Analysis of Cost-Effective Means of International Freight Transport - Coursework Example

International Transport Introduction This paper attempts to provide an analysis of cost-effective means of international freight transport, withoutcompromising on the quality of the service, in relationship to transporting of Triethanolamine (TEA) from the Inland Container Depot (ICD) at Tughlakabad near New Delhi in India to Singapore, via the Nhava Sheva Gateway seaport near Mumbai on the west coast of India. Triethanolamine (TEA) Commercial grade Triethanolamine (TEA) consists of a solution of Triethanolamine made up of 85% Triethanolamine and 15% Diethanolamine. There are several commercial applications for TEA including its use in personal care products and surfactants. The commercial applications of TEA make it an industrial product that is traded to different parts of the world (Tea Fast Facts). TEA is a light yellow viscous liquid, which is packed in stainless steel containers. There is no hazard rating calling for regulations and therefore as freight it can be transported with minimal regulatory requirements. However, it needs to be protected against extremities of heat and so has to be kept away from sources of heat or ignition. In other words transport of TEA only requires the containers be made of stainless steel and that during transportation these containers are isolated from any possible source of heat or ignition, making it fairly safe for transport (Mallinkrodt Chemicals, 2000). . ICD Tughlakabad Figure – 1 (Inland Container Depot, Delhi Customs) Globalization has become a driving force for international trade, which has grown in leaps and bounds. ICD Tughlakabad is made use of by importers and exporters in their trading activities, and it has become the largest dry port in South Asia. The Public Sector undertaking Container Corporation of India Ltd (CONCOR) is the custodian of ICD Tughlakabad. (Inland Container Depot, Delhi Customs). The administration facilities at ICD Tughlakabad contain offices of the Customs, banks, shipping lines, Custom House Agents (CHA’s) and surveyors. Operational facilities include four full length rail lines in the Customs area to handle containers received from manufacturers for export and containers coming in via the Gateway port of Mumbai, Nhava Sheva and Chennai and other ports. IN addition, it is possesses modern facilities for handling of containers like rail mounted gantry with the capacity to lift 40 metric tonnes; rubber tire diesel powered cranes; billoties and lift trucks; 16,000 sq mts of covered sheds in the customs area, for the stuffing and de-stuffing of containers. These most modern facilities make ICD Tughlakabad well-suited for multi-modal transport of freight internationally, as shipping arrangements can be made, containers stuffed, customer formalities completed and transported to the required Gateway port via rail and then shipped to their destinations for door delivery to the points of requirement by interaction at the single point of ICD Tughlakabad (ICD, Delhi Customs). Nhava Sheva International Container Terminal (ICT) The Nhava Sheva Port or the Jawaharlal Nehru Port is located on the West coast of India, close to the commercial hub of Mumbai in India. Almost half of the maritime traffic and 65% of the container traffic of India is handled by this port. It offers modern equipment and technology, keeps up to international standards, provides its customers with competitive rates, ensures safe handling of freight, applies the principles of sustainable development and gives its customers good service (World Port Source). DP World Nhava Sheva has international operations and is a leading container terminal at Nhava Sheva with ISO 9001, ISO 14001, OHSAS 18001 and ISO 27001 management systems certifications. This terminal consists of 600m of quay line that has a draught of 13.5m at berth. It also offers a paved container yard area of 30 hectares with 6,222 ground slots. The rail yard holds 620 ground slots out of these 6222 ground slots. The capacity of this terminal is 1.4 million TEUs. This terminal has the capacity for handling fifth generation vessels. It has a railhead from where two trains are run simultaneously to and from the inland container depots including the Tuglakabad ICD. The two rail lines are capable of handling 180 TEUs in a single placement on these two trains. It offers the most modern IT infrastructure for control and management of its operation within its facilities and also for interaction with its customers. This interaction with customers is on a flexible platform that allows the software to be adapted to specific customer requirements and thus offers secure, reliable, faster, efficient and user-friendly services to all its customers (DP World, Nhava Sheva). The frequency with which various sizes of container ships from different parts of the world ply in and out of the Nhava Sheva Port and the facilities including rail transport offered by the container terminal at the port provide an efficient means for containers from ICD Tughlakabad to be transported to different ports in the world including Singapore. Rail versus Road Transport Efficiency in India In his comparison of the efficiency of rail and road transport in India, Ramanathan 2004, pp. 100-106, proves that rail transport is more efficient than road transport in India and a major contributor is the reduced dependency on coal as fuel through the increase in use of electricity and diesel as energy sources. Rail transport is expected to take over the main transport role for freight going forward in the new millennium, as a result of the better efficiency over road transport (Ramanathan, 2004) Rail versus road transport competition is fiercer in the transport of public than in the transport of freight. In freight transport rail transport with its better efficiency has had and continues to hold a very definite edge. The better efficiency translates into cost benefits and more efficient transport of freight by rail in comparison to road transport. Taking a leaf out of the experiences of rail transport in the developed world, the Indian railways work aggressively to nip any inroads into their market by road transporters through maintaining cost and operational efficiency as benefits to customer (Tiwari, 2007). The fixed costs in rail transport is proportionally higher and therefore the as the size of output increases the cost in rail transport per unit on the basis of economies of scale. The world wide experience in increased returns on scale is that in rail networked economies with heavy density size advantages work in favour of rail transport and furthermore rail transport operations in combination with supply of infrastructural services make rail transport a monopoly. The importance of rail transport causes it to be government owned in many countries and the larges such of these monopolies is the Indian Railways. The large size and scope of its freight movement makes it possible for Indian Railways to offer low-cost freight services, with the only hindrance in further reduction in freight costs, beings its social obligations that it fulfils as a part of the state owned companies in India (World Bank Group, 2009, p.175). Multimodal International Freight Transport The key drivers for multimodal international freight transport are the economic globalization, agility in manufacturing, speed demand in market delivery and supply chain management (Rondinelli & Berry, 2000). The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) 2009, defines multimodal transport as “a transport system usually operated by one carrier with more than one mode of transport under the control or ownership of one operator. It involves the use of more than one means transport such as a combination of truck, railcar, aeroplane or ship in succession to each other e.g. a container line which operates both a ship and a rail system of double stack trains”, The key features of multimodal transport are the effective use of a combination of transport modes, fast and efficient means of reaching goods to their destinations, new options in the business of freight transport and the appropriate use of container and information communication technology in the process (UNESCAP, 2009). Several key benefits are derived by the use of multimodal freight transport. These key benefits are the minimisation of time lost at the points of transhipment, enhances the speed at which the transit of goods occurs, reduction in having to cope with documentation and formalities, reduction in freight transportation costs, only one transport agency to interact with and all this at increased quality in the transport of goods. The minimisation of time lost at transhipment points occurs through the transport agency having an effective communication system that enables coordinates the interchange and onward transhipment of goods. The benefit that the faster transit of goods provides lies in the reduction of the disadvantages associated with the manufacturing points of goods being at a distance from the end-use points and the reduction in the tying up of capital resources in relationship to the goods. Documentation and formalities can be reduced through the completion of these obligations at the point of origin, removing the need for them at each segment of the transport chain. The benefits of the reduced time in transit and documentation are reflected in cost reductions in freight charges (UNESCAP, 2009). Cost Effective Means for Transporting TEA from Tughlakabad to Singapore Multimodal freight transport works out to be the cost effective means for transporting TEA from the ICD at Tughlakabad to Singapore. The multimodal transport system involves a combination of rail transport across land to the Nhava Sheva port on the west coast across land and then use of a container vessel to tranship the freight over water to Singapore. Some of the key elements that make this a mode of freight transport cost and quality attractive lies in the infrastructure of the ICD at Tughlakabad, the economy in rail transport to Nhava Sheva Port, and quick transhipment of the freight by a container vessel to Singapore. TEA is a freight that has the minimal of regulations in transport due to its low risk. The Tughlakabad ICD has the infrastructure to stuff the containers within the customs yard and clear customs formalities, such that there is no need for duplication of customs documentation and formalities during transit and at the time of transhipment. The Tughlakabad ICD has within its infrastructure transport agencies capable of as the single agency to transport the freight overland and across the seas to Singapore. Indian railway infrastructure facilities run into the Tughlakabad ICD customs yard and the containers that have passed the customs formalities can be easily loaded onto the rail cars with the loading machinery available in the customs yard. Once loaded on to the rail cars there is regular and timely movement of rail cars over the railway network of the Indian railways to the Nhava Sheva Gateway port. The infrastructure at the DP World ICT allows for unloading of the freight onto its yards and storage till the arrival of the container vessel used for carrying the freight to Singapore. The Nhava Sheva gateway port handles a major proportion of the container traffic in and out of India, and so container vessels plying to and from various ports are constantly arriving and departing form Nhava Sheva port. This allows for quick transhipment of the TEA freight from Nhava Sheva port to Singapore. The IT technology used at Tughlakabad ICD and DP World ICT make it possible to track the movement of the freight from the time it leaves Tughlakabad till it reaches Singapore. This means that the shipper, the consignee and all others in the transport chain are aware or can access the movement of the freight for necessary action from their side. Cost effectiveness comes from the lower freight rate in transportation over land in India making use of the scale of economy of the Indian railways that offers competitive freight rates over other modes of land transport. Additional cost savings result form the use of a single transport agency and streamlining of customs documentation, so that there is no duplication of customs documentation and formalities. Additional cost savings come from the minimal storage time at the DP World ICT, due to the quick transhipment through the busy Nhava Sheva gateway port. Quality of transportation service is enhanced by the integration of information technology into the logistics of all the elements involved in the transportation of the freight from Tughlakabad ICD through the Nhava Sheva Port to Singapore. Literary References DP World, Nhava Sheva. ‘Nhava Sheva International Container Terminal’, [Online} Available at: http://70.40.216.149/dpworldmumbai/ (Accessed Aug 22, 2009). ICD, Delhi Customs. ‘Brief History of Containerized Cargo at ICD Delhi’, [Online} Available at: http://www.geocities.com/icddelhi/ (Accessed Aug 22, 2009). Inland Container Depot, Delhi Customs. ‘About Tughlakabad’, [Online} Available at: http://www.geocities.com/icddelhi/tuglakabad.htm (Accessed Aug 22, 2009) Mallinkrodt Chemicals. 2000, ‘”TRIETHANOLAMINE’, Materials Safety Data Sheet [Online} Available at: http://www.rocketmotorparts.com/pdfs/triethanolamine_msds.pdf (Accessed Aug 22, 2009). Ramanathan, R. 2004, Indian Transport Towards the New Millennium; Performance, Analysis and Policy, Concept Publishing Company, New Delhi. Rondinelli, D. & Berry, M. 2000, ‘Multimodal transportation, logistics, and the environment: managing interactions in a global economy, European Management Journal, vol.18, no.1, pp. 398-410. ‘Tea Fast Facts’, DOW [Online] Available at: http://www.dow.com/amines/prod/ethano-tea.htm (Accessed Aug 22, 2009). Tiwari, R. D. 2007, Railways in Modern India, Ward Press Ltd, Toronto. UNESCAP. 2009, ‘Multimodal Transport Operations’, [Online] Available at: http://www.unescap.org/ttdw/CapBuild/PPT%20-%20Multimodal%20Transport%20Operations.pdf (Accessed Aug 22, 2009). World Bank Group. 2009, World Development Report 2009: Reshaping Economic Geography, World Bank Publications, Washington. World Port Source. ‘Nhava Sheva’, Online] Available at: http://www.worldportsource.com/ports/IND_Nhava_Sheva_1529.php (Accessed Aug 22, 2009) Read More