Cargotalk

Cargotalk

Vol XII No.7 Pages 60 Rupees 50 cargotalk.in

By DDP Publications

SOUTH ASIA’S LEADING CARGO MONTHLY

JUNE 2012

No.1 in Circulation & Readership

RNI No.: DELENG/2003/10642 Date of Publication: 22/05/2012

Postal Reg. No.: DL (ND)-11/6002/2010-11-12. WPP No.: U (C)-272/2010-12, for posting on 25th-26th of advance month at New Delhi P.S.O.

Road Transport in India Facing serious problems due to shortage of drivers and long pending issues

Rail Freight Movement

Policy of Cross Subsidisation resulting in slow growth

THAI CARGO IN INDIA Adds capacity to comply with demand

2 CARGOTALK

MAY 2012

WWW.CARGOTALK.IN

JUNE 2012

Publisher

SANJEET Editor

FROM THE EDITOR

RUPALI NARASIMHAN Sr. Assistant Editor

RATAN KUMAR PAUL Desk Editor

NEELAM SINGH General Manager

GUNJAN SABIKHI Deputy General Manager

HARSHAL ASHAR

Regional Manager: South

K N SUDHEER

Regional Manager: North

RAJIV SHARMA

Asst. Manager: West

ROLAND DIAS

Marketing Co-ordinator

GAGANPREET KAUR Design

SHIVALI SHAKDHER Advertisement Designer

VIKAS MANDOTIA Production Manager

ANIL KHARBANDA Circulation Manager

ASHOK RANA

Running on a rough surface Despite tall talks of smooth operations of rail and road freight across the country, these vital modes of transport are in severe crisis. It continues owing to the faults in the policy framework and malpractices at the execution level, leaving logistics entrepreneurs and the nation’s economic interest in doll drums.

Rail freight, for instance, is suffering from perennial issues despite the policy of privatisation and so called PPP. Privatisation of containerised freight movement, in particular, is an irony in view of the derailment of the original plan. Private container operators are losing interest in running the show because of apathy from the Indian Railways. In fact, IR has been maintaining the same formula regarding its functions, though the Ministry of Railways harping on liberalisation of freight movement. Private operators cannot thrive and survive under tremendous pressure of infrastructure facilities including tracks, rolling stocks and terminals, and without control on them. Erratic and escalating hauling and terminal charges, on the other hand, remain a major bone of contention. Private container train operators

4 CARGOTALK

JUNE 2012

(PCTO) often lament for the step-motherly treatment

by IR. Road sector too, is running on a rough surface.

A completely unorganised sector operated by small and medium sized players are in quandary owing to shortage of skilled manpower including drivers, poor road conditions and road side amenities, multiple check posts and taxes, harassments by police and various departmental officials/staff, lack of safety and security and increasing input costs. At the same time, these factors are also responsible for slow growth of road transport industry in the country.

In order to strengthen the growth tracks of the country’s economy, serious initiatives especially from governments are required. A prerequisite for sustainable growth would be to ensure smooth and fast operations of surface network by eradicating all fault lines. And, this can be achieved only through a strong, transparent and effective government policy.

Rupali Narasimhan Editorial Director

DDP Publications Private Limited 72 Todarmal Road, New Delhi – 110001, India.

Tel.: +91 11 23731971, 23710793, 23716318, Fax: +91 11 23351503, E-mail: cargotalk@ddppl.com, Website: www.cargotalk.in %ranch 2IÀces Mumbai: 504, Marine Chambers, New Marine Lines, Opp SNDT College, Mumbai – 400020, India Tel.: +91 22 22070129, 22070130 Fax: +91 11 22070131, E-mail: mumbai@ddppl.com Middle East: P.O. Box 9348, Saif Zone, Sharjah, UAE Tel.: +971 6 5573508 Fax: +971 6 5573509 Email: uae@ddppl.com CARGOTALK is a publication of DDP Publications Private Limited. All information in CARGOTALK is derived from sources, which we consider reliable and a sincere effort is made to report accurate information. It is passed on to our readers without any responsibility on our part.The publisher regrets that he cannot accept liability for errors and omissions contained in this publication, however caused. Similarly, opinions/views expressed by third parties in abstract and/or in interviews are not necessarily shared by CARGOTALK. However, we wish to advice our readers that one or more recognized authorities may hold different views than those reported. Material used in this publication is intended for information purpose only. Readers are advised to seek specific advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the readers’ particular circumstances.

Contents of this publication are copyright.

No part of CARGOTALK or any part of the contents thereof may be reproduced, stored in retrieval system or transmitted in any form without the permission of the publication in writing.The same rule applies when there is a copyright or the article is taken from another publication. An exemption is hereby granted for the extracts used for the purpose of fair review, provided two copies of the same publication are sent to us for our records. Publications reproducing material either in part or in whole, without permission could face legal action.The publisher assumes no responsibility for returning any material solicited or unsolicited nor is he responsible for material lost or damaged.This publication is not meant to be an endorsement of any specific product or services offered.The publisher reserves the right to refuse, withdraw, amend or otherwise deal with all advertisements without explanation.All advertisements must comply with the Indian and International Advertisements Code.The publisher will not be liable for any damage or loss caused by delayed publication, error or failure of an advertisement to appear. CARGOTALK is printed & published by SanJeet on behalf of DDP Publications Private Limited. and is printed at Cirrus Graphics Pvt. Ltd., B-62/14, Phase-2, Naraina Industrial Area, New Delhi – 110028 and is published from 72Todarmal Road, New Delhi – 110001.

WWW.CARGOTALK.IN

5 CARGOTALK

MAY 2012

JUNE 2012

Cover Story

CONTENTS DEPARTMENTS Airlines News 8 Emirates witnesses growth for the 24th consecutive year, SkyCargo records 8.4% increase 10 Thai Cargo in India adds capacity to comply with demand

24

The road transport sector, which provides the first and last mile connectivity, carries about 70 per cent of cargo transported by surface operators. However, grossly unorganised and dominated by small and medium players in India, this sector needs adequate attention from the facilitators and policy makers for smooth functioning, so that the lifeline of the national economy can serve the country properly.

An industry perspective...

54 58

11 Kenya Airways starts DelhiNairobi service with special focus on cargo 22 China Airlines Cargo launches twice weekly freighter services to Chennai

30 48 24

Cargo Performance 34 Airlines wise exim cargo performance from Delhi International Airport in April 2012 International News 12 dnata at Dubai World Central witnesses 700% increase in volume of cargo News in Brief

35 Airlines wise exim cargo performance from Mumbai International Airport in April 2012 36 India’s Airport wise domestic cargo performance for March 2012

CSR First Flight Couriers organises marathon for a cause Logistics Events

16 DHL Express inaugurates new Service Centre facility in Noida

Shipping & Ports

16 Pacific Air Logistics’ new Head Office in Delhi

Family Album

Angre Port in Maharashtra: Open for Business

Logistics Services

44 ACCD discusses future of Indian freight forwarders

18 DB SCHENKERswift: Schenker India to strengthen its position

46 Damco India hosts customer meet at Bengaluru

JUNE 2012

50

Calendar of International Events

38 India’s Airport wise international cargo performance for March 2012

6 CARGOTALK

48

COLUMNS Lead Story 30 Policy of Cross Subsidisation resulting in slow growth of rail freight movement Guest Column

52

40 Indian Railways has a crucial role 58

Technology

CEO Talk

54 Calogi signs pact with Dubai Insurance to offer e-transaction by cargo community

Emergence of new markets: Damco puts more emphasis on India

WWW.CARGOTALK.IN

7 CARGOTALK

MAY 2012

Airlines News Performance

Emirates witnesses growth for the 24th consecutive year, SkyCargo records 8.4% increase

6KHLNK $KPHG ELQ 6DHHG $O 0DNWRXP

Despite the ongoing economic slowdown in the major consumption centres in the world and fuel price hike resulting in huge pressure on profitability, the Emirates Group has unveiled its 24th consecutive year of profit and companywide growth. CT BUREAU

T

he Emirate Group’s 2011-12 Annual Report shows that the company posted a net profit of AED 2.3 billion (US$ 629 million), with its ground handling subsidiary, dnata, marking its highest ever profit in 52 years of operation. The Group’s revenue reached a record high to AED 67.4 billion (US$ 18.4 billion) which is an increase of 17.8 per cent on last year’s results. The Group’s cash balance grew by 9.5 per cent reaching a strong AED 17.6 billion (US$ 4.8 billion).

Commenting on the commendable performance, Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group said, “Achieving our 24th consecutive year of profit and maintaining an upward growth trajectory is an achievement that belies the industry norm.”

He underlined the strategy of the Emirates that translated into remarkable results. “Throughout

the 2011-12 financial year, the Group has collectively invested close to AED 14 billion (US$ 3.8 billion) in new products. This investment has garnered new customers and has increased our international presence,” he pointed out. He asserted that successful business growth is the result of sustained and calculated investment.

“Every dirham that we earn is strategically ploughed back into our business and it is this foresight that has allowed the Group to maintain such strong and consistent profitability,” he added.

The year 2011-12 has been a strong one for Emirates SkyCargo with revenues of AED 9.5 billion (US$ 2.6 billion), an 8.4 per cent increase on last year, on account of an increase in freight tonnage and freight yield per Freight Tonne Kilometre (FTKM) which rose by 5.4 per cent.

Remarkably, while the bulk of the cargo

industry reported downward tonnage, Emirates SkyCargo’s tonnage increased to 1.7 per cent reaching 1,796 thousand tonne. Contributing 16.2 percent of Emirates’ total transport revenue, Emirate SkyCargo continues to play an integral role in the company’s expanding operations. At the end of the financial year, Emirates SkyCargo fleet consisted of eight freighters – two on wet lease and six on operating lease.

In the 52 years of dnata, 2011-12 has been its most successful period yet. With an increase of 58.9 per cent over last year, dnata grew its revenue to AED 7 billion (US$ 1.9 billion). Overall profit for dnata also reached its highest ever point at AED 808 million (US$ 220 million).

During the year, dnata’s operating costs increased by 58.9 percent to AED 6.2 billion (US$ 1.7 billion), primarily triggered by the first full integration of the Alpha Group.

Apart from SkyCargo, dnata’s cargo HANDLING DIVISION ALSO WITNESSED

upward growth with revenues increasing by 12.6 per cent to AED 993 million (US$ 271 million) on account of increased tonnage at Dubai International Airport and Singapore Changi Airport. Increased cargo volumes at Dubai International Airport and Dubai World Central saw dnata handle 3.3 per cent more cargo.

FOR THE FIRST TIME, GQDWD·V ODUJHVW UHYHQXH VWUHDP KDV FRPH IURP LQ ÁLJKW catering, accounting for AED 2.5 billion (US$ 668 million) of its total revenue.

The single largest factor in this revenue shift is the full year inclusion of the Alpha Flight Group who uplifted over 48 million meals during the year.

8 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

9 CARGOTALK

MAY 2012

Airlines News New Initiatives

Thai Cargo in India adds capacity to comply with demand Thai Cargo, which recently started its weekly freighter flights to Delhi, Hyderabad and Chennai is quite optimistic about the increase of air cargo traffic from India.

Speaking to Cargotalk, Korakot Chatasingha, general manager – India, Thai Airways International, explained the market trends. CT BUREAU

T

hough the going is very tough for many of the airlines flying to and from India, Thai Airways and its cargo department appears to be exuberant. The exim trade between India and Thailand is expected to be US$ 14 billion by 2014. With this projection, the air cargo trade is also expected to grow phenomenally. Thai Cargo has taken the conscious decision to bring capacity ahead of demand, to build confidence among the shippers and customers.

Currently, Thai Airways has 52 passenger flights per week with approximately 20 tonne belly hold cargo capacity per flight.

In addition, the airline recently introduced 747-400 freighters to Delhi, Hyderabad and Chennai, once a week to each of the cities.

The freighter has 115 tonne capacity per flight. At present, the airline has a cargo load factor of about 75 per cent in passenger aircraft and 100 per cent in freighters.

The scheduled routes are Bangkok-DelhiFrankfurt, Bangkok-Hyderabad-Frankfurt and Bangkok-Chennai-Amsterdam, which depart from Delhi on Sunday, Hyderabad on Thursday and Chennai on Monday. “We are highly ambitious about the potential of India as a cargo generating country.

Electronics, garments, pharmaceuticals and perishable cargo are the major items that we are carrying from India. However, at the same time we are exploring new products that the country is producing for export,� said Chatasingha. Interestingly, about 80-90 per cent cargo carried by Thai Airways is

10 CARGOTALK

JUNE 2012

India-Thailand trade The proposed comprehensive free-trade agreement between India and Thailand is estimated to double the bilateral trade to US$ 14 billion by 2014. Recently, Royal Thai Consulate Consul General Chanchai Charanvatnakit stated that the trade between India and Thailand grew from US$ 4.7 bn in 2007 to US$ 8.2 billion in 2011, almost double. He also maintained that the implementation of ASEAN-India Free Trade Agreement and India-Thai Free Trade Agreement would result in greater trade expansion.

ttransshipment hi t cargo, mainly i l for f Europe, E USA and South East Asian countries. “At Suvarnabhumi Airport in Bangkok, we have a very quick and efficient transshipment

. .RUDNRW &KDWDVLQJKD WK IURP OHIW DORQJ ZLWK -3 6LQJK

WK IURP OHIW DUHD FDUJR VDOHV RSHUDWLRQV PDQDJHU ,Q ,QGLD 7KDL &DUJR DQG RWKHU RIILFLDOV RI WKH DLUOLQH DW WKH LQ LQDXJXUDWLRQ RI QHZ VDOHV RIILFH LQ 1HZ 'HOKL

facilities for long haul destinations, owing to the ultra modern airport facilities and huge worldwide network of Thai Airways,�

Chatasingha underlined.

WWW.CARGOTALK.IN

Airlines News New Launch

Kenya Airways

K

enya Airways have started its flights to the second city in India. After flying to Mumbai for quite some time, the African carrier has announced the launch of flights between Nairobi and Delhi four times a week, effective May 16. With Boeing 767300, the airline is providing belly space for approximately nine tonne cargo capacity per flight. The Delhi-Nairobi flights depart from Delhi on day 1, 3, 5 and 7.

Speaking to Cargotalk, Bennet Stephens, area manager-India, Sri Lanka, Nepal and Bangladesh informed that the NairobiDelhi sector is not only important for passenger traffic, but is equally important for cargo traffic’s point of view. “We are

starts Delhi-Nairobi service with special focus on cargo quite confident that our aircraft will have full belly load from Delhi. We are expecting good volume of pharmaceuticals, spare parts, machine-related engineering goods and perishable cargo,� he said. Kenya Airways has appointed Jet Air as its GSA for looking after cargo marketing and booking.

Stephens highlighted the fact that India has been aggressively promoting trade with Africa as it seeks to gain access to the continent’s emerging markets. India is Kenya’s sixth largest trading partner. The Kenya-India bilateral trade hit US $4.8 billion in 2010-2011. He also underlined that there would be a substantial volume of transshipment cargo that would reach

%HQQHW 6WHSKHQV DUHD PDQDJHU .HQ\D $LUZD\V UG IURP OHIW DORQJ ZLWK 3URI )HVWXV .DEHULD $PEDVVDGRU RI .HQ\DQ VW IURP OHIW DQG RWKHU .HQ\D $LUZD\V RIILFLDOV DW WKH SUHVV FRQIHUHQFH LQ 1HZ 'HOKL

beyond Kenya. “Nairobi is the natural hub in Africa and our USP would be lowest transit time in the region. Moreover, we are offering time bound express services and competitive price, so that shippers can have an extra edge in the market,� he added.

11

CARGOTALK

JUNE 2012

International Airports Terminal News

dnata at Dubai World Central Witnesses 700% increase in volume of cargo

6WXDUW +D\PDQ

World’s leading ground handling company, ‘dnata’, which operates its newest cargo terminal, FreightGate-8, located at Dubai World Central-Al Maktoum International Airport (DWC), has managed an increase of 700 per cent in air cargo volume for 2011-2012.

Speaking to Cargotalk, Stuart Hayman, vice president, cargo operations, dnata, huge increase in volume and aircraft movements were the principal factors behind the remarkable performance. RATAN KR PAUL

D

nata’s international presence has already grown substantially. To date, the company is one of the world’s largest combined air services providers with operations in 39 countries around the globe. dnata-operated air cargo terminal at DWC was opened in June 2010. Currently, the terminal handles local and sea-air export and import cargo as well as transit cargo at DWC. In 2011-2012, dnata handled 127,665 tonne of air cargo, representing an increase of 700 per cent over the previous period.

The total number of active cargo flights handled by the dnata team on the ramp and in the cargo terminal was 2,832 for the financial year, having grown by 600 per cent from the previous period.

“The huge increase in volume and aircraft movements is a result of customers taking advantage of the many benefits that dnata’s facilities and services offer. Some of these benefits include the lack of congestion at the new airport, the wide range of cargo and ground handling services that are available and also the proximity to the nearby Jebel Ali Port and the many logistics companies who are based in the adjacent Jebel Ali Free Zone,” explained Hayman.

He also maintained that the proximity to the port has meant dnata has seen increased cargo volumes in the form of multi-modal cargo. “Loads are arriving by sea, making the quick and easy transfer to the airport cargo terminal using the customs bonded bridge connection, and then flying out for the final leg of the journey. The same is also happening in reverse with cargo arriving by air and then departing via sea,” said Hayman. According to him, dnata has also seen an increase in commercial scheduled flights carrying large import loads for specific freight forwarding customers who have substantial logistics operations in both Dubai Logistics City (DLC) and Jebel Ali Free Zone (JAFZA). They are taking advantage of the shorter transit times from DWC airport to their warehouses.

12 CARGOTALK

JUNE 2012

DIFFERENT TY TYPES YPES OF CARGO HANDLED AT DWC Dnata has seen a comprehensive range of different types of cargo handled through FreightGate-8 throughout the course of the last year. A large quantity of ‘general cargo’ including IT equipment, garments, machinery, spare parts and automotive parts were the major items handled by dnata. “We have also seen a lot of ‘project cargo’ activity with some specialised loads including heavy generators. In fact, we recently handled the heaviest shipment ever across all of our FreightGate cargo terminals.

It was a massive generator with a single piece weighing 95 tonnes that WWW.CARGOTALK.IN

13

CARGOTALK

JUNE 2012

International Airports Terminal News

required a great deal of very careful planning and specialised equipment to have this piece loaded on to the chartered freighter aircraft,” shared Hayman.

MAJOR DESTINATIONS

Europe and Asia have been strong destinations for flights operating to and from DWC. In addition, there have been a number of charter flights providing regional distribution to various destinations within a four hour flying radius of Dubai and also further fly to and from Africa.

In addition to actual flights, FreightGate-8 also handles cargo that is destined for departure from other airports in the UAE including Dubai International (DXB), Sharjah (SHJ) and Abu Dhabi (AUH) which are all serviced through a robust road feeder service which provides connectivity to and from any destination around the world. dnata has over 30 airlines, which are regularly using dnata’s handling services at DWC. Some of the major scheduled operators include Martinair, Saudia Cargo and Atlas Air (operating for a major freight forwarder based at Dubai Logistics City). Regular charter operators include: National Airlines, SkyLink Aviation, Kalitta Air and Chapman Freeborn.

DWC is currently running as a freighter only airport in terms of commercial flights. Accordingly, all cargo physically being handled for flights arriving and departing DWC is being carried by freighter aircraft.

Hayman informed that with respect to the import cargo traffic, the ratio between Dubai bound cargo and transshipment cargo is approximately 50:50 with the percentage of transshipment cargo being largely driven by the multi-modal air to sea traffic.

DWELL TIME/ CLEARING TIME

The dwell times for import and export cargo at DWC that is moving on commercial scheduled flights is very similar to DXB, with imports being handed over within hours of arrival of shipments rather than days. Export cargo is also moving through the cargo terminal at a faster pace than other FreightGates. “This is a result of a larger component of ‘shipperbuilt’ pallets that are arriving at DWC and are being delivered intact without the need for any physical break-down in the cargo terminal.

Import cargo is capable of being delivered to our customers within two hours of flight arrival and is also being electronically cleared through customs,” Hayman said. dnata currently handles a wide variety of freighter aircraft types at DWC, including: Ilyushin IL76s, Antonov AN124s, Hercules C130s, Airbus A300Fs, Boeing 747Fs, Boeing 777Fs and the newest freighter in the skies, the Boeing 747-8F which can carry a payload of up to 134 tonne. These varied aircrafts are operated by 36 different airlines at present.

In addition to the aircraft flights, dnata’s FreightGate-8 also handles another 35 airlines which operate truck flights. Over 30,000 tonne of cargo have been transported from this mode of handling during the past 12 months.

14 CARGOTALK

JUNE 2012

MODERNISATION OF EQUIPMENT In response to the growing volume, dnata has steadily been increasing and improving its fleet of equipment to service the DWC operation. In addition to the standard cargohandling equipment, dnata has also invested in specialised equipment to help handle the out-sized loads.

This includes a specially fabricated ‘40 foot dolly’ that was engineered by dnata’s ground support equipment (GSE) team which allows for the safe and easy transportation of loads that are up to 40 feet in length.

“We measure our volumes for each shift (which covers a 12 hour period) and we often handle volumes in excess of 1,000 tonne in these 12 hour shifts. With these volume records constantly being set and all of the unusual loads that we have been handling recently, our motto has now become, ‘If it fits in to an aeroplane, then dnata’s FreightGate-8 and ramp operations teams can handle

it safely and securely!’ We are truly open for business and look forward to the volume growth continuing in the months and years to come,” he concluded.

WWW.CARGOTALK.IN

15

CARGOTALK

JUNE 2012

Industry News News in Brief

DHL Express inaugurates new Service Centre facility in Noida Recently, DHL has inaugurated a new, modernised Service Centre facility in Noida (UP). It features new, state-of-the-art conveyors and sorting systems and spread over 13,000 sqft. The facility was inaugurated by Malcolm Monteiro, SVP and area director, South Asia, DHL Express.

Commenting on the occasion, Monteiro said, “The new service centre facility showcases our commitment to India and our customers so they continue to receive the highest level of service from DHL.� According to him, with the upgraded Service Centre, DHL Express will be able to take care of all the logistics requirements of industries in the Noida region. The Noida service centre will have 19 routes, 31 staff members and 14 vehicles servicing the area. He also informed that in 2011, DHL Express handled about nine million international shipments in India.

Pacific Air Logistics’ new Head Office in Delhi Pacific Air Logistics, the Indian division of the global GSSA, Air Logistics Group, has recently established a new head office in Delhi at G5 Building, Terminal 1, IGI Airport, to oversee the five branch offices at key gateways across India.

Commenting on the launching of the new office, Vikram Singh, regional director – Asia Pacific, Air Logistics Group, said, “The time has come to open a dedicated head office in India to ensure we provide the best possible service to our customers in India. With a dedicated head office bringing together our department managers from finance, business development and operations, we can now fully utilise the potential of this growing market.�

KU Thankachen appointed chief manager, ICD TUGHLAKABAD

Express Transport becomes Express Global Logistics /HDGLQJ ORJLVWLFV FRPSDQ\ ([SUHVV 7UDQVSRUW KDV UHFHQWO\ FKDQJHG LWV QDPH WR ([SUHVV *OREDO /RJLVWLFV 3YW /WG (;*

WR ³NHHS SDFH ZLWK WLPHV DQG WR JLYH D IDLU FRQVLGHUDWLRQ WR WKH IHHGEDFN IURP WKHLU EXVLQHVV DVVRFLDWHV´ 7KH QHZ QDPH LV DOLJQHG ZLWK FRPSDQ\œV VSHFLDOLVDWLRQ DUHD

16 CARGOTALK

JUNE 2012

RI SURYLGLQJ ORJLVWLF VROXWLRQV DOO RYHU WKH ZRUOG 7KH FRPSDQ\ VRXUFHV PDLQWDLQHG WKDW ([SUHVV 7UDQVSRUW HVWDEOLVKHG LQ ZLWQHVVHG DQ DJJUHVVLYH JURZWK GXULQJ WKH ODVW \HDUV RI H[LVWHQFH DQG FRQWLQXHV WR SURJUHVV DW WKH VDPH SDFH

Recently, KU Thankachen has taken over as chief manager, ICD, Tughlakabad. Prior to his new assignment at the ICD Tkd, he was posted as chief general manager, central region, Nagpur, looking after terminals at Nagpur, Aurangabad, Raipur, Mandideep and Bhusawal.

Thankachen started his career from Airports Authority of India, in New Delhi as cargo manager before joining Concor. He held various portfolios in commercial and international marketing in the corporate office of Concor.

WWW.CARGOTALK.IN

Logistics Services New Initiatives

DB SCHENKERswift Schenker India to strengthen its position

6DWHVKZDU 7XWHMD

D

B Schenker in India, a leading provider of integrated logistics services in the region has taken a new initiative to facilitate the exporters and importers community in India. The new product ‘DB SCHENKERswift’ is focused on the customers mainly in the Tier II and Tier III cities which are yet to reap the advantages of proximity to international air routes.

Elaborating on the nature of the product, Tuteja clarified that though the name sounds that DB SCHENKERswift is an express service, it is not alike. However, he maintained that driven by Schenker’s philosophy of time bound delivery, DB SCHENKERswift campaign, will improve the company’s product range for customised solutions, faster deliveries, customer incentives and excellence in customer relationship. “There would be more value additions in the 2nd phase covering multiple destinations and commodities; special pricing during scheme period, customer incentives and widening the industry base to serve more customers,” he said.

REACH OF DB SCHENKER SWIFT According to Tuteja, Tier II and Tier III cities hold the future in them, for growth of India and the industry. Today, there are many manufacturers and exporters in Tier II and Tier III cities who are catering to many DB Schenker customers around the globe. The participation from such 18 CARGOTALK

JUNE 2012

Recently, DB Schenker in India has launched a new service called ‘DB SCHENKERswift’ to facilitate small and medium enterprises in the satellite towns and Tier II and Tier III cities with promotional pricing and door-to-door solutions in timebound manner. Sateshwar Tuteja, director, sales and key accounts management, industry vertical sales, Schenker India, provides details. RATAN KR PAUL

cities would be increasing in the global trade at a pace much more than others, and these cities will be driving India’s industrial outlook for tomorrow.

requirement. In case of ocean freight customers, DB Schenker provides the transportation as well as facility of inland container depots and freight

“So focusing on these areas will be a move to consolidate our brand in the areas which otherwise know about DB Schenker but consider us as a premium service provider which is limited to metros and multinational customers to serve with. I think this is the right time when we move forward and serve a larger base of customers which actually is the engine of India’s growth in the coming time,” Tuteja explained.

Commenting on the implementation of DB Schenker services to and from beyond seaports and airports, Tuteja maintained that DB Schenker has already expanded its network during last 16 years across India to offer multi-modal and door-to-door services. “Today we have the capability, in India and in most of the countries, to serve our customers with one stop solutions,” he said. Tuteja pointed out that in the Indian context, apart from the freight services where DB Schenker is amongst the top service providers, the company has its own customs clearance license. For domestic transportation to/from the ports, DB Schenker has identified the suppliers on the basis of the company’s global quality policies. For the transportation to/from airports, the areas covered under international airports routes are mostly covered by the road transport for any cargo

AIMS AND OBJECTIVES To improve the company’s product range for customised solutions, faster deliveries, customer incentives and excellence in customer relationship To move forward and serve a larger base of customers which actually is the engine of India’s growth in the coming time To serve the customers with one stop solutions To focus on the development of trade lane customers from India to various destinations

WWW.CARGOTALK.IN

19

CARGOTALK

JUNE 2012

Logistics Services New Initiatives

stations across India to a location nearby the customer facility. For such cargo, the company provides the bonded warehousing facilities to the customers on requirements.

TARGET CUSTOMERS Tuteja informed that DB SCHENKERswift is focusing on the development of trade lane customers from India to various destinations.

Eventually, many of them are located in the Tier II and Tier III cities where DB Schenker has its own network of branches and logistics facilities. Currently, DB Schenker in India is operating from 34 locations in India and has almost every industrial hub covered within its network. “Simultaneously we have more than 48 warehouses covering more than 1.3 million square feet of space in India which can facilitate customers in domestic and international movement of goods,” added Tuteja.

He expects that for DB SCHENKERswift there will be customers from across the industries with a fair degree of variation from Schenker’s usual stronghold areas. “We are going to focus more on commodity basis than supported by the ‘vertical structure’, since this would be more appropriate to the customers in satellite cities.

Also, for a geographical cluster of industries, there would be different solutions based on the requirements.”

TARGET MARKETS Tuteja appeared confident about the reach of the new product across the world as well.

He maintained that being a global logistics group, DB Schenker has its strength across the world. From India, the company is providing integrated logistics services to Americas, Europe and Asia Pacific trade lanes which are the major trade lane partners for the country.

Simultaneously, DB Schenker is promoting Middle East and Africa trade lanes which offer high potential to its customers’ businesses. “We have our infrastructure in place for the trade lane concept for all these continents and have dedicated persons to look after the customers in particular trade lanes,” he said.

DB Schenker’s trade lane concept further develops with the country representatives in selected countries who are placed in 20 CARGOTALK

JUNE 2012

“

We are going to focus more on commodity basis than supported by the ‘vertical structure’, since this would be more appropriate to the customers in satellite cities

ti l ddestination ti ti countries t i tto llookk after ft particular customer’s need in the trade lane. “The biggest advantage of this type of functions is one face to the customer in the trade lane who will be entirely responsible to service the customers for best priced, designed and doorto-door solutions as per the requirement,” Tuteja asserted.

Tuteja, however, expressed concern about the prevailing economic slowdown in the US and EU markets. “Like others in the industry, we are also concerned about the situation in these two major economic partner regions to India and future outlook is invariably depends upon India’s trade with these regions and vice versa,” he said. He observed that India has a robust buying power today, and hence, it is expected that import would not be affected much.

In Tuteja’s opinion, the economic situation in last 2-3 years has although reduced the pace

of development yet things are still on the track for DB Schenker. “These are minor corrections which economy undergoes due to external factors and we don’t see any negative out of it. Keeping the macro situations apart, we are sure that our offerings are powerful. These services have strong ability to catch-up with the market trend very fast. These would certainly be turned out to be successful in capturing the market very soon,” Tuteja shared.

WWW.CARGOTALK.IN

Airlines News New Launch

China Airlines Cargo launches twice weekly freighter services to Chennai

T

he national carrier of Taiwan, China Airlines Cargo, has commenced a twice weekly B747-400F freighter service on the Taipei-K uala Lumpur-Chennai-Luxembourg-Taipei route, with effect from May 16, 2012.

Commenting on this new launch, Brian Chou, senior vice president of the airline was confident that routing through Kuala Lumpur would be an advantage as it would help in cross-loading, since it attracts cargo from Hong Kong, Indonesia and other South-East Asian markets. He said that the allocation from Chennai was 40 metric tonne on each flight. According to Chou, the exports cargo

22 CARGOTALK

JUNE 2012

from Chennai would be primarily electronics, mobiles, pharmaceuticals, leather, textiles, etc..

The imports into Chennai would mainly consist of electronics goods.

To celebrate the new launch, China Airlines Cargo organised an event in Chennai which was well-attended by freight forwarders, regulatory authorities, media and senior staff from the airline. The airline officials included Brian Chou, senior VP, KK Wu, VP-sales & mktg., Paul Hseuh, GM-cargo mktg. & planning and HoJo Chang, country GM-India. Pukhraj Chug, MD, Ascent Air, GSA in India of China Airlines Cargo from November 1999, was also present on the occasion to welcome the guests.

WWW.CARGOTALK.IN

23

CARGOTALK

JUNE 2012

Cover Story Road Transport

Road Transport in India Facing serious problems due to shortage of drivers and long pending issues The road transport sector, which provides the first and last mile connectivity, carries about 70 per cent of cargo transported by surface operators. However, grossly unorganised and dominated by small and medium players in India, this sector needs adequate attention from the facilitatorss and policy makers for smooth functioning, so that the lifeline of the national economy can serve the country properly. An industry perspective...

RATAN KR PAUL

A

t present, the logistics and transportation cost in India is not competitive with respect to other countries and is also one of the highest. There are various roadblocks that impinge upon optimum utilisation of the resources. The policies of the government are not facilitating for growth and are rather regressive. They are more tuned as controlling mechanism rather than providing impetus for growth. The road transport sector is full of industrious people with entrepreneurial zeal who are running their businesses under trying conditions.

There is a need of strong political will to facilitate growth and organise this sector. For instance, there are plethora of taxes imposed on the trucker and transporter when they are doing the business on hairline margins to feed their families.

The corruption and harassment on roads is rampant and the working conditions are miserable. The new generation is not willing to enter this trade and there is imminent danger for drivers’ shortage looming large.

tangible solutions for smooth functioning of the trade but they need to be taken in right earnest.”

Adding to this plight, there is an uncertain situation. The government is insisting on minimum eight standard qualification for drivers. This is already having a telling impact as drivers’ licenses are not being renewed and educated people are embracing other employment avenues rather than transport sector.

VINEET AGARWAL, joint managing director, TCI, highlighted that Said BAL MALKIT SINGH, president, All India Motor Transport Congress (AIMTC), “We have been highlighting and raising the issues adversely affecting the trade in various forums as well as with the government. We are professing 24 CARGOTALK

JUNE 2012

India has the second largest road network in the world but national highways constitute only two per cent of the total road network in the country. In India, roads account for 65 per cent of the freight traffic while the railways serve the remaining 35 per cent.

WWW.CARGOTALK.IN

Presently, the average speed of trucks on Indian roads is about 20kmph.

A truck can cover only 250-400km per day compared to 700-800km in developed countries like US and Europe—the reason being poor roads and check-post delays, which, in turn, increases truck’s operating cost. Fuel worth Rs. 100-150 billion is wasted on highways and check-posts annually due to interstate and intrastate checkpost delays, stringent documents, etc.

Poor maintenance of roads also leads to slow speed, equipment breakdown and accidents.

“Road’s condition in India is not satisfactory in our point of view. There is much improvement required in the maintenance of roads, the facilities provided at the road side amenities, security of the drivers and the condition of street lights which hamper night driving. The Joint Study Report of TCIIIMC has found that the road transport of the country is facing a number of problems,” said Agarwal. One of the major problems faced by the sector is interstate and intrastate check-post

delays. Since different states have different documentation requirements for sales tax compliance, a considerable amount of time is wasted at interstate check-posts for completing sales taxrelated formalities. On top of this, there is police harassment and corruption soliciting unofficial payments from drivers.

The facilities provided to the truckers in the name of road side amenities are quite poor. Transporters/drivers are facing problems pertaining to wayside amenities like far-off motels/restaurants for stays at night, petrol pumps, minor vehicle repair workshops, designated parking, ATM and STD facilities.

The Joint Study Report by TCIIIMC shows that one of the biggest impediments has been delays at check posts and on-road for filling in forms required by various govt. departments, checking and scrutiny of documents and physical checking of the vehicles, drivers and consignment by RTO and Traffic police, and collecting highway toll and taxes.

CRUCIAL ISSUES Multiple Check Posts Multiple taxes Bribes Harassment by police and RTO officials Physical assault of drivers/assts Cascading and demoralising effects on drivers and truck operators Unsafe driving zones, poor trucker friendliness en route Poor road conditions in many areas

Many a times truck drivers are running on a tight schedule and in spite of having all the required documents, they end up paying bribes to the officials to minimise the procedural formalities. The study shows that on-road stoppage expenses (toll/RTO/ST/Octroi, etc.) including unofficial payments made to government officials and traffic police amount to, an average, 15 per cent of the total trip expenses.

9LQHHW $JDUZDO

%DO 0DONLW 6LQJK

One of the major problems faced by the sector is interstate and intrastate check-post delays. On top of this, there is police harassment and corruption.

This has created inefficiencies in the system and resulted in increased cost of operation. The report has even suggested solutions such as adoption of a system similar to the TIR Carnet system prevailing in Europe and implementation of uniform integrated tolling systems which can help in removing much inefficiency.

MANISH GUPTA, MD, RCPL, informed that multiple checks conducted by various agencies at border continues unabated resulting in undue detention which results in lower speed, increased fuel consumption, idling of vehicles and leads to corruption. “India needs a barrier free movement of goods without further delay,” he said.

25

CARGOTALK

JUNE 2012

Cover Story Road Transport

AREEF PATEL, vice chairman, Patel Integrated Logistics, underlined that the road freight transport industry has always been the backbone for economic growth of a nation. With around 85 per cent share from unorganised sector, the industry has become highly competitive. Even the players from organised sector strive to achieve double digit profit margins due to the presence of large number of small players in the industry.

“Industry growth has high co-relation with the economy and factors like fuel cost, GDP growth, regulatory and policy framework, etc., have strong bearing on the industry growth. Industry profitability is dependent on various factors like fuel cost, freight rates, vehicle utilisation, vehicle mix, broker commission, etc. In addition to this, increased costs due to road conditions and stoppages at various check points also impact the profitability,” Patel pointed out.

According to him, introduction of the proposed Goods and Services Tax (GST) would change the rules of the game for logistics sector in India. With introduction of GST and abolition of CST, trade boundaries between states will not exist and companies can consolidate their supply chains. It would facilitate seamless supply across supply chain and across states. GST would increase the importance of logistics for the manufacturing sector.

Presently, most large manufacturing firms have regional warehouses of their own to avoid inter-state taxes, but under GST they can streamline their operations and outsource their supply chain requirements to the logistics sector.

UDAY V. MALYA, chief financial officer, BLR Logistiks, endorsed Agarwal. In his opinion, though road conditions have improved over the years, India is still way behind the international average of 8001200 km a day. Security remains a major concern, especially in the hinterlands.

Huge improvement is needed in the road 26 CARGOTALK

JUNE 2012

side amenities, both in terms of recreation and safety. “These obstacles are resulting in an increase in the overall operating cost and is an important factor for logistics cost being 13 per cent of India’s GDP as compared to 11 per cent in Europe and 9 per cent in the US. For instance, a major component of every ODC consignment is the payment that has to be made at several stages to facilitate the movement of the goods,” he said.

DILEEPA B.M., CEO, Bonded Trucking, Shreeji Transport Services, added similar perspective. “Road freight volume is increasing as we can deliver the cargo in very short time only because of the good condition of roads,” he said. He also maintained that the emergence of Customs Bonded Trucking Services is very helpful to the industry people. “Bonded Trucking is playing a vital role for all international carriers. The places where airlines are able to land, they are using bonded trucking facilities and increasing their business.

In the days to come there will be a huge demand for bonded trucking in India,” he explained.

On the flip side, Dileepa unveiled some gray areas that may create havoc for this segment. “Presently in India, we have very good roads. But toll charges are increasing day by day, which is an additional cost for the bonded trucking operations,” he said. Moreover, hassles at check post are the most regular problems faced by all Bonded Trucking operators. “This is because of the lack of knowledge. The Bonded Trucking means carrying export and import transshipment cargo under a Transshipment Bond accepted by the commissioner of customs on behalf of the President of India. Once cargo is sealed in customs Bonded Truck, it has to be opened by the destination customs only.

But still the check post officers stop the trucks and hold them for a long time. Then we need to explain the concept of bonded trucking and release the trucks,” Dileepa unveiled.

GOOD BEGINNING Ministry of Road Transport and Highways launches RFID based electronic Toll Plaza Union Minister for Road Transport and Highways, Dr. CP Joshi has recently inaugurated country’s first RFID technologybased electronic Toll Collection Plaza at Chandimandir, Punchkula (Haryana). This technology will help users to make payment without stopping at toll plazas and will reduce traffic congestion and

$UHHI 3DWHO

8GD\ 0DO\D

Bonded Trucking is playing a vital role for all international carriers. In the days to come there will be a huge demand for bonded trucking in India WWW.CARGOTALK.IN

SUNIL KUMAR JAIN, MD, North Eastern Carriers Corp, was confident that despite the rough surface, thanks to the current expertise, qualified manpower and positive plans and execution, the freight transportation sector would surely gain a competitive edge and would tap the increasing volume of freight movements. “India is the destination of the future in the field of freight transport and logistics. The Indian freight transport by road sector service is striving for improvements to catch up with growing business need of the Indian economy,” he emphasised.

However, he too observed that much is to be desired as regards to improvement of road conditions and other facilities like road side amenities, security, etc. “The freight cost in India is very high due to lack of infrastructure, administrative cost, toll taxes and congestion in roads, etc.,” he argued.

VIPUL NANDA, MD, Mercurio Pallia, expressed high optimism about the growth of road transport sector in

India. He was of the view that freight transport industry in India is highly fragmented and unorganised. However, changing policies with regards to tax structure are likely to give a competitive edge to make it an organised sector. “In the past ten years, the road freight segment has reported a remarkable growth rate and it is expected to sustain this growth momentum in the coming years. This growth of freight transport is supported by ongoing investment in road infrastructure which will drive growth in future as well,” he felt. He also maintained that infrastructure, of course, is a challenge but that can be improved and is improving slowly.

“But major challenge is security that is needed to be dealt with,” he urged.

LONG PENDING DEMANDS Though, the road transport sector is the lifeline of the economy, yet it is not considered as a sector for planning for growth and for generation of revenue.

“We appeal to the government to

commuting time. Toll statements GOOD can be made available online BEGINNING

to the road users and they need not have to stop for the receipt.

Before issuance of RFID Tags, the road users need to register with the agency with the basic details like name, address, vehicle type, vehicle registration no., etc. The information will be stored in the central database along with the unique identification code of Tag.

accord industry status to the road transport sector so that it gets some incentives for development,” voiced the AIMTC president.

Agarwal stressed that Indian logistics industry has gained immense significance over the years owing to increased industrial activities but the logistics sector lacks the industry status. “The government should look accordingly at the industry status of the logistics sector,” he endorsed AIMTC’s resolution. Agarwal also suggests setting up a separate regulatory authority for the logistics sector in accordance to the Insurance Regulatory & Development Authority or Telecom Regulatory Authority of India as it would help to coordinate between the various ministries for an integrated policy for the sector.

Malya added that the logistics/road transport industry is awaiting the implementation of GST for a long time and the government should take urgent 27

CARGOTALK

JUNE 2012

Cover Story Road Transport

'LOHHSD %0

Strong government policies from the Centre and States are much needed to eradicate the harassment related to check posts, multiple taxes and police.

6XQLO .XPDU -DLQ

0DQLVK *XSWD

NEED OF THE HOUR Malya raised a vital aspect,“The industry should do more to address the working conditions of the drivers as, in the long run, the availability of drivers can be a major hindrance to the growth of this industry.”

9LSXO 1DQGD

steps to roll out the same. The multiplicity of taxes and requirement of various state wise documentations would be replaced by a unified country level tax structure and standardised documentation, and this would facilitate effective compliance. According to him, increasing ‘toll nakas’ and toll charges are becoming major components of cost and they also reduce the mileage of the fleet.

“We request the government authorities to have toll fee only at one point for one truck in India, so that round the year truck can travel anywhere without any problem,” added Dileepa. While Jain felt that strong government policies from the Center and States are much needed to eradicate the harassment related to check posts, multiple taxes and police.

28 CARGOTALK

JUNE 2012

Agarwal maintained that safety should be a prime concern as transporting goods on roads is prone to accidents. In his opinion, the prime factors responsible for road accidents are overloading and rash and negligent driving. It is imperative that drivers and crew are imparted proper training.

According to Nanda, though drivers are pivotal for freight transport industry, ironically no driver wants his son to join this business because of ill-treatment everywhere. “Logistics players should take it up with various state governments to improve border crossings. Enhancement of highway patrolling to improve safety on roads, more facilities for trucker’s en route for rest and recreation should be the prerequisite to develop the industry scenario,” he said.

Jain urged different government authorities and the road transport operators’ associations like AITWA, AIMTC, PHDCCI (task force on logistics) etc., to constantly have joint talks and address all related issues.

WWW.CARGOTALK.IN

Lead Story Rail Freight

Policy of Cross Subsidisation Resulting in slow growth of rail freight movement It is an irony that despite a gigantic railway network available with the Indian Railways and privatisation of container train operations, the share of rail freight is only about 30 per cent in the total cargo moved by surface transport mode. Is the Railways becoming expensive and inefficient as compared to cargo moved by road transport? Cargotalk spoke to the industry stakeholders to delve into the issues. RATAN KR PAUL

A

ccording to the recent figures published by the Indian Railways, 38.58 million tonnes of containerised freight was moved by Indian Railways during 2011-12 comprising 29.17 million tonnes of EXIM traffic and 9.41 million tonnes of domestic traffic. This is hardly 3.98 per cent of the total originating traffic (969.78 million tonne) moved by Indian Railways during 2011-12.

The global average of containerisation is 60-70 per cent of total freight. This is much higher than India’s level of containerisation at 25 per cent. However, it is growing at 12-15 per cent. In India, container train operators contribute about Rs 4,000 crore annually to railways freight revenues.

The Indian Railways projects to handle container traffic of 210 mt by 2020, according to the Vision 2020 document.

30 CARGOTALK

JUNE 2012

In the past years, CONCOR has emerged as the main player facilitating the rail freight movement in containers during 2011-12. CONCOR moved 28.3 million tonnes of containerised cargo (by rail) during 2011-12 which is over 73 per cent of the total containerised cargo moved by rail. Concor’s share in EXIM traffic has been around 76 per cent.

CHALLENGES AND BOTTLENECKS According to ANIL GUPTA, MD, CONCOR, there are two main challenges before the Container Train Operators (CTOs). First and primary challenge is to increase the rail coefficient of EXIM containers which is currently very WWW.CARGOTALK.IN

low. “As per my estimates, total EXIM tonnage handled at all Indian ports was little over 150 million tonnes during 2011-12, including 120 million tonnes handled at the major ports. EXIM Rail coefficient at 29.17 million tonnes comes to a little under 20 per cent. The big challenge is to take this rail coefficient up to around 30 per cent during next fiscal year which will require a minimum rate of growth of over 16 per cent in the EXIM traffic,” said Gupta. In his opinion, the second main challenge is to increase the domestic traffic which as per the tonnage estimates of Railways has actually gone down by 7.2 per cent, from 10.14 million tonnes (moved in 2010-11) to 9.41 million tonnes in 2011-12. $QLO *XSWD

%XGK 3UDNDVK

5& 'XEH\

6DMDO 0LWWUD

Gupta also maintained that the first block to be tackled is the one related to higher dwell time of import containers at the gateway ports. Today dwell times are very low for some ICDs for which large volumes are available. For other ICDs, dwell times are high since aggregation of 90 TEUs takes time before the rake can be loaded for any destination. E-transactions and e-filing of the documents will facilitate hassle-free and fast container movements and clearances which is yet another area of concern. However, even though there have been lots of improvements, yet almost 15 per cent to 20 per cent of the containers at port continue to be there without SMTP at the right time which results in delayed movements of containers. Ports are already under pressure to turn out the rakes faster and the delays in availability of SMTPs often lead to situation of CTOs running under load trains whereas containers are physically available for shipment.

BUDH PRAKASH, MD, Kutch Railway Company, pointed out the recent (just before the Rail Budget) hike of rail freight rate by Indian Railways. Interestingly, in the Budget there was no increase in passenger fare in Classes up to 3 tier A/C. “This means that the cross subsidisation has increased further as the input cost in passenger services too has gone up. This is a dampener to increase in the rail share in the total goods transport,” said Prakash. He underlined the fact that business community calculates the total cost from door to door movement and then decides to use railways for their goods movement. “There is hardly any incentive for the industry to prefer rail as the mode of transport. On the other hand, Railways are having severe capacity constraint.

OBSTACLES BEFORE THE PCTOS Indiscriminate increase in haulage and other charges leading to price instability Denial of non-discriminatory access to sidings owned by Railways, CONCOR and private parties Restriction of movement of certain commodities Levy of haulage charges for movement for examination of the BLC rake to a base examination depot Lack of any reasonable level of operational service by the Railways Lack of Common User Terminals/ Container Rail Terminals Delay in development of container terminals/ ICDs by PCTOs Lack of level playing field Multiple/conflicting roles of the Indian Railways

Any improvement in capacity is only marginal as introduction of more passenger train partially eats into the increased line capacity,” added Prakash.

Commenting on the role of capacity building by Kutch Railway Company (KRC), Prakash clarified the company’s position. He informed that Kutch Railway Company has a limited role of providing Broad Gauge connectivity to two important ports in Gujarat, i.e., Kandla Port and Adani Port (formerly known as Mundra Port). At present, the connectivity has been provided through a single Broad Gauge Line. KRC has already initiated a proposal for doubling the line up to Palanpur. Various clearances are awaited and it is expected that the same will be available in the near future. This double BG line will serve as a feeder connection to Western Dedicated Freight Corridor (DFC).

According to Prakash, the biggest challenge before the rail freight/container operators is unreliability of movement. Indian Railways run passenger carrying trains to fixed paths published in time-tables.

Freight trains/container trains have no fixed time31

CARGOTALK

JUNE 2012

Lead Story Rail Freight

table. They are run through the available paths in between passenger carrying trains.

If due to any reasons the scheduled paths of passenger carrying train get disturbed, goods/container movement is further hit.

The speed differential between freight trains and passenger carrying trains is also a major constraint in improving the average speed of goods/container trains which, at present, is very low. Another problem is under powering of freight trains resulting into low average speeds.

RC DUBEY, president, Association of Container Train Operators (ACTO) was also of the view that the Rail Budget 2012-13 was not focussed on basic infrastructure for rail freight movement, which is not sufficient

Private container train operators are increasing their market share.

Currently, they are retaining 30 per cent share in total volume handled by railways on carrying certain cargo, lack of stability on rate offered by IR, poor transit time because of poor services from IR (e.g., changes of engines, excessive examination time, lack of proper technology, etc.), heavy terminal access charges, poor hinterland connectivity (beyond rail stations and rail terminals), etc.,” observed Dubey.

Taking cue from Dubey, SAJAL MITTRA, CEO, Arshiya Rail Infrastructure (one of the leading private container train operators) pointed out that in order to bring in the desired investment and efficiency in the container train operations business, PPP model was the way forward and in line with the Government of India’s policy in this regard. He underlined that Indian Railways (IR) collected Rs 640 crore as license fees under various categories from 16 container train operators. Till date, Private Container Train Operators (PCTOs) have invested over Rs. 4000 crore in creating the infrastructure including terminals, rakes, handling equipment and start-up costs. The PCTO industry employs around 1,000 people directly and 3,000-3,500 people indirectly.

32 CARGOTALK

JUNE 2012

Over the next five years, PCTO industry also anticipates to operate approximately 450 rakes, pay haulage of Rs. 3,000 crore per annum to IR, and employ 3,000 to 3,500 people directly and 11,500 -13,000 people indirectly.

He also informed that as a part of the Arshiya Group’s long-term plan Arshiya Rail shall induct 150 rakes and build five mega terminals adjacent to the five planned Free Trade & Warehousing Zones and Domestic Distriparks located in North, West, South and East and Central part of India.

“Even though private operators have made significant investment in this space, however, since 2010, the growth in the CTO space has stagnated primarily due to the restrictive policy regime of the Railways. Introduction of commodity specific restrictions, notifications and sudden haulage hikes has impacted the long-term prospects as well as the day-to-day business of the industry,” Mittra viewed. He further stated that though the government has implemented PPP through PCTO policy, but due to irrational policies it has not been able to leverage its true potential.

for resource mobilisation. “Ironically, a few days before the Budget, Indian Railways had increased the freight charges (20 per cent hike), though there was little investment in infrastructure,” he said. As a result, added Dubey, Rail freight traffic is tilting towards road transport, which is already sharing 70 per cent share of total traffic carried by surface mode of transport.

According to Dubey, despite the initiatives from the Ministry of Railways regarding privatisation of container train operations a few years ago, the private companies are not growing as per expectation and potential. “Major challenges before the private container train operators include the restrictions from the Indian Railways

THE WAY FORWARD According to Gupta, all the CTOs need to deliberate on how to increase the EXIM traffic by these proportions, by addressing the main issues of export/ import imbalances, port-wise imbalances and other issues of facilitation and logistics costs.

In addition, Gupta appealed,“All CTOs need to sit together with the shipping lines and sort out the area of movement of empty containers from the hinterland in case lines are not able to generate exports for their containers within a reasonable time.”

Offering a solution for increase of speed, Budh Prakash suggested that only fixed path/ dedicated lines should be used for the freight/container trains. Construction of DFC is a step in that direction.“Improve the rolling stock design for goods/ container trains so that the problem of speed differential is resolved. Expedite the construction of Dedicated Freight Corridor.

“For the CTO industry to succeed and achieve its true potential, the Railways needs to support and accept the CTOs as partners rather than viewing them as competitors.

On the other hand, Dubey urged for collaboration between road and rail transport operators.“Neither rail nor road transport can offer A to B, i.e., point to point services. Door-to-door means there has to be three legs of transportations— first mile is by road transport, second mile is by rail transport and third mile is by road transport,” he explained.

WWW.CARGOTALK.IN

33

CARGOTALK

JUNE 2012

Cargo Performance Import/Export

DELHI INTERNATIONAL AIRPORT CARGO DEPARTMENT, IGI AIRPORT, NEW DELHI (AIRLINE-WISE IMPORT/EXPORT CARGO PERFORMANCE FOR THE MONTH OF APRIL 2012)

S. No. Airlines

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63

Jet Airways Cathay Pacific Emirates Air India British Airways Thai Airways Lufthansa Cargo Airline Singapore Airlines Fedex Express Corpation Etihad Airways Qatar Airways Malaysian Airline System Swiss World Cargo(India) KLM Kalitta Air Uzbekistan Turkish Airlines Virgin Atlantic Air France Unitop Airlines Finnair Martin Airline Japan Airlines Aeroflot Cargo Airlines Austrian Airlines Saudia United Airlines China Eastern Airlines Air China Philippine Airlines Aerologic Gulf Air Ariana Afghan Airlines China Air Indigo Cargo Blue Dart Safi Airways Kam Air Mahan Air Ethopean Airlines Eva Air Dhl Express Air Mauritius China Southern Airlines Air Arabia Aerosvit Oman Air Asiana Airlines Sri Lankan Airlines Ltd Air Shagoon Axios Aviation Services Air Astana Kuwait Airlines Biman Bangladesh Kingfisher Airlines Ltd. Air Shagoon Pakistan International Jetlite Turkmenisthan Airlines UPS Royal Jordanian Airlines Elal Israel Air Druk Air

Total Cargo handled in April‘11 % VARIATION

Export(MTs)

Export Perishable Cargo (MTs)

Export (with Peri.)

(UPL)(MTs)

Import

Total Cargo

All wt. in mt.

% of Total

1374 812 896 550 897 328 620 603 802 415 425 314 441 452 380 421 473 355 284 0 347 186 125 232 199 209 197 131 117 46 5 142 104 79 103 128 126 122 112 22 46 0 60 41 73 42 59 20 37 0 50 24 3 23 27 27 10 5 11 0 10 0 1

159 2 1045 526 51 43 25 17 23 30 118 37 37 43 0 34 31 3 30 0 17 9 3 60 10 100 1 6 1 10 0 21 0 0 0 0 1 0 2 4 0 0 32 0 2 22 9 0 0 0 0 13 24 2 0 0 1 0 6 0 1 0 0

1532 815 1941 1075 948 371 645 620 825 446 544 352 478 495 380 455 504 357 314 0 364 195 128 292 210 309 198 137 118 56 5 163 104 79 103 128 127 122 113 26 46 0 91 41 75 64 68 20 37 0 50 37 27 26 27 27 11 5 17 0 11 0 1

2169 2305 545 930 715 1023 744 703 341 420 266 375 221 192 291 202 123 208 185 475 105 264 265 56 112 9 92 122 140 160 185 4 58 79 50 4 1 0 7 80 59 100 2 41 0 8 0 47 29 57 0 3 12 12 2 0 13 19 0 16 1 5 0

3702 3119 2486 2005 1663 1395 1389 1323 1167 865 810 726 699 687 671 657 627 566 498 475 469 459 393 348 322 319 291 260 258 215 190 166 162 158 154 133 128 122 121 107 105 100 93 83 75 72 68 67 66 57 50 40 39 37 29 27 24 23 17 16 12 5 1

11.79% 9.93% 7.91% 6.38% 5.29% 4.44% 4.42% 4.21% 3.71% 2.75% 2.58% 2.31% 2.23% 2.19% 2.14% 2.09% 2.00% 1.80% 1.59% 1.51% 1.49% 1.46% 1.25% 1.11% 1.03% 1.01% 0.93% 0.83% 0.82% 0.69% 0.60% 0.53% 0.52% 0.50% 0.49% 0.42% 0.41% 0.39% 0.38% 0.34% 0.34% 0.32% 0.30% 0.26% 0.24% 0.23% 0.22% 0.21% 0.21% 0.18% 0.16% 0.13% 0.12% 0.12% 0.09% 0.09% 0.08% 0.07% 0.05% 0.05% 0.04% 0.02% 0.00%

14145 15285 -7.46%

2611 2392 9.15%

16756 17677 -5.21%

14654 16422 -10.76%

31410 34098 -7.88%

100.00%

## Cargo Handled at Centre for Perishable Cargo

34 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

MUMBAI CSI AIRPORT

EXPORT/IMPORT CARGO TONNAGE HANDLED IN APRIL 2012

(Including TP Cargo)

WEIGHT IN TONNES Export General

S. No. Airlines 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

Jet Airways Emirates Air India Lufthansa Cathay Pacific Singapore Airlines British Airways Etihad Airways Air France Swiss Intl. Airlines Qatar Airways Turkish Airlines Malaysian Airlines Thai Airways Saudi Arabian Airlines Federal Express Ethopian Airlines UPS Delta/KLM Airlines Korean Air Kenya Airways Fin Air Gulf Air Kuwait Airways South African Airlines Qantas Air Arabia Oman Air Continental/United Airlines Indigo Air Blue Dart Air Mauritius EL-AL Airlines Charters Srilankan Air Bangkok Airways Pakistan Airways Yemenia Airways Baharin Airlines Iran Air Egypt Air Kingfisher Airlines Royal Jordanian Airways Air China Air Cargo Germany Austrian Airlines North West Airlines Others

GRAND TOTAL

Export Perishable

Total Export

Import

Total Exp+Imp

1336.20 1203.19 678.52 525.50 901.43 576.90 500.95 554.36 386.17 373.21 177.14 483.05 392.75 159.41 490.82 356.30 554.04 92.86 86.88 263.87 262.34 234.21 82.36 74.90 194.80 71.99 43.38 112.90 41.30 94.98 85.82 109.58 57.20 0.00 43.44 62.36 24.14 29.81 34.34 25.85 14.77 13.53 9.71 0.00 0.00 0.00 0.00 3.34

1167.48 1429.57 1643.03 620.17 79.45 242.05 416.67 52.77 184.63 113.91 342.12 63.19 27.75 98.02 169.99 0.00 4.57 0.00 52.70 18.59 2.06 26.15 141.40 136.52 5.40 5.17 106.05 23.50 0.14 12.95 0.00 3.33 0.11 0.00 5.11 0.77 11.31 9.00 0.00 7.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 92.56

2503.68 2632.76 2321.55 1145.67 980.88 818.95 917.62 607.13 570.80 487.12 519.26 546.24 420.50 257.43 660.81 356.30 558.61 92.86 139.58 282.46 264.40 260.36 223.76 211.42 200.20 77.16 149.43 136.40 41.44 107.93 85.82 112.91 57.31 0.00 48.55 63.13 35.45 38.82 34.34 33.62 14.77 13.53 9.71 0.00 0.00 0.00 0.00 95.90

2918.59 910.43 944.11 1680.59 1798.13 1082.99 646.84 609.43 436.38 408.14 350.69 302.04 359.92 513.29 80.04 342.71 15.47 333.45 199.66 49.47 10.71 0.00 2.30 8.31 9.94 75.95 0.85 3.54 94.00 24.57 34.58 1.14 54.85 111.05 30.98 0.41 9.68 0.27 0.27 0.47 0.49 0.00 0.82 2.99 0.00 0.00 0.00 690.11

5422.27 3543.19 3265.66 2826.26 2779.01 1901.94 1564.46 1216.56 1007.18 895.26 869.95 848.28 780.42 770.71 740.85 699.01 574.08 426.31 339.24 331.93 275.11 260.36 226.06 219.72 210.14 153.11 150.28 139.94 135.44 132.50 120.40 114.05 112.16 111.05 79.53 63.54 45.13 39.09 34.61 34.09 15.26 13.53 10.53 2.99 0.00 0.00 0.00 786.01

11820.60

7315.95

19136.55

15150.65

34287.20

16782.72

37996.66

EXPORT/IMPORT CARGO TONNAGE HANDLED IN MARCH 2012 Cargo Handled in March’12

14197.80

7016.14

21213.94

35

CARGOTALK

JUNE 2012

Cargo Performance Indian Airports

TRAFFIC STATISTICS DOMESTIC FREIGHT

Freight (in Tonnes) For the Month S. No. Airport

(A) 11 International Airports 1 Chennai 2 Kolkata 3 Ahmedabad 4 Goa 5 Trivandrum 6 Calicut 7 Guwahati 8 Jaipur 9 Srinagar 10 Amritsar 11 Portblair Total (B) 6 JV International Airports 12 Delhi (Dial) 13 Mumbai (Mial) 14 Bangalore (Bial) 15 Hyderabad (Ghial) 16 Cochin (Cial) 17 Nagpur (Mipl) Total (C) 9 Custom Airports 18 Pune 19 Lucknow 20 Coimbatore 21 Mangalore 22 Patna 23 Trichy 24 Bagdogra 25 Chandigarh 26 Varanasi 27 Madurai 28 Gaya Total (D) 20 Domestic Airports 29 BHUBANESWAR 30 INDORE 31 AGARATALA 32 VISAKHAPATNAM 33 JAMMU 34 VADODARA 35 IMPHAL 36 RAIPUR 37 UDAIPUR 38 RANCHI 39 BHOPAL 40 AURANGABAD 41 LEH 42 RAJKOT 43 DIBRUGARH 44 JODHPUR 45 TIRUPATI 46 SILCHAR Total (E) Other Airports Grand Total (A+B+C+D+E)

36 CARGOTALK

JUNE 2012

For the period April to March

March 2012

March 2011

% Change

2011-12

2010-11

% Change

7415 6872 3204 355 139 20 437 626 182 7 247 19504

8245 7198 1284 437 121 17 705 636 181 5 202 19031

-10.1 -4.5 149.5 -18.8 14.9 17.6 -38.0 -1.6 0.6 40.0 22.3 2.5

84730 81703 19964 4016 1449 191 7761 6475 2361 89 2386 211125

93336 84861 15060 4247 1540 282 8520 8177 2016 161 2299 220499

-9.2 -3.7 32.6 -5.4 -5.9 -32.3 -8.9 -20.8 17.1 -44.7 3.8 -4.3

17045 16580 7132 2959 774 296 44786

17551 17988 7357 3053 755 449 47153

-2.9 -7.8 -3.1 -3.1 2.5 -34.1 -5.0

200525 190288 83256 34472 8533 4588 521662

209113 199831 87515 36390 8610 9145 550604

-4.1 -4.8 -4.9 -5.3 -0.9 -49.8 -5.3

2421 219 614 25 260 0 154 304 18 78 0 4093

2327 384 624 28 260 0 94 86 31 56 0 3890

4.0 -43.0 -1.6 -10.7 0.0 63.8 253.5 -41.9 39.3 5.2

24134 3690 7281 267 3425 0 1672 3042 356 842 0 44709

27828 3492 6637 305 3279 0 1114 1013 422 580 0 44670

-13.3 5.7 9.7 -12.5 4.5 50.1 200.3 -15.6 45.2 0.1

195 345 484 190 125 238 410 272 0 122 84 124 92 62 28 2 1 26 2800

271 471 595 284 106 166 592 217 0 148 82 115 131 68 41 4 1 48 3340

-28.0 -26.8 -18.7 -33.1 17.9 43.4 -30.7 25.3 -17.6 2.4 7.8 -29.8 -8.8 -31.7 -50.0 0.0 -45.8 -16.2

2286 4734 6889 1046 1265 2282 4984 2870 0 1650 890 1227 1336 738 343 41 26 497 33104

2667 5380 7105 1107 1371 2099 6002 2356 0 1306 1175 1841 1426 933 322 27 12 480 35609

-14.3 -12.0 -3.0 -5.5 -7.7 8.7 -17.0 21.8 26.3 -24.3 -33.4 -6.3 -20.9 6.5 51.9 116.7 3.5 -7.0

121 71304

106 73520

14.2 -3.0

1491 812091

1279 852661

16.6 -4.8

WWW.CARGOTALK.IN

37

CARGOTALK

JUNE 2012

Cargo Performance Indian Airports

TRAFFIC STATISTICS INTERNATIONAL FREIGHT

Freight (in Tonnes) For the Month S. No. Airport

(A) 11 International Airports 1 Chennai 2 Kolkata 3 Ahmedabad 4 Goa 5 Trivandrum 6 Calicut 7 Guwahati 8 Jaipur 9 Srinagar 10 Amritsar 11 Portblair Total (B) 6 JV International Airports 12 Delhi (Dial) 13 Mumbai (Mial) 14 Bangalore (Bial) 15 Hyderabad (Ghial) 16 Cochin (Cial) 17 Nagpur (Mipl) Total (C) 11 Custom Airports 18 Pune 19 Lucknow 20 Coimbatore 21 Mangalore 22 Patna 23 Trichy 24 Bagdogra 25 Chandigarh 26 Varanasi 27 Madurai 28 Gaya Total (D) 18 Domestic Airports (E) Other Airports Grand Total (A+B+C+D+E)

For the period April to March

March 2012

March 2011

% Change

22885 3562 986 275 4555 2775 0 29 0 723 0 35790

27326 4111 923 420 3582 2246 0 14 0 471 0 39093

32720 40973 13108 3702 2551 45 93099 0 97 49 0 0 179 0 0 0 0 0 325 0 0 129214

2011-12

2010-11

% Change

-16.3 -13.4 6.8 -34.5 27.2 23.6 107.1 53.5 -8.4

272461 43890 11793 2154 46753 25400 0 235 0 6998 0 409684

295497 45098 12980 2535 37795 21964 0 398 0 5834 0 422101

-7.8 -2.7 -9.1 -15.0 23.7 15.6 -41.0 20.0 -2.9

36204 43983 13317 4097 3449 31 101081

-9.6 -6.8 -1.6 -9.6 -26.0 45.2 -7.9

367830 467182 141693 43627 34173 388 1054893

390932 470402 135263 42170 32198 346 1071311

-5.9 -0.7 4.8 3.5 6.1 12.1 -1.5

0 73 39 0 0 154 0 0 0 0 0 266 0 0 140440

32.9 25.6 16.2 22.2 -8.0

0 839 467 0 0 2012 0 0 1 0 0 3319 0 0 1467896

0 586 390 0 0 1775 0 0 0 0 0 2751 76 0 1496239

43.2 19.7 13.4 20.6 -1.9

Chapman Freeborn India shifted to new office Chapman Freeborn Air Chartering has moved its office in India to a new location in New Delhi to accommodate its expanding team. According to the company sources, over the last two years, the global aircraft charter specialist’s India operation has seen a continued growth. Hence

38 CARGOTALK

JUNE 2012

the move is to larger premises in order to accommodate for all its aircraft brokering activities.

The new office is located opposite the Indira Gandhi International Airport and near the new Terminal 1-D Domestic Terminal. “In the last two years of managing the India office we have seen

a substantial growth in this region. We have expanded our local team in order to adapt to the increase in business we are witnessing. Our goal is continue to expand into the best locations to ensure value and commitment for our clients’ needs,” said Shailendra Seth, director of Chapman Freeborn India.

WWW.CARGOTALK.IN

Guest Column Indian Rail

Indian Railways has a crucial role to play for logistics industry

3URI * 5DJKXUDP

F

inancially, the Indian Railways (IR) was in the ‘ICU’, even needing a short-term loan of Rs 3,000 cr from the Finance Ministry. The question is when and how will the IR get out of this state. The Railway Budget 2012-13 is a welcome step, conceptually gutsy attempt to lay the way forward for reforms in the Indian Railways (IR).

Under such circumstances, planning an investment of Rs 60,100 cr during 2012-13 was significant, with an expected contribution of—Rs 24,000 cr from the general budget, Rs 18,050 cr from internal surplus, Rs 15,000 cr from market borrowings through Indian Railway Finance Corporation, Rs 2,000 cr from safety fund, and Rs 1,050 cr from extra budgetary resources.

This annual investment is the highest ever planned, but substantially below the required average annual investments of over Rs 150,000 cr during the 12th five year plan. This figure is in the range of the requirement that has been projected both in the ‘Vision 2020’ document released under former Railway Minister, Mamta Banerjee and by the Expert Group for Modernisation of Indian Railways (of which the author is a member).

To avoid conflict of interests, this would require an independent assessment. While the IR has been resisting the concept of a regulator, former Railway Minister Dinesh Trivedi had, for the first time, proposed the 40 CARGOTALK

JUNE 2012

There is no denying the fact that for the nation’s economic development, transportation is a key facilitator. Within that, keeping environmental and energy considerations in mind, rail technology is the best. The railways have been the ‘lifeline’ of the nation and will need to be more so now.

However, the ‘lifeline’ being in the ‘ICU’ does not augur well for the nation. PROF. G RAGHURAM

idea of an independent Railway Tariff Regulatory Authority. The needs and terms of such an Authority were expected to be first discussed by

a committee of key stakeholders, and then by the parliament.

Internal surplus can be generated by increasing revenues and controlling costs. Freight rates were increased (‘rationalised’ as claimed by the then minister) by 10 per cent to 15 per cent before the budget, and hence did not come as a budget proposal. A similar increase for passenger fares was proposed in the budget. Given that passenger fare increase had not happened for almost eight years, most stakeholders have appreciated the move. However, the Minister’s own party not being happy about it made him sacrifice his job as the Minister of Railways.

INVESTMENTS A major way to step up the investments would be to generate substantially more internal surplus, and seek extra budgetary resources through public private partnerships (PPPs). Another source, of course, is the general budget.

Contribution from the general budget can be expected in the case of strategic projects (which are normally provided for), and explicit subsidies towards (i) non-remunerative lines and (ii) fares, if kept lower than ‘desirable,’ towards a larger national goal.

With the projection of increased freight traffic from 970 million tonne in 2011-12 to 1025 million tonne in 2012-13 and the increased freight and passenger rates, the net surplus was expected to provide Rs 18,050 cr towards investment. This would be the highest such surplus anticipated. The obvious risk is whether the freight increases would turn away the traffic.

The Modernisation Committee expects over Rs 200,000 cr over five years as internal surplus! It is important that IR move in this direction.

RAIL FREIGHT

OPPORTUNITIES

There are opportunities in increasing freight traffic by investments in routes where bulk freight is moving by road due to lack of rail capacity, especially through some of the major ports.

There are opportunities in revenue generation WWW.CARGOTALK.IN

41 CARGOTALK

JUNE 2012

Guest Column Indian Rail

and cost reduction by focusing on low investment and high return activities. Standardisation of intercity and long distance passenger trains could enable greater flexibility in usage of coaches, the average of which is around 550 kms/day, but offers a potential of reaching 700 to 800 kms/day. Investments in reversals and flyovers at various railway junctions would streamline traffic flows, thereby reducing costs and increasing asset utilisation. Signalling investments can improve capacity and of course safety. Rationalisation of work force by automation and retraining could help reduce staff costs.

Prioritising investments directed at projects which are nearing completion could help generate revenues quickly. The budget does not explicitly talk of these options, except signalling, unless they are implicitly implied.

ROLE OF PPP:

EXPERIENCES SO FAR Big ticket extra budgetary resources need to come in through PPPs. There are issues, however, of how PPP friendly IR is perceived to be.

For example, one of the significant PPP domains, namely container train operations, has been riddled with a series of problems, leaving the private investors feeling uncomfortable in relating to the IR. One of the significant players has even gone to the Competition Commission against the IR. Keeping this reality in mind, the budget 2012-13 expects only Rs 1,050 cr towards this. The Modernisation Committee expects over Rs 220,000 cr through PPPs over five years! The IR would need to change their mindset and do significant organisational reforms before PPP funds start flowing in.

I would commend the approach followed in coming up with the budget, which (as was often said) is not just an annual statement, but a vision for the long-term, to be achieved by ‘biting the bullet’. Apart from the parliamentary, industry and other key

Investments in flyovers at various railway junctions would streamline traffic flows, reduce costs and increase asset utilisation. ministry consultations, State Governments, Institutions (I know for sure the Indian Institute of Management, Ahmedabad and National Institute of Design, Ahmedabad) and two specific high level committees, namely the Modernisation Committee, and the High Level Railway Safety Review Committee were consulted.

The budget was also path breaking in its attempt to talk of missionary approaches to delivering results, as recommended by the Modernisation Committee. In addition, a slew of special purpose vehicles (or focused organisations) and authorities have been announced, they are: Rail-Road Grade Separation Corporation of India, Railway Safety Authority, Railway Research and Development Council, Indian Railway Station Development Corporation, 42 CARGOTALK

JUNE 2012

Logistics Corporation, National High Speed Rail Authority and SPV with State Government of Andhra Pradesh.

A lost (though not irretrievably) opportunity is making the Dedicated Freight Corridor an independent railway. Similarly, the High Speed Rail should be envisaged as an independent railway. There should be more proliferation of organisations at the customer service level, so that market orientation becomes the much required mindset. Overall, the question for the country is primarily how to best leverage rail technology and how to make IR a vibrant organisation! In my view, this year’s bold budget has set the tone for this.

MAJOR CONSIDERATIONS The way forward to create a climate for PPPs has also been considered through the setting up of Indian Railway Station Development Corporation and Logistics Corporation.

However, more significant restructuring is required in the separation of the policy making (Ministry), operations (Railway Board) and regulation (Safety, Tariff). Further, at the operational level, more organisations that will compete for and in the market are required.

(The author, Prof. G Raghuram is a Professor, IIM Ahmedabad, and a member of the Expert Group for Modernisation of Indian Railways) WWW.CARGOTALK.IN

Family Album Club Function

ACCD discusses future of Indian freight forwarders The Air Cargo Club of Delhi (ACCD) recently organised a luncheon meet in New Delhi on a serious issue pertaining to the future of small and medium sized freight forwarders in India. Addressed by Tushar Jani, chairman and Radharamanan Panicker, CEO- Group CSC, the meet was attended by a huge and guests. hug ge number of ACCD members m

44 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

45

CARGOTALK

JUNE 2012

Family Album Get Together

Damco India hosts customer meet at Bengaluru Damco India recently organised a customer meet on May 8, 2012 in Bengaluru to celebrate the organisation’s success in one of the fast growing markets in South India. Rolf Habben-Jansen, CEO, Damco Global, was present at the event along with Lars Sorensen, CEO, Damco South Asia; Ram Kumar Nair, GM - South India and Krishna Kumar, national sales head, Damco India, to interact with the customers.

46 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

Corporate Social Responsibilities Annual Event

First Flight Couriers organises marathon for a cause

F

irst Flight Couriers, which is India’s leading courier company, has been organising marathon from last four years and the entire collections were donated to the welfare institutions like Snehasadan & Cheshire Homes. This year too the Marathon was organised on February 12, 2012 at Bandra Kurla complex. Like previous years, few celebrities and top bureaucrats were present at the event as the guests of honour. Approximately 600 plus employees of the company participated in this sporting event. The race started from the City Park located at BKC and was ended at the same venue followed by a prize giving ceremony.

“First Flight has always been in the forefront when it comes to supporting noble causes and helping institutions, which dedicate their services for the betterment of the underprivileged section of our society,” said RK Saboo, deputy managing director, First Flight. According to him, the management of the company has always been conscious of its corporate social responsibility.

At present, First Flight Couriers has a network across the country. While the corporate office of the 25 year-old company is based in Mumbai, its 20 regional offices are located in the metros and other major cities of the country.

AAI Celebrates 17th Annual Day The Airports Authority of India (AAI) celebrates its 17th Anniversary on April 28 in New Delhi. On this occasion, AAI in-house cultural team organised a spectacular evening on the theme titled “Indralok se Indraprastha – A Runway Yatra”. Ajit Singh, Union Minister for Civil Aviation was present at the evening as Chief Guest. Also present at the function were V P Agrawal, chairman, AAI and several other dignitaries.

48 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

International Events Logistics Events

1. Air Cargo China

June 5-7, 2012 Shanghai New International Expo Centre Contact : Messe M체nchen GmbH Air Cargo China Messegel채nde 81823 M체nchen, Germany Phone +49 89 949-20277 info@transportlogistic-china.com

International Events

4. Aviation Outlook China 2012 July 10-11, 2012 Jumeirah Himalayas Hotel Shanghai - China www.terrapinn.com

8. ACF 2012

October 2-4, 2012 Georgia World Congress Center 285 AndrewYoung International Blvd. N.W. Atlanta, Georgia 30313-1591 Phone: 1 786 265 7011 Fax: 1 786 265 7012 Email: secgen@tiaca.org

9. FIATA 2012 World Congress

October 8-12, 2012 Hyatt Regency Century Plaza Los Angeles, CA FIATA2012@vrsevents.com Call: 202-373-4174

Calendar of International Events

10. India Maritime 2012

October 17 -20 Panaji, Goa, India Contact: Federation of Indian Chambers of Commerce and Industry (FICCI) Federation House 1, Tansen Marg, New Delhi-110001 Ph: 011-23359734 E-mail: s.sundli@ficci.com; rishi.arora@ficci.com

2. LogiChem Asia

June 26 - 28, 2012 Grand Hyatt Singapore, Singapore Contact: +65 6408 9217 E-mail: kwilkins@joc.com

5. Compack Chennai 2012

July 13-15, 2012 Chennai Trade Centre Chennai, India Contact : Smart Expos, Chennai, India Ph : +(91)-(44)-22501986/22501987

3. e-Cargo Conference 2012

June 26 - June 28, 2012 Geneva, Switzerland IATA Geneva Conference Center www.iata.org

6. Aviation Outlook Africa

July 23-26, 2012 Sandton Convention Centre Johannesburg www.terrapinn.com

7. Cool Logistics Global September 24-26, 2012 Crowne Plaza Antwerp, Belgium Contact: +44 20 8744 0244

11. 8th Trans Middle East Bahrin 2012

November 20-21, 2012 Gulf International Convention And Exhibition Centre, Kingdom of Bahrain Contact: Level 1, Lot 7, Block F, Saguking Commercial Building, Jalan Patau-Patau, 87000 Labuan F. T., Malaysia Tel: +60 87 426 022 Fax: +60 87 426 223 Email: enquiries@transportevents. com

50 CARGOTALK

JUNE 2012

WWW.CARGOTALK.IN

51

CARGOTALK

JUNE 2012

Shipping & Ports Capacity Building

Angre Port in Maharashtra Open for Business With increasing import-export business, leading Indian ports are having tough time to manage operations. The newly launched Angre Port – Maharashtra’s first private port – intends to release the tension by attracting traffic on Western Coast and further boost the growth in shipping and cargo industry. ANITA JAIN

W

ith an investment of close to Rs 520 crore, Maharashtra’s first merchant minor port was thrown open for commercial operations on April 23, 2012. Situated on the west coast of India (between Mumbai

DID YOU KNOW? This is the second port to come up in Jaigad, after the much larger one constructed by the Jindals-whose JSW Power runs a thermal power plant in the area--is already operational. Chowgule said, they do not consider JSW’s Port in competition as it has been built largely keeping in mind the group’s requirements of handling coal.

Additionally, the Angre Port’s focus on handling only clean cargo and not coal and iron ore, will help it gain advantage.

and Goa in Ratnagiri district), the all weather port boasts of natural draft of 10 meters, 700 meter quay length, natural break water, cargo handling facility of around 16 million tonne per annum with facilities to handle merchant cargo 52 CARGOTALK

JUNE 2012

$QJUH 3RUW LQDXJXUDWLRQ

including dry bulk, liquid cargo and container cargo. In the second phase of development, it plans to increase the draught to 13 meters and capacity to 25 mtpa.

Furthermore, for additional revenue stream, the port is in process of building India’s first ship-lift repair yard facility at a cost of Rs 430 crore to be ready by June 2013. It will be the first such major facility for ship repair on the western coast and will serve as a cheaper and convenient alternative as compared to Sri Lanka or West Asia. A lift that can raise a vessel of up to 8,500 tonnes to 14.5 metres above the water level will be deployed at the facility to place the vessel ashore, and on to the repair yard. The yard will have a total of six berths of up to 150 meters in length and capacity to handle six ships simultaneously of up to 10,000 DWT size ship. This integrated ship repair facility will be able to accommodate all kind of activities including electronic navigation, underwater, etc.

According to Vijay Chowgule, Chairman, Chowgule Ports & Infrastructure (holding co. of Angré Port), the port has finalised container feeder service operations with multiple shipping lines that will connect it with two transshipment hubs – Jebel Ali and Colombo. The container feeder vessel originating from Jebel Ali will call at Colombo, Cochin and New Mangalore port before connecting Angré port directly with Jebel Ali. He said, “By bringing down the logistics costs, goods produced and traded in the region, will

become competitive in the overseas markets.

Angré Port will act as a catalyst to the development of Kolhapur emerging as the new manufacturing hub beyond the golden triangle of Mumbai, Pune and Nashik. Our concentration on clean cargo will help. I think there is enough room and enough business in the geography waiting to be tapped.” This port, according to him, will bring about a saving for Exim cargo originating from Kolhapur and Belgaum which at present involves transportation and handling cost at JN Port, of about USD 560 and USD 700 per container, respectively.

This port project was awarded to Chowgule group in March 2008 by the Maharashtra government for a 50-year period as per the concession agreement on Build Own Operate Share and Transfer (BOOST) basis. “The port will have customs clearance facility at site, and hence, will also reduce the total cycle time needed at JN customs,” informed Atul Kulkarni, CEO, Chowgule Ports & Infrastructure.

WWW.CARGOTALK.IN

53 CARGOTALK

JUNE 2012

Emerging Technology Cargo Portal

Calogi signs pact with Dubai Insurance to offer e-transaction by cargo community Calogi, the Dubai based leading air cargo portal, recently signed an agreement with Dubai Insurance to offer cargo insurance online via the Calogi portal. The services will be for across the world and the company is targeting India in a big way, through business partners. RATAN KR PAUL

C

argo insurance is essential in this industry as cargo in transit means cargo at risk. The online cargo portal, Calogi, currently serves a user base of more than 500 companies and 1,500 discrete users, all of whom require insurance to protect their cargo against loss or damage. “We are currently shortlisting distribution partners for the Calogi solutions in the Indian Market. We are in the process of negotiating with the potential partners and aim to have the contract signed by mid-May,� informed Patrick Murray, head of Calogi.

Commenting on the significance of the agreement with Dubai Insurance, he maintained that cargo insurance quotes will now be available online and forwarders will no longer have to use other time consuming communication modes such as the telephone and fax to satisfy their insurance needs, increasing productivity and eliminating paperwork for both the forwarders and insurance companies. “I believe that our offering will be very attractive to the Indian market as our is the only system that unites the major air cargo supply chain stakeholders on one platform,�

Murry said.

To be associated with Calogi solution, the data is entered once and re-used across the supply chain offering complete transparency. For Indian air cargo supply chain stakeholders who use the portal, there are no expensive messaging costs. For those that still require traditional messages, the 54 CARGOTALK

JUNE 2012

company can send them via email or file transfer, thus removing SITA costs.

/ 5 3DWULFN 0XUUD\ +HDG RI &DORJL DQG $EGHODWLI $EXTXUDK &(2 'XEDL ,QVXUDQFH

“The new Calogi solution will allow Dubai Insurance to offer products at competitive prices for all domestic and international cargo either while the shipment is being transported or while in the possession of the forwarder,� said Abdellatif Abuqurah, CEO, Dubai Insurance.

Abuqurah claimed that Calogi has brought a new dimension to the airfreight industry in the form of credit management. Distributing stock to a forwarder is no longer like issuing a blank cheque.

Instead airlines can decide the amount of financial risk they are willing to take with each forwarder by setting credit limits. “We will continue to develop Calogi to keep abreast of industry standards and initiatives. We have two philosophies. The first is to continue to support the industry by developing and testing features once and make them available on the portal, thus helping our stakeholders to keep their costs down. Our second philosophy is to increase our income by increasing the volume of users and transactions,� Murry shared.

According to Murry, Calogi has priced its solution in a manner so that it remains within the reach of the small-to-medium enterprises. “We did not want cost to be a barrier. Even an exporter who has one or two shipments a week has found our system extremely cost effective,� he asserted.

PROSPECT OF INDIAN MARKET ³:H DUH YHU\ H[FLWHG DERXW DQG ORRNLQJ IRUZDUG WR UROOLQJ RXW &DORJL LQ ,QGLD ´ VDLG 0XUU\ &DORJLœV VWUDWHJ\ LV WR IRFXV RQ WKH DLUOLQHV *6$V DQG IRUZDUGHUV LQLWLDOO\ JURZ WKH VXEVFULEHU EDVH DQG WKHQ LPSOHPHQW WKH RWKHU IHDWXUHV RI &DORJL DV DQG ZKHQ WKH GHPDQG ULVHV &DORJL KRZHYHU PDLQWDLQHG WKDW UHSOLFDWLQJ WKH 'XEDL EXVLQHVV PRGHO LQ ,QGLD ZLOO EULQJ WKH PRVW EHQHILWV EXW PD\ QRW EH SRVVLEOH LQ WKH ILUVW \HDU ³:H ZRXOG VWLOO OLNH WR VHH D ZRUOG ZKHUH DLU FDUJR VXSSO\ FKDLQ VWDNHKROGHUV FDQ LPSOHPHQW SHU FHQW H IUHLJKW SHQHWUDWLRQ DQG UHPRYH DOO SDSHU IRUPV ³,Q WHUPV RI GHYHORSPHQW ZH KDYH D JUHDW VHW RI VROXWLRQV WR KHOS RXU SRWHQWLDO ,QGLDQ FXVWRPHUV WR LQFUHDVH WKHLU EXVLQHVV ´ KH VDLG

WWW.CARGOTALK.IN

55 CARGOTALK

JUNE 2012

Emerging Technology Cargo Portal

NEW

SOLUTIONS In 2012, Calogi introduced c-Club—the first loyalty programme dedicated to the air cargo supply chain business.

Murry maintained that it offers even more benefits to the company’s customers conducting their business on the portal. According to Murry, the Calogi c-Club loyalty solution allows any seller of services on the portal to run his own flexible loyalty scheme with any buyers on the portal. By running their own loyalty programme, Calogi subscribers will be able to solidify existing relationships, initiate new relationships and convert one-time customers into repeat business.

In addition, Calogi has built an express and mail product which will enable forwarders to ship courier products (even under Courier Baggage Voucher) with the same rating and stock control

features as general cargo. In this case, Calogi will act as a clearing house for such courier transactions.

Calogi has also developed and implemented a third party logistics module which allows 3PL service providers to sell services, such as packing, dangerous goods management and storage to any user on the Calogi portal. “Calogi will deduct the money from the purchaser’s account and pay the seller of the service. The Calogi loyalty programme will also be used by 3PL service providers,� Murry highlighted.

Calogi has also developed a solution to offer opportunity for shipper, origin forwarder, airline and destination forwarder to view the A4 air waybill. “This presents airlines, flying domestic routes, with an opportunity to remove neutral and manual stock from their domestic market and pave the way for full e-freight compliance,� Murry informed.

Gandhi Automations Dock shelters from Campisa $FFRUGLQJ WR WKH *DQGKL $XWRPDWLRQV VRXUFHV FXWWLQJ RII WKH LQVLGH HQYLURQPHQW IURP WKH RXWVLGH 'RFN VKHOWHUV IURP &DPSLVD LV QRW RQO\ XVHIXO WR WKH KXPDQ ZRUNLQJ FRQGLWLRQV EXW DOVR VDYH HQHUJ\ HFRORJ\ DQG HQKDQFH ZRUNLQJ HIILFLHQF\ &DPSLVD RIIHUV D FRPSOHWH UDQJH RI GRFN VKHOWHUV IRU HYHU\ NLQG RI XVH DQG HQYLURQPHQW ³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´ VDLG WKH VRXUFHV

CUSHION DOCK SHELTER Gandhi Automation sources maintain that Cushion Dock Shelter is ideal to maintain the ‘cold chain’. Thanks to its high insulation factor, Cushion Dock Shelter is the ideal solution for controlled temperatures.

56 CARGOTALK

JUNE 2012

UPDATE

PVC Dock Shelter

*DQGKL $XWRPDWLRQV FODLPV WKDW WKH UHWUDFWDEOH 39& IURQW SDQHOV GRFN VKHOWHU LV WKH PRVW SRSXODU 7KDQNV WR LWV VLPSOLFLW\ ORZ FRVW DQG HIILFLHQF\ LW JUDQWV IRU D FRQVWDQW SD\ EDFN RI WKH LQYHVWPHQW ,W LV DYDLODEOH IRU GRFN OHYHO LQVWDOODWLRQ RU IRU JURXQG OHYHO LQVWDOODWLRQ IRU WKH SURWHFWLRQ RI GRRUV ZLWKRXW GRFN WWW.CARGOTALK.IN

Logistics Services CEO Talk

Emergence of new markets Damco puts more emphasis on India With weak prospects for growth in Europe and North America, large companies are increasingly turning elsewhere, including Africa, which has been underdeveloped for a long time. And, India perhaps tops the priority list. Let’s find it from an exclusive interview with Rolf Habben-Jansen, Global CEO, Damco. RATAN KR PAUL 5ROI +DEEHQ -DQVHQ

A

s far as outlook in India is concerned, Damco is quite positive about the Indian growth story as it is based on sound economic fundamentals.

Moreover, the Indian market remains attractive and with India being the second most populous country in the world after China, domestic internal demand is here to stay.

“Companies are learning how to change sourcing locations much more quickly and easily than even a few years ago. So sourcing may happen today from China, tomorrow from India, and later from Vietnam,” stated Jansen.

He pointed out that the Asian, Latin American and African consumer is growing in confidence and spending power. On the other hand, the impact of political unrest in the Middle East has had more impact on oil prices than trade. The Japanese Tsunami and the Thailand floods had larger impacts on global trade and supply chains in some specific industries. The weak consumer demand in the US and Europe have had a rather larger impact.

However, these events have not had a particular impact on Damco’s operations and logistics strategies because Damco operates in 95 countries and is not particularly dependent upon any one region.

“We believe that service providers, such as Damco who stay close to their customers and have over a period of time built a strong understanding of their business, will be able

58 CARGOTALK

JUNE 2012

to provide value to customers even in difficult scenarios,” Jansen asserted.

The CEO further shared that emerging markets would play a key role in Damco’s future success.

“Our strategy includes a strong focus on high growth markets in Asia, Africa and Latin America.

If you look at how our organisation is built, roughly 65 per cent of the people we employ are in these high growth markets, which is also a plus from a cost perspective as it makes us quite competitive,” he underlined. He maintained that Damco’s position in places like Sub-Saharan Africa, India, Bangladesh, Vietnam, Cambodia, Indonesia and China is also quite strong.

Jansen emphasised that India would continue to provide Damco with attractive opportunities to achieve new levels of growth for its products and services. “We feel that there is a lot of growth still waiting to happen with many major Indian businesses increasingly outsourcing their logistics activities to capable and globally experienced third party logistic service providers like us,” he said.

Jansen stressed that Damco has significant growth plans.

“In air freight, we have enhanced our sea-air product by offering services through several hubs located in strategic locations that offer a cost and transit advantage to the customer,” he added.

Commenting on the new products launched

by Damco to cope up with current trends and future challenges, Jansen highlighted the recently launched services called ‘Damco Dynamic Flow Control’ (details about this product were published in the May 2012 issue of Cargotalk).

He expects that this product will elevate Damco’s position in the market place. “We see this solution as a clear differentiator that has the potential to create significant value for our customers as well as for Damco,” he added.

ACCORDING TO JANSEN, in 2011 Damco made steady progress mainly due to its continued focus on remaining close to its customers and offering them cost effective reliable logistics solutions. The company grew its ocean volume by over 20 per cent and air freight volumes by over 10 per cent.

WWW.CARGOTALK.IN