IoT: Key Technology to Transform
the Social Infrastructure in India
C&C User Forum & iEXPO2016 Seminar Report
December 16, 2016
Mr. Piyush Sinha, CEO of DMICDC Logistics Data Services Limited, spoke on how they are collaborating with NEC to solve the social infrastructure issues in India.
Current situation in India
The current logistic situation in India in terms of its trade industry is not too favorable:
The country ranks 133rd in the world in terms of Trading Across Borders. The time to export in India—i.e., to make it through customs—is close to five days, and container transportation from Mumbai to Delhi, which is a distance of 1500 kilometers, takes on average about 22 days. Moreover, it is impossible to predict exactly when a container will arrive, which can be frustrating for Japanese workers in India, as fundamental Japanese concepts such as just-in-time inventory are difficult to uphold. In addition, the costs of transportation, and the lead time to export, are significantly higher in India compared to other countries.
Another problem is the difficulty of transporting containers in India. Rail transportation is the most economical means of transportation, but it accounts for just 17% of the share; more than 60% of containers are transported by road. Truck transportation is costly and time-consuming, and also quite unpredictable due to the congested highways. Moreover, it poses a serious threat to the environment. A modal shift from highways to railways is therefore required. It is clear that as India continues to grow, the container volume will grow, and currently there are not sufficient highways to support that magnitude of transportation. In essence, railway transportation has to become a more effective medium.
Supply chain challenges
Currently, only 17% of freight in India is transported by train. Roadways, though they account for about 68%, are very costly and visibility is low. On the ports, there is a high turnaround time and limited berth capacity. With the storage infrastructure, there is poor capacity planning, and in terms of technology and skills there is not a good connection between the hard infrastructure that the government is implementing and the soft infrastructure. There needs to be some kind of integration of soft and hard infrastructure for the initiatives the government is taking to work.
Most of the shipment processes in India have their own IT systems. A port terminal operator has to deal with the logistics company, the railway system, the custom system, the trucker information system, the shipping line IT system, the inland container depots (ICDs), and the container freight system (CFS) before a container reaches the customer. Most of these systems are not in communication with each other, and there is no single window interface that enables users to pinpoint the position of their packets. So, on a typical morning, the supply chain department or the logistics department or the manufacturer may be expecting a container, and they will have to go to each individual system to find out where it is. They might have no idea if a package is in a warehouse, is caught up in customs, or is in transit somewhere along the way. They have to check all sorts of different systems before they get an accurate picture of what's going on. This is a big challenge for any user of the interface.
Logistics in India
A couple of years ago, Narendra Modi, the prime minister of India, started a new initiative called "Make in India". The basic objective is to encourage foreign companies to set up manufacturing facilities in India by providing them with the required infrastructures and clearances. Mr. Modi is well aware that this initiative will fail unless the logistics situation in India is improved. Essentially, logistics is the key.
The logistics sector in India was pulling in about 110 billion dollars in 2013, and this is expected to become 200 billion dollars by 2020. This translates into about 7% of India's GDP. In other words, this is a serious industry! The container volume in India is also expected to increase by 10 times over the next 20 years or so.
Overview of Delhi-Mumbai Industrial Corridor
An MoU* was signed between India and Japan in July 2006 for partnership in the Delhi-Mumbai Industrial Corridor (DMIC) program. This industrial corridor between Delhi and Mumbai, is based on Japan's Tokyo-Osaka industrial corridor, although it is much larger (the region that the DMIC covers is about 450,000 square km, or about 20% larger than the entire land mass of Japan).
The total estimated investment in DMIC is about 100 billion dollars. There are 24 investment regions where manufacturing entities are setting up spread over. Eight industrial cities are included in phase-1 of the project. Various feasibility studies and interviews with individuals at the Ministries of Railways, Shipping, Commerce, Roadways, and Transportation and with global user companies showed that, in terms of transport and logistics, all users wanted a good tracking service, and the logistics companies and shippers had several complaints pertaining to governmental red tape and a lack of transparency. Although the government is actively developing a physical infrastructure (setting up the DMIC, building new highways, expanding existing highways), there is a lack of a soft infrastructure. Ideally there should be an IT system that can maximize the use of the physical structure that is already in place. To this end, a system for visualizing container movement that can optimize the process of the entire supply chain is envisioned. This is how the DMIC Logistics Data Bank was born: to maximize the advantages of both rail and road transport.
* MoU:Memorandum of Understanding
Implementation of DMIC
Some of the issues faced by road and rail transport include longer lead time, transportation delay, and unknown location. These are the primary issues for which solutions are needed. If users have access to visualized transportation information, they can make informed decisions about how to design their own supply chain.
In the recent past, it was difficult for users to track their shipments because there were multiple systems. The solution is DMIC LDB: a complete end-to-end container movement tracking system displayed on a single window.
To make this a reality, Mr. Sinha and his team took a cloud-based platform of NEC, known as the logistics visualization system, and customized it for the Indian market. They use RFID technology as an IoT service and SDN for communication. They started with visualization and then incorporated big data analysis.
In this system, any time a container is imported or exported, a magnetic RFID tag is attached to the container when it enters the country and is removed when the container leaves. RFID readers are installed at toll plazas, on the CFS, and at the ICDs, and hand-held termninals are used to synchronize the RFID tags with the container number. That tag is then used to track the position of the container throughout its journey. The various systems at play—the port systems, the railway systems—are all integrated so that information between them is shared. RFID tags are used to track all of the data related to the transportation. This data is then provided to each of the users through a Web-based portal on the cloud, and anybody can access it from any location, including from mobile devices.
The initial scope of the project was simply to collect data and to generate information on container location. It has since been expanded to utilize the collected big data for the analysis of bottlenecks, the construction of comparative matrices, and the evaluation of train operator performance. This data analysis also allows customization for each company. For example, 20 days from now, if a customer wants to export a container, the analysis can be used to determine the shortest, cheapest, and fastest route, and that information can then be integrated with the supply chain.
The LDB service was launched on July 1, 2016 at Jawaharlal Nehru Port, the largest port in India, which has about 50% of the container traffic in India moving through it. It has four port terminal operators that handle this. NEC with the help of its local entity, NEC Technologies India interfaced with the government agencies, various stakeholders and drove the business from feasibility study, conceptualization and implementation.
All containers coming into India are affixed a magnetic RFID tag and synchronized with container number. The port system or train system is integrated with the delivery system, and all toll plazas and train stations are equipped with RFID readers. Updates are immediately shared in a central database. This is how the movements and whereabouts of the containers are tracked. Essentially, the entire supply chain is covered, so the user only needs one unified system to get updates on the container information.
Benefits of Logistic Data Bank
The benefits that LDB can bring to the system are enormous. Container transportation time can be reduced, which has the potential to save the country billions of dollars. It is also possible to create a growth spiral where the system works with the entire supply chain to continuously improve itself by encouraging healthy competition among the various container handling entities.
From the government standpoint, there is reduced lead time and cost, which is essential. Several intangible benefits are evident as well—there is increased international competitiveness, manufacturing entities are being encouraged to come and participate in initiatives like Make in India, the manufacturing sector is getting a boost, and organized business resulting in greater employment opportunities is being promoted.
There are environmental benefits as well. If trucks continue to transport containers, excessive fuel emissions and traffic decongestion will continue, and India runs the risk of becoming so polluted as to be rendered uninhabitable. With the modal shift from truck to train, these environmental effects are significantly alleviated.
Overall, there are enormous benefits to all entities, ranging from the ports, the container train operators, and the highways to the ICDs and CFS. The visibility, the analysis, and the prediction that are being brought into the system will also bring in a lot of added value to the services. Specifically, things like empty container management, demand forecasting, and predictive analysis will be of great benefit to each of the stakeholders.
Mr. Sinha and his team are enthusiastic about the fundamental benefits this initiative is bringing to the trade industry in India. Phase 1, which was focused on the western corridors of India, is nearing completion, and phase 2 will see an expansion to the southern and eventually eastern parts of the country. Ultimately, all containers that are transported in India will be covered by the single system.