Poor road conditions across the country is a major challenge
Economy & Market

Poor road conditions across the country is a major challenge

Vikas Damle

Srinath Manda, Program Manager, Transportation & Logistics Practice, Frost & Sullivan

How do you evaluate logistics in cement industry?
Logistics in cement industry typically means bulk cargo handling both in the inbound (sourcing) and outbound (distribution) side. Inbound logistics involves transporting limestone and other raw materials that do not involve any notable warehousing and value added activities, outbound logistics involves systematic transportation and storage activities, apart from a few value added services.

What are functional bottlenecks?
Due to the sensitive nature of the product (as cement is prone to damage by atmospheric humidity), outbound logistics involves careful handling of the product both in transportation and storage. The product needs to be weather proof in every stage of its distribution until it finally reaches the end-user. Ensuring its safety across the distribution chain is a major challenge for the cement industry.

Railways haul about 40 per cent of cement, what are the bottlenecks?
Even though railways is the most preferred inland transportation mode for the cement industry, lack of integrated rail connectivity from sourcing locations to plants and again from plants to last mile distribution points is the major issue faced by the industry.

What are the inwards and outwards logistics, the cost proportion?
While cement industry reportedly incurs around 15 percent of its turnover as logistics activities cost, inbound activity accounts for one-third of this cost and the remaining is incurred on outbound logistics.

What are preferred modes of transportation of cement?
As mentioned above, rail is the most preferred inland transportation mode of cement industry (mainly for long distance consignments) because large volume of consignments to major destination(s) across country can be sent in a single consignment. However, since railways are unable to offer end-to-end connectivity, road transportation has emerged as the most used transportation mode by this industry. Coastal shipping is also used in few parts of the country by cement companies.

What are the new challenges in road transport?
Poor road conditions across the country (especially for the last mile distribution) are a major challenge for the cement industry utilising road transportation. Rapid fuel price hike leading to frequent escalation of transport charges is another challenge. In addition, rising toll charges on highways is also adding to transportation costs for the industry.

What is the focus on logistics going ahead?
For the cement industry, the focus or trends that are expected to enhance efficiencies in logistics are:

  • Transportation using bulkers (specialised cement transport trucks that carry cement in bulk, similar to oil tankers) instead of the traditional mode of transporting cement bags through road/rail can be considered as a major development/innovation in cement logistics. This will result in significant savings in packaging costs.
  • Emergence/growth of "Ready Mix Concrete" industry has created another direct distribution channel between cement manufacturers and customers (ready mix companies in this case).
  • While the above two trends are likely to gain more significance in future, improvements in packaging technologies (such as improved packing materials, vacuum sealed packing etc) are also expected to gain prominence.
  • Realisation of Dedicated Freight Corridors (DFCs) by the Indian Railways (expected to be by 2015-16) is also likely to shift a significant share of cement transportation from road to rail mode.
Indian Cement Review