Efficient Supply Chain and Logistics Management: Implementing a Multimodal Approach to Cut Costs

The supply chain and logistics industry in India has experienced tremendous growth and scrutiny in the last few years. Metrics such as the Logistics Performance Index (LPI) have been used to monitor India’s progress. In 2023, it ranked 38th out of 139 countries.

Organizing, coordinating, storing, and moving different resources to people, inventory, raw materials, and equipment between multiple places like production sites and a distribution hub is known as logistics. The PM Gati Shakti programme was presented by the Indian government in 2021. From 2024 to 2025, the primary objectives are to lower logistical costs and promote economic growth.

Multimodal Logistics: Definition

Using at least 2 distinct modes of transportation to convey commodities from one location to another is known as multimodal transportation. This usually falls under a single contract with a single transport operator who handles the whole journey. In addition, it may involve road, rail, sea, or air freight.
This is not the same as intermodal transportation as it uses a variety of modes to move the products. However, each journey segment is under a separate contract.

For example, a single carrier, typically referred to as a multimodal transport operator or provider, oversees multimodal transportation. The shipper opting for multimodal transport still undergoes a single contract process. However, the provider utilizes a network of smaller carriers or contractors to execute the task.

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Benefits of Multimodal Logistics for Supply Chain & Logistics

In terms of carrying out contractual responsibilities, supply chain and logistics multimodal shipping streamline the entire procedure. The following are some of the evident benefits associated with multimodal transit:

Time-Saving

In a Supply Chain & Logistics multimodal system, shipping companies communicate with all forms of transportation. Using a single provider can shorten the time it takes for your goods to arrive. Shippers can utilize various modes of transportation to ensure their packages’ swift and secure delivery. Moreover, multimodal transportation systems enhance productivity.

Cost-Effective

Opting for the lowest-priced delivery companies may seem advantageous. However, utilizing a freight broker can streamline the process of multimodal transportation, saving you time and effort. Nonetheless, it’s important to note that the cheapest option may not always guarantee the highest level of safety or reliability.

Faster Transportation

Recent restrictions that limit truck drivers’ ability to log significant driving hours have caused some overland shipments to move more slowly. Having many means of transportation covered under a single agreement offers even distribution of traveling time. This will avoid delivery delays and drivers spending excessive amounts of time on the road.

Clearer Communication

Clear communication is the determining factor in distinguishing between multimodal and intermodal transportation. Having to coordinate with multiple carriers can lead to delays in loading and shipping. Utilizing a single contract for the entire relocation process offers additional benefits such as enhanced transportation management. Moreover, it reduces the workload for the contracts section of your legal team.

Key Components of a Multimodal Approach for Supply Chain & Logistics

In today’s fast-paced business world, managing Supply Chain & Logistics effectively is vital for any company’s success. To achieve this, many businesses are turning to multimodal approaches, which offer a variety of benefits.

Let’s take a closer look at the key components:

Transportation Optimization: One crucial aspect of this approach is optimizing transportation. By using different modes like trucks, trains, planes, and ships, companies can cut down on time and expenses. For example, combining trucking with rail transport for longer trips can save money and ensure goods reach their destination on time.

Inventory Management: Another important part is managing inventory efficiently. By using advanced technology and data analysis, businesses can keep just the right amount of stock, reducing both shortages and excess costs. Linking inventory systems with transportation networks helps plan better and coordinate movements, making the whole process smoother.

Warehouse Efficiency: Making warehouses work better is the key to overall success. Automated systems, smart layouts, and lean practices all contribute to smoother operations and lower costs. By making the most of available space and cutting down on handling time, companies can meet customer needs faster and more reliably.

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Technology and Innovation in Multimodal Logistics

Businesses now have real-time visibility over the movement of commodities across air, sea, and land transportation because of advanced technology. Organizations can increase productivity, performance, and competitiveness by using it to make better-informed decisions.

Moreover, AI and ML-powered logistics management systems enable real-time tracking of shipment statuses from various partners and modalities. This capability offers a unified tracking view within a single dashboard.

Businesses can reduce costs, save time, and use fewer resources by automating the management of documents as manual paperwork is hectic. Besides, they can lower the number of man-hours needed for shipment processing by using digital document handling, smart invoicing & billing, and multi-channel functionality.

Challenges and Risks of Multimodal Logistics

Businesses face a whole new set of challenges as global cross-border deliveries are driven by demanding and impatient customers and e-commerce. As a result, multimodal Supply Chain & Logistics Management has quickly become the prevailing method in the industry for leveraging economies of scale and efficiency across multiple transportation modes.

Poor Real-Time Visibility

Logistics service providers (LSPs) sometimes lack coordination, which causes disruptions to tracking cargo during hand-offs between multiple vehicles and challenges for businesses seeking real-time status updates. Additionally, the severity of the issue is increasing due to the absence of standardized data like status updates.

Excessive Paperwork

There is a substantial amount of paperwork exchanged among different logistical and carrier companies throughout the end-to-end shipment process. This not only adds to the shipper’s workload but also leads to confusion and disorderly handling of shipment movements.

Poor Coordination Among Stakeholders

Businesses in multimodal logistics and supply chain management only communicate with the primary service provider. As a result, cooperation and communication with the other subsidiary service providers tend to be missing. The absence of clear communication and coordination among many stakeholders results in a lack of trust, poor communication, and an overall drop in the quality of operations.

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Future Outlook and Opportunities of Multimodal Logistics

Despite these above-stated problems, India’s logistics industry is quite promising. This country benefits from a strategic location that will allow it to become a hub for a wide range of products.

To strategically develop this industry, it is essential to tackle long-standing issues. Some of these are removing the Octroi fee, the construction of state-of-the-art warehousing facilities, the improvement of road and rail infrastructure, and simplification of customs procedures, etc.

Conclusion

As discussed, India’s Supply Chain & Logistics sector holds immense promise with the implementation of the PM Gati Shakti program and a focus on multimodal transportation. Embracing technological advancements and addressing long-standing issues will position India as a strategic hub in the global logistics landscape.

Partnering with a trusted advisor like Tecnova, one of the leading Supply Chain & Logistics Consulting Firms in India can be helpful. We help companies manage the transportation and logistics of their products from India to their global markets. Thus, we have the expertise to assist the industry’s transformational path with our knowledge.

Reference

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