Inland Water Transport in India: A case of LPG

transportation
Guided by – Prof. Amar Sapra
Submitted by - Ankush Jhawar (1811330), Gunjesh Kumar (1811413)

Executive Summary
With an extensive network of inland waterways stretching to a total navigable length of 14,500 km in forms
of the rivers, canals, and backwaters, this mode of transportation has high expected growth potential. Inland
waterways are an economical, environmentally friendly and less fuel consuming mode of transportation with
higher loading capacities compared to the existing modes of road and rail.

However, there are multiple issues which need to be addressed before a full-fledged multiple modal logistic
network involving inland waterways is established. These issues involve reliability issues with the natural flow
of rivers and varying seasonal depth and infrastructure issues due to additional loading, unloading, and
navigation requirements. These issues are being catered to by the Inland Waterways Authority of India (IWAI),
a central authority established to monitor and develop Inland water transportation (IWT). Multiple investment
projects are underway, including river training, dredging, terminal, and ports building, which is expected to
take proper shape in the next ten years.

On the flip side, major concerns for any company using IWT are higher travel time, which results in high in-
transit inventory of goods being transported and large number of carrying vessels required. This will incur
additional capital expenditure. IWT’s cost-effectiveness is realised when the source and destination are in the
vicinity of the waterway else first and last-mile costs are a cause of concern. Lastly, return load, which is a
concern for any mode of transportation, is further escalated in the case of IWT with limitation on nature of
goods to be transported back and their return route.

In this report, we look at the economic feasibility of transportation of LPG through inland waterways. LPG
which evaporates easily is a safe product to transport via waterways with no possible water contamination
even in case of leakage or spillage. Considering the constraints mentioned previously, NW1 (Ganga-Bhagirathi-
Hooghly) has been taken as a sample case, and economic feasibility is being looked as compared to existing
modes of transportation, which are road, rail, and pipeline. An excel model (Exhibit-9) is developed for the
analysis which considered the distances from each touch points to help with the cost of different models like
optimisation of existing bottling plant network, the inclusion of inland waterways for the first leg i.e., refinery
to bottling plant and shifting of bottling plant near the docks.

Introduction
Inland Water Transport is a universally accepted low-cost, fuel-efficient, less polluting mode of transport. The
biggest advantage associated with IWT is its economical nature for transportation of bulk shipments over long
distances between places situated in the vicinity of the waterfront.

Having realized the capacity of waterways transportation, a central authority named Inland Waterways
Authority of India (IWAI) was established by the Indian Government in 1985 which identified five inland
waterways in the country as National Waterways:

- National Waterways 1: 1620 Km long stretch between Allahabad and Haldia on Ganga-Bhagirathi-
Hooghly river system
- National Waterways 2: 891 Km long stretch between Sadiya and Dhubri on the Brahmaputra river

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 - National Waterways 3: 205 Km long stretch between Kollam and Kottappuram on west coast canal
- National Waterways 4: 1078 Km long stretch between Kakinada and Puducherry running along the
Coromandal Coast
- National Waterways 5: 588 Km long stretch between Talcher and Dharma

There are low Infrastructure requirements for IWT when compared to road and rail transport with majority
essential investments into ports and terminal facilities, first and last mile connecting road or rail
infrastructures, navigation aids, and critical river depth maintenance through dredging facilities. IWT provides
relatively low congestion and high capacity movements when compared to other modes of transportation,
making it a high potential, lucrative mode of transportation.

National Waterways 1
National Waterways No.1 spread on Ganga-Bhagirathi- Hooghly river system is the longest national waterway
with prime importance due to its locational advantages. It became operational in 1986. The waterway from
Haldia to Allahabad is stretched for a total of 1620 km. Currently, as a major shipment, NW1 is used to move
3 million MTs of imported coal from Haldia to NTPC Farakka plant via 20 barges of 2000 DWT(Deadweight
tonnage) capacity each.

The stretch passes through the states of Uttar Pradesh, Bihar, Jharkhand, and West Bengal and is divided into
three segments with 560 km long Haldia-Farakka segment, 460 km long Farakka-Patna segment and 600 km
long Patna-Allahabad segment.

The least available depth (LAD) has been maintained along the stretch at 3m between Haldia and Farakka,
2.5m between Farakka and Barh, 2m between Barh and Ghazipur, 1.2 to 1.5m between Ghazipur and
Allahabad.i

There are 21 terminals along NW1 which includes Haldia, Budge Budge, Bhut Ghat Road, Botanical Garden
Area, Kolkata, Santipur, Katwa, Hazarduari, Pakur, Farakka - Downstream and Upstream, Rajmahal, Sahibganj,
Bateshwar Sthan Bateshwar, Bhagalpur, Munger, Patna, Semaria Khurd, Buxar, Gazipur, Varanasi and
Prayagraj.

Challenges with Inland Waterways

Though Inland Waterways is a potential low cost, high capacity mode of transportation compared to existing
modes of rail and road, the existing scenario has multiple challenges associated with it to be considered:

Reliability Issues
Even with extensive network of rivers, most rivers have reliability issues in terms of serving as a sustainable
mode of transportation because of following issues:

• Seasonal fall in water level specially during summers (Exhibit 1)

• Route diversion by rivers resulting in reduction of river depth
• Reduction in water flow due to diversion for irrigation purposes, especially relevant for river Ganga
• Presence of low height and width bridges along the way obstructing the movement of bigger vessels
(Exhibit 2)

All these issues need to be catered through timely training of rivers to prevent route diversion, dredging of
rivers to remove sediments from riverbed and maintain minimum depth required for transportation.

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Infrastructure Issues
There is a lack of adequate terminal and berthing facilities at the loading and unloading docks. Most inland
waterways stretch currently suffer from unavailability of proper navigation systems as compared to the road
and rail transportation leading to high travel time and unavailability of transportation during night.

These issues require high investments for creation of proper infrastructure and modernization and creation of
proper river information system with integration of GPS for proper navigation.

Higher lead time resulting in additional Capital Expenditure

Due to extensive rail and road network, these modes provide better connectivity and thus require lesser travel
time. However, inland waterways being completely reliant on the route of rivers, goes through multiple bends
and curved stretches increasing the effective distance and thus the time of travel. Also, the speed of a ship is
much lesser than road and rail transport.

This higher travel time results in holding more in-transit inventory both in the form of the goods being
transported and the container vessels carrying it as well. This incurs additional working capital for the
company.

First & Last mile Costs

Inland waterways are highly efficient when the source and destination are near to the port/terminal along the
waterway. River Mandovi has been used to transport iron ores to china since 2004 with multiple iron ores
operating in the river’s catchment area and numerous loading points. (Exhibit 3)

With source and destination distant from the port/terminal, the first and last mile costs are a big concern. The
concern is further intensified if the carrying vessels for waterways transportation and first & last mile delivery
differ. This further adds additional cost of loading and unloading to the final logistics cost.

Return Load
A major cost for any mode of transportation is optimisation of return load. Even the most advanced forms of
transportation face this issue. For example, if we consider the freight cost from Delhi to Calcutta, it is 3 times
higher than Calcutta to Delhi. This is mainly because of low return load from Calcutta. Also, the movement
from Calcutta will be against the current when ship will be loaded and while returning, it will be in the direction
of current. Also, in case of Road and rail, flexibility is high but in waterways, movement must be only along the
river.

Scope of study
The aim of the study is to assess the viability of transportation of LPG through inland waterways and build a
model to arrive at an optimum route for each demand centre. For our analysis, we have selected National
Waterways 1 as our reference and the model is developed which can be replicated for other waterways as
well. The model takes input as demand location, bottling plant, location of docks and location of refinery.
Currently, model doesn’t consider capacity as a constraint for any of the location.

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Current Supply Chain of LPG Transportation
The whole supply chain of LPG transportation can be divided into two stages. The first stage comprises of
transportation of LPG from the refinery to
the bottling plants either through pipelines
or via roads in tankers while the second
stage comprising of movement of filled LPG
cylinders from bottling plants to
distribution centers which then transports
it to the final customers.

Scope of Inland Waterways in the

Supply Chain
Transportation through Inland waterways can be incorporated in 2 ways in the existing supply chain.

Way 1:

In this way, LPG is transported via road/rail/pipeline to the nearest Inland waterway terminal/port and then
transported via inland waterway to nearest port/terminal to the bottling plants where last-mile transportation
is done via road.

Way 2:

In this way, LPG is transported via road to nearest bottling plant from where LPG cylinders are transferred to
nearest terminal/port and then transported via inland waterway to nearest port/terminal to the distribution
centres from where last mile delivery is done via road.

For our study, we have focused on optimizing the supply chain through way 1. Also, since cost of transporting
cylinder is very high (Exhibit-8), it makes sense to keep bottling plants near the demand locations.

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Possible models
We identified two possible approaches to the problem in hand

1. Keeping the location of bottling plants fixed, optimize the existing network by the usage of Inland
Waterways in stage 1 of the supply chain.
2. Moving the location of bottling plants near to docks, direct distribution of cylinders to Demand
locations

Due to unavailability of demands at bottling plants, we optimized the existing network of bottling plants in the
current form of road as the only mode of transportation and used this optimized network as base of our 2
models.

Optimization of network of bottling plants

The current network of bottling plants is optimized by finding the nearest demand locations to the bottling
plants and clubbing them together to eliminate redundant bottling plants. Since, the cost of opening and
operating a bottling plant is significant (roughly it costs 22 Cr to set-up a 21000 MTA plantii), it would be
beneficial for the company to optimize the number of bottling plant. (Exhibit-4)

Assumptions
• In the absence of the exact location of the distribution center, we have taken the centre of the demand
district as the location for calculation of the distances.
• The cost of loading and unloading has been ignored for both primary and secondary transportation.
• The capacity of Bottling plant is considered unlimited

Methodology
Step 1: For every demand location, cost of transporting per tonne LPG was identified from source location to
bottling plants and from bottling plants to demand location based on the latitude and longitude of all the
locations.

Step 2: Based on all the combinations, lowest cost/tonne route is selected and thereby giving the number of
bottling plants required to serve the entire demand.

Step 3: The capacity required at each bottling plant is calculated by adding the demand which is served cia the
bottling plant in the optimized network. The cost was calculated based on data provided (Exhibit-7)

Key Learnings
We found that the number of bottling plants given was 77, but only 44 were required (Exhibit-6). The reason
for that could be the initial state wise disparity in taxes. Now, since GST has been launched, movement across
the border doesn’t incur cost leading to more flexibility.

Model 1
In this model, the current network of optimized bottling plants is taken as a reference. The first leg of
transportation i.e., from refinery to bottling plant is divided into two part: refinery to docks and docks to
bottling plant. For transportation between refinery to dock, inland waterway is being considered for cost
calculation.

Assumptions
• The shipment vessel has high capacity and can carry demand of multiple port at once
• The cost of loading and unloading has been ignored for both primary and secondary transportation.

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 • The capacity of bottling plant is considered unlimited

Methodology
Step 1: After identifying the optimized number of bottling plants, to calculate the inland waterways cost for
the first section which is source location to docks and docks to bottling plants, we again looked at the
cost/tonne to transport LPG for both the legs.

Cost of transport through road, rail and pipeline was given (Exhibit-7). For Inland water transport, Rs. 1/Km/MT
is being taken by authorities to maintain the infrastructural requirement for smooth movement of vessels and
based on the calculation from (Exhibit-5), ~Rs. 0.19/Km/MT comes out to be transportation cost for inland
waterways. So, the total cost used for inland water transportation is taken as Rs. 1.19/Km/MT.

Step 2: Considering all the combinations, we identified optimum number of docks needed to serve the
demand.

Step 3: Based on the optimum number of docks, capacity required at each dock is calculated by adding the
demand from each bottling plant which is served via the dock

Key Learnings
Overall, there is a cost saving of 30% when inland waterways are used. The reasons for the same are:

• Major cost saving happens because of the low cost of inland water transport, which is Rs. 1.19/Km/MT
• Since inland waterways are only present till Prayagraj but demand locations and bottling plants are till
Gurgaon, which are far away are better served from other refineries which are present in western part
of the India like Kandla. The reason for the same is the low product sourcing cost at the western cost
due to proximity to the gulf countries.
• Cost of refineries on the west coast and that of Haldia has a difference of around Rs. 1800-2000/MT
due to less product sourcing already explained the previous point.

Model 2
In this model, bottling plant location is shifted to closest docks and inland waterways cost is being used for
transportation between refinery to the bottling plant.

Assumptions
• The shipment vessel has unlimited capacity and can carry the whole consignment demand at once
• In the absence of the exact location of the distribution center, we have taken the centre of the demand
district as the location for calculation of the distances.
• The cost of loading and unloading has been ignored for both primary and secondary transportation.
• The capacity of bottling plant is considered unlimited

Methodology
Step 1: In the excel model (Exhibit-9), latitude and longitude of each terminal are considered as new bottling
plants.

Step 2: As the next step, cost/tonne of transporting LPG from Source location to the docks which are also the
bottling plant location in this model is calculated. Also cost/tonne for transporting the bottles from the docks
to the demand location is calculated.

Step 3: Considering all the combination, we identified the optimum number of docks required to serve the
demand.

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Key Learnings
Cost of transporting cylinders from bottling plants to the demand locations is three times higher as compared
to transporting bullets from ports to bottling plants via road due to low packing efficiency and load carrying
capacity of trucks carrying cylinders. Thus, higher the distance of demand locations from bottling plants,
costlier it would be to transport. Model 2 is hence costlier than model 1, however it is still economical than
the current model due the low-cost transportation through inland waterways. (Exhibit-8)

Comparison
To establish the feasibility of inland waterways for transportation of LPG, we did a comparative calculation of
existing supply chain network with network involving inland waterways explained In Model 1. We calculated
the time of travel required and corresponding carrying bullets required for fulfilling the demands at demand
locations for both the modes.

Assumptions
• Efficiency of transportation both via truck and ship is considered as 80%.
• Loading & unloading time is not considered in calculations.

Calculations
Transportation via road
Avg. Speed of trucks = 40 kmph

Distance between refinery and bottling plant = d

LPG bullet capacity= 10 tonnes

Demand at a bottling plant= D

Time of travelling to & from, t= 2*d/40

Total Vessels required per day at a bottling plant= (0.8*t*(D/10))/24

Transportation via inland waterways

Avg. Speed of ship = 11 kmph

Distance between refinery and dock= d1

Distance between dock and bottling plant= d2

Demand at a bottling plant= D

Time of travel to & from, t= (2*d1)/11+(2*d2)/40

Total Vessels required per day at a bottling plant = (0.8*t*(D/10))/24

Key Learnings
The average travel time across all demand locations goes up by more than 400% with usage of inland
waterways instead of road. As a result, the number of carrying bullets required to fulfil the demands goes up
by more than 300%. These additional vessels required will incur working capital expenditure and viability of
inland waterways for any stretch will be governed by this factor as well.

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Future Scope
• The model takes the Haversine distances between the coordinates of the docks and refinery. However,
distances based on latitude and longitude can be calculated to get more precise distance and accurate
calculations.
• Frequency of ships are not calculated in the current model and can be explored based on the ship
capacity and demand requirements at docks.
• We have ignored the cost of loading and unloading from ship during our calculation, but for more
precise analysis, this can be included.
• In this report, we have ignored the current restrictions of NW1, which are low depth, low width, etc.
assuming Govt. is working on it and it will be resolved in coming ten years. If immediate movement
needs to be planned, then these constraints need to be built in the model.

Appendix
Exhibit-1

Source: http://documents.worldbank.org/curated/en/983071491924854124/Major-Ganga-sub-basins-
water-balance-analysis-report

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Exhibit 2 (Bridges along NW1)
Vertical Horizontal
Clearance Clearance
S. Name of bridge & Location Chainage on (m) (m)
No NW-1
Haldia – Farakka Stretch the State of West Bengal
1 Vidya Sager Setu at Kolkata 141.5 33.84 443.54
2 Ravindra Setu Howrah Road Bridge at Kolkata 144 9 432.62
3 Nivedita Setu (Road Bridge) 152.7
4 Swami Vivekanda Setu (Rail cum Road Bridge, 152.75 8.88 100.3
Bally)
5 Jubilee Rail Bridge (Hooghly Bridge, Naihati) 184.8 11.38 159
6 Ishwar Chand Gupta Road Bridge, Kalyani 191.3 10 110
7 Gourange setu at Nabadwip 277.8 13 100.25
8 Bhagirathi Road Bridge at Berhampur 422 10.67 70.95
9 Bhagirathi Rail Bridge at Nasirpur 436.8 10 110
10 Bhagirathi Road Bridge at Jangipur 498 10.71 73
11 Road cum Rail Bridge (over Feeder Canal, 112- 509.5 11.3 76.22
07, U/s Jangipur)
12 Pakur Road Bridge (over Feeder Canal) 524.7 12.15 49.07
13 Shankapur Road Bridge (over Feeder Canal) 534.5 15.24 97.23
14 Incomplete Bridge (over Feeder Canal Near 538
Alinagar)
15 Rail-cum Road Bridge over Feeder Canal Road 8- 541 11.3 76.2
57, Near NTPC

Farakka - Allahabad Stretch in the State of Bihar & Uttar Pradesh

1 Vikramshila Setu (Road Bridge) at Bhagalpur 712 10.67 100

2 Rajendera Setu (Road cum Rail Bridge) at 853 10 40
Mokamah, (Bihar)
3 Mahatama Gandhi Setu (Road Bridge) at Patna 955 12 114
4 Digha - Pahleja Road cum Rail Bridge at Patna 968 12 126
5 Road Bridge at Doriganj, Chhapra (Bihar) 1000 10 117.6
6 Road Bridge at Srirampur Ghat, Ballia (U.P.) 1085 10 80
7 Road Bridge at Buxar (Bihar) 1120 9.45 92.7
8 Road Bridge at Ghazipur (U.P.) 1178 10.68 85.1
9 Road Bridge at Zamania (U.P.) 1205 15.87 76.5
10 Road Bridge at Saidpur (U.P.) 1254 15.8 76.5
11 Road Bridge at Baluaghat (U.P.) 1281 9.9 98.65
12 Road cum Rail Bridge at Varanasi (U.P.) 1308 6.56 101.5
13 Road Bridge at Saamneghat at Varanasi (U.P.) 1318 10 90
14 Vishwasundari Road Bridge at Ramnagar (U.P.) 1318 13 120
15 Road Bridge at Chunar (U.P.) 1342 10.6 76.5

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 16 Road Bridge at Bhatauli (U.P.) Under 1368 10 73.5
construction
17 Road Bridge at Mirzapur (U.P.) 1398 2.52 30.5

Exhibit 3 (Usage of Inland water transport in Goa)

(https://www.indiawaterportal.org/articles/mining-havoc-impact-mining-water-resources-goa-article-dams-
rivers-and-people)

Exhibit - 4

Exhibit 5
(Average cost of transportation through waterways is 1.19)
https://www.thehindubusinessline.com/opinion/flowing-down-the-waterways/article23384237.ece

https://economictimes.indiatimes.com/industry/energy/power/ntpcs-farakka-project-gets-domestic-coal-
via-inland-waterways/articleshow/36241323.cms

Size (m) Loaded Charter Consumption Speed (Knots)

Capacity
Class Draft Rates-Barge Power (KW)
(DWT)
L B (m) (Rs/Day) Fuel Ltr/Hr
I 32 5 1 100 18,000 - Diesel 1 42 6 to 7
II 45 8 1.2 300 30,000 337 Diesel 1.6 67 6 to 7
III 58 9 1.5 500 60,000 - Diesel 2 83 6 to 7

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 IV 70 12 1.8 1,000 80,000 432 Diesel 2.4 100 6 to 7
V 70 12 1.8 1,000 80,000 432 Diesel 2.4 100 6 to 7
VI 86 14 2.5 2,000 1,10,000 597 Diesel 4.4 220 6 to 7
VII 86 14 2.9 4,000 1,30,000 - Diesel 8.4 350 6 to 7
Source: http://iwai.nic.in/showfile.php?lid=1563 (Rs 1 charge source as well)

Calculations

Speed= 6 knots or 11.11 kmph

Charter Rates= Rs 1,30,000 per day

Capacity= 4000 DWT

Assuming 20 hrs of operation time per day

Rates per km per tonne = 130000/ (4000*11.11*20) = Rs 0.146/Km/MT

Exhibit -6
Bottling plants which would be used to serve the network resulting from the optimization:

Bottling Plant
Raiganj LPG Plant Sugauli SILICA PETROLEUM (ND) Rangpo Lucknow
Paharpur Hazaribag Jalpaiguri Etawah Shahajahanpur
Raipur Bokaro Jamshedpur Agra Farukhabad
Durgapur Malda Raninagar Varanasi Aligarh
Mokama Barauni Jatni Allahabad Kanpur
Purnea Sultanpur Balasore BAREILLY LPG PLANT HISSAR LPG PLANT
Patna Koraput Khurda LPG Plant Unnao Bhagwanpura
Jhansi LPG Bottling
Budge Budge IPPL Haldia Lakhimpur Kheri (I-Vir) Loni
Plant
Muzaffarpur Jharsuguda Paradip Sohna TOP

Exhibit – 7 (Previous Cost Data – Sample data format – Not Exhaustive)

Port wise product sourcing cost: -

Kandla Jamnagar Hazira Mumbai Ratnagiri Mangalore Kochi Chennai Vizag Haldia Paradeep
144 0 219 227 519 378 734 1554 1833 2005 1862

STATE BOTTLING MODE BULK INPUT ROAD BULK INPUT FDZ Rate
PLANT NAME FRT Rs./MTKM Rs./MT
ARUNACHAL Kimin Bp ROAD 2.8754 729.39
ASSAM Bongaigoan BP Local Pipeline 2.8754 729.39
ASSAM Gopanari BP ROAD 2.8754 729.39
ASSAM Guwahati BP Local Pipeline 2.8754 729.39
ASSAM Duliyajan BP Local Pipeline 2.8754 729.39
ASSAM Sarpara BP ROAD 2.8754 729.39
ASSAM Silchar BP ROAD 2.8754 729.39
ASSAM Numaligarh BP Local Pipeline 2.8754 729.39
BIHAR Barauni BP ROAD 2.8808 729.39

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Demand from April 2018- Jan 2019

State Name District Name Total Demand

ARUNACHAL PRADESH CHANGLANG 1107.9
ARUNACHAL PRADESH DIBANG VALLEY 167.54
ARUNACHAL PRADESH EAST KAMENG 337.33
ARUNACHAL PRADESH EAST SIANG 431.62
ARUNACHAL PRADESH KAMENG(EAST) 418.97
ARUNACHAL PRADESH KAMENG(WEST) 1047.47
ARUNACHAL PRADESH KURUNG KUMEY 268.3
ARUNACHAL PRADESH LOHIT 938.58
ARUNACHAL PRADESH LONGDING 246.88
ARUNACHAL PRADESH LOWER DIBANG VALLEY 493.77
ARUNACHAL PRADESH LOWER SUBANSIRI 911.29
ARUNACHAL PRADESH NAMSAI 565.42
ARUNACHAL PRADESH PAPUM PARE 5356.51

Exhibit-8
Input Mode of Transportation: -

1. Bulk Road - Can receive from any sources/intermediate locations

2. Rail – Can receive from Kandla, Jamnagar, Hazira, Mumbai, Mangalore, Vizag and Guna
3. Local Pipeline – Can receive only from the local source available. All inland locations receiving
product by “Local Pipeline” to be considered as a product source for the local location.
4. Jamnagar-Loni P/L – Receives products from Kandla and Jamanagar. Loni can act as an intermediate
location for further road supplies of Bulk and Packed LPG
5. Paradip-Haldia-Durgapur P/L: Only for the local supplies. No further Bulk-Road movement from
receiving locations.

Road Transportation rate: -

1. FDZ Rate – Freight applicable for free delivery zone

2. Road freight rate/MT – Max of (FDZ rate or Rs. /MTKM rate)
3. Location wise Bulk input road freight given in the enclosed Excel
4. Packed road freight for all locations: FDZ=746/MT and MTKM Rate = 7.795

Exhibit- 9
Excel model access link - https://bit.ly/2mQ18LG

i
https://ewsdata.rightsindevelopment.org/files/documents/75/WB-P148775_XlQOX8u.pdf
ii

http://environmentclearance.nic.in/writereaddata/FormB/TOR/PFR/0_0_08_Jul_2015_1603276531PrefeasibilityReport
.pdf

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