‘Railside warehousing is win-win for all’
10 Sep 2013 5:11 PM GMT
Set up in 2007, Central Railside Warehouse Company (CRWC) is a young organisation by public sector standards. Coming under the department of food and public distribution, the ministry of consumer affairs, it develops and constructs warehouses with the railways for storage of food and other products. The idea is to reduce the logistic expenses and benefit industries. Starting with Bangalore, CRWC has built 18 warehouses throughout the country. Edited excerpts:
In these six years since inception, how has CRWC been faring?
While there were no warehouses along railway tracks earlier, railside warehousing is a new concept. This is an innovative step because goods which move by train – cement, fertiliser, sugar and salt, among many others – are now stored in warehouse near the railway stations. They are not taken to the depots. These warehouses have been designed to store goods of six to seven trains, where one train means about 3,000 tonnes of goods. From these warehouses the goods are distributed to the stores. This is proving beneficial for both industries and customers. The concept is picking up fast. The growth rate has been as high as 20 per cent. Also, we are a profit-making, dividend-paying company. We have invested about Rs 200 crore. We are moving about 9 million tonnes per year. We have got 18 operational units across the country. At some major locations, like Chennai, there are two warehouses at one unit. We are in the process of setting up more units at Kochi, Guwahati, Malda in West Bengal and Gandhidham in Gujarat. We are also working to set up a cold chain system.
Who are the leading users of your services?
Apart from Food Corporation of India and some government sector companies, a large numbers of private companies from sectors like cement, sugar and fertiliser use our services.
Is there any competition from the private sector?
As I said earlier, it is an innovative concept – there is no competition. We are creating railside warehouses, which did not exist earlier. There was a need for such warehouses.
We want to develop more and more railside warehouses. The more we develop, the more it would be convenient for the customers as it would bring down the overall logistic costs. Today the logistic cost of any product is around 13-15 per cent (of the total cost). Logistics basically means transport and warehousing. Handling, wear-and-tear, loss and transport requirements are reduced through innovations like railside warehousing. This would (in turn) reduce the cost of the product.
Earlier all big companies had their own warehouse but now setting up a warehouse has become a costly affair and people prefer to outsource it. So it is proving beneficial for both you and the end user. In the age of competition, any reduction in the logistic cost would be transferred to the customer. If a company saves 50 paise per unit, it would reduce the retail price by at least 25 paise to capture market share. That is why the logistic cost is making a lot of difference in the set-up. The (overall) logistic cost in developed countries like the US is 8 per cent of GDP. Today we are all trying to reduce the logistic cost, whether it is in terms of transport or warehousing.
How do you ensure that quality of the warehouse is maintained?
For maintaining quality, one of the most important factors is the location, from the technical and commercial point of view. The next is service to the customers. We provide complete insurance and security of the goods. The warehouses are operational round the clock. More than 10 people per warehouse are outsourced to provide security. There are also about 10 people managing the warehouse. We are in the process of putting up a warehouse management system by computerising the whole system, so that even the customer can see which products are available in the warehouse. We are also in the process of establishing mechanisation of the handling arrangements. Today everything gets loaded and unloaded manually. We will soon mechanise it by putting up a conveyor belt and a stock lifter. Whatever is stored inside the warehouse is all safe. Twelve out of our 18 warehouses are ISO-certified. We also conduct an annual customer satisfaction survey.
Can you tell us about challenges the company has faced so far?
The first big challenge has been getting land for setting up the warehouse. Then there was the challenge of getting the right kind of trained manpower. This business is yet to grow in India and that is one of the reasons warehouse professionals are not available. Transportation is also a huge challenge. Has any state government approached you to build a warehouse? The Gujarat government has given us land in SEZ Dahej to set up a warehouse. This one is not close to any railway track – it would have road connectivity. This is a custom-bound area and thus would be based on a multi-modal transport system. The material would come by ship and go by trains. The Madhya Pradesh, Assam and Odisha governments have approached us to build warehouses next to railway tracks. It is a new concept, so it is taking some time to grow.
Transporting goods to the Northeast is a considerable challenge. How is CRWC dealing with that?
It is a big challenge for us as well. There is no warehouse in the Northeast. We are trying to set up one in Guwahati. We are in touch with the Assam government and the Inland Water Authority of India (IWAI). IWAI is developing a river port on the Brahmaputra. The Northeast is one area where there is need (for warehousing) but the infrastructure has not developed yet. The railway infrastructure is not expanding fast. We are trying, and the government is supporting us in this venture.
What are your plans for future? Any expansion on cards?
Apart from setting up railside warehouses in new locations, we are developing cold chain operations where we can keep fresh food and vegetables. This would involve a different technology altogether. Fish cannot be kept with flowers or with ice cream. It requires multiple chambers as every commodity has a different requirement. We are developing two of them along the tracks at Dankuni in Kolkata and Ghaziabad in NCR.
On arrangement with Governance Now
In these six years since inception, how has CRWC been faring?
While there were no warehouses along railway tracks earlier, railside warehousing is a new concept. This is an innovative step because goods which move by train – cement, fertiliser, sugar and salt, among many others – are now stored in warehouse near the railway stations. They are not taken to the depots. These warehouses have been designed to store goods of six to seven trains, where one train means about 3,000 tonnes of goods. From these warehouses the goods are distributed to the stores. This is proving beneficial for both industries and customers. The concept is picking up fast. The growth rate has been as high as 20 per cent. Also, we are a profit-making, dividend-paying company. We have invested about Rs 200 crore. We are moving about 9 million tonnes per year. We have got 18 operational units across the country. At some major locations, like Chennai, there are two warehouses at one unit. We are in the process of setting up more units at Kochi, Guwahati, Malda in West Bengal and Gandhidham in Gujarat. We are also working to set up a cold chain system.
Who are the leading users of your services?
Apart from Food Corporation of India and some government sector companies, a large numbers of private companies from sectors like cement, sugar and fertiliser use our services.
Is there any competition from the private sector?
As I said earlier, it is an innovative concept – there is no competition. We are creating railside warehouses, which did not exist earlier. There was a need for such warehouses.
We want to develop more and more railside warehouses. The more we develop, the more it would be convenient for the customers as it would bring down the overall logistic costs. Today the logistic cost of any product is around 13-15 per cent (of the total cost). Logistics basically means transport and warehousing. Handling, wear-and-tear, loss and transport requirements are reduced through innovations like railside warehousing. This would (in turn) reduce the cost of the product.
Earlier all big companies had their own warehouse but now setting up a warehouse has become a costly affair and people prefer to outsource it. So it is proving beneficial for both you and the end user. In the age of competition, any reduction in the logistic cost would be transferred to the customer. If a company saves 50 paise per unit, it would reduce the retail price by at least 25 paise to capture market share. That is why the logistic cost is making a lot of difference in the set-up. The (overall) logistic cost in developed countries like the US is 8 per cent of GDP. Today we are all trying to reduce the logistic cost, whether it is in terms of transport or warehousing.
How do you ensure that quality of the warehouse is maintained?
For maintaining quality, one of the most important factors is the location, from the technical and commercial point of view. The next is service to the customers. We provide complete insurance and security of the goods. The warehouses are operational round the clock. More than 10 people per warehouse are outsourced to provide security. There are also about 10 people managing the warehouse. We are in the process of putting up a warehouse management system by computerising the whole system, so that even the customer can see which products are available in the warehouse. We are also in the process of establishing mechanisation of the handling arrangements. Today everything gets loaded and unloaded manually. We will soon mechanise it by putting up a conveyor belt and a stock lifter. Whatever is stored inside the warehouse is all safe. Twelve out of our 18 warehouses are ISO-certified. We also conduct an annual customer satisfaction survey.
Can you tell us about challenges the company has faced so far?
The first big challenge has been getting land for setting up the warehouse. Then there was the challenge of getting the right kind of trained manpower. This business is yet to grow in India and that is one of the reasons warehouse professionals are not available. Transportation is also a huge challenge. Has any state government approached you to build a warehouse? The Gujarat government has given us land in SEZ Dahej to set up a warehouse. This one is not close to any railway track – it would have road connectivity. This is a custom-bound area and thus would be based on a multi-modal transport system. The material would come by ship and go by trains. The Madhya Pradesh, Assam and Odisha governments have approached us to build warehouses next to railway tracks. It is a new concept, so it is taking some time to grow.
Transporting goods to the Northeast is a considerable challenge. How is CRWC dealing with that?
It is a big challenge for us as well. There is no warehouse in the Northeast. We are trying to set up one in Guwahati. We are in touch with the Assam government and the Inland Water Authority of India (IWAI). IWAI is developing a river port on the Brahmaputra. The Northeast is one area where there is need (for warehousing) but the infrastructure has not developed yet. The railway infrastructure is not expanding fast. We are trying, and the government is supporting us in this venture.
What are your plans for future? Any expansion on cards?
Apart from setting up railside warehouses in new locations, we are developing cold chain operations where we can keep fresh food and vegetables. This would involve a different technology altogether. Fish cannot be kept with flowers or with ice cream. It requires multiple chambers as every commodity has a different requirement. We are developing two of them along the tracks at Dankuni in Kolkata and Ghaziabad in NCR.
On arrangement with Governance Now
Next Story
