Assessing inefficiencies in urban freight flows of agrarian commodities

Abstract

India has seen an unprecedented growth in its economic prowess in recent years. This has been possible due to the major government interventions and push to the industry. Logistics is an important pillar in the growth of any industry and nation. It represents five percent of India’s GDP1 . India handles 4.5 billion tonne freight every year leading to a total cost of INR 9.5 lakh crore2 . These goods represent a variety of commodities like agricultural commodities (22%), mining products (39%) and manufacturing related commodities (39%) respectively3 . India also is said to spend 14% of its GDP in logistics which is high compared to other major economies. Urban Freight sector is a major part of the entire gamut. It is defined as “Urban freight transport is defined as all movements of goods in to, out from, through or within the urban area made by light or heavy vehicles, also including service transport and demolition traffic, online shopping trips made by private households and waste (reverse logistics). This excludes all personal movements”4 . It has been found that urban freight alone is responsible for 50% of the total transportation cost, which is high when put in the entire supply chain cost. There has not been much research in the domain as well even when optimizing on this part of the logistics can reduce costs considerably. Also, the research which is available in Europe and US does not clearly imply with India for its nature. The transportation sector in India is very disaggregated, when it comes to urban freight the picture is even more blur. Data availability with respect to the domain is another very big challenge which many researchers face due to which the studies in the domain are considerably less. All these reasons contribute to making the study of urban freight even more important. With National Logistics Policy and initiatives like Gati Shakti and others have been important steps to make a quantum leap. But without the study of this sector which involves last, first at times middle mile deliveries and the work would be incomplete. Which is why this study is an attempt to assess the inefficiencies in the urban freight flows of agrarian commodities. It is destined to assess and identify inefficiencies that plague the system and render it inefficient and costly, time consuming and suggest possible interventions to improve the situation. To achieve the aim certain objectives have been defined: a) to understand the costs, and processes involved in the urban freight flows, b) to determine and assess the factors affecting the urban freight flows, c) to recommend improvements/ changes to improve the flows and reduce the costs. The scope of the study is limited to road-based freight flows due to their high share in the urban areas. Due to limited availability of time, human resources and scarcity of secondary data, the study focusses on certain commodities in detail, along with this the time of the study is between December 2022 to May 2023 where the data collection was done in January & February 2023. An extensive literature review was carried out extracting literature using Google Scholar using the relevant keywords. An array of articles, reports from government and private agencies were also studied. It was observed that the available literature is very recent. The site selected for the study is Kanpur which is the industrial powerhouse of the state of Uttar Pradesh. State is ranks among top three in production of wheat, rice and sugarcane and is a leader in production of many other commodities. The state has approximately 65% of its population employed in agricultural activities. Kanpur is also one of the largest trading centres for may agricultural commodities in the state and region after Delhi which is why its eminent to study this area in detail. The commodities selected for study are wheat, rice and mustard because of the production, trading, and processing volumes in the area. Stakeholder discussions were conducted to map the supply chains, understand the process and costs along with the challenges. Followed by primary and secondary data collection. The primary surveys involved OD survey at APMC. Establishment surveys were conducted of the processors, traders, and transporters. The outcomes based on the identification of inefficiencies in quantitative terms that affect the supply chain and freight flows include interventions in three realms which are cost, infrastructure and policy. Infrastructural interventions may include location decisions, decentralized operations of the APMC. Cost related interventions may include trip decisions, vehicle decisions, cost optimization strategies. Whereas policy related interventions may include location specific mandates, restrictions, infrastructure and operational facilitation, shared usage strategies to name a few. During the time of this study, it has been found that data gaps must be investigated to make informed decisions. Lack of data is not only a hurdle in the research but is also an issue that leads to vague increase in the costs.