1. “Preparedness Of Steel Mills to Improve Efficiency in Logistics”
Indian Steel Markets Conference Organised by Mjunction services limited
On 7-8 June, 2018 at Kolkata
“Preparedness Of Steel Mills to Improve Efficiency in Logistics”
L N Mallik
ED (Transport & Shipping) SAIL

2. Cargo Movement For Steel Industry
Scale of Logistics movement in Steel Industry
Iron Ore
Coking Coal
Fluxes (Ferro Alloys)
Iron
3 units INPUT
1 unit OUTPUT
Cargo Movement For Steel Industry
Coking coal consumption: 1:1, Iron Ore: 1:1.63, Flux: 0.4, 2

3. Crude Steel Production in India (Million tons)- last 10 yrs

4. National Steel Policy 2017
With a vision to create a technologically advanced and globally competitive steel industry that promotes economic growth, the GoI has formulated the National Steel Policy 2017.
The NSP aspires to achieve 300 MT of steel making capacity by 2030, translating into additional investment of Rs.10 lakh crore.
The policy seeks to increase consumption of steel in major segments like infrastructure, automobiles, and housing, as well as seeks to increase per capita steel consumption from existing level of around 61 kg to 160 kg by 2030.
The policy has extensively dealt with almost all areas like steel demand, capacity, raw materials, technological efficiency, product quality, value addition, focus on high end research, infrastructure and logistics.
National Steel Policy (NSP) 2005 aimed at 100 MMT by which has already been achieved by India.

5. National Steel Policy 2017 Infrastructure & logistics:
Adequate and timely infrastructure growth in the eastern states where bulk capacity addition is likely to come up.
Development of evacuation infrastructure to minimize turnaround time as well as to build necessary linkages to reduce length of haulage.
Alternative modes of transportation of raw materials such as slurry pipelines and conveyors.
Promotion of transportation of raw materials and finished goods through inland waterways and coastal shipping.
Port-laid development of steel clusters under the aegis of Sagarmala Programme.
Strengthening Port infrastructure.

6. Logistics Scenario

7. Logistics Scenario in India
India’s spend on logistics activities is higher than the developed nations due to low efficiency
Key factors
Low level of mechanisation
Low average Vehicle speed
High turnaround time
High cost/time for inland movement
Significant current & planned investment in infrastructure
The competitive advantage between companies is going to be determined by the logistics cost

8. Logistics Infrastructure for Steel Industry in India
Major dependence on Indian Railway as most of the plants are located in hinter land.
Bulk commodities like iron ore , Coal, fluxes, move almost by rail.
Presently, around 50-60% of the domestically produced steel moves by rail.
Coastal movement in India is not well developed.
Bottlenecks in reaching and also evacuation of cargo from the ports and plants.
Inland waterways in a nascent stage.
Infrastructure development being accorded priority by Government and industry.

9. CONCENTRATION OF STEEL MILLS
Major steel plants located in three states rich in coal and iron ore, putting pressure on port & other logistics infrastructure for both Import & Export.

10. Indian Railways – development to help Steel Industry
Share higher than 60% for most of the bulk movement for core sectors
Suffering from Congested Track/ high density of traffic, Low avg speed of Trains – Low turn around
Modernization and upgradation of equipment-both fixed infrastructure & rolling-stock
Doubling and Port Connectivity
Dedicated Freight Corridors will be a game changer in rail transportation.
FOIS : Real time information system on rake movement
Large investment under PPP route – Logistic Parks/ Hub
Steel Movement by Rail : Presently ~ 50% , to be improved

11. Cargo Owner Perspective
For steel sector, challenges are two fold involving inward and outward movement through coastal mode:
To ensure supply of raw material at right time and price
To ensure order servicing by supplying steel at the destination at right time and cost.
The decision to shift cargo from rail/road to coastal/IWT will depend on the ability of the service provider to reach material of a reasonable size at a optimum cost and at right time.
The decision of cargo user is mainly based on the mode optimization in terms of cost, delivery, time of servicing etc. as shown in the matrix.

12. Mode Optimisation RAIL ROAD Coastal/ IWT Cost Medium High Cheap
Batch size
Large
Small
Large/ Medium
Door to door
Limited
Speed
Fast
Slow
Integration and partnership across members of logistics value chain is essential

13. New Ports for advantage of Steel Industry
National Maritime Agenda formulated by Ministry of Shipping, envisages massive investment in port sector.
New Ports : Dhamra, Gangavaram, Krishnapatnam, Gopalpur, Kakinada will play a big role to support exim logistics for Steel Industry in east coast
Port capacity likely to increase to 3.2 billion tonnes by for handling about 2.5 billion tonnes of cargo
Capacity expansion mainly by way of construction of new berths and jetties
Increase Coastal shipping and facilitate hassle-free multimodal transport & promote use of the inland waterways for cargo movement

14. Development of Coastal Shipping
India has long coast line of 7,500 kilometers but penetration of coastal movement is low.
Ministry of Shipping formulated scheme under Sagarmala to provide financial support to ports for creation of infrastructure.
Under the Scheme, projects for construction/ up-gradation of exclusive coastal berths for coastal cargo and berths/jetties, mechanization of coastal berths; capital dredging etc. will be considered for assistance.
Mineral resources available along the coast, suits the development of industries to raise the potential of growth of coastal trade in the long-term.
Major ports such as Calcutta, Haldia, Tuticorin, Madras, Cochin, Kandla, etc. have the right infrastructure for handling coastal trade along with other minor ports.
Steel Companies desire to explore this option seriously

15. Inland waterways
India has an extensive network of inland waterways. Transportation by waterways is highly underutilised as compared to developed nations.
Development of NW5 - The significance of NW5 lies in its location close to Talcher-Paradip region which is abundant in resources for evacuation of different commodities including thermal coal, coking coal and iron-ore.
Development of NW4 - This waterway which connects the upcoming capital of Amaravati to the coastal parts of the state is extremely important for the development of new industrial hinterlands proposed under the various nodes of Visakhapatnam Chennai Industrial Corridor.
Development of NW2 - This waterway has potential to cater to the traffic in the north eastern region.
Development of NW1 - With a length of 1620 km, NW1 is the longest waterway in India from Ganga-Bhagirathi-Hoogly river system from Allahabad to Haldia.
Steel Companies desire to explore this option also along with coastal shipping

16. SAIL – A Maharatna Company

17. SAIL – A Maharatna Company
Largest steel manufacturing company in India
Capacity 23.0 MMT Hot Metal to increase to 50 MMT by 2030
Extensive marketing net work and dealer outlet in all 600 districts in India
Producer of the widest spectrum of steel products in the country
Turn over : 59,381 Crore

18. Major Raw Material – consumption & requirement
SAIL - Volume of Logistics
Major Raw Material – consumption & requirement
Unit: Million Tonnes
Actual
After Ongoing Expansion
Hot Metal (HM)
15.60 
23.46
Raw Materials Requirement
Iron ore
25.00 39
Limestone
3.90 5
Dolomite
2.80 4
Coking Coal
15.00 21
Total RM
46.70 69
* Import of dry bulk is expected to be around 20 million tonnes per annum beyond 2020 18

19. SAIL Vision 2030 : Traffic Envisaged
Transportation requirement of SAIL 5 ISPs (Unit: Million Tonnes)
Detail
H.M.Production 16
52.5
Coking Coal
16.3 47
Boiler Coal
4.1 24
Iron Ore
26.5 87
Flux
7.35 23
Total Inward
54.3
233
Outward Despatch
12.7 42
Total Rail Traffic 67
275
All expansion at existing SAIL 5 ISPs location

20. Strategy Eliminate waste in terms of time,money & capacity
Capacity utilisation of resources – railway wagons, Captive mines, Own warehouses & railway sidings, loading bays
Reduction in turnaround time of wagons
Operate from efficient Supply Chain entities (e.g – ports, mines & railway sidings) to cut down waste.

21. Risk Pooling
Include alternatives entities to mitigate risk which may be cost effective and make supply Chain agile to handle uncertainty.
Multi-sourcing to eliminate uncertainties in supplies from single source.
Alternate mode of transports like road, inland water ways ,coastal shipping, slurry pipe line.
Multi-Port operation to remove logistics constraints in respect of port operation, railway operation.

22. Risk Pooling contd.
Adopt multi strategy to evacuate finished products :
Develop despatch Yard in plants
Increase road despatch facilities at plants
Induct own dedicated rakes for plant to plant based Ware houses
Adopt Marketing strategy based on Hub & spoke distribution model

23. 3. Competitive advantage
Owning railway wagons for deploying on strategic routes.
Creation of feeder routes between SAIL plants/units and Dedicated freight Corridor (DFC).
Creation of regional processing cum despatch Warehouses along the DFC at strategic location in each region
Owning of additional deep draft mechanised port/berth in Eastern Coast along with share in all the existing ports (Tajpur port at Sagar,West Bengal is being developed Jointly by State Govt. & Ministry of Shipping)

24. Expectation of Steel Industry & Way Forward
India will have strong steel demand in coming years and Steel making capacity to grow manifold
Ports:
Augmentation of ports Capacity to be done as envisaged in time
Port connectivity - Each Major port & Non Major Ports should have last mile connectivity.
Rail & Road:
Availability of Railway rakes for seamless evacuation
Last mile connectivity
Coastal Movement:
Integration of Coastal and Inland waterways to create single window solution and improve hinterland connectivity
Possibility of diversion of domestic cargo from land modes
Multimodal transportation to be strengthened

25. “Leaders win through logistics. Vision, sure. Strategy, yes.
But when you go to war, you need to have both toilet paper and bullets at the right place at the right time.
In other words, you must win through superior logistics.” Tom Peters

26. Thank You