There are several binding forces in today's logistics industry in India. Yet the industry suffers from a lack of integration of processes, and that has been bleeding the nation through costs that could have been just a fraction. Multi-modality of logistics continues to be one.Containerised form of shipment continues its healthy growth trend at over 12.5 per cent CAGR, but with a global container capacity growing only at half the rate of container traffic, the mismatch is clear. Containerisation is trying to catch up from the 30 per cent of logistics it currently constitutes closer to the global 70 per cent.The multi-modal method of transportation of containers is not new in India, but as fragmented as the market is, the last-mile connectivity and other issues have stymied the growth of containerisation in India. As usual, the nation's infrastructure lags behind the industry.Container infrastructure, including port handling, rail and road connectivity, etc, is way behind. Containerisation's biggest worry, as is for the entire logistics industry, is not as much its own growth as that of infrastructure that will enable it.With its expansion both at ports and inland, containerisation is expected to provide a much-needed boost to rail logistics. Last month Krishnapatnam Port Company (KPCL), India's largest emerging gateway on the east coast, has signed an agreement with the Container Corporation of India (Concor), to provide seamless movement of container traffic from the port to the hinterland. The partnership deal is a milestone as CONCOR, the Mini Navratna PSU under the Ministry of Railways and the largest player in the inland container rail freight segment with more than 200 high-speed container rakes, will enhance the container logistics initiative of Krishnapatnam Port. Across India, of the principal commodities that India trades in, the commodities that are containerised include engineering goods, agricultural commodities, textiles and readymade garments, pharmaceutical products (bulk formulations) and machinery (auto and electronic).PremiseNinety-five per cent of world trade is carried by sea and the Global Maritime Containerisation Market is set to touch 731.88 million TEUs by 2017. The continued industrial development and expansion in commercial operations of business organisations across the globe is providing the impetus for the growth of this industry. With a healthy 12 per cent growth, container movement in India is poised for a major growth. The Indian Maritime Agenda 2020 and its implementable phases - including inland and coastal shipping - will mean that containerisation, as a form of seamless and the most preferred multi-modal method of transport, is set to take a quantum leap.India is considered a major maritime nation as it has a long coastline of around 7,517 km with 13 major and 176 non-major ports. With trade growing between India and other countries, the natural outcome is that the total traffic at Indian ports will grow. Industry estimates project this growth at a CAGR of 9 per cent between 2010-11 and 2015-16 and expect this to be driven by growth inn the traffic of coal and container. The share of non-major ports is projected to grow to 46 per cent by 2015-16 from 36 per cent in 2010-11 due to the increasing shift of traffic from major ports to non-major ports.The growing environmental awareness across the globe is also likely to create an increase in sea traffic as companies look for greener alternatives to expensive air and road transport. Besides this the enhancement of existing pollution control systems and alternative sources of fuel are expected will push growth figures.The infrastructure letdownWhile the containerisation industry is poised for big growth, Indian infrastructure plagued by red tape and bureaucracy is crawling at snail's pace. There is a crying need for reform and improvement at major and minor ports besides establishing Container Freight Stations (CFSs), Inland Container Depots (ICDs), rail links, road networks and so on. Besides this, modernisation has to be brought into various functions to facilitate quicker movement of cargo.The containerisation industry displays an imbalance of trade-surplus in one sector and deficit in another. There is also the phenomenon of new ships coming in but no cargo. Privatisation has brought in many new players. As practitioners say, there is no dearth of players or finance in the containerisation industry but the will of the government that is needed to move things. Politics must be delinked from the growth of infrastructure. The GST must be implemented and road transport networks improved, like the quadrangle and highways."If a seamless link between road, hinterland and ports is created volume will increase fourfold," says Aun Aejaz, Director, Doehle Danautic Logistics. "When it comes to the issue of risk management and safety, the condition here is dismal. In handling and sorting, with the 3G network rollout that is in the offing, sorting of containers will be quick and easy.""Eventually, in the future I see the consolidation of major ports, like each region like say the West Coast will have two or three major ports for the mother vessels," Aejaz says. "The minor ports will turn into feeder ports. This would be a very viable business model. Container Transhipment Terminals are part of the hub and spoke model and will happen."Government ApathyGovernment apathy towards the creation of infrastructure is quite a stumbling block. There is a crying need for investment especially in smaller ports, many don't even own gantry cranes which are a basic pre-requisite to handle containers. This equipment is quite expensive but rather than expect ROI, the Government must invest in these as a service.Vaidheeshwaran, Chief Officer, Wallem Ship Management, points out, "Development has slowed down. Most of the politicians who take decisions on port infrastructure have no shipping experience and this job should be left to mariners with experience. There is also the need to simplify the paperwork. We could take a leaf out of the US, where every state has a good number of developed sea ports and movement of cargo is rapid and easy. Smaller ports must be dredged to allow large vessels to come in. The vested interests from the political domain results in lack of development, a prime example would be the Tuticorin port which has the potential to become a large one."The government and players should invest more in R&D, says Jeetendra P Singh, Managing Director, Amco Cargo, who believes that proper marketing and market research is necessary will increase the demand for containers.These issues are by no means unknown to the respective departments. Last year, a Working Group was set up, cutting across ministries of road, rail, shipping and commerce (no single ministry is in charge of logistics). The Group, headed by Dr Anwarul Hoda (see interview in this section), made many forward-looking recommendations, but hardly any action has been taken on most of them.Building ICDs and CFSsFor nearly a decade, experts have believed that India should aim at becoming a logistics hub. However, the shipping ministry's plans to emphasise the development of non-major ports in preference to building large ports may be in conflict with the goal to become an international logistics hub. ICDs and CFSs, therefore, should be the infrastructure need of the hour.Creation of more CFSs and ICDs will cater to the growing volumes of container traffic. These would offer services for handling and temporary storage of import/export laden and empty containers which are carried under customs transit through any applicable mode of transport that come under Customs control. In an ICD, the containers are collected for onward movement to or from the ports whereas at the CFS containers are stuffed, unstuffed and the aggregation/segregation of cargo takes place. ICDs are usually situated outside the port towns, however there are no site restrictions apply to CFS.The Indian Customs Manual defines an ICD as "A common user facility with public authority status equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs transit by any applicable mode of transport placed under customs act. All activities related to clearance of goods for home use, warehousing, temporary admissions, reexport, temporary storage or onward transit and outright export, transshipment take place from such stations."In countries like Hong Kong and Singapore, container terminals are added every year and there is greater accessibility. India which is a far bigger country than these needs to improve infrastructure and accessibility.The government's decision to allow 100 per cent FDI in Indian ports through the automatic route is set to push up the growth in infrastructure. FDI flows for ports touched $1.64 billion during April 2000 - May 2011, accounting for 1.2 per cent of the total FDI inflows into the country, according to the data released by Department of Industrial Policy and Promotion (DIPP).Some of the hurdles that FDI investors expect the government to address are a modernisation of government systems and reduction in bureaucracy, improved infrastructure, simplification of procedures, better tax structure, improvements in labour laws and employment visa rules.