The Single Logistics Law and its impact on Supply Chain Disruptions
Union Road Transport and Highways Minister, Nitin Gadkari has indicated the introduction of a single logistics law (LEAPS Bill), the “Logistics (Efficiency, Advancement, Predictability, and Safety) Act across all modes of freight transportation. It will replace the existing law on multimodal transport of goods (applicable to international carriage) and conflicting provisions of existing uni-modal laws (for domestic carriage).
Traditionally an informal or unorganized sector, logistics is the backbone of any economy. While it has contributed to the country’s growth, its structural fragmentation can not be neglected much longer. In recent years, with the introduction of the Logistics Division under the Department of Commerce in 2017, we are beginning to see a paradigm shift in the sector towards developing it into an organized sector.
Why do we need a Logistics Act?
With the intent of eradicating duplication and simplification of procedural requirements, the law is a definite shift towards facilitating multi-modal (involving multiple modes; air, water, rail, road) transportation to the country’s numerous sectors. As a building material supplier, the law should have a visible reduction in logistic costs, with an umbrella projected figure by Mr. Gadkari reducing it from the current 14% to the global average of 8% annual gross domestic product (GDP). It aims to be the single legislation that governs all logistics services in India.
Present Shortcomings
The need for this was felt after realising how the current system is acting as a bottleneck. The system in practice is uni-modal i.e. each leg of the transportation, from the manufacturer to the consumer involves separate contracts with different partners. Not only is it more cumbersome, but there is also higher room for error, mishandling, and transit damage. A building material supplier today has to maintain different arrangements for each part of the delivery, with a number of grey or hidden costs incurred due to lack of transparency. Because of this, the supplier ultimately faces greater liability issues and higher insurance and litigation costs.
Owing to the multiplicity of each stage of the carriage, differing rules are often applicable based on the nature of insurance obtained. For example, a building material supplier today requires a “railway receipt” for transport by rail, a “goods forwarding note” for road transport, or a “Bill of Lading” for freight by sea. The rules on recognition of delay and consequential damages, determination, and exoneration of liability vary as governed by the respective mode of transport and its laws. Even the terminologies are often divergent, eg. while the MMTG Act uses “carrier”, while the Railway Act has no definition of a carrier.
What the “LEAPS Bill” Brings to the Table
By creating a uniform liability regime for all domestic carriage, both manufacturers and contractors will simply have to obtain a single set of permits end-to-end. A building material supplier will only have a single set of updated definitions to adhere to, both during the determination and exoneration of any liabilities with the freedom to proceed with higher liability caps for contracts with an equivalent raise in the rate of carriage if applicable.
The logistics document will replace all existing documents with updated terminologies and uniform dispute resolution principles to bridge all gaps between uni-modal and multi-modal transport contracts.
The Impact
As a consumer, this streamlining will positively affect both your capital and productivity. If the building material supplier has a more streamlined dispatch process, their product can utilize multiple modes of carriage more efficiently. This, in conjunction with lower insurance because of the uniform law, means a decrease in the current price of the commodity.
How is OfBusiness making a Difference?
Within the span of a decade, the Indian economy has more than doubled in size to $1.37 trillion. This monumental growth has only been made possible through an equally phenomenal rise in freight via multiple modes of transport. We understand that not just ours, but rather any economy depends on its logistics sector. Our centralized digital platform is a complete solution for all your building material needs. From professional guidance to determining real-time inventory at the best market prices, you can place orders from a trusted building material supplier in minutes.
Combining transportation, warehousing, consolidation, and cross-border movements, all key sectors depend in some form or the other on the availability of fluid transport lines. By maintaining a central stock, we ensure the product is stored, packaged, and delivered with the right precautions to minimize transit loss and other freight hassles. We deliver to your doorstep and are unbeaten when it comes to efficiency and transparency.