the
products are manufactured or stored. Consumers find what they need in a place conveniently
located near home or work.

SUMMING UP

TRANSPORTATION is a factor of time utility; it determines how fast and how consistently a
product moves from one point to another. This is known as time-in-transit and consistency of
service.
Logistics contributes to time utility by recognizing that different products have different
sensitivities to time. For example, a three-day late delivery of bananas likely has more serious
consequences than a three-day late delivery of a box of pencils. As for place utility, logistics
facilitates products being moved from points of lesser value to points of greater value.

MODEL EXAMINATION QUESTIONS

a. Explain the characteristics of utilities in detail

b. Note on Time Utility
c. Note on Space Utility
UNIT - 3 FEATURES OF IN-BOUND, OUT-BOUND,
LOCAL AND MEDIUM

STRUCTURE

3.1 In-bound Logistics

3.2 Out-bound Logistics
3.3 Inbound and Outbound Logistics Process (Step-by-Step Guide)
3.4 Summing Up
3.5 Model Examination Questions

IN-BOUND LOGISTICS

Inbound logistics connotes the activities which are related to sourcing, acquiring, storing and
delivering the raw materials and parts to the product or service department. It is part and parcel
of the operations, for a firm involved in manufacturing business.

In simple terms, inbound logistics is the fundamental activity, which focuses on buying and
scheduling the inflow of materials, tools and final goods, from suppliers to the production unit,
warehouse or retail store.
Inbound logistics includes all those activities, which are substantial to make the goods available
for operational processes, at the time of their need. It encompasses materials handling, stock
control, inspection and transport, etc. to facilitate, the production or market distribution.

Features

A. Purchase Order Receiving

Quickly and efficiently manage the receipt of your outstanding purchase orders using quick
reminders and workflows. The expedite list identifies through color highlighting exactly which
orders are overdue or expected and provides the ability to follow directly with your primary
contact by email and/or phone number.

Key Benefits:

1. Streamlined receiving process

2. Quickly expedite outstanding orders
3. Mobile options available

B. Quality Assurance

Quickly establish the types of inspections and tests that you want to perform along with control
limits and acceptance criteria, and link them in any combination to your items. NetSuite will
then assist with dispositioning any product that fails inspection including returning to the vendor
where necessary.

Key Benefits

1. Define inspection plans

2. Maintain product quality
3. Reduce customer returns

C. Container Tracking

NetSuite's Inbound Shipment Management feature provides the ability to define and track
containers of goods as they make their way to you from your suppliers. Once the container
record has been created, you can use the intuitive Add PO Items screen to choose which of the
items from your open purchase orders are to be tracked. The status of the container can be easily
updated and monitored, and once received you can receive all of the PO Items at once.
Key Benefits

1. Centralised Container Tracking Record

2. Update/Receive All POs
3. Landed Cost Calculations

OUT-BOUND LOGISTICS

Outbound logistics, as the name suggests, is the collection, storage and distribution of the final
goods and related information flows, from the manufacturing plant to the end user. It covers all
those activities (i.e. selecting, organising, transporting, etc.) which are involved in the outflow of
merchandise from seller to the buyer.

Outbound logistics, in the case of a tangible item, can be warehousing, material handling,
inspection and transport, etc., but for intangible ones like services, it is associated with setting
for bringing customers to the service location.

INBOUND AND OUTBOUND LOGISTICS PROCESS (STEP-BY-

STEP GUIDE)

It is important to know the basics of an inbound and outbound process to better understand
how it affects the efficiency of your overall supply chain:
 A. The Inbound Process:
a. Recording and Receipts
Recording and receipts drive the inbound process. Receipts help supply chain professionals
ensure that each step in the process is completed and communicated with accuracy. Basic
receipts include item, quantity, unit of measurement, and other required information.
Elements that should be tracked throughout the inbound process include: lot numbers,
manufacturing dates, expiration dates, serial numbers, P.O. tracking, various inventory receipt
statuses, default receipt status rules, emergency re-direction, routing of times to special staging
on “short” inventories, immediate availability of items for backorders and cross-docks, and
more.
Pre-receipt notification is among the newer and exciting logistics services in use by supply
chain companies. This service speeds up the inbound process by reducing the amount of
information entered manually. The pre-receipt process allows for automation, real time receiving
and put away functions, reduction of receiving errors, and minimizes cost.
b. Load Arrival
Your receiving process should start immediately after pre-receipts have been loaded into
the WMS system.
However, with a highly functional WMS system (like the one BR Williams utilizes), product is
more than simply received. Within minutes, the system can make receipt/load appointments in
advance, or reserve docks, doors, and staging areas.
This preliminary inbound planning helps supply chain management companies become more
efficient when completing each logistics service. All receipt information should be already
entered with minimal human error. Due to this, when a receipt/load arrives, the warehouse
coordinator knows exactly which dock door to direct the truck, and then can easily assign an
unload staging area.

c. Receiving Real-Time Information

The “receipt” is handed to coordinators, already “bar-coded” with specific instructions for an
associate who can begin the receiving activities and real-time reporting.
Checking processes as you go ensures that the inbound process continues to run smoothly.
Automated systems used by your logistics and trucking companies should ensure that warehouse
associates are at the correct dock door and are unloading the correct shipment based on
information from the bar-coded receiver.
Once the inbound receipt and load arrival process is completed warehouse associates begin
detailed receiving. Types of receiving are different for each supply chain and trucking company.
BR Williams does detail receiving in two ways:
 One-Step Receiving: When customers benefit from eliminating the staging and have
their products sent directly to storage
 Two-Step Receiving: When the receipt/load needs to be staged instead of putting
directly into storage

d. License Plate Tracking

Having control over your moving product is just as important as having control during
storage and warehousing. Trucking companies know this, and have started allowing for their
license plate numbers to be tracked through WMS systems.
This is an important step in managing the entire inbound process, and will become necessary in
December, 2017 when ELD compliance becomes mandatory.
e. Put-Away and Receipt Close
In older systems, once the product was received, it was stocked only by professionals. This is
still true today in certain cases. However, new systems provide for other options and automation.
For example, BR Williams’ WMS system specifically allows customer configured settings that
help determine whether your product will be put-away using an operator-dictated or system-
directed method.
The final step for logistics and trucking companies involved in the inbound process is
updating in real time that the trailer or carrier has been emptied.
This is when real-time capabilities allow for review and exceptions.
The process speeds up when receipts and other information can be sent in real-time. It also
allows for docks to be immediately labeled “available” for other receipts/lead shipments.

B. The Outbound Process:

a. Order Entry, Adds, Changes, and Deletions
When the inbound process is handled correctly, it allows for an easier outbound process.
Order entry is similar to the pre-receipt process in the inbound process. The first steps of an
outbound system is to validate orders, check for errors or duplications, and handle
exceptions immediately.
Up to the point that line items are loaded onto an outbound trailer, customers should have the
ability to add, change, or delete specific items or entire orders.
Making these logistics services available to customers is the number one reason why real-time
reporting is crucial to the outbound process.

b. Replenishment and Product Picking

Replenishment is essentially planning for future deliveries by establishing pick pre-requisite
requirements and scheduling logistics services and activities to be completed before the
corresponding pick tasks.
This step allows for your supply chain to continuously operate with minimal manual planning
and strategy between steps.
The picking process can be simple or very complex. Your picking process should be unique due
to the nature of different businesses, industries, and clients.
Choose logistics and trucking companies that allow for tailored picking capabilities and
strategies.
Picking strategies may include:
 Order picking
 Line picking
 Cluster picking
 Batch picking
 Zone picking
 Label-based picking
 Paper-based picking

c. Packing, Staging, Checking, and Loading

Packing is arguably the most important logistics services involved in the outbound process. It
includes packing items, inspecting, labeling, routing and manifesting outbound orders per
specific customer requirements.
If this step isn’t managed flawlessly, completed shipments and arrival times can be compromised
and the reputation of the business will be at stake.
Staging locations should already be decided if an automated system is involved. While going
through the process of staging, checking and loading each step should be recorded in real-time
thorough WMS for accuracy and timeliness.
Once all shipments are loaded and ready to go, a warehouse coordinator should be automatically
updated, and a warehouse associate should be directed to load your order onto a trailer.

d. Shipping and Document Generation

The last step to a successful outbound process is shipping the product to its final arrival
place and creating a log of the process for your records.
This is another important reason to use trucking companies who utilize a WMS. If every step has
been recorded throughout the process, the final reporting is essentially already complete.

SUMMING UP

Logistics is an integral part of the supply chain management, which results in the timely delivery
of the goods and materials to the final destination. It aims at providing right goods, at given time,
in desired quantity and condition, at proper place and price.

Inbound logistics includes all the activities that are concerned with order placement to the
suppliers. On the other hand, outbound logistics covers all those activities that involve dealing or
trading in products produced by the company.

MODEL EXAMINATION QUESTIONS

 State the features of In-bound Logistics

 Note on Outbound Logistics
 Explain the in-bound & out-bound logistics process in detail
UNIT - 4 LONG AND CONTINENTAL
TRANSPORTATION – FEATURES OF LOGISTICS
TRANSPORTATION

STRUCTURE

4.1 Introduction
4.2 Selection Factors for Mode of Transportation
4.3 Modes of Transportation
4.4 Mixed Modes (Multi-modal / Intermodal Transportation)
4.5 Features of Transportation
4.6 Summing Up
4.7 Model Examination Questions

INTRODUCTION

A transport system, international or local, relates closely to the definition of large technological
systems: technological systems contain complex, problem solving components. The state of
transport system is a result of the measures and action carried out by the producers, and users of
the system. Producers and operators are organization or companies, which can be categorised
according to their main duties, such as policy formulation, infrastructure construction and
maintenance, production and operation of services for transport system, and production of
transport related services. Individual people, the whole population, are the users of the passenger
transport system (Tuominen, 2007).

SELECTION FACTORS FOR MODE OF TRANSPORTATION

 Cost: cost per mile is considered. Tariff charges, extra inventory, warehousing, buffer
stock, broker fees, customs are the contents of the cost.
  Transit Time: time from shipment of order at the origin to receipt of order at the
destination with security of goods is considered. System stops may jeopardize goods,
risks lessen when goods are in transit.
 Safety & Security: It ensures arrival of goods at destination in same condition as they
were perceived. Proper packing & rite selection at mode of transport should be done
carefully at avoid damage or theft.
 Reliability: It is meeting schedules on time as per requirements of the customer. Faster
the mode the reliability increases. But it has to be weighed against the cost.
 Speed: with this attribute door to door delivery time is considered. Time starts from
releasing product from supplier.
 Capabilities of Mode: Transporter should be in the position to deliver goods at any
remote place & should be able to transport huge & heavy loads also.
 Accessibility: In order to satisfy consumers, goods should be made available when they
are required & when they are desired. Mode of transportation should be such that it is
easily accessible.
 Characteristics of Goods: depending upon them physical nature of goods, the mode of
transportation should be selected.

MODES OF TRANSPORTATION

A. RAILROADS

Railroads transport a significant amount of domestic freight. Railroads has density low-valued
freight over long distances at lower rates than roads & air but higher than water & pipelines.

Their primary competitors include domestic water carriers for large bulky products & motor
products for higher valued goods. They lack flexibility & high speed delivery in standard
operations.

Advantages –

 High speed
 Large carrying capacity
 Suitable for long distance
 Safe & reliable
  Protection of goods
 Suitable for heavy & bulky products
 Economical
 Less pollution

Disadvantages –

 Huge capital expenditure

 Huge overheads costs
 Monopoly
 Lack of flexibility
 Not effective for small loads & short distances
 Secondary transportation is needed

B. ROADWAYS

It is ultimate mode of transport with highest flexibility. Main features is that it provides door to
door service. Some major problem areas are –

 Bad & unsafe road conditions

 Heavy traffic

Advantages –

 Less capital
 Door to door services
 Services to rural areas
 Flexible services
 Suitable for short distances
 Lesser rank of damage in transit
 Rapid speed
 Savings in packaging cost
 Feeder to other modes of transport

Disadvantages –

 Irregular & unreliable

  Not suitable for long distances
 Bad & unsafe roads leading to damages & breakages
 Lack of uniformity in rates
 Low speed
 Low capacity

C. WATER TRANSPORT

It dominates international transportations because of their cost structure & ability to transport
large volumes. Water carriers competes heavily with rail along certain routes & with pipelines
for movement of some products. Their cost structure & volume levels are such that they can
change very low rates. Initial cost of ship is significant but volume transported over useful life if
ship is so large that cost per unit is relatively low.

Advantages –

 Largest carrying capacity

 Long distance
 Protection of goods
 Cheapest mode of transport
 Flexible mode
 Major role in international trade

Disadvantages –

 Huge capital expenditure

 Huge overhead costs
 Slow speed
 Alliance needed
 Specialized packaging
 Not suitable for short distance
 Risk involved in bad environment conditions

D. PIPELINES
 Unique mode of transportations. They are fixed in place & product moves through them.
They can transport product only in liquid or gaseous state e.g.:- petroleum products
  They are cost effective where large quantities of liquid products need to be transported.
Pipelines are most dependable mode of delivery unaffected by external factors like
weather.
 They are fixed in place & the product moves through them. This limits the type of
products to be transported. They can transport products in liquid or gaseous state.
 They are cost effective where large quantities of liquid products need to be transported. It
is a continuous flow mode.
 This transportation is slow, rigid in terms of routes & product types & limited to
terminal-to-terminal service.
 The pipelines average speed is usually 2-5 miles per hour.

Advantages –

 Lower transit losses

 Safety & reliability
 Environmental friendly
 Reliable & continuous mode
 Cheapest mode of transport
 Lower operating & maintenance costs
 Low energy consumptions
 Not labor intensive

Disadvantages –

 Transports only liquid & gaseous form products

 Limited to certain geographical areas
 Highest fixed costs & lower variable costs among transport modes.

E. AIRWAYS

Fastest terminal-to-terminal mode of transportation. They specialize in time sensitive movement

of document, perishable items, etc. it has highest percentage of revenue coming from passenger
travel. Air freight services cost more than other modes. They transport small volume shipments
rather than large volume & packaged products rather than heavy bulk commodities.

Advantages –
  Quickest mode of transport
 Suitable for long distances
 Flexible
 Less damage to goods
 Quick services
 Easy access
 No physical barrier

Disadvantages –

 Narrow coverage
 Very costly due to fuel costs & labor intensity
 Risky
 Small carrying capacity
 Huge investments

F. ROPEWAYS
 Ropeways are used for transporting materials in hilly & other inaccessible areas.
 This mode is good when gradients (slope) is steep
 Ropeways connect point of supply & demand by shortest route.

Advantages –

 Transports bulk material over short distance

 Lower capital cost
 Ideal for hilly areas.

Disadvantages –

 Limited scope of operations

 Slowest mode of transport

FEATURES OF TRANSPORTATION

 Product Options - This feature is concerned with the number of different products that can
realistically be shipped using a certain mode. Some modes, such as pipeline, are very limited
 in the type of products that can be shipped while others, such as truck, can handle a wide-
range of products.
 Speed of Delivery - This refers to how quickly it takes products to move from the shipper’s
location to the buyer’s location.
 Accessibility – This transportation feature refers to whether the use of a mode can allow
final delivery to occur at the buyer’s desired location or whether the mode requires delivery
to be off-loaded onto other modes before arriving at the buyer’s destination. For example,
most deliveries made via air must be loaded onto other transportation modes, often trucks,
before they can be delivered to the final customer.
 Cost – The cost of shipment is evaluated in terms of the cost per item to cover some distance
(e.g., mile, kilometer). Often for large shipments of tangible products cost is measured in
terms of tons-per-mile or metric-tons-per-kilometer.
 Capacity – Refers to the amount of product that can be shipped at one time within one
transportation unit. The higher the capacity the more likely transportation cost can be spread
over more individual products leading to lower transportation cost per-item shipped.
 Intermodal Capable – Intermodal shipping occurs when two or more modes can be
combined in order to gain advantages offered by each mode. For instance, in an intermodal
method called piggybacking truck trailers are loaded onto railroad cars without the need to
unload the trailer. When the railroad car has reached a certain destination the truck trailers
are off-loaded onto trucks for delivery to the customer’s location.

SUMMING UP

The logistics services industry is defined as the obtaining, producing, and distributing of
materials and products in the right quantities to an end user or final destination. It includes the
science of planning, implementing, and managing procedures for the most efficient and effective
storage and transportation of goods as possible. Services and related information from the source
point to the consumer is sent through logistics to fulfill and meet customer demands.

The movement of people, goods, and animals from one location to another by air, rail, road, sea,
cable, space, or pipeline is known as transportation. Transportation services are divided into
three aspects: infrastructure, vehicles, and operations. Transportation is very important because it
allows communication and trade between two parties.
MODEL EXAMINATION QUESTIONS

1. Explain the factors responsible for selection of Mode of Transportation

2. Note on Airways
3. Note on Railways
4. Note on Roadways
5. State the features of transportation
BLOCK-III: RAILWAYS AND LOGISTICS
CONTOURS
In this block we will learn the following;

Unit 1 - Features and facilities offered by Railways- Factors influencing growth in Rail Logistics
– Suitability for different Cargo and distance Ranges segments

Unit 2 - Innovative schemes / facilities to popularize rail logistics in India. Railway

infrastructure in India and Freight movement

Unit 3 - Share of Railways in Cargo movement in India and world-wide. Railways and Logistics
Economics- Freight Determination for Cargo in Railways – Freight levels and rail-cargo
elasticity

Unit 4 - Route Scheduling – Cargo consolidation – Arrangements for pooling at rail head and
distribution from rail head – Dedicated Rail-sidings for Bulk users – Technology, Cost, Speed,
Security and Dynamics – Competition with other modes.
UNIT - 1 FEATURES AND FACILITIES OFFERED BY
RAILWAYS- FACTORS INFLUENCING GROWTH IN
RAIL LOGISTICS – SUITABILITY FOR DIFFERENT
CARGO AND DISTANCE RANGES SEGMENTS

STRUCTURE

1.1 Introduction
1.2 Features of Railways
1.3 Suitability of Rail Transport
1.4 Advantages of Railways
1.5 Disadvantages of Railways
1.6 Facilities offered by Railways
1.7 Factors Influencing Growth in Rail Logistics
1.8 Suitability for Different Cargo & Distance Ranges Segments
1.9 Summing Up
1.10 Model Examination Questions

INTRODUCTION

The railways have been the ‘pioneer of modern mechanical transport.’ The first Indian railway
rolled on its 34 km track Mumbai to Thane on April 16, 1853. Since its beginning and up to the
advent of motor transport, it enjoyed monopoly as land transport.

Railways have played a very significant role in the economic, social and political development
of many countries in the world. Though the railway requires a very huge capital outlay as
compared to other modes of transport, it is our principal means of transport. It carries about 70 to
80 percent of our total traffic of goods and people. The Indian railway system is the largest in
Asia and the fourth largest in the world. It is also the biggest public undertaking in the country.
FEATURES OF RAILWAYS

 Public Utility Service:

Railways provide an essential service to the public. It being a public utility service, requires
protection and investments by government.

 Monopoly:
Railways have monopoly in India. The rail transport is managed by the Railways Department of
the Central Government. No private operator is allowed to enter this transport sector.

 Huge Investments:

The railways require huge investments for purchase of land, laying of tracks, constructing
railway stations and sheds, buying automobiles, etc. No single individual can afford to make all
these investments.

 Privileges:
The railways require special privileges to provide efficient transport service. Railways’ require
special property rights for purchase of land, construction of bridges and railway lines.

 Special Rate Fixation:

The railways fix separate rate for passengers and goods traffic. The same rates are applicable to
all persons and all areas of the country. Rail services are available to all members or the public
on equal terms.

 Non-transferability:
Once the railway lines are laid down then these tracks cannot be used for any other purpose. So
railway services are non- transferable.

SUITABILITY OF RAIL TRANSPORT

Though rail transport has certain limitations, it plays a very significant role in the economic,
social and political development of a country.
The rail transport is particularly suited:
 For carrying heavy and bulky goods.
 For carrying cheap goods.
 For carrying passengers and goods (bulky and heavy) over long distances.

Rail-Road Competition:
Rail and road are the two most popular modes of land transport. A businessman has to choose
one mode of transport while sending goods to other destinations. The rapid progress of motor
transport has raised the problem of rail-road competition. Both the modes try to attract customers
towards them. The competition in these modes is not justified in the national interest.

Why is this competition not justified?

Though it is in the interest of trade and commerce that there should be a healthy competition
between rail and road but it is not in the interest of both the agencies. Both the means of
transport should not waste their energy in competing each other but should provide a
complementary role. Both should work jointly in economic uplift of the country by providing
efficient and cheap modes of transport.

Rail road Co-ordination:

There is need to co-ordinate the services of road transport and railways. The two modes should
be made to act as complementary to each other and not competitive to each other. Road transport
can act as a feeder to the rail transport. Both modes are suited to different; kinds of traffic and
they should act in such a manner so as to enable the traffic to go by that means of transport
which is the most economical in its carriage.

Co-ordination of transport brings about the following/advantages:

 Better utilization of scarce resources.
 Elimination of wasteful competition and the evils of cut-throat competition.
 Elimination of duplicate and overlapping services.
 Minimization of cost.
 Providing efficient transport services,
 Serving the vital national needs of the country,
 Economic development.
Methods of Co-ordination:
Basically, there are two ways of co-ordination:
 Positive measures taken by the government to direct the traffic one way or the other,
 Preventive or regulatory measures.
The various methods that can be employed to achieve co-ordination are:
 Integration of the two competing transport systems,
 Mutual co-operation and understanding between the two modes of transport,
 Inter-dependence of the two modes of transport.
 Legislative measures providing for systematic control and regulation of the activities of
the competing modes of transport.
 Nationalization of transport.

ADVANTAGES OF RAILWAYS

 Dependable:
The greatest advantage of the railway transport is that it is the most dependable mode of
transport as it is the least affected by weather conditions such as rains, fog etc. compared to other
modes of transport.

 Better Organised:
The rail transport is better organised than any other form of transport. It has fixed routes and
schedules. Its service is more certain, uniform and regular as compared to other modes of
transport.

 High Speed over Long Distances:

Its speed over long distances is more than any other mode of transport, except airways. Thus, it
is the best choice for long distance traffic.

 Suitable for Bulky and Heavy Goods:

Railway transport is economical, quicker and best suited for carrying heavy and bulky goods
over long distances.
  Cheaper Transport:
It is a cheaper mode of transport as compared to other modes of transport. Most of the working
expenses of railways are in the nature of fixed costs. Every increase in the railway traffic is
followed by a decrease in the average cost. Rail transport is economical in the use of labour also
as one driver and one guard are sufficient to carry much more load than the motor transport.

 Safety:
Railway is the safest form of transport. The chances of accidents and breakdowns of railways are
minimum as compared to other modes of transport. Moreover, the traffic can be protected from
the exposure to sun, rains, snow etc.

 Larger Capacity:
The carrying capacity of the railways is extremely large. Moreover, its capacity is elastic which
can easily be increased by adding more wagons.

Public Welfare:
It is the largest public undertaking in the country. Railways perform many public utility services.
Their charges are based on ‘charge what the traffic can bear’ principle which helps the poor. In
fact, it is national necessity.

 Administrative Facilities of Government:

Railways provide administrative facilities to the Government. The defence forces and the public
servants drive their mobility primarily from the railways.

 Employment Opportunities:
The railways provide greater employment opportunities for both skilled and unskilled labour.
Over 16 lakh persons are depending upon railways for their livelihood.

DISADVANTAGES OF RAILWAYS

 Huge Capital Outlay:

The railway requires is large investment of capital. The cost of construction, maintenance and
overhead expenses are very high as compared to other modes of transport. Moreover, the
investments are specific and immobile. In case the traffic is not sufficient, the investments may
mean wastage of huge resources.
  Lack of Flexibility:
Another disadvantage of railway transport is its inflexibility. Its routes and timings cannot be
adjusted to individual requirements.

 Lack of Door to Door Service:

Rail transport cannot provide door to door service as it is tied to a particular track. Intermediate
loading or unloading involves greater cost, more wear and tear and wastage of time.

The time and cost of terminal operations are a great disadvantage of rail transport.

 Monopoly:
As railways require huge capital outlay, they may give rise to monopolies and work against
public interest at large. Even if controlled and managed by the government, lack of competition
may breed inefficiency and high costs.

 Unsuitable for Short Distance and Small Loads:

Railway transport is unsuitable and uneconomical for short distance and small traffic of goods.

 Booking Formalities:
It involves much time and labour in booking and taking delivery of goods through railways as
compared to motor transport.

No Rural Service:
Because of huge capital requirements and traffic, railways cannot be operated economically in
rural areas. Thus, large rural areas have no railway service even today. This causes much
inconvenience to the people living in rural areas.

 Under-utilized Capacity:
The railway must have full load for its ideal and economic operation. As it has a very large
carrying capacity, under-utilization of its capacity, in most of the regions, is a great financial
problem and loss to the economy.

 Centralized Administration:
Being the public utility service railways have monopoly position and as such there is centralized
administration. Local authorities fail to meet the personal requirements of the people as
compared to roadways.
FACILITIES OFFERED BY RAILWAYS

Indian Railways have provided numerous facilities to rail passengers including the following:-
 Online ticket booking facility through Indian Railway Catering and Tourism Corporation
(IRCTC) website thereby obviating the need to stand in queues at reservation counters.
 Reserved and unreserved ticket booking facility through mobile phones.
 Provision of Automatic Ticket Vending Machines (ATVMs) at Railway stations for
dispensation of tickets.
 Installation of Point of Sale (POS) machines at various locations of Indian Railways for
enabling cashless transactions.
 Earmarking of separate counters at various Computerised Passenger Reservation System
(PRS) centres for dealing with the reservation requisitions received from physically
challenged persons, senior citizens, ladies, Ex.MPs, MLAs, accredited press
correspondents and freedom fighters.
 Automatic preparation of reservation charts at least 4 hours before scheduled departure of
train and thereafter booking of available accommodation through internet as well as
through PRS counters.
 Dissemination of information about change in passenger’s reservation status in the case
of Waiting list/RAC to confirmed, cancellation of trains through SMS.
 Cancellation of Computerised Passenger Reservation System (PRS) counter tickets
through IRCTC website or through 139.
 Automatic refund to e-ticket holders in case of cancellation of trains.
 Introduction of Alternate Train Accommodation Scheme ‘VIKALP’ to provide
confirmed accommodation to waitlisted passengers and optimal utilisation of available
accommodation.
 Increase in number of berths earmarked as RAC to accommodate more passengers.
 Enhancement of the existing combined quota earmarked for Senior Citizens, pregnant
women and female passengers 45 years of age and above to 6 lower berths per coach in
Sleeper, 3 lower berths per coach in 3AC and 3 lower berths per coach in 2AC class.
Further, in Rajdhani, Duronto and fully Air Conditioned/ Express trains, the number of
lower berths has been increased to 4 lower berths per coach.
 Introduction of Sarathi Seva to help old and disabled passengers requiring assistance at
the station and strengthen the existing services for enabling passengers to book Battery
 Operated Card (BOC), porter services etc. on a paid basis in addition to the existing pick
up and drop and wheelchair services.
 Provision of Yatri Mitra Sewa at major stations for enabling passengers to book
wheelchair services cum porter services.
 Provision of cushioned seats in General Second class coaches, bottle holder and snack
table in non-air conditioned Sleeper Class coaches, dustbins in Non-AC coaches, Braille
signages in coaches, mugs with chain in Non-AC coaches, toilet in the newly
manufactured DEMU/MEMU coaches, etc.
 Station-based e-catering services have been introduced and at present, available on 357
stations.
 1100 Water Vending Machines have been installed at 345 stations for providing pure
drinking water to travelling passengers.
 To mitigate the hardships faced by mothers while travelling with infants, Janani Sewa
has been introduced to make available baby foods, hot milk and hot water.

FACTORS INFLUENCING GROWTH IN RAIL LOGISTICS

 Geographical factors:
The North Indian plain with its level land, high density of population and rich agriculture
presents the most favourable conditions for the development of railways. However, the presence
of large number of rivers makes it necessary to construct bridges which involve heavy
expenditure.

There are practically no railways in the flood plains of many rivers in Bihar and Assam. The
plateau region of south India is not as much suitable for railways as the North Plain area. The
Himalayan region in the north is almost entirely devoid of railways due to its rugged topography.

Some railway terminals such as Jammu Tawi, Kotdwar, Dehra Dun, Kathgodam, etc. are found
on the foothills. Some narrow gauge railway tracks are found in the Himalayan region. A
railway link between Jammu and Kashmir valley is being planned at a very high cost. The sandy
areas of Rajasthan are also not much favourable for railways.
There was no railway line between Jodhpur and Jaisalmer till 1966. Similarly, forested areas of
Madhya Pradesh and Orissa, deltaic swamps of West Bengal, marshy areas of Rann of Kachchh
and hilly tract of Sahyadri are also unfavourable for the development of railways.

Sahyadri can only be crossed through gaps like Thalghat, Bhorghat and Palghat to reach coastal
trail heads like Mumbai, Vasco-de-Gama, Mangalore and Kochi. Obviously, the railways tend to
follow the path of least resistance.

 Economic factors:
Railways develop more in the economically advanced areas where the need for railway network
is felt more. Conversely, railways bring economic prosperity to the areas through which they
pass. This is because of the economic linkages that we find the highest density of railways near
big urban and industrial centres and in areas which are rich in mineral and agricultural resources.

 Political and Administrative factors:

The present railway system in India is the legacy of the British rule. The British administration
planned the direction and pattern of the railway lines in such a way that they could exploit the
valuable raw materials of India for the benefit of their industries and flood the Indian markets
with the finished goods from Britain.

Besides, the Britishers wanted to maintain their military supremacy, for which quick movement
of troops and arms was necessary and construction of railways became unavoidable. Thus, top
priority was given to the big ports of Mumbai, Kolkata and Chennai. These ports were connected
with their hinterlands by railway lines to facilitate imports and exports. It is from the ports that
the railway network spread to the other parts of the country.

SUITABILITY FOR DIFFERENT CARGO AND DISTANCE

RANGES SEGMENTS

 Metro rail: this is an underground railway system in a city; it covers a smaller inner-
urban area ranging outwards to between 12 km to 20 km (8 to 14 miles). The usual
British word for the underground railway system in London is the tube. The American
word is subway.
 Milk run: this is a type train journey with stops at many places before reaching the
actual destination.
 Mono rail: a railway system in which trains travel on a single metal track.
 Overground rail: in this case, the train travels on the surface of the ground, rather than
in tunnels underground.
 Passenger train: this type of train only carries passengers and not freight.
 Freight train: it is a train that carries only goods.
 Light railway: it is a railway for small trains, usually one that people ride on
for pleasure.
 Eurostar: It is a fast train that travels between Britain, France, and
Belgium using the Channel Tunnel.
 Cable rail: this railway is usually attached to a cable by which it is pulled up a mountain.
 Boat train: a train that takes passengers to a port where they can continue their journey
by ship, or a train that takes them from a port to a town or city
 People mover: it is a simple railway system, usually in a place such as an airport or a
theme park.
 Commuter rail: this is also called suburban rail, it is a passenger rail transport service
that primarily operates between a city center and middle to outer suburbs beyond 15 km
(10 miles) and commuter towns or other locations that draw large numbers of commuters
people who travel on a daily basis.
 Inter-city rail- this is a
fast rails that travels between major cities without stopping at small towns in between.
 Funicular rail: this is a railway with carriages that are pulled up a steep slope by a cable.
 High-speed rail- this refers to passenger rail systems running at operational speed
between 200 and 300 km/h, and above in some cases, it is significantly faster than
traditional rail traffic, using an integrated system of specialized rolling stock and
dedicated tracks.
 Regional rails: these are passenger rail services that travel between towns and cities,
rather than purely linking major population hubs the way inter-city rail does. These trains
operate with more stops over shorter distances than inter-city rail, but fewer stops and
faster service than commuter rail.
SUMMING UP

Rail transport has emerged as one of the most dependable modes of transport in terms of safety.
Trains are fast and the least affected by usual weather turbulences like rain or fog, compared to
other transport mechanisms. Rail transport is better organised than any other medium of
transport. It has fixed routes and schedules. Its services are more certain, uniform and regular
compared to other modes of transport. Rail transport originated from human hauled contraptions
in ancient Greece. Now it has evolved into a modern, complex and sophisticated system used
both in urban and cross-country (and continent) networks over long distances.

Rail transport is an enabler of economic progress, used to mobilise goods as well as people.
Adaptations include passenger railways, underground (or over ground) urban metro railways and
goods carriages. Rail transport has some constraints and limitations also. One of the biggest
constraints of rail transport is heavy cost. Trains need high capital to build and maintain and the
cost is magnified when a whole rail network is to be built. The cost of construction, maintenance
and overhead expenses are very high compared to other modes of transport. Also, rail transport
cannot provide door-to-door service as it is tied to a particular track. Intermediate loading or
unloading involves greater cost, more wear and tear and wastage of time.

MODEL EXAMINATION QUESTIONS

1. State the features of railways in details

2. Explain the Suitability Factors of Rail Transport
3. Elaborate the Advantages & Disadvantages of Railways
4. Explain in detail the facilities offered by Railways
5. State the reason influencing the growth in Rail Logistics
6. State the Suitability for Different Cargo & Distance Ranges Segments in Rail Logistics
UNIT - 2 INNOVATIVE SCHEMES / FACILITIES TO
POPULARIZE RAIL LOGISTICS IN INDIA RAILWAY
INFRASTRUCTURE IN INDIA AND FREIGHT
MOVEMENT

STRUCTURE

2.1 Introduction
2.2 Market Size of Indian Railways
2.3 Investment / Developments in Indian Railways
2.4 Government Initiatives Taken for Indian Railways
2.5 Innovative Schemes to Popularize Rail Logistics in Indian Railways
2.6 FDI in Indian Railways
2.7 Rail Freight Transport
2.8 Future of Indian Railways
2.9 Summing Up
2.10 Model Examination Questions

INTRODUCTION

The Indian Railways is among the world’s largest rail networks. The Indian Railways route
length network is spread over 115,000 km, with 12,617 passenger trains and 7,421 freight trains
each day from 7,349 stations plying 23 million travellers and 3 million tonnes (MT) of freight
daily. India's railway network is recognised as one of the largest railway systems in the world
under single management.
The railway network is also ideal for long-distance travel and movement of bulk commodities,
apart from being an energy efficient and economic mode of conveyance and transport.
The Government of India has focused on investing on railway infrastructure by making investor-
friendly policies. It has moved quickly to enable Foreign Direct Investment (FDI) in railways to
improve infrastructure for freight and high-speed trains. At present, several domestic and foreign
companies are also looking to invest in Indian rail projects.

MARKET SIZE OF INDIAN RAILWAYS

During April-February 2017-18, the passenger traffic of Indian Railways reached 7.58 billion.
The overall revenue of Indian Railways stood at US$ 23.63 billion during April-February 2017-
18. The passenger earnings grew to US$ 6.8 billion and the freight earnings grew to US$ 15.6
billion during the same period.

INVESTMENTS/ DEVELOPMENTS IN INDIAN RAILWAYS

Foreign Direct Investment (FDI) inflows into Railways related components from April 2000 to
December 2017 were US$ 897.09 million.
Following are some of the major investments and developments in India’s railways sector:

 A plan for redevelopment of Surat's railway station will soon be announced requiring a
total expenditure of Rs 4,650 crore (US$ 715.12 million).
 The Indian Railways is planning to invest around Rs 3,000 crore (US$ 461.08 million) to
convert 40 out of its 100 yards into smart yards and end manual inspections.

GOVERNMENT INITIATIVES TAKEN FOR INDIAN

RAILWAYS

Few recent initiatives taken up by the Government are:

 The Government of India is going to come up with a ‘National Rail Plan’ which will
enable the country to integrate its rail network with other modes of transport and develop
a multi-modal transportation network.
 The Ministry of Railways, Government of India, has launched the Smart Freight
Operation Optimisation & Real Time Information (SFOORTI) application to optimise
freight operations and manage traffic flows.
 A 'New Online Vendor Registration System' has been launched by the Research Designs
& Standards Organisation (RDSO), which is the research arm of Indian Railways, in
order to have digital and transparent systems and procedures.
 Indian Railways is planning to standardise the number of coaches in trains to 22 or less
which will lead to running of more trains, according to Mr Piyush Goyal, Minister of
Railways.
 Indian Railways is targeting to increase its freight traffic to 3 billion tonnes by 2030 and
have a 50 per cent share in overall goods movement.
 The Ministry of Railways is set to overhaul the US$ 15.61 billion station redevelopment
plan to increase the lease period for developers to 99 years, which is expected to give the
real estate sector a boost.
 India's first National Rail and Transportation University which will be set up in Vadodara
has been approved by the Union Cabinet, Government of India, to skill Indian railways'
human resources and build capacity.
 The Government of India has signed an agreement with the Government of Japan under
which Japan will help India in the implementation of the Mumbai-Ahmedabad high
speed rail corridor along with a financial assistance that would cover 81 per cent of the
total project cost.
 To enhance transparency in the processing and settlement of bills, Indian Railways has
come up with a new bill tracking system for contractors/vendors of Indian Railways to
track status of their bills.
 The cumulative savings of Indian Railways due to procurement of power under open
access arrangements reached Rs 5,636 crore (US$ 869.8 million) during April 2015 -
October 2017 and are estimated to reach Rs 41,000 crore (US$ 6.3 billion) by 2025.
 The Indian Railways has planned to phase out diesel locomotives over the next five years
and replace them with electric ones, which will help them save about Rs 11,500 crore
(US$ 1.78 billion) yearly, stated Mr Piyush Goyal, Minister of Railways, Government of
India.
 With the aim of boosting connectivity between India and Bangladesh, Mr Narendra
Modi, Prime Minister of India, and Ms Sheikh Hasina, Prime Minister of Bangladesh,
launched various connectivity projects including a new passenger train service between
Kolkata and Khulna.
  To boost the industrial infrastructure of Chhattisgarh, the state government, in a joint
venture with Indian Railways, has decided to build two fully electrified rail corridors
worth Rs 10,000 crore (US$ 1.54 billion).
 Indian Railways has put forward a global tender for obtaining 700,000 metric tonnes of
railway track for improving track safety, as per Mr Piyush Goyal, Minister of Railways
and Coal, Government of India.

INNOVATIVE SCHEMES TO POPULARIZE RAIL LOGISTICS

IN INDIA RAILWAY

A. Virtual Ticketing Agents

Ticketing has been amongst the most innovative areas within rail and metro, perhaps most
visible in smart-card systems overtaking paper tickets in a growing number of the world’s
transport networks. The next development could well be Virtual Agents, essentially an at station
computer offering a combination of ticket office, vending machine and call centre. A passenger
using the Virtual Agent is able to talk a ‘real person’ in ‘real time’ offering a similar experience
to being a the ticket window except over a video link. The ticket agent you speak to would be
likely at a central ticket office hub.
For rail companies this would enable a central pool of staff to be deployed across the network
and be able to be focussed at certain peak times. It would also potentially offer the opportunity to
offer ticket advice in different languages and even link staff from quiet stations into helping at
busier stations at peak times. For passengers it offers a human contact but also the immediacy
and speed of a ticket machine. Challenges for this service exist, not least ensuring a
communications infrastructure exists that can support non-stop video calls but with virtual
ticketing agents already being trialled by Deutsche Bahn this is a technology likely to begin
being seen at major stations soon.

B. Li-Fi
The development of Wi-Fi within rail and metro within transit is well documented and is a
service offered on many trains and at stations around the world. But a new technology, Li-Fi,
could well soon supersede it and become the future of mobile internet. Li-Fi, transmits data
using the spectrum of visible light and many experts claim this leads to reduced costs and greater
efficiency to traditional Wi-Fi. Wi-Fi and Li-Fi both transmit data over the electromagnetic
spectrum, but whereas Wi-Fi uses radio waves, Li-Fi uses visible light. As visible light is far
more plentiful than the radio spectrum its believed it can achieve far greater data density and
provide a better service.
This technology is appealing for railways and metros not only for the opportunity if offers
passengers to better access web-based material and enjoy a greater array on on-board or at-
station infotainment but also from an operational point of view as Li-Fi by not using radio
frequencies poses no risk of interfering with mission critical electronic circuitry. This is still a
developing technology and questions still remain over line of sight and issues of delivery but if
executed fully can offer a major opportunity.

C. Big Data and rail

A major buzzword for many industries but a development with real potential for the rail and
metro industry. Big Data, defined here as a massive volume of both structured and unstructured
data that is so large that it’s difficult to process using traditional techniques. The harvesting of
such data has two major areas of potential for rail and metro. Smarter train communication
through wireless signalling enables operators to constantly receive data from trains and more
effectively monitor performance and highlight potential problems or maintenance requirements
earlier. This can diminish the time trains are out of service and limit passenger disruption.
In addition, the development of smartcards and CRM systems have enabled operators to gather a
huge amount of data on their passengers for the first time. This enables operators to gain a
deeper insight into behavioral and movement patterns and make smarter and more efficient
choices accordingly. Not only on an operational level e.g. staff deployment or passenger station
flow management but also in improving customer service and making marketing more targeted.

D. Ticketless Travel
The recent announcement that Transport for London (TfL) will soon be offering London and
underground passengers the opportunity to use their bank cards for ticketless travel is the
strongest yet development in this sector from one of the most influential operators. Passengers
on buses in London can already use their bank card instead of the Oyster smartcard or cash.
A number of solutions are now available for the use of bank cards acting as ticketless solution on
rail and metro including EMV band cards (Europay, MasterCard and Visa), and Barclaycard’s
PayTag stickers.
Many commentators see the main development in ticketless travel coming from smartphones
eventually replacing completely the need for season tickets and smartcards with NFC (Near
Field Communication) technology already built into many smartphones and not being deployed.
One question that this does raise is where does this lead smartcards? They are still very attractive
to operators as not only do they maintain a stored value, so the operator has your money before
your travel but they can also be read very quickly at barriers and gates and help to build up a
significant data picture. No doubt the technology will soon be able to answer these questions
though!

E. High-Speed and Hyper-Speed Rail

For anyone reading this in the United Kingdom or California they will be well versed in
arguments about the development of high-speed rail but we could soon be entering the world of
hyper-speed rail travel. High-speed rail has already revolutionized national and international
transportation in many parts of the world, in particular in Japan, China and continental Europe.
And now plans are being developed to go even faster.
Earlier this year, few will have escaped the media coverage of Elon Musk’s ‘Hyperloop’, a
innovative new form of transportation, consisting of an elevated, reduced-pressure tube that
contains pressurized capsules driven within the tube by a number of electric motors, Musk
claimed it would “never crash, be immune to weather, go twice as fast as an airplane, four times
as fast as a bullet train, and – to top it off – run completely on solar power.” Whilst the
Hyperloop may currently lack the financial or political will to make it a reality there’s no doubt
that super high-speed rail is a reality.
In China, the Shanghai Maglev Train has been in operation since 2003 and has been recorded at
a top speed of 311 mph, Japan’s famed bullet train, the Shinkansen runs on a high-speed network
of over 1400 miles hitting speeds of up to 275mph and in Europe, France’s TGV Réseau which
generally runs at 199mph has been serving passengers since 1992. The slow but continued
growth of High-Speed rail not only opens up a host of further technical developments but offers
a strong countermeasure to other forms of transport.

F. Ergonomic station design

With passenger numbers generally increasing and demands and expectations changing, the
modern train station is changing and offers a host of potential developments for passengers.
Ensuring that large numbers of travellers can move freely and efficiently to, through and from a
station is essential to maintaining the operational effectiveness of the transport system as a
whole.
Station developments now consider ergonomic and human factors, in particular looking in a
scientific way at people and their needs, and then providing analytical evidence based on
psychological, behavioural and physical factors to improve experiences. For example, in the
development of stations experts can be used to analyse passenger movement and behaviour and
then plan the station layout to encourage them to do the things you need them to do, for example
travelling one the correct side of the escalator or arriving at gate lines with their tickets ready.
Other areas of growth in this sector including the development of new technologies and smart
ticketing and also the place for retail and catering opportunities within the station.
Couple with Big Data and Smart Ticketing, ergonomic station design could create a new and
improved passenger experience at a station.

G. Rail Loyalty Schemes

Already a major part of business for the airline industry, passenger loyalty schemes – structured
marketing efforts that reward, and therefore encourage, loyal buying behaviour – are a
developing trend for rail and metro operators. The development of loyalty schemes has become
particularly important in deregulated markets where the passenger has a number of choices over
a particular route. It’s also been made possible by the development of smartcard technology and
data storage so it can be run more effectively and efficiently.
One of the most advanced rail loyalty schemes is run by East Coast in the UK, we asked Peter
Williams their Commercial and Customer Service Director for more information on this: “Our
loyalty scheme is called East Coast Rewards, which we launched in July 2011. It is a Points-
based scheme with points being able to be redeemed for a number of rewards from train travel
tickets, to cinema tickets, magazine subscriptions, hotel stays even WiFi or access to our First
Class lounges. We’d actually had a loyalty scheme before but it was a fairly antiquated system,
involving the physical sending in of tickets which was pretty labour intensive and only had a
limited membership. The development of our digital platforms has made East Coast Rewards
possible and it’s been a great success, with us exceeding our targets and we have plans for its
further development.”
With the growth of smarter and deeper data on passengers and greater competition the
development of loyalty schemes looks set to grow further.
 H. Passenger Entertainment
Once upon a time this extended no further than this morning’s newspaper or a well-thumbed
novel but modern rail is increasingly offering a host of options for passengers to be both
entertained and informed on board. Train passengers can now be offered films, TV programmes,
music, games and news either by fixed on-board video displays (similar to airlines) or via
Wireless to be watched on their own device. On example of this is NTV in Italy which offers an
on-board portal, Italolive, which enables passengers to watch TV, films, news and sport this is
again free and offered through our Wi-Fi service.
This development improves the passenger enjoyment of a journey, particularly a long-distance
one, bringing it on a par or even exceeding that of an airline trip. Not only does it create a more
positive passenger experience but it also potentially opens up opportunities for further revenue
generation by offering such entertainment as a paid for-service. Passenger entertainment is still
at a fairly formative stage for most providers but as the technology develops and becomes more
widespread it’s set to grow further.

I. Digital Signage
Signage at rail and metro stations has sometimes been a neglected area amidst the developments
happening around it. But now a series of changes has created a new opportunity for the growth
of this unglamorous but essential aspect of the industry and even in an era when mobile devices
are omnipresent the usage of digital signage continues to grow. The Transportation Research
Board recently published a report analysing its use and found that not only does it boost the
perception that the transit service is being improved but also reduces the perception of wait time
and highlighted how informed riders feel more safe and secure.
The slow but steady increase of colour signage and video is outlined by Michael Welsh of Data
Display: “A colour display offers a number of additional offerings to a traditional display –
operators can customize the colour to fit their colour scheme or to colour coordinate with a
particular line. It offers the capability to display a full colour video which opens up the
opportunity to potentially run advertisements whether for local tourist attractions, for visitors or
of a purely commercial nature. This in turn potentially opens up a new revenue stream for the
agency.”
The evolution of colourful digital signage which can run videos and adverts is a development
which can not only improve the passenger experience but also create additional revenue streams
and branding opportunities for operators. One to watch!
 J. 4G
The creation of mobile internet has revolutionised travel for rail passengers and development of
the 4G, the fourth generation of mobile communication technology standards will continue these
major changes.
Firstly, it’s expected that 4G would help end the limited and sometimes frustrating phone and
mobile internet coverage on-board trains. And the high-speed connection would help quicken the
pace of the roll-out of on-board passenger entertainment as it would enable the viewing of video
and streaming of music far quicker and on a more stable platform. In addition the widespread
use of 4G will further underline to passengers how easy and convenient mobile ticketing and on-
board e-commerce can be and would increase its usage.
The deployment of a 4G solution on rail and metro is not without obstacles, not least the rail
operators being able to access sufficient spectrum and how it would work alongside the existing
networks. But perhaps of all the features on this list, the development of 4G in our industry is the
most inevitable and maybe just the most important.

FDI POLICY IN RAILWAYS

100 % FDI is permitted through automatic route for construction, operation and maintenance
railway infrastructure since November 2014. Some of the key areas open for investments are:
 Suburban corridor projects through PPP,
 High speed train projects,
 Dedicated freight lines,
 Rolling stock including train sets, and locomotives/coaches manufacturing and
maintenance facilities,
 Railway Electrification,
 Signaling systems,
 Freight terminals,
 Passenger terminals,
 Infrastructure in industrial park pertaining to railway line/sidings including electrified
railway lines and connectivity to main railway line
 Mass Rapid Transport Systems.
RAIL FREIGHT TRANSPORT

Rail freight transport is the use of railroads and trains to transport cargo as opposed
to human passengers.

A freight train or goods train is a group of freight cars (US) or goods wagons (International
Union of Railways) hauled by one or more locomotives on a railway, transporting cargo all or
some of the way between the shipper and the intended destination as part of the logistics chain.
Trains may haul bulk material, intermodal containers, general freight or specialized freight in
purpose-designed cars. Rail freight practices and economics vary by country and region.

When considered in terms of ton-miles or tonne-kilometers hauled per unit of energy consumed,
rail transport can be more efficient than other means of transportation. Maximum economies are
typically realized with bulk commodities (e.g., coal), especially when hauled over long
distances. However, shipment by rail is not as flexible as by the highway, which has resulted in
much freight being hauled by truck, even over long distances. Moving goods by rail often
involves transshipment costs, particularly when the shipper or receiver lack direct rail access.
These costs may exceed that of operating the train itself, a factor that practices such
as containerization aim to minimize.

Rail freight by network, billion tonne-km (2010)

Network Gt-km Countries

North America 2863 U.S., Canada, Mexico

China 2451

Russia 2351 CIS + Finland, Mongolia

India 607

European Union 391 27 member countries

Brazil 269 includes Bolivia (1)

South Africa 115 includes Zimbabwe (1.6)

Australia 64

Japan 20

South Korea 10

In 2011, North American railroads operated 1,471,736 freight cars and 31,875 locomotives, with
215,985 employees, They originated 39.53 million carloads (averaging 63 tons each) and
generated $81.7 billion in freight revenue. The largest (Class 1) U.S. railroads carried 10.17
million intermodal containers and 1.72 million trailers. Intermodal traffic was 6.2% of tonnage
originated and 12.6% of revenue. The largest commodities were coal, chemicals, farm products,
nonmetallic minerals and intermodal. Coal alone was 43.3% of tonnage and 24.7% of revenue.
The average haul was 917 miles. Within the U.S. railroads carry 39.9% of freight by ton-mile,
followed by trucks (33.4%), oil pipelines (14.3%), barges (12%) and air (0.3%).

Railways carried 17.1% of EU freight in terms of tonne-km, compared to road transport (76.4%)
and inland waterways (6.5%)

FUTURE OF INDIAN RAILWAYS

The Indian Railway network is growing at a healthy rate. In the next five years, the Indian
railway market will be the third largest, accounting for 10 per cent of the global market. Indian
Railways, which is one of the country's biggest employers, can generate one million jobs,
according to Mr. Piyush Goyal, Union Minister for Railways and Coal.
In order to develop three new arms of Dedicated Freight Corridor (DFC) in the various regions
of the country, Indian government is planning to invest Rs. 3,30,000 crores ($50.98 billion).
Also, Indian Railways is planning to invest in order to adopt European Train Control Systems
(ETCS) which will help in the development of the infrastructural facilities.
SUMMING UP

Indian Railways is on the cusp of a dramatic transformation and this is your opportunity to play
a role in its advancement, and subsequently our nation’s economic growth. Sounds daunting?
We promise it isn’t. Indian Railways invites your submissions on how to raise money for the
Railways to provide better services. The goal is to encourage dialogue, refine ideas and put great
strategies to work. You get to make your mark on history. Besides there are incredible cash
prizes on the line.

The Challenge is designed as an online competition hosted at innovate.mygov.in providing

submission of original innovative solutions for ‘How to raise money for Railways to provide
better Services (Jan Bhagidari)’. The solution should include the idea, detail business plan,
implementation strategies for raising of money. The participants may particularly look at
opportunities of easy implement ability in the current system of Indian Railways.

MODEL EXAMINATION QUESTIONS

1. Elaborate on the Market Size of Indian Railways

2. Give details of the Investment / Developments in Indian Railways
3. Explain the Government Initiatives Taken for Indian Railways
4. Give a list of Innovative Schemes taken by Indian Railways
5. Note on Rail Freight Transport
UNIT - 3 SHARE OF RAILWAYS IN CARGO
MOVEMENT IN INDIA AND WORLD-WIDE.
RAILWAYS AND LOGISTICS ECONOMICS- FREIGHT
DETERMINATION FOR CARGO IN RAILWAYS –
FREIGHT LEVELS AND RAIL-CARGO ELASTICITY

STRUCTURE

2.11 Introduction
2.12 Market Size of Indian Railways

INDIA TRANSPORTATION

 Roads carry almost 85 percent of the country’s passenger traffic and more than 60
percent of its freight.
 Rail carried some 19.8 million passengers and 2.4 million tonnes of freight a day in year
2009 and is one of the world’s largest employers.
 Major improvements in the sector are therefore required to support the country's
continued economic growth and to reduce poverty.
India’s transport sector is large and diverse; it caters to the needs of 1.1 billion people. In 2007,
the sector contributed about 5.5 percent to the nation’s GDP, with road transportation
contributing the lion’s share.

Good physical connectivity in the urban and rural areas is essential for economic growth. Since
the early 1990s, India's growing economy has witnessed a rise in demand for transport
infrastructure and services.
However, the sector has not been able to keep pace with rising demand and is proving to be a
drag on the economy. Major improvements in the sector are therefore required to support the
country's continued economic growth and to reduce poverty.

Indian Railways is one of the largest railways under the single management. It carried some
19.8 million passengers and 2.4 million tonnes of freight a day in year 2009 and is one of the
world’s largest employer. The railways play a leading role in carrying passengers and cargo
across India’s vast territory. However, most of its major corridors have capacity constraint
requiring capacity enhancement plans.

Challenges

The railways are facing severe capacity constraints. All the country’s high-density rail corridors
face severe capacity constraints. Also, freight transportation costs by rail are much higher than in
most countries as freight tariffs in India have been kept high to subsidize passenger traffic.

Key Government Strategies

India’s Eleventh Five Year Plan identifies various deficits in transport sector which include
inadequate roads/highways, old technology, saturated routes and slow speed on railways,
inadequate berths and rail/road connectivity at ports and inadequate runways, aircraft handling
capacity, parking space and terminal building at airports. Government aims to modernize,
expand, and integrate the country's transport services. It also seeks to mobilize resources for this
purpose and to gradually shift the role of government from that of a producer to an enabler. In
recent years, the Government has made substantial efforts to tackle the sector’s shortcomings
and to reform its transport institutions. These include:

 Reducing the congestion on rail corridors along the highly trafficked Golden
Quadrilateral and improving port connectivity by launching the National Rail Vikas
Yojana (National Railway Development Program).
 The development of two Dedicated Freight Corridors from Mumbai to Delhi and
Ludhiana to Dankuni.
 Improving urban transport under Jawaharlal Nehru National Urban Renewal Mission
(JNNURM).
 Upgrading infrastructure and connectivity in the country's twelve major ports by
initiating the National Maritime Development Program (NMDP).
World Bank Support

The World Bank has been a major investor in the transport sector in India. At present, it has ten
projects in transport portfolio which include seven state road projects and one each for national
highway, rural road and urban transport with total loan commitments for the transport sector in
India as in June 2011 is US$5.9 billion spread over 14 project. The main activities include:

Eastern Dedicated Freight Corridor Project: The World Bank is financing, in the first phase, the
343 km Khurja to Kanpur section of total 1,800 km Eastern Dedicated Freight Corridor
(Ludhiana - Delhi-Mughal Sarai). The World Bank may finance a total of around 1,100 km of
the Eastern Dedicated Freight Corridor in three phases. It will also help develop the institutional
capacity of the Dedicated Freight Corridor Corporation (DFCCIL) to build and maintain the
DFC's infrastructure network.

FREIGHT TRAFFIC

Total freight transported (btkm - billion tonne km) Percentage shares

Year Road Rail Air Water Total Road Rail Air Water

1950-51 6.0 37.6 NA NA 43.6 13.8 86.2 NA NA

1960-61 14.0 72.3 NA NA 86.3 16.2 83.8 NA NA

1970-71 47.7 110.7 NA NA 158.4 30.1 69.9 NA NA

1980-81 90.9 147.7 NA NA 238.6 38.1 61.9 NA NA

1990-91 145.1 235.8 NA NA 380.9 38.1 61.9 NA NA

1999-2000 467.0 305.2 0.1 NA 772.3 60.5 39.5 0.018 NA

2000-01 494.0 312.4 0.1 1.5 808.0 61.1 38.7 0.018 0.2

2001-02 515.0 333.2 0.2 1.7 850.1 60.6 39.2 0.019 0.2
2002-03 545.0 353.2 0.2 1.7 900.1 60.5 39.2 0.018 0.2

2003-04 595.0 381.2 0.2 1.8 978.2 60.8 39.0 0.020 0.2

2004-05 646.0 407.4 0.2 2.1 1055.7 61.2 38.6 0.022 0.2

RELATIVE USE OF RAIL AND ROAD TRAFFIC

Freight Traffic Passenger Traffic

Year Freight Freight Total Freight Passenger Passenger Total Passenger
Rail % Road % Traffic Rail % Road % Traffic
(billion tonne- (billion
km) passenger-km)
1970-71 65.5 34.5 194.4 32.9 67.1 359.1
1973-74 61.5 38.5 199.1 31.6 68.4 427.6
1976-77 62.3 37.7 251.5 29.7 70.3 549.3
1979-80 54.6 45.4 285.8 27.9 72.1 710.4
1982-83 48.6 51.4 365.9 23.7 76.3 955.9
1985-86 48.7 51.3 422.7 22.2 77.8 1079.2
1988-89 48.0 52.0 505.0 23.0 77.0 1169.0
1999-2000 39.5 60.5 772.2 19.0 81.0 2262.3
2000-01 38.4 61.6 814.4 18.0 82.0 2532.5
2001-02 39.5 60.5 844.2 16.6 83.4 2963.8
2002-03 39.6 60.4 942.2 15.6 84.4 3299.5
2003-04 38.9 61.1 981.2 14.7 85.3 3676.6
2004-05 39.9 60.1 1020.4 13.3 86.7 3881.6
UNIT – 4 ROUTE SCHEDULING – CARGO
CONSOLIDATION – ARRANGEMENTS FOR POOLING
AT RAIL HEAD AND DISTRIBUTION FROM RAIL
HEAD – DEDICATED RAIL-SIDINGS FOR BULK
USERS – TECHNOLOGY, COST, SPEED, SECURITY
AND DYNAMICS – COMPETITION WITH OTHER
MODES

STRUCTURE

4.1 Route Scheduling For Indian Railways

4.2 Movement Of Bulk Commodities (Till 2011-12)
4.3 Zone Wise Sidings
4.4 How Technology Plays A Central Role In Indian Railways
4.5 High-Speed Rail In India
4.6 Security in Indian Railways
4.7 Comparison of Railways with Other Modes
4.8 Mixed Modes (Multi-modal / Intermodal Transportation)
4.9 Summing Up
4.10 Model Examination Questions

ROUTE SCHEDULING FOR INDIAN RAILWAYS

How to Find Train Schedule:

 Date: To find train time table click in the Date field to open the Calendar and select the
date on which you wish to travel.
  Source: Enter the name of the source location of your journey. For example, if you're
starting your journey from Delhi, enter Delhi. You will see the list of stations in that city
and can select the specific station from which you will be starting your journey.
 Destination: Enter the name of the destination location of your journey. For example, if
you're ending your journey in Mumbai, enter Mumbai. You will see the list of stations in
that city and can select the specific station at which you will be ending your journey.
 Press 'Go'.
 You will see a list of all the trains between the source and destination stations for that
particular day. The list includes information about the train number, train name,
departure time, arrival time, and the days of the week on which the train runs.
How to Find Train Route:
Enter either the train number or name in the field. You will see a list of options that match your
entry. Select your train name or number and press 'Go'. You will see a list with information on
station code, station name, route number, arrival time, departure time, halt time, distance, and
how many days the train runs.

 Trains Between Stations

 All the information that the user needs about all these different kinds of trains that
run between stations is now within his/her command. Our simple NDTV Rail Beeps
search will bring right in front of your screen, the details of the number of trains
running, operative days of the trains, train timings and a lot many more options. The
simple NDTV Rail Beeps is based on real time data from the Indian Railways with
results that are constantly updated.
 The NDTV Rail Beeps search is based from the latest Indian Railways and IRCTC
schedules. With accurate data of different train timetables, it will help the user plan
his/her travel much more efficiently.

 Find Trains Between Stations Quickly

The process to find the trains between stations is, as mentioned before, very simple. Using
NDTV Rail Beeps search makes the entire process of finding where to travel, how to travel and
when to travel, very simple. Here is how to go about it in just three simple steps.

 STEP 1: There are two search boxes. The user has to simply type the names of the
two stations in them.
  STEP 2: When you write the name of the station, a drop-down menu will provide you
with one or more options of the station name and the station code. Simply select the
station you want. For Ex: On typing New Delhi, the drop-down menu will display
the option: “NEW DELHI (NDLS)”.
 STEP 3: After selecting the station name and station code of two stations, simply
select the date of journey and then hit the “Enter” key on your keyboard or click on
the “Search Train” option.
After you complete the above process, the following search results will appear:
 Number of trains running between the two selected stations
 Indian Railway train codes/ Train Numbers
 Train names
 The train station of origin
 Scheduled Departure time
 Scheduled Arrival time
 The Weekly Schedule of the trains (Number of days the trains run in a week)
 The Travel Class: AC, Chair Car, Sleeper, etc
With the increasing demand of getting information at your fingertips, here is the amazing ability
to see trains between stations at your command, whenever you need it. And the whole process to
get the information you want is very simple and completely hassle-free. The Indian Railways is
the fourth largest railway networks in the world with 1,15,000 kms of tracks over a 65,000 kms
of distance and a revenue of around Rs 1.7 trillion. All of this because around 20 million
passengers travel every day in the Indian railways!

Not only this, but in 2015-16, an average of 13,313 passenger trains ran daily. The 13,313 trains
were estimated to have carried around an estimated 22 million passengers every single day. The
Indian Railways also have over 70,000 passenger coaches with more than 11,000 locomotives.

To cover so much ground, trains travel all across India between many stations. Because of the
vast network of railways, there is a huge demand to travel. And since there is a huge demand to
travel in today’s age of rapid advancement in technology, a huge information database for trains
between stations is the need of the hour. Especially a reliable database that has information on
all the different trains between stations all across India and which is also easily accessible
without any difficulties.
  Now, Information Enquiry For All National Trains Is Easy
What is also important is to get to know the trains between all the stations in an easy, user-
friendly manner, as over-complicated steps should not turn away the user. Fortunately, with the
way technology has progressed, gone are the times when one had to physically go to a railway
station to find out information about all the different trains or even use phones to call up the
railway stations and ask for information.

With the spread of the internet, it has now become extremely easy to access all the information
one needs on all the important trains running through the entire railway network.
 Database of Trains In Indian Railways
There are a vast number of trains that run between important stations. All metropolitan cities as
well as almost all other cities, towns and villages are covered in the entire length and breadth of
the country’s railway network!

There are also a vast number of trains that run across the country every day. It is important that
the database accurately covers all the trains that run across all the different stations. Any small
error can lead to a huge loss for the user, which is unacceptable.

There are a large number of trains that are searched about daily by users who need to travel
between many important stations. The many types of trains are the Rajdhani, Superfast trains,
Duronto, Shatabdi, passenger trains, mail express trains and the local trains that run in the metro
city of Mumbai.

 Mumbai Local
The Mumbai Local trains are the most famous of the local trains because of the large volume of
people who travel across the length and breadth of the huge city of Mumbai. It is also the oldest
mode of transport in the mega city of Mumbai.

 Luxury Trains
Apart from local trains and passenger trains, there are luxury trains too. Those passengers who
wish to avail premium travel would also like information on such trains. These trains have a
special travel circuit and they travel between important stations where there are many different
tourist spots and they also stop at many different heritage spots as well.

Some of these luxury trains include the Maharajas Express, the Golden Chariot, the Deccan
Odyssey and perhaps the most famous of all the luxury trains, the Palace On Wheels.
The trains are specially designed to reflect the utmost luxury to the passengers who choose to
travel on these trains.

 Garib Rath
Apart from the luxury trains, the Garib Rath is also a special, one-of-a-kind train. These trains
have reduced fares to make train travel more affordable for those less fortunate. The Garib Rath
trains are also super fast trains which also have Air Conditioned coaches as well, so that
passengers travel with the least inconvenience. The Garib Rath beats the speeds of some express
trains and some super fast trains too!

 Duronto Express
This is one of the fastest trains in India. The Duronto Express trains are parallel to the Rajdhani
and Shatabdi trains when it comes to their speed! The Duronto trains have a special ability in
that they are only connected to all the major capital cities of the country and the fact that they are
long-distance trains allows them to complete long distances between major stations in very short
times.

 Some Interesting Facts of Trains Between Stations

With such a vast network of railway lines, there are a number of interesting facts about the
different trains between stations that are sure to be of interest.

For example, the shortest distance that is covered between two successive stations is just 3 kms.
The 3 kms long distance is between Nagpur station and Ajni station.

In contrast, the longest distance that is covered by a train is 4,273 kms. The distance is between
the stations of Dibrugarh and Kanyakumari and the train that covers it is called the Vivek
Express.

The station with the longest name is “Venkatanarasimharajuvaripeta” in Andhra Pradesh while
the one with the smallest station name is “Ib” in Odisha.

The Trivandrum-Hazrat Nizamuddin Rajdhani Express train covers a distance of 528 kms
without stopping!
MOVEMENT OF BULK COMMODITIES (TILL 2011-12)

Commodity 2007-08 2008-09 2009-10 2010-11 2011-12

MT % MT % MT % MT % MT %
Coal 336.83 42.43 369.63 44.35 369.15 44.62 420.37 45.61 455.81 47.04
Food grains 38.23 4.82 35.51 4.26 38.96 4.36 43.45 4.71 46.40 4.79
Iron & Steel 25.79 3.25 28.58 3.43 31.85 3.59 32.82 3.56 35.15 3.63
Iron ore 136.69 17.22 130.58 15.67 132.74 14.95 118.46 12.85 104.70 10.80
Cement 78.99 9.95 86.24 10.35 93.15 10.49 99.08 10.75 107.66 11.11
POL 35.88 4.52 38.08 4.57 38.88 4.38 39.29 4.26 39.77 4.10
Fertilizers 35.83 4.51 41.35 4.96 43.68 4.92 48.22 5.23 52.69 5.44
Lime stone 14.14 1.78 13.34 1.60 14.77 1.66 16.37 1.78 17.66 1.82
&
Dolomite
Stones(Incl. 13.92 1.75 10.48 1.26 11.44 1.29 11.66 1.27 12.96 1.34
Salt 4.62 0.58 4.83 0.58 4.76 0.54 4.64 0.50 5.14 0.53
Sugar 5.98 0.75 4.36 0.52 3.97 0.45 3.76 0.41 4.56 0.47
Sub Total 726.90 91.56 762.98 91.55 810.08 91.25 838.12 90.93 882.50 91.07
Commodities 66.99 8.44 70.41 8.45 77.71 8.75 83.61 9.07 86.55 8.93
other than
above
Grand Total 793.89 100 833.39 100 887.79 100 921.73 100 969.05 100

Source: NewItem_216_Report_Invent_RailwaySidings

ZONE WISE SIDINGS

The total 859 sidings are operational in India.

NUMBER OF SIDINGS IN INDIA

SI. Zonal Railway Headquarter No. of sidings

1 Central Railway (CR) Mumbai(CSTM) 71

2 Western Railway (WR) Mumbai(CCG) 52

3 Southern Railway (SR) Chennai 76

Eastern Railway (ER) Kolkata 57

4

5 Northern Railway (NR) New Delhi 104

 6 East Central Railway (ECR) Hazipur 74

7 East Coast Railway (ECOR) Bhubneshwar 56

North Central Railway (NCR) Allahabad 29

8

9 North Eastern Railway (NER) Gorakhpur 5

10 Northeast Frontier Railway (NFR) Maligaon (Guwahati) 20

11 North Western Railway (NWR) Jaipur 15

South Central Railway (SCR) Secundrabad 79

12

13 South Eastern Railway (SER) Kolkata 68

14 South Western Railway (SWR) Hubli 32

15 South East Central Railway (SECR) Bilaspur 84

West Central Railway (WCR) Jabalpur 37

16

17 Kolkata Metro Kolkata Nil

Total 859

Commodities Handled at Sidings

As mentioned earlier in section 3.2, the major commodities handled by IR’s are Coal, Iron
Ore, Food grains, Cement, Petroleum products, Fertilizer and Containerized Traffic.
Hence, nine categories of commodities have beenselected for study and analysis
purpose. These nine categories of commodities are Coal, Minerals, Cement, Food
Grains, Fertilizer, Petroleum Oil & Lubricants (POL), Industrial (Engineering)
materials, Containers and common except (POL). The sidings may not restrict to a
particular commodityonly. The data reflects that major commodities are handled at a
particular siding is considered for the study.
HOW TECHNOLOGY PLAYS A CENTRAL ROLE IN INDIAN
RAILWAYS

Operation of railway services has progressed a lot since the advent of the first locomotive.
Railways is the most preferred mode of transport for more than 70% of the population. With
changing times, railway operations and services have developed with better orientation towards
customers. Management of railways, ticketing systems and availability of services are now
developed to be stronger catering to the need of larger customers.

The need of railways has become impervious with growing population and especially in a
country such as India, expansion as well as improvement of railways is a necessity. In Indian
context, the existent railway infrastructure seems to be lackadaisical with number of
inadequacies in service and satisfaction. Even though technological advancements are integrated
in the system, ICT (Information and Communications Technology) is to be utilized more
pervasively.

Information and communication technology has had a central role in railways right from its
inception. Since the beginning, telephone and communication lines were carried along railway
routes, as communication was crucial in railway operations. Even in modern times, improvement
of railway services and operations is difficult without integration of strong IT systems. Railway
systems have improved in various fronts with extensive usage of ICT. Some of the most
important advancements are in fields of Security, Operations, Customer Services and access to
railway services.

Security is paramount in railway operations; on it depends the lives of millions of commuters.

There are examples of many tragic accidents of trains where thousands lost their lives, some of
which happened because of communication lapse and technical glitches in the system. A secure
network, aided by excellent communication systems, is indispensable to guarantee security in
railway transportation. Utilization of high capacity digital technology with comprehensive set of
functionalities has now become the heart of modern rail operations. New technologies such as
high bandwidth systems and IP based networks are being developed for strengthening safety and
security features in railways. Voice data and train control messages are critical for strong
security. IP and Ethernet technologies are bringing in new aspects of secured railway networks.
These systems are the backbone of alarm systems, Video surveillance, and remote access
monitoring and equipment telemetry. Advancement of ICT has developed the overall operations
within railway management. Railway systems based on IP and MPLS Networks enables delivery
of diverse modes of communication and traffic. Such system facilitates developed mode of
operations within the system for better performance of railway traffic. The system can be
integrated to improve various aspects such as site access control, Video surveillance, remote
access monitoring and equipment telemetry and so on. Corporate LAN networks integrated with
public address systems can be created using advanced ICT. RFID based freight consignment
tracking can be implemented improving railway freight services.

One of the most important contributions of ICT in railways is in the domain of customer service
and access to information. Railway systems are integrated with efficient and real-time frontend
IT platforms for improvised customer services. Modern railway systems have to deal with
massive commuters and an increasing transportation of goods. Moreover, the need of better
services has increased with the requirement of more pervasive railway services. Real time
information system is a crucial aspect of customer service. Passenger inquiry about availability
of trains, arrival and departure schedules at stations and status of booked tickets are some of the
aspects that serves as parameters of customer satisfaction of railway services. In fact, they are
the most important facets for access to railway service. For a huge and complicated railway
network system such as India, efficient use of ICT can certainly make a difference. Passenger
ticketing and inquiry systems are being developed to be highly service oriented to provide an
“ease of access” to customers. In present times, railway information systems are being integrated
to mobile services. Adding to this, many web applications are being developed through which
railway services can be accessed via mobile devices.

However, much is still desired and left to be done when it comes to information dissemination.
Railways sit on huge reams of information that is either unorganized or not looked into at all.
Much of the information is generated and consumed at local or station level and is still prone to
manual errors as often seen in the ETA predictions. There is no single source of information and
consumers often have to hunt for the information they are looking for.

The use of ICT is imperative in railways. Digital technology can make railway services more
secure and safe. Customer oriented features providing a range of services can be developed to
make access of railways simplified and comfortable.
HIGH-SPEED RAIL IN INDIA

India does not have any railways that can be classified as high-speed rail (HSR) by international
standards, i.e. railways with operational speeds exceeding 200 km/h (120 mph).[1]The
current fastest train in India is the Gatimaan Express with a top speed of 160 km/h (99 mph),
which only runs between Delhi and Agra.

Prior to the 2014 general election, the two major national parties (Bharatiya Janata
Party and Indian National Congress (INC)) pledged to introduce high-speed rail. The INC
pledged to connect all of India's million-plus cities by high-speed rail, whereas BJP, which won
the election, promised to build the Diamond Quadrilateral project, which would connect the
cities of Chennai, Delhi, Kolkata, and Mumbai via high-speed rail. This project was approved as
a priority for the new government in the incoming president's speech. Construction of one
kilometer of high speed railway track will cost ₹100 crore (US$15 million) - ₹140
crore (US$21 million) which is 10-14 times higher than the cost of construction of standard
railway.

India's prime minister Narendra Modi approved the proposal of Japan to build India's first high-
speed railway. The planned rail would run approximately 500 km (310 mi) between Mumbai and
the western city of Ahmedabad, at a top speed of 320 km/h (200 mph). Under this proposal, the
construction began in 2017 and is expected to be completed in the year 2022. The estimated cost
of this project is ₹980 billion (US$15 billion) and is financed by a low-interest loan from Japan.
Operation is officially targeted to begin in 2023, but India has announced intentions to attempt to
bring the line into operation one year earlier. It will transport the passengers from Ahmedabad to
Mumbai in just 3 hours and its ticket fare will be cheaper than air planes i.e. ₹2500-₹3000.

Speed of trains

Operational Average Government Indigenous

Type of Train Manufacturers/Operators
Speed Speed Approval Production

500 – 550 km/h JR

Super Speed (Max. Speed 450 km/h NO NO Central (Japan), Transrapid
603 km/h) (China), CRH 2 (China)
 CRH
1 China, AGV France, Shin
High Speed 300 – 350 km/h 250 km/h Yes NO kansen Japan, Velaro/Zefiro
/ICx Germany, RotemSouth
Korea KTX, SRT

Yes WAP-5 locomotives,

(Only max. Kapurthala Rail Coach
160 km/h Factory (Indian, max. speed
Semi-High
160 – 200 km/h 110 km/h (99 mph) is YES of 160 km/h
Speed
allowed for (99 mph)), WAP-7 (Indian,
operation in max. speed of 160 km/h
India) (99 mph))

WAP-5, WAP-7, WDP-

Already in 4/B/D, WAP-5, WAP-4
Express Trains 110 – 140 km/h 60 – 90 km/h YES
operation and LHB coaches of Indian
Railways

WAM-4, WAP-1, WDP-

Already in
Passenger 50 – 70 km/h 30 – 40 km/h YES 4/B/D, WDP-3A, WDM-
operation
3A/D.

Air travel v/s high-speed trains

High-speed trains provide almost the same speed as air travel, while providing multiple
additional benefits:

 Air travel is point-to-point, whereas high-speed trains provide connectivity to en route

locations with railway stations almost every 50 km or so on a railway line.
 Air travel time savings are nullified by the inefficiency in pre and post-travel procedures. A
traveller may spend an extra 6 hours for air travel:
 4 hours to check in (2 hours in each direction of travel).
  2 hours to travel to the airport (1 hour in each direction of travel), whereas railway
stations are located nearer to more travellers' points of origin.
 The cost of travelling to the airport is also saved, as high-speed rail stations can be easily
reached through public transport.
 India will save a massive amount of foreign exchange as cabs and taxis which consume
fossil fuel to transport passengers to the airport will not be needed in a HSR era.
 Massive saving of foreign exchange for the country as trains will use electricity rather than
costly air-grade fossil fuel used in aircraft which has to be imported.
 Environment friendly transport as there are no emissions from the trains since they run on
electricity.
 Super speed trains create massive job opportunities in MSME sector within the country, as
trains, stations, tracks, guidance and related equipment have to be manufactured and train
infrastructure requires regular maintenance, whereas aircraft are imported or leased.
 Democratisation of high-speed travel as more people will be able to access cost-effective
high speed travel, which is as of now available to only a few in the country.
 Railways have to come-up with an answer to the access-controlled expressways which are
expected to take away most of the railway passengers in the coming years, which will also
cut the travel time by half and with your own vehicle. Super-speed trains have major benefits
over using your own vehicle on expressways. As of 2017, India has approved construction of
10 expressways. US experience has shown that only a 500+ km per hour railway can provide
benefits over expressways, slower than that will lose out to expressways.

SECURITY IN INDIAN RAILWAYS

Prevention and detection of crime, registration of cases, their investigation and maintenance of
law and order in railway stations as well as on running trains are the statutory responsibility of
the State Governments. For this purpose, a separate wing of State police in the name of
‘Government Railway Police’ (GRP) functions from respective States.

Railways pay 50% of the cost incurred by States on GRPs to the respective States. Thus, security
over railway premises and trains is done by States through the GRPs. At the same time, security
of railway tracks, bridges and tunnels is looked after by local Police. Besides sharing the cost on
railway security on 50:50 basis with respective States, IR are also supplementing efforts of
States in providing security to passengers through the Railway Protection Force which functions
under the Ministry of Railways.

The Railway Protection Force was constituted as a statutory force by an Act of Parliament in the
year 1957 i.e. the RPF Act, 1957, for the better protection and security of railway property. The
said Act was amended in the year 1985 declaring the RPF an Armed Force of the Union. The
RPF Act was further amended in the year 2003 (along with the Railways Act, 1989) with
inclusion of the security of passengers and passenger area within the ambit of its duties.

Thus, besides ensuring protection and security of railway property over the length and breadth of
the Indian Railways, the Force has also been actively supplementing efforts of States since the
year 2003 in ensuring security of passengers and passenger area. The administrative set up of the
RPF is as per the administrative set up of the Indian Railways. A mobile wing of RPF, in the
name of Railway Protection Special Force (RPSF), is also functioning on Battalion pattern.
Twelve Battalions of RPSF are located in different parts of the country and carrying out the
arduous task of railway security in terrorism prone, naxal affected and other vulnerable areas
over Indian Railways.

Three new RPSF Battalions, including one Mahila Battalion, have been approved to further
augment railway security. Separate specialized intelligence units in the name of Special
Intelligence Branch (SIB) and Crime Intelligence Branch (CIB) also function from Divisional as
well as Zonal Railways’ level for collection of special and criminal intelligence. Besides above,
Stores, Dog Squad and Band are other constituent units of the Force at Divisional and Zonal
Railways.

Measures initiated by the RPF for security of passengers and passenger area

 Escorting of about 1,275 important Mail/Express trains daily, in addition to escorting of

2,200 important Mail/ Express trains by the GRP personnel.
 Escorting of ladies compartments of suburban trains during night hours in coordination
with GRP staff. y Access control at important railway stations.
 Keeping vigil at station platforms, yards and circulating areas against anti social elements
and surveillance through CCTV cameras from control rooms.
 Prosecution of offenders for unauthorized vending/ hawking, entry into ladies and
reserved compartments, touting of tickets, trespassing, roof travelling, alarm chain
pulling etc. under relevant provisions of the Railways Act.
  Detection of passenger related crime, arrest of criminals and handing over to GRP for
further legal action.
 RPF/RPSF personnel have been deployed in vulnerable sections, naxal affected areas and
northeast region to ensure smooth transportation of goods & passengers and to secure
Railways during bandh, dharna, agitation etc.
 Liaison/Coordination has been maintained with GRP/ State Police/Central Intelligence
Agencies to strengthen railway security.

Protection and security of railway property:

Since the year 1966, RPF is prosecuting offenders under relevant provisions of the ‘Railway
Property (Unlawful Possession) Act, 1966’ for unlawful possession of the railway property. This
Act has been amended in the year 2012 and ambit of penal sections has been widened.

Strengthening of Manpower

Sanctioned strength of the RPF is about 75,000 which is spread over the length and breadth of
the Indian Railways. Strengthening and augmentation of manpower in RPSF/RPF is underway.
Recruitment has been conducted for filling up of 511 posts of Sub-Inspectors and simultaneously
process for filling up of 17,087 posts of constables is also nearing completion. For further
strengthening of women security, 10% of these posts are being filled through women candidates.
Sanction of posts for creation of 04 women RPF companies has already been conveyed to the
concerned Zonal Railways. Further, eight more companies of women RPF personnel have been
sanctioned by the Ministry of Finance.
COMPARISON OF RAILWAYS WITH OTHER MODES

% of US
Product Intermodal Product
Mode Options Speed Accessibility Cost Capacity Capability Movement
Very
Truck Broad Moderate High Moderate Low Very High 28%
Railroad Broad Slow Moderate Low Moderate Very High 41%
Very Very
Air Narrow Fast Low High Low Moderate <1%
Very Very Very
Water Broad Slow Moderate Low High Very High 13%
Very Very Very
Pipeline Narrow Slow Low Low High Very Low 17%
Very Very
Digital Narrow Very Fast Very High Low Moderate Very Low ?

ATTRIBUTES RAIL ROAD WATER AIR PIPELINES

Cost Moderate High Very low Very high High then low
Speed Average Fast Very slow Very fast Very high
Dependency Average High Average High High
Flexibility High Average Very high Low Limited
Access High Very high Limited Average High
Frequency Low High Very low Average Very high
Articles Coal, grain, Cloth, live Iron ore, grain Flowers, Gas,
Transported steels etc. stocks, books etc. emergency petroleum
etc. items etc. products etc.

Mode of Comparison – Dominant Traffic

MODE % SHARE NATURE OF TRAFFIC

Rail 40% Agricultural products, ores, coal, heavy machines, etc.

Road/ Highway 30% Medium & Light manufacturing distribution

Water 15 % Mining, cement chemicals, agricultural products, heavy

machinery, etc.

Pipeline 10% Petroleum products, chemicals, gas

Air 5% Emergency requirements of any material, small lots

Cost & Structure of Each Mode

MODE FIXED COSTS VARIABLE COSTS

Rail High Low

Road Low capital Medium- fuel, maintenance

Water High/ medium Low

Pipeline Highest Low

MIXED MODES (MULTMODAL / INTERMODAL

TRANSPORTATION)

 It refers to combination of at least two modes of transport. This results in an integrated

transport chain where the strength of each alternative is utilized.
  Main characteristics are transshipment terminals that allow efficient cargo handling
between short-distance & long-distance traffic as well as application of standardized &
reusable loading units.
 Intermodal movements combine the cost &/or service advantage of two modes in single
product movement.

There are three types of multimodal transportation

a. Piggyback (Road + Rail) (TOFC or COFC)

It is a combination of rail & road. The containers are placed on railways flat-car &
transported by rail form from one terminal to another. After reaching the destination
terminal, they can be placed on trailers & transported by roads which are also called
TOFC i.e. Trailer on Flat Car or COFC i.e. Container on Flat Car.
In this, the carrier places the carried trailer on a rail flatcar, which moves the trailer by
rail for long distance. Then motor carrier moves the trailer for short distance for pick-ups
& deliveries.
b. Fishy back (Road + Water)
It is combination of road & water. They utilize waterways, which are one of the least
expensive methods for line-haul movement.
The fishy back, train ship & container ship concepts load a truck trailer, railcar or
container on to ship for the line-haul move.
c. Birdy back (Road + Air)
It is a combination of road & airways & is generally used in international shipments.
Local cartage is a vital part of every air movement because air fright must eventually
transport from the airport to the final delivery destination.
Air-truck movements usually provide service & flexibility comparable to straight motor
freight.

SUMMING UP

Safety projects include the elimination of an average of 1,217 unguarded level crossings per year
by building an average of 1,066 overpasses and underpasses per year; an automated fire alarm
system on Rajdhani Express trains was begun in 2013, extending to the air-conditioned coaches
of all trains, and 6,095 GPS-enabled Fog Pilot Assistance System railway signalling devices
(replacing the practice of placing firecrackers on tracks to alert train drivers) installed in 2017 in
four zones: Northern, North Central, North Easternand North Western.

IR carries out various activities that are essentially uneconomic in nature, where it is either not
able to recover the costs (capital investments/operating costs) it incurs to deliver such services,
or ends up foregoing revenues. Such activities, termed by IR as Social Service Obligations,
include concessional tariffs for a few passenger segments or essential commodities and services
in uneconomical train routes.[104] While the assessment of actual losses to meet social service
obligations requires a scientific study, the estimation of such losses from IR for the fiscal year
2016-17 is ₹296.3 billion (US$4.5 billion).

MODEL EXAMINATION QUESTIONS

1. Explain the Route Scheduling For Indian Railways

2. Note on Zone Wise Sidings
3. How Technology Plays A Central Role In Indian Railways
4. Give details of High-Speed Rail In India
5. Explain in details the Security in Indian Railways
6. Compare Indian Railways with Other Modes
7. Note on Mixed Modes (Multi-modal / Intermodal Transportation)
BLOCK-IV: ROADWAYS AND LOGISTICS
CONTOURS
In this block we will learn the following;

Unit 1 Concept of TL and LTL (Truck Load & Less than Truck Load). Roadways as a primary
mode and complementary mode of transportation in Logistics

Unit 2 Features, Facilities and suitability

Unit 3 Innovations in road ways to make it Logistics-friendly

Unit 4 Factors influencing choice – facilities to popularize rail logistics in India – Share of
Railways in Cargo movement and world-wide

Unit 5 Factors influencing growth in Road Logistics – Suitability for different Cargo and
distance Ranges segments – Innovative schemes
UNIT -1 CONCEPT OF LESS THAN TRUCKLOAD &
FULL TRUCKLOAD. ROADWAYS AS A PRIMARY
MODE AND COMPLEMENTARY MODE OF
TRANSPORTATION IN LOGISTICS

STRUCTURE

1.1 Introduction
1.2 Less than truckload (LTL) shipping and Full truckload (TL)
1.3 Road Freight Industry
1.4 Growth Prospects of Roadways
1.5 Advantages of Road Transport
1.6 Disadvantages of Road Transport
1.7 Classification of Road Transport
1.8 Geographical Distribution of Roads
1.9 Expansion of Road Transport
1.10 Summing Up
1.11 Model Examination Questions

INTRODUCTION

Road freight is one of the most common of all modes of transportation. It is widely used in
continents such as Europe, Africa, and North America. The single customs document process
provides a seamless movement of goods even across various states and countries.
However, truck transport is limited somewhat as to what it can carry by the size of the vehicles
used and by size and weight restrictions. Another limitation is that it is affected by weather, road
conditions and traffic.
CONCEPT OF LESS THAN TRUCKLOAD & FULL
TRUCKLOAD
Deciding between the less than truckload (LTL) shipping and full truckload (TL) methods is
often a hard choice when you aren’t sure of your options. A lot of factors weigh into freight
shipping. Assessment of each element can steer you toward the most efficient method based on
your particular needs. Factors like freight dimensions (made up of length, width and height),
freight classification and special services are all things to consider when choosing a shipping
method.

Concept of less than truckload (LTL) and full truckload (TL):

The transport of freight that does not require the entire space of a truck is also known as less
than truckload (LTL) shipping, whereas full truckload (TL) shipments take up the space or
weight limit of an entire trailer. Depending on your specific freight requirements, one option is
likely better suited than the other.

Less than Truckload: Less than truckload (LTL) shipping allows multiple shippers to share
space on the same truck. It is cost efficient, with multiple companies paying for their portion of
trailer space. The less than truckload (LTL) shipping route is ideal for businesses who have
freight shipments less than 15,000 pounds. To protect items while in transit, it is essential to
consolidate goods into large, crated or palletized packages. Prepare the shipment to endure
handling during transfer to multiple trailers before it arrives at the consignee or destination.
Businesses choose this budget-friendly option when the consumer demand for their products is
average or stable.

Less than truckload shipping is affordable for small business because you share the
transportation costs with other companies, and use a third-party logistics (3PL) company. Each
company takes up a portion of the truck for their goods and only pays according to the amount of
product shipped and the length of travel. LTL shipments often make several stops and unpack
and re-pack goods. The shipment will take longer to reach the destination but you’ll save on
shipping costs. An experienced transportation logistics company will work hard to save you
money by matching your shipments with regular scheduled shipments heading to the same
destination.
Advantages of Less than Truckload

 Cost effective freight transportation

 Ideal for small businesses

Full truckload (TL) shipping: Full truckload can mean 2 things; either you have enough
products to fill a full truckload, or you have a partial load but you prefer a dedicated truck . Full
truckload is often chosen when businesses have 10 pallets or more to ship, when they have high
risk packages, or when time is an issue (FTL is faster). Full truckload costs more than LTL, but it
will get your shipment delivered faster.

If less than truckload shipping doesn’t meet your needs, then full truckload shipping might be for
you. Shippers use full truckload (TL) when:

 There are enough items to fill an entire truck.

 The customer prefers a whole truck dedicated to their goods.
 The freight is time sensitive.
 The weight makes it more cost effective than less than truckload.
With full truckload (TL), shipments typically travel on only one truck with one destination, so
delivery time estimates are often accurate and fast in comparison to less than truckload (LTL)
shipping. The chance of possible damage to items during transit also decreases since there is less
handling of the freight at multiple stops. Truckload (TL) also makes sense when the freight
weighs more than 15,000 pounds, or the company has more than 10 pallets worth of goods to
transport.

Advantages of Less than Truckload

 Best way to transport large shipments
 Ideal for high risk or delicate freight shipments
 Shipment remains in the same truck from point A to point B
 Considerably faster than LTL; great for high consumer demand
ROAD FREIGHT INDUSTRY

The industry is highly fragmented and largely unorganised. The unorganised sector accounts for
nearly 80% of the market share. However, changing policies with regards to tax structure are
likely to give a competitive edge to the organised sector. Road transport comprises of freight and
passenger traffic. It accounts for
over 60% of goods traffic and
over 80% of passenger traffic.
Road freight transport can be
further classified into primary
and secondary transportation.
Primary transportation is one
Source : CII, KPMG Logistic report
that covers distance not less than
50 kms and over 1,000 kms.
Primary road freight accounts for over 70% of the Rs 1.42 trillion road freight industry. In the
past ten years the road freight segment has reported a compounded annual growth rate of 8.9%
and is expected to sustain this growth momentum in the coming years. The same has been on
account of earlier infrastructural investments. The capital expenditure was primarily focused on
building network of roadways to enable transportation, which has resulted in a vast network of
roads. It is also well connected in comparison to the other modes of transport. Thus, road
transport gains on account of route flexibility that enhances reach.

THE GROWTH PROSPECTS OF THE ROADWAYS

 In the past the growth of road freight business was supported by ongoing investments in
road infrastructure, which will drive growth in the future as well. In the XI five year plan,
Rs 3.6 trillion investments have been outlined, which will be utilised to develop and re-
develop road infrastructure across the nation. This will reduce the time of transportation.
Better road infrastructure will also lower maintenance cost for transporters. Thus, it will
lead to enhanced reach and improvement in efficiency in road transportation.
 Gradual proposed phase out of CST by 2010 is likely to reduce burden of multiple taxes.
Taxes are levied both at the centre and state with no provision of set off. This leads to
cost and price escalation. This dampens competitiveness of domestic goods. The move to
 phase out CST will provide competitive edge to suppliers catering to markets across
regions. The customers would also stand to benefit as burden of taxes on MR would be
reduced.
 Implementation of VAT would also enable companies to move from a state-wise
warehousing system to a hub-and-spoke warehousing system. Currently, companies
prefer state-wise warehousing system to reduce tax burden. This also facilitates inter-state
sourcing and distribution networks. Multiple warehouses lead to cost inefficiencies in
terms of warehousing space, employee costs, IT connectivity etc. Removal of CST would
enable interstate transport through centralized warehousing facility, which in turn would
consolidate supply chain network. Even though few states have replaced state sales tax by
state VAT, it does not provide tax credit for movement of goods across states.
Implementation of state VAT has not reduced the need for border check points. With the
new tax regime, stocking points would be reduced. While that will involve a one time
cost and considerable time and effort, eventually it is expected to lead to cost efficiencies
and a better supply chain system. The improved logistics would not only help sustain the
quality of products dispatched but would also reduce delivery delays.
 The growth of the organised retail sector has slowed down to single digits in 2009.
However, the long term growth prospects of the sector are intact. The same is on account
of expectations of revival in economic growth.
 India enjoys demographic dividend. The same is likely to boost demand of electronic
goods, automobiles etc. Increased demand for these products is likely to uphold growth of
the manufacturing sector. Also, the demand is likely to be driven by increasing
population. With the increase in population, demand for daily necessities and houses
(increase in demand of commodities such as cement, steel and other building materials)
would increase. This in turn will necessitate transportation of goods.

ADVANTAGES OF ROAD TRANSPORT

 Less Capital Outlay:

Road transport required much less capital Investment as compared to other modes of transport
such as railways and air transport. The cost of constructing, operating and maintaining roads is
cheaper than that of the railways. Roads are generally constructed by the government and local
authorities and only a small revenue is charged for the use of roads.
  Door to Door Service:
The outstanding advantage of road transport is that it provides door to door or warehouse to
warehouse service. This reduces cartage, loading and unloading expenses.

 Service in Rural Areas:

Road transport is most suited for carrying goods and people to and from rural areas which are
not served by rail, water or air transport. Exchange of goods, between large towns and small
villages is made possible only through road transport.

 Flexible Service:
Road transport has a great advantage over other modes of transport for its flexible service, its
routes and timings can be adjusted and changed to individual requirements without much
inconvenience.

 Suitable for Short Distance:

It is more economic and quicker for carrying goods and people over short distances. Delays in
transit of goods on account of intermediate loading and handling are avoided. Goods can be
loaded direct into a road vehicle and transported straight to their place of destination.

 Lesser Risk of Damage in Transit:

As the intermediate loading and handling is avoided, there is lesser risk of damage, breakage etc.
of the goods in transit. Thus, road transport is most suited for transporting delicate goods like
chinaware and glassware, which are likely to be damaged in the process of loading and
unloading.

 Saving in Packing Cost:

As compared to other modes of transport, the process of packing in motor transport is less
complicated. Goods transported by motor transport require less packing or no packing in several
cases.

 Rapid Speed:
If the goods are to be sent immediately or quickly, motor transport is more suited than the
railways or water transport. Water transport is very slow. Also much time is wasted in booking
the goods and taking delivery of the goods in case of railway and water transport.
  Less Cost:
Road transport not only requires less initial capital investment, the cost of operation and
maintenance is also comparatively less. Even if the rate charged by motor transport is a little
higher than that by the railways, the actual effective cost of transporting goods by motor
transport is less. The actual cost is less because the motor transport saves in packing costs and
the expenses of intermediate loading, unloading and handling charges.

 Private Owned Vehicles:

Another advantage of road transport is that big businessmen can afford to have their own motor
vehicles and initiate their own road services to market their products without causing any delay.

 Feeder to other Modes of Transport:

The movement of goods begins and ultimately ends by making use of roads. Road and motor
transport act as a feeder to the other modes of transport such as railways, ships and airways.

DISADVANTAGES OF ROAD TRANSPORT

 Seasonal Nature:
Motor transport is not as reliable as rail transport. During rainy or flood season, roads become
unfit and unsafe for use.

 Accidents and Breakdowns:

There are more chances of accidents and breakdowns in case of motor transport. Thus, motor
transport is not as safe as rail transport.

 Unsuitable for Long Distance and Bulky Traffic:

This mode of transport is unsuitable and costly for transporting cheap and bulky goods over long
distances.

 Slow Speed:
The speed of motor transport is comparatively slow and limited.

 Lack of Organisation:
The road transport is comparatively less organised. More often, it is irregular and undependable.
The rates charged for transportation are also unstable and unequal.
CLASSIFICATION OF ROAD TRANSPORT

The main significance of the Nagpur Plan lies in the fact that it classified roads into four
categories on the functional basis. They are: (i) National Highways (ii) State Highways (iii)
District Roads and (iv) Village Roads. A brief description of each category is given as under:

A. National Highways:
The main roads which are constructed and maintained by the Central Public Works Department
(CPWD) are known as the National Highways. These roads are meant for inter-state and
strategic defence movements and connect the state capitals, big cities, important ports, big
railway junctions and link up with border roads.

Distribution of National Highways:

A number of national highways run across the country in all directions linking important places
to one another. The historically important Sher Shah Sun Marg is known as National Highway 1.
It links Delhi and Amritsar. National Highway 2 links Delhi and Kolkata. National Highway 3
runs between Agra and Mumbai via Gwalior, Indore and Nasik.

National Highway 7 is the longest one which links Varanasi with Kanniyakumari via Jabalpur,
Nagpur, Hyderabad, Bangalore and Madurai. It traverses a distance of 2,325 km. National
Highway 5 and 17 run along the eastern and western coasts respectively.

National Highway 15 represents the border road in Rajasthan desert and runs through Kandla,
Jaisalmer, Bikaner and joins the border road in the Punjab. Fig. 28.2 shows the important
national highways.
The NHDP consists of the following components.

 The Golden quadrilateral (5,846 km) connecting four major cities of Delhi, Mumbai,
Chennai and Kolkata.
 The North-South and East-West corridors (7,300 km) connecting Srinagar in the North to
Kanniyakumari in the South and Silchar in the East to Porbandar in the West.
 Port connectivity and other Projects (1,133 km).
 B. State Highways:
These are constructed and maintained by state governments and join the state capitals with
district headquarters and other important towns. These roads are also connected to the national
highways. The length of state roadways in India has more than doubled within a span of about
three decades and has increased from 56,765 km in 1971 to 1, 37,950 km in 1999. These roads
constitute 5.46 per cent of the total road length of India.

Although construction and maintenance of state highways is the responsibility” of the concerned
state governments, yet with the revamping of the Central Road Fund (CRF) in 2000, the Centre
provides about Rs. 1,000 crore for development of state roads.

Further, to promote inter-state facilities and also to assist the State Governments in their
economic development through construction of roads and bridges, Central Government provides
100 per cent grant for inter-state connectivity and 50 per cent grant for projects of economic
importance from CRF. Loan assistance from external funding agency is also taken by some
states.

C. District Roadways:
These roads join the district headquarters with the other places of the district. Development and
maintenance of these roads fall within the purview of Zila Parishads. There has been more than
four and half times increase in the length of district roadways from 1,73,723 km in 1951 to
801,655 km in 1999.

In 1999, these roads accounted for 31.74 per cent of the total road length of India. Formerly most
of the district roads were unsurfaced and lacked bridges and culverts. But now the situation as
changed and most of these roads are surfaced. Such a situation has improved connectivity and
pave way for economic development.

D. Village Roads:
The village roads are mainly the responsibility of village panchayats and connect the villages
with the neighbouring towns and cities. These are generally dusty tracks and are usable only
during the lair weather. They become muddy and unserviceable during the rainy season.
Efforts have been made m the recent past to connect the villages with metalled roads. The length
of these roads has increased by about 5 times from 2, 06,408 km in 1951 to 10, 28,410 km in
1999. These roads accounted for over 40 per cent of the total road length of the country in 1999.

Still about 10 per cent of the villages having a population of 1,000 or more and 60 per cent of the
villages with less than 1,000 people are not connected by all-weather roads. The network needs
expansion and upgradation of existing roads to all- weather roads.

A new thrust was given to village roads when the Pradhan Mantri Gram Sadak Yojna (PMGSY)
was launched in December 2000. This is a 100% Centrally Sponsored Scheme to provide rural
connectivity to unconnected habitants with a population of 500 persons or more (250 persons in
case of hilly, desert and tribal areas) in rural areas by the end of the Tenth Plan period.

The scope о PMGSY has been expanded to include both construction of new links and
upgradation of existing through routes associated with such link routes to form one complete
sub-network for providing connectivity between the village and the market.

A survey undertaken to identify the “core network as part of PMGSY showed that over 1.70 lakh
unconnected habitations needed to be undertaken under this programme. This would require new
construction of 3.68 lakh kilometres of rural roads at a total cost of Rs. 1, 33,000 crore.

E. Border Roads:
Border Roads Organisation (BRO) Board was set up in May 1960 for accelerating economic
development and strengthening defence preparedness through rapid and co-ordinated
improvement of roads in the north and north-eastern border areas. This organisation has
constructed world’s highest road joining Chandigarh with Manali in Himachal Pradesh and Leh
in Ladakh.

This road runs at an average altitude of 4,270 metres above sea level and negotiates four passes
at heights ranging from 4,875 to 5,485 metres. It is a vital road link in the western Himalayas
and has considerably reduced the distance between Chandigarh and Leh.

The Border Roads Organisation has now spread its activities throughout the country and is
presently working in states of Rajasthan, Jammu and Kashmir, Himachal Pradesh, Maharashtra,
Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Sikkim, Assam, Meghalaya, Nagaland, Tripura,
Manipur, Mizoram, Arunachal Pradesh, Bihar and Andaman and Nicobar Islands. It has so far
constructed over 24,553 km of roads and surfaced 20,225 km of roads. It is also maintaining
about 16,720 km of roads in border areas.

F. Urban Roads:
A road within the limits of the area of municipality, military cantonment, port or railway
authority is called an urban road. There has been a phenomenal growth in urban roads from a
meagre 46,361 km in 1961 to 2, 37,866 km in 1999 as a result of accelerated growth in
urbanization.

G. Project Roads:
A road within the limits of the area of a development project of a public authority for the
exploitation of resources such as forests, irrigation, hydro-power, coal, sugarcane, etc. is called a
project road. Various developmental projects have been undertaken as a result of which the
length of project road has increased from 1, 30,893 km in 1971 to 2, 70,523 km in 1999.

H. International Highways:
The roads which are financed by the World Bank and connect India with neighbouring countries
are called international highways. There are two categories of such highways, (a) the main
arterial routes linking the capitals of neighbouring countries. Some of the important routes of
this category are (i) the Lahore-Mandalay (Myanmar) route passing through Amritsar-Delhi-
Agra-Kolkata-Golaghat- Imphal (ii) Agra-Gwalior-Hyderabad-Bangalore-Dhanushkodi road and
(iii) Barhi-Kathmandu road.

(b) Routes joining major cities, ports etc. with arterial network such as: (i) Agra-Mumbai road
(ii) Delhi-Multan road (iii) Bangalore-Chennai Road and (iv) Golaghat-Ledo road.

GEOGRAPHICAL DISTRIBUTION OF ROADS

The network of roads is more or less similar to that of railways, although former far excels the
later with respect to kilometreage. A look at Figure 28.2 and Table 28.14 shows that there are
great variations in the distribution pattern of roads in India.

As mentioned earlier, Madhya Pradesh (along with Chhattisgarh) pos-esses the longest length of
National Highways, followed by the Uttar Pradesh, Rajasthan, Tamil Nadu, Andhra Pradesh,
Maharashtra and Karnataka. Incidentally these are larger states with high density of population
and comparatively advanced stage of industrial growth.

However, length of National Highways passing through a state is not always a true index of
economic well being of a state as they serve only the main routes. For example, Madhya Pradesh
has longest route length о the national highways and still has some of the most backward areas
which are located far away from the main road routes.

The length of state highways could be a better index of road accessibility at the state level. T e
picture is slightly different with regard to state highways when compared to that of the national
highways.

EXPANSION OF ROADWAYS
SUMMING UP

Road transport is vital to India's economy. It enables the country's transportation sector to
contribute 4.7 percent towards India’s gross domestic product, in comparison to railways that
contributed 1 percent, in 2009–2010. Road transport has gained its importance over the years
despite significant barriers and inefficiencies in inter-state freight and passenger movement
compared to railways and air. The government of India considers road network as critical to the
country's development, social integration and security needs of the country.India's road network
carries over 65 percent of its freight and about 85 percent of passenger traffic.

Indian road network is administered by various government authorities, given India's federal
form of government. The following table shows the total length of India's road network by type
of road as on 31 March 2016.

Road transport is the second important mode of transport in India. It covers every corner of the
country which the railway transport even could not cover. Road transport provides the basic
infrastructural facilities to both the agricultural and industrial sector of the country. Moreover,
construction and maintenance of roads can generate huge employment opportunities as it is
twice as labour intensive as agriculture or housing. Indian roads carry 85 per cent of the
passengers and 70 per cent of the freight traffic of the country. The highways, make up only 2
per cent of the road network by length, but carry 40 per cent of this traffic.

MODEL EXAMINATION QUESTIONS

I. Explain the difference between Less than truckload & Full than truckload
II. Note on Road Freight Industry
III. Explain the Growth Prospects of Roadways
IV. State the advantages of Road Transport
V. State the disadvantages of Road Transport
VI. Provide in detail the classification of Road Transport
VII. Give the geographical distribution of Roads in India
UNIT – 2 FEATURES, FACILITIES AND SUITABILITY

STRUCTURE

2.1 Features of Road Transport

2.2 Suitability of Road or Motor Transport
2.3 Problems of Road Transport
2.4 Importance of Roadways
2.5 Growth & Development / Facilities in Road Transport
2.6 Summing Up
2.7 Model Examination Questions

FEATURES OF ROAD TRANSPORT IN INDIA

In India, about 65% of freight and 80% passenger traffic is carried by the roads.

 National Highways constitute only about 1.7% of the road network but carry about 40% of
the total road traffic.
 Number of vehicles has been growing at an average pace of 10.16% per annum over the last
five years. About 65% of freight and 80% passenger traffic is carried by the roads.
 National Highways constitute only about 1.7% of the road network but carry about 40% of
the total road traffic.
 Number of vehicles has been growing at an average pace of 10.16% per annum over the last
five years.
India has the second largest road network in the world, with over 3.314 million kms of roadways
spread across the length and breadth of the country. The roads are primarily made of bitumen,
with some Indian National Highways having concrete roads. The concept of expressway roads is
also catching up in India, and the Mumbai – Pune expressway and Delhi Gurgaon expressway
are the finest examples. Yamuna-expressway which connects Delhi to Agra is also good.
The history of roads in India takes you back to the Indus Valley Civilization, where street
pavings were made for the first time in India. Around the 1st centuy, the Silk route was made
which tremendously aided in trade across India. The medieval India saw the emergence of
the Grand Trunk Road. The GT Road, as it is famously called, starts in Sonargaon near Dhaka in
Bangladesh and ends at Peshawar in Pakistan and links some of the major cities in india from
Kolkata to Amritsar.

The Indian roadways network ranks as the second biggest roadways network in the world. The
road network of the country covers more than 2.059 million miles or 4.42 million kilometers.
For every sq km of land, there is 0.66 km of highways in the country.

The density of the highway network of India is somewhat more as compared to the United States
(0.65) and substantially higher as compared to Brazil (0.20) and China (0.16).!!!!
Previously, India did not had funds fori ts road network. However, the scenario has changed in
the past decades. The Government of India in collaboration with a number of private players is
taking groundbreaking endeavours for the road transportation system of the nation.

Till date, some of the important plans that have been put into operation include names like the
Yamuna Expressway, National Highways Development Project, and the Mumbai-Pune
Expressway.
According to the data furnished in 2002, just 47.3% of the Indian roadways network comprised
paved roads.

SUITABILITY OF ROAD OR MOTOR TRANSPORT

Though road transport has certain limitations, it is indispensable to the development of

commerce and industry. It plays a very significant role in the economic development of a
country.

The road transport is particularly suited:

 For carrying goods which are very cheap, heavy or bulky;
 For transporting goods of perishable nature such as vegetables, fruits, eggs, milk, etc.;
 For carrying goods and people over short distances;
 For transporting delicate goods such as chinaware or glassware.
 For forests, hilly and rural areas where the other modern modes of transport are not
available.

PROBLEMS OF ROAD TRANSPORT

 Bad Roads:
The roads in India are in bad shape. The link roads are not properly metaled and many are even
Kucha Roads. The vehicles have to bear more wear and tear and the cost of operating them is
unreasonably high.

 Slow Growth of Vehicles:

The growth of commercial vehicles has been very slow because of higher operation costs. The
rates of fuel are growing up every now and then. The prices of vehicles are very high due to
heavy excise duties. The taxes on commercial vehicles are also exorbitant. All these factors are
responsible for the slow growth of commercial vehicles.

 Lack of Co-ordination:
There is a lack of co-ordination between the centre and the states. The states want the centre to
construct and maintain main highways but on the other hand centre is trying to shift this burden
on the states. It has resulted in the blocking of rapid development of roads in India.

 Competition among Different Modes:

There is a competition among different modes of transport. The transport policies of different
states are different. Some highways have more traffic while on others there are not sufficient
transport services.

IMPORTANCE OF ROADWAYS

 Roads play a very important role in the transportation of goods and passengers for short
and medium distances.
 It is comparatively easy and cheap to construct and maintain roads.
 Road transport system establishes easy contact between farms, fields, factories and
markets and provides door to door service.
 Roads can negotiate high gradients and sharp turns which railways cannot do. As such,
roads can be constructed in hilly areas also.
 Roads act as great feaders to railways. Without good and sufficient roads, railways
cannot collect sufficient produce to make their operation possible.
 Road transport is more flexible than the railway transport. Buses and trucks may be
stopped anywhere and at any time on the road for loading and unloading passengers and
goods whereas trains stop only at particular stations.
 Perishable commodities like vegetables, fruits and milk are transported more easily and
quickly by roads than by railways.
GROWTH AND DEVELOPMENT / FACILITIES IN ROAD
TRANSPORTATION

Road transport in modern sense i.e. vehicles driven by internal combustion engines using petrol
or diesel as fuel was practically negligible in India before World War II. Following plans have
been drawn to develop roadways in India.

 Nagpur Plan:
First serious attempt to develop roadways was made in 1943 when Nagpur Plan was drawn. This
plan envisaged increasing of the kilometreage of major roads to 1, 96,800 km and of other roads
to 3, 32,800 km by 1953. The highlight of the plan was that no village in a developed
agricultural region should be more than 8 km from a major road or 3 km away from any other
road while the average distance of villages from a major road should be less than 3.2 km.

In a non- agricultural region, these distances were fixed at 32, 8 and 10 km respectively. This
plan could not be implemented immediately because the country was ruled by a number of
princely states outside British India. The concerted efforts to achieve the objectives of this plan
were made only after the re-organisation of the states. The targets of this plan were more or less
achieved by 1961.

 Twenty Year Plan:

After achieving the objectives of the Nagpur Plan, another plan known as Twenty Year Road
Plan was drawn in 1961. It aimed at increasing the road length from 6.56 lakh km to 10.60 lakh
km and the density to 32 km of road per 100 sq km by 1981.

The other objectives of the Twenty Year Road Plan were (i) to bring every village in a
developed agricultural area within 6.4 km of a metalled road and 2.4 km of any other road, (ii) to
bring every village in a semi-developed area within 12.8 km of a metalled road and (iii) to bring
every village in an undeveloped and uncultivated area within 19.2 km of a metalled road and 8
km of any other road.

 The Rural Development Plan includes construction of rural roads under Minimum Needs
Programme (MNP), Rural Landless Employment Guarantee Programme (RLEGP),
Jawahar Rojgar Yojana (JRY) and Command Area Development (CAD) programmes to
 connect all villages having a population of 1,500 or more with all weather roads and
those having less than 1,500 population with a link roads.

 Build Operate Transfer (ВОТ) is a scheme under which private operators are invited to
construct roads and bridges. They are allowed to collect toll tax from the vehicles using
these roads and bridges for a specific period of time after which these assets are
transferred to the government. The National Highways Act has been amended to
facilitate private investment in real construction under ВОТ scheme.

 Central Road Fund (CRF) is being raised for the betterment of roads by imposing
additional excise/customs duty at the rate of Rs. 1.50 per litre on petrol with effect from 2
June 1998 and on High Speed Diesel (HSD) with effect from February 28, 1999. The
annual accrual through this sources will be about Rs. 5,500 crore. A part of this (Rs. 0.4
per litre against sale of high speed diesel oil and Rs 0.86 per litre against sale of petrol)
goes to fund the NHDP.

The Central Road Fund Act 2000 was enacted in December, 2000 with the primary objective of
providing regular and adequate flow of funds for development of the road sector. This is a non-
lapsable fund. The Act empowers the Centre to administer, manage and allocate the accrued
amount to the following:

 Development of rural roads. About 43 per cent of the levy on diesel will be spent on
improving rural connectivity,
 Development and maintenance of National Highways
 Construction of road under/over bridges and safety works at unmanned railway
crossings, and
 Development and maintenance of State roads.

SUMMING UP

The road transport is one of the most important means of transport and is indispensable to the
development of commerce and industry. All the movement of goods begins and ultimately ends
by making use of roads. Roads act as an important feeder to the other modes of transport such as
railways, ships and airway.
MODEL EXAMINATION QUESTIONS

1. Explain in details the problems of road transport

2. Give details of the features of road transport
3. What are the suitability of road transport
4. State the importance of road transportation
5. Explain the facilities developed by the government in road transport
UNIT -3 INNOVATIONS IN ROAD WAYS TO MAKE IT
LOGISTICS-FRIENDLY

STRUCTURE

3.1 Innovations in Road Building Techniques

3.2 Innovations in Road Safety
3.3 Smart Roads
3.4 Summing Up
3.5 Model Examination Questions

INNOVATIONS IN ROAD BUILDING TECHNIQUES

 Noise-reducing asphalt:

“There have been a few cost-benefit analyses done that show that using asphalt to reduce noise
levels makes more sense than constructing sound wall barriers,” says Jim Bird, director of
performance for the Western Canada Asphalt, Paving & Construction product line at Lafarge.
Durawhisper is a Lafarge product designed to reduce traffic noise while meeting all the normal
specifications for hot-mix asphalt. It’s ideal for use in residential areas.

 Eco-friendly manufacturing:

As a result of the focus on green technologies that is permeating the industry, asphalt mixes are
being developed that have less of an impact on the environment.

Lafarge’s Duraclime is a warm mix that meets all the specifications of a hot mix. Because it is
manufactured at a lower temperature, odour, smoke, fuel consumption and emissions are
reduced during manufacturing. According to the company’s website, using Duraclime can lower
the carbon footprint of an asphalt-producing plant by up to 20 per cent.

Cost-wise, Duraclime is about the same as traditional hot-mix asphalt. Says Bird, “I’m not sure
that anybody has a good reason not to use Duraclime. Regardless of whether it’s a Lafarge
product or one belonging to our competitors, the technical data coming out of analyses
concludes that warm mixes are equivalent to hot mixes in terms of performance standards.”

 Eco-friendly ingredients:

Another way manufacturers are making roads more sustainable from an environmental
perspective is by using recycled material in the mix. For instance, Canadian Road Builders Inc.
offers a mix called Vegecol that is made entirely from renewable, plant-based material and can
be used on major roads as well as for walking and biking paths.
Like Duraclime, Vegecol is manufactured at a cooler temperature, reducing its carbon footprint.
As an added benefit, there are no petrochemical ingredients to contaminate run off water.

 Computer modelling:

“The advances in roadbuilding are coming in engineering areas,” says Gene Syvenky, chief
executive officer, Alberta Roadbuilders & Heavy Construction Association. Computer
modelling is being used much more for designing structures, benefiting taxpayers and resulting
in better performing roadways.
“Using computer modelling for a structure like an overpass, for instance, is much more
effective,” explains Syvenky. “Engineers can test ideas and you can instantly see the impacts,
including the cost impacts, of changes.”

 Water-saving pavement:

Built using porous asphalt or pervious concrete, water-saving paved surfaces allow storm water
to drain through the surface into a catchment area below. The products work well in parking lots,
allowing owners to collect runoff and store it for uses such as on-site irrigation.

“It’s very expensive for municipalities to treat water and irrigation may not be a very good use
of clean water,” Bird says. “Porous asphalt also helps filter sediment out of runoff water, which
is another benefit for municipalities.”

Lafarge has used porous asphalt in trial projects in Calgary, including a demonstration section in
the parking lot of the new water building. What’s not known is how the asphalt will handle
Alberta winters.
“With our winter sanding efforts, there is some trepidation as to how quickly the permeability
deteriorates,” Bird says. “We just have to work out strategies for maintaining a porous parking
lot.”

 Perpetual pavements:

Perpetual pavements are designed to last around 50 years, compared to 20 years for conventional
pavements. According to Uzarowski, the durability is due to the components of superior-
performing asphalts and the ability to model and analyze road systems before construction.

“Fatigue cracking occurs when the tensile strength at the bottom of the asphalt exceeds the limit.
So the trick with perpetual pavement is to design it from the bottom up,” Uzarowski says.

Uzarowski and his team designed the first municipal perpetual pavement in Canada, the Red Hill
Valley Parkway in Hamilton, Ont., constructed in 2007. The bottom layer is a rich bottom mix, a
specially designed mix packed with asphalt cement that is basically indestructible, and therefore
highly resistant to cracking.

The middle and top layers are made of high-quality Superpave asphalt mixes that resist rutting,
cracking and wear.
“On the day the construction is completed the pavement will start to deteriorate. That’s normal,”
Uzarowski says. “But if it’s a perpetual pavement, nothing will happen at the bottom and the
majority of the pavement remains sound. Deterioration will occur at the top, but it’s easy to fix.”

Repair work only has to be done every 20 years or so and, because it only involves milling and
replacing the surface, it can be done overnight.

While they’re too expensive for low-traffic-volume roads, perpetual pavements are predicted to
become increasingly popular for major roadways.

 Full-depth reclamation:

Repairing roads has traditionally involved removing the old asphalt pavement and hauling it off-
site for disposal. Full-depth reclamation is a repairing technique in which the old asphalt is
mixed with the underlying gravel and the resulting asphalt/gravel combination is used to form a
new road base.
Mixing the asphalt into the gravel has been proven to produce a better-quality base material,
saves the cost and environmental implications of removing the old asphalt from the site and
reduces the amount of new aggregate used.

 Collaboration:

It’s not a product or a road building technique, but it is affecting the quality of roads. “Industry
partners—the roadbuilder group, transportation people from all levels of government, consulting
engineers—are sharing information and best practices, and taking a much more collaborative
approach in creating a solution,” Syvenky says. The result going forward is going to be better
products and even more innovation.

INNOVATIONS IN ROAD SAFETY

 Infrastructure – 3D Pedestrian Crossing

3D street art went viral not long ago, with breathtaking photos of pedestrian sidewalks turned
into waterfalls, cliffs and canyons were all over social media. The concept has now crossed over
to pedestrian crossings. While the designs will look flat for pedestrians crossing the road, it will
appear three dimensional to oncoming traffic, increasing motorists’ awareness.
  Sustainable Urban Transport – Ride-hailing services

Just as the bars, clubs and pubs fill up around midnight, many public transport networks start to
shut down.

Ride-hailing services offer an easier and safer way home after a night out, instead of getting
behind the wheel. While several studies fail to agree on the impact of ride-hailing services in
reducing alcohol-related car accidents, there is great potential for such services to reduce drink
driving in tandem with stricter enforcement and more effective behavioural interventions.

 Behavioural Interventions – Ziggy

Meet Ziggy, the lead character in the Scottish Government’s innovative approach to early road
safety education. Road safety education shouldn’t wait until we’re rebellious teenagers trying to
get a driver’s license. While parents and teachers have squeezed piano, ballet, swimming, and
now even robotics and programming into early childhood, RoadSafety Scotland believes that
early intervention through a multimedia approach will help develop positive attitude and
behaviours for life. Ziggy features across videos, games, stories and classrooms, designed for
children, educators and parents.

 Policy strengthening – Vision Zero

What first started as the Sweden’s innovative multidisciplinary approach to road safety in the
1990s, Vision Zero is now gaining momentum across major cities in the United States. While
most countries are focused on reducing the current rate of road fatalities, Vision Zero is a
strategy to eliminate all traffic fatalities and severe injuries in the future. Find out more
at http://www.visionzeroinitiative.com/

 Raising Awareness – Life Saving Stickers

Speed limits in residential areas are often ignored, endangering the safety of pedestrians,
especially children who are playing outdoors. In Australia, authorities came up with a way to
remind motorists of the speed limit through an untapped medium. Life saving stickers were
applied on to the bins which line residential streets in Queensland, attracting motorists’ attention
and the involvement of local households.

THE SMART HIGHWAY

The "Smart Highway" project (a collaboration between Studio Roosegaarde, a design lab based
in the Netherlands, and engineers from Heijmans Infrastructure) is one of several recent efforts
to make roads smarter, safer, and more energy efficient. This year, the group is preparing to
make a 300-meter test road with glowing lane markers and weather-warning paint. Check out the
gallery on the "Smart Highway" and/or read about more intelligent road projects here.

A. PROTOTYPE: GLOW-IN-THE-DARK LINES

The people behind the "Smart Highway" project developed glow-in-the-dark paint that could be
used instead of street lamps, saving electricity and cash. In tests, it shines for up to 10 hours at
night.
B. PROTOTYPE: ROAD MAY BE ICIER THAN IT APPEARS
The group developed paint that only appears when the temperature is below freezing—perfect
for warning motorists about possibly icy terrain. Later this year, they plan to test out a prototype
road with both glowing paint and temperature-reactive paint.
 C. TEMPERATURE-REACTIVE PAINT
When's the last time the road told you the weather?

D. CHARGING UP
Drivers could charge their electric cars through magnetic induction in special lanes. (In fact, the
Korea Advanced Institute of Science and Technology has an induction-charged bus on its
campus already.)

E. REACTIVE LIGHTS
Constantly lighting roads with little traffic is a waste of electricity—and municipal dollars.
Proximity sensors could flip lights on and off as needed.
 F. UPDRAFT POWER
Wind energy from passing cars could be harnessed by small turbines and used for lighting.

G. DYNAMIC LINES
Someday, the lines on a road could transform in reaction to changing traffic patterns.

SUMMING UP

The performance, design and operation of a transportation system is affected by several factors
such as human factors, vehicle factors, acceleration characteristics, braking performance etc.
These factors greatly influence the geometric design as well as design of control facilities.
Variant nature of the driver, vehicle, and roadway characteristics should be given importance for
the smooth, safe, and efficient performance of traffic in the road.

MODEL EXAMINATION QUESTIONS

I. Note on Smart Highways

II. Explain in details the innovations done in road safety measures
III. Give the details of innovations done during road building techniques
UNIT – 5 FACTORS INFLUENCING GROWTH IN ROAD
LOGISTICS – SUITABILITY FOR DIFFERENT CARGO
AND DISTANCE RANGES SEGMENTS – INNOVATIVE
SCHEMES

STRUCTURE

5.1 Factors to consider when choosing the most suitable mode of transport
5.2 Innovative Schemes
5.3 Road sector in India Recent Developments
5.4 Summing Up
5.5 Model Examination Questions

FACTORS TO CONSIDER WHEN CHOOSING THE MOST

SUITABLE MODE OF TRANSPORT

 Cost of Transport:
When choosing how to best transport products for exportation, your budget should be the most
important factor when making decisions. Costs can vary based on the type and amount of goods
that need to be transported. Bear in mind that the cost of transport will influence the cost of
goods.

If you are transporting heavy or bulky products over a long distance inland, then rail transport
will be the most economical. Land transport, typically by trucks, is best suited for small amount
of goods being transported over short distances. It also saves packing and handling costs. Water
transport is without a doubt the cheapest mode of transport, very suitable for heavy or bulky
goods that need to be transported over long distances where time is not an important factor. For
the transportation of perishable, light or valuable goods, air transport will be the most efficient
mode of transport to use, although it is expensive. Importers and exporters should also consider
the overall cost of transportation, keeping the “hidden costs” such as insurance premiums and
finance charges in mind.

 Reliability and Regularity of Service:

Transport modes differ in reliability and regularity. Your decision on which mode of transport to
use will be influenced by the urgency and speed by which you would like your goods to be
delivered. Land, ocean and air transport are usually affected by bad weather such as heavy rains,
snow, fog and storms which may cause delays.

 Safety:
Safety and security of goods in transit also influence which mode of transport to use. Land
transport may be preferred to railway transport because your losses are generally less. Water
transport exposes the goods to the perils of sea; hence from a safety point of view, sea transport
is the most risky. Also, to protect the goods in transit, certain types of packaging are
recommended, which might influence costs. Goods may also require special facilities such as
refrigeration or special security measures that need to be taken into consideration.

 Characteristics of goods
The size and weight of goods also play a role in deciding which mode of transport to use. Land
and air transport cater mainly for light and small shipments while rail- and sea transport cater for
heavy shipments. Deciding which mode of transport to use will also be dependent on how
dangerous, fragile or of high value the products are. Air and land transport are usually the best
option to use for breakable products of high value.

 Speed of Transport:
Air transport is the quickest mode of transport but it is costliest of all. Motor transport is quicker
than railways over short distances. However, the speed of railways over long distances is more
than that of other modes of transport except air transport and is most suitable for long distances.
Water transport is very slow and thus unsuitable where time is an important factor.

 Fuel efficiency/ carbon emission:

With the growing environmental concerns many people and companies prefer to chose a option
with smaller carbon footprint. Some people prefer electric vehicle solely because of the “green”
label associated with them. Fuel efficiency is closely linked with carbon emission while doing a
comparative study, getting more output from same quantity of fuel is always desirable.
  Capacity/ Carrying Capacity:
This is another important factor especially for logistic companies, it becomes important in case
of travelling in a group. While going on a trip with your complete class you cannot expect to
take multiple vehicles because of safety and security concerns,a vehicle with more carrying
capacity will be preferred. In case of transporting goods the concept of scale of economies is
best exploited for economic profit while dealing with bulk orders.

 Integration with other modes

For long trips or trips which requires change of mode this factors becomes most significant for
completion of the trip. In case the selected mode is not integrated with other modes than the trip
will never get completed. In some cases to overcome the problem of integration a heavy cost
will be incurred to complete the required trip.

 Comfort
This factor is at times ignored while some makes it priority depending upon the affordability.
This is essential in case of travelling and ignored in case of transporting goods. Humans
undertakes the trip for various purpose like work, leisure journey, picnic, shopping and thus
always prefer comfort. Those who can afford to pay more are expected to get more comfort
while some prioritize cost over comfort depending on their personal decision.

 Privacy:
This factor is usually ignored and comes into mind in some cases especially when the purpose of
trip is confidential like in case of business trips. All conversation taking place during the journey
are required to be kept confidential. It can also be required when a person wishes to spend
quality time with someone. Public transport does not provide option of privacy or if in some
cases they do provide than its negligible. Private vehicles can provide high level of privacy.

 Employment generation:
This factor is not considered for individuals and companies but is essential for government while
making policies as employment generation becomes their responsibility.

 Frequency:
A mode with higher frequency is desirable as the waiting time reduces thus saving time. Modes
with good frequency helps especially in cases of delays.
  More considerations:
Other factors to keep in mind:

 The terms of the export sales contract, e.g. the buyer may stipulate that a particular
mode of transport should be used.
 The location of the foreign market – obviously, a destination on another continent
will eliminate the road and rail option for the main transport leg.
 The location of the overseas buyer in relation to airports, sea ports and railway
stations.
 The facilities at the port of destination, e.g. whether there is bulk handling or
container –handling equipment.

INNOVATIVE SCHEMES

 Growth of private-vehicle ownership

The growth of vehicles has been much faster than that of the population. The number of
registered vehicles increased from 55 million in 2001 to 142 million by 2011, with a currently-
estimated 195.6 million in 20162. Seventy-five per cent of these registered vehicles (147 million)
are motorcycles. Furthermore, the physical infrastructure hasn’t been able to keep pace with the
growth in demand. The urban road length has increased from 252,001km in 2001 to 411,840km
by 2011. In the last decade registered vehicles per million population has increased by 219%
while urban road infrastructure per million only increased by 124%.

This rapid motorisation has led to severe congestion, longer journeys and higher per capita trips.
Indian roads are also popular for heterogeneity of vehicles sharing the same road space. There
are around 32 different vehicle types in India such as bicycles, cycle-rickshaws, auto-rickshaws
(‘tuk-tuk’), motorcycles, cars, buses and trucks.

 Development of ‘smart cities’

The federal government of India has launched two flagship programmes – 100 Smart Cities and
Atal Mission for Rejuvenation, and Urban Transformation (AMRUT) for 500 cities that have a
population of 100,000 or more, with funding of $8 billion and $8.3 billion, respectively. The
smart cities initiatives focus on core infrastructure service, whereas, AMRUT will adopt a
project approach to ensure basic infrastructure services.
A ‘smart city’ is an urban region that is highly advanced in terms of overall infrastructure,
sustainable real estate, communications and market viability. It is a city where information
technology is the principal infrastructure and the basis for providing essential services to
residents. Until now the federal government has shortlisted the establishment of ‘109 smart
cities’ in India. The key idea of smart cities is the alliance of public services with an integrated
public transport system. Information Technology, therefore, will play a crucial role in both
integrating and automating these services.

The 20 cities in the first stage will receive INR 2 billion (US$ 30 million) in 2015-2016 and INR
1 billion (US$ 15 million) every year for the following three years; a total of INR 5 billion (US$
75 billion). State governments and respective urban local bodies will also contribute the same
amount. Many foreign countries, including Japan, France, Germany, Singapore etc. have come
forward to support the federal government’s plan to develop smart cities.

Smart cities cannot be built without smart public transport. Under the smart cities programme,
the cities are required to build efficient urban mobility and public transportation by creating
walkable localities, as well as promoting a variety of transport options. However, there is no
clear guideline for developing a sustainable public transportation system. An urban transport
system is subject to planning, execution and development by the states and union territories;
hence, under the smart cities programme each city can prepare its ‘Smart City Vision’ document,
highlighting the city’s vision and funding proposal.

 The emergence of metro systems

After the success of the Delhi Metro, lots of Indian cities are exploring the option of
implementing metro rail networks. The Ministry of Urban Development (MoUD) estimates that
there is approximately 316km of metro lines currently in operation and more than 500km of
metro lines under construction across the country. This includes metro/mono rail systems
promoted by state governments and private bodies.

Most of the systems are developed by public authorities with external funding and support from
federal government. However, some of the cities have developed the system in partnership with
private players e.g. Gurgaon (operated by IL&FS), Mumbai (operated by RATP) and Hyderabad
(operated by Keolis – under development). In the Union Budget 2014-2015, the government
emphasised that the planning of metro projects must begin now. The federal government has
earmarked INR 100 billion (US$ 1.5 billion) for metro projects in the fiscal budget 2016-2017.

 Revamping city bus system

Buses are the most popular and convenient mode of transportation in urban cities. More than 1.6
million buses are registered in India, and the public bus sector operates 170,000 buses carrying
roughly 70 million people per day. However, bus transportation has not been able to cater to the
growing travel demand. There are only 30,000 buses serving the city areas, out of which
approximately 3,500 buses are operated under a public-private partnership agreement. All bus
operators are incurring huge losses and do not have funds for the capital investment needed to
procure new vehicles and technology. The average age of the fleet ranges from two years to 11.8
years for state bus transport undertakings.

The National Sample Survey Office (NSSO) carries out an annual survey of household
expenditure on service and durable goods in India. As per the details of expenditure on transport,
buses are the most preferred mode of transport in both rural and urban India, followed by auto
rickshaws.

The federal government launched National Urban Renewal Mission (NURM) in 2009 and
embarked upon a massive programme of revitalising urban areas by allocating national funds to
speed up the creation of much-needed infrastructure. The programme was split in two phases
and was concluded in 2015. Approximately 222km of Bus Rapid Transit (BRT) systems are
operational and the remaining 282km are under construction. MoUD has provided financial
assistance to 11 cities for the construction of 504km Bus Rapid Transit System (BRTS).

According to estimates from ICRA Limited (2016), 100 of the largest Indian cities require
approximately $15.4 billion to procure 150,000 new buses and upgrade ancillary transport
infrastructure. It will be difficult for state governments or local bodies to invest such a large sum
without further federal government support.

In order to generate more investment in the sector, the federal government has proposed to open
the public bus sector to private companies. This will allow buses to operate on nationalised
routes. According to the Road Transport Ministry, the opening of the sector will increase the
passenger ridership to 120-150 million per day.

 Future bus technology

The federal government has unveiled an ambitious project to replace all public bus transport
fleets with hybrid technology. The government launched the full indigenous retro-fitted electric
bus, converting existing conventional fuel buses into electric buses, developed by KPIT
Technologies and Central Institute of Road Transport (CIRT).

A main hindrance to the adoption of new technology is the financial implication and capital cost.
The average cost of a hybrid bus in India is around INR 23 million (US$ 375,000), compared to
INR 9 million (US$ 150,000) for a premium diesel bus. In order to incentivise the operators to
procure electric and hybrid buses, the federal government has launched the ‘Faster Adoption &
Manufacturing of Electric and Hybrid Vehicle (FAME)’ scheme to provide a subsidy of INR 6.1
million (US$ 100,000) for electric and hybrid buses.

Currently Navi Mumbai Municipal Transport (NMMT) has procured five hybrid city buses from
Volvo and MMRDA has procured 25 hybrid buses from Tata Motors. There are currently no
fully electric buses in commercial operation. BYD has completed a pilot in Bangalore (2014)
and Delhi (2016) to demonstrate electric bus technology.

 Innovative technology
IT solutions are important for public transport systems and information is becoming critical for
any service planning. The key factors such as passenger demand; journey demand; service hour;
and service frequency have great impact on the expenditure and revenue of any authority or
operator. IT tools can also help to refine processes and improve efficiency. Smart transportation
systems should have fleet management, ticketing, security surveillance, traffic management and
real-time passenger information.

The recent ‘Policy Road Map for City Bus Systems in India’6 study identified that most of the
city’s bus operators are still lagging behind in the implementation of an IT system. The survey
revealed that nine out of 12 cities have implemented a vehicle tracking system and 11 out of 12
have implemented electronic ticketing machines (ETMs). However, no cities have yet
implemented ‘planning and scheduling’ or ‘depot management’ systems; with the majority using
manual systems for such operations. The availability of real-time information is equally
important for commuters to plan their journey. In the absence of good quality data, commuters
aren’t able to obtain accurate service information. However, there are some third party mobile
app providers that provide offline information to users such as Trafi and Moovit.

Smart ticketing has been slow to gain popularity in India. All metro systems have implemented
smart ticketing solutions for its ‘closed’ environment; Delhi Metro sells approximately 16,000
smartcards a day and 1.8 million commuters use the card daily. However, the smart ticketing
systems are not yet integrated with the bus system. The federal government did make plans to
introduce a Smart National Common Mobility Card (NCMC) to enable seamless travel using
different modes of transport across the country as well as having retail purchasing benefits.
However, the initiative did not take off. In July 2015 the government established a committee to
recommend an inter-operable smartcard.

In June 2016 Bengaluru Metropolitan Transport Corporation (BMTC) became the first city in
India to launch the Axis Bank BMTC Smart Card – an open loop EMV contactless smartcard.
However, the system is not integrated with other modes such as metro. Mumbai is another
example that has various modes of public transport including suburban railway lines, metro,
buses, taxis and auto-rickshaws. The Mumbai Metropolitan Region Development Authority
(MMRDA) has appointed London’s Transport for London (TfL) to prepare a detailed plan for an
integrated ticketing system in the Mumbai Metropolitan Region. An integrated system is planned
to be rolled-out by 2018.
  New measures to strengthen public transport

The federal government has recently ratified COP21 (Conference of Parties) agreement in Paris,
France on 2 October 2016. India currently accounts for approximately 4.5% of global
greenhouse gas emissions. Although the key focus is on clean energy generation, the federal
government is also looking to reduce emissions from the transportation sector.

SUMMING UP

The cities of this diverse country and its urban population play an important role in the growth of
the country. As per the 2011 census, 31.2% of India’s population (377 million) is living in urban
areas. As the UN estimates, this numbers will grow to 40% (590 million) by 2030 and 58% (875
million) by 2050. While only 30% of the total population live in urban areas, approximately 63%
of India’s Gross Domestic Product (GDP) is contributed by those urban areas1.

Even with the current size of the urban population, Indian cities are facing a multitude of issues
such as severe congestion; deteriorating air quality; increasing greenhouse gas (GHG) emissions
from the transport sector; increasing road accidents; and an exploding growth in the number of
private vehicles (largely motorcycles). With the urban population projected to more than double
in the next generation, the situation could easily get out of control and thwart India’s economic
development efforts unless remedial measures are soon taken.

In a move to recognise and act upon urban mobility issues, in 2006 the federal government of
India introduced the National Urban Transport Policy (NUTP), setting the policy framework for
providing sustainable mobility for the future. In 2015 the government unveiled its new plan to
upgrade 100 cities into ‘smart cities’ and to ‘renew’ 500 cities.

ROAD SECTOR IN INDIA RECENT DEVELOPMENTS

MODEL EXAMINATION QUESTIONS

1. State the factors influencing the choice of mode of transportation

2. Note on Innovative schemes in the road ways transportation