CargoConnect November 2017 by Surecom Media

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Poor Roads breaking the Pace of Indian Logistics

VOL VIII ISSUE XII november 2017 `20

Hidden Opportunities & Challenges in Indian Air Cargo

Technology Transforming the Cold Chain Is GST favouring Ease of Doing Business?

Cargo Transport SHIFTING Towards Containerisation

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Contents

Volume VIII • Issue XII • november 2017

Editor and Publisher Smiti Suri Senior Correspondent Tariq Ahmed Feature Writers Gaurav Dubey Sheena Sachdeva Deepashree Banerjee Director Ajeet Kumar

14 COVER STORY

Cargo Transport Shifting Towards Containerisation focus

Marketing Manager Niti Chauhan Asst Manager Marketing Asad Mohammad Marketing Executive Mehuli Choudhury Administration Vipin Marwah Accounts & Administration Poonam Gupta

38 SPECIAL FEATURE

Hidden Opportunities & Challenges in Indian Air Cargo FEATURES

Sr Designer & Visualiser Shaique Ahmad

Poor Roads breaking the Pace of Indian Logistics .........................................................8

INTERVIEWS R Shankar, CEO, TVS Logistics Services Ltd – India ...............................................70 Rachid Fergati, Managing Director - Indian Sub-Continent, UPS ......................................72 Mark Whitehead, Chief Executive, Hong Kong Air Cargo Terminal Limited (Hactl) .............74

Technology Transforming the Cold Chain .......................................46

UPFRONT ....................................6 guest column .......................76 NEWS ..................................77-82 PROFILE ....................................82 EVENTS ................................84-88 UPCOMING EVENTS ..................89

Is GST favouring Ease of Doing Business? ..............................56

APPOINTMENTS ........................89 REPORT .....................................90

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Designer & Visualiser Mayank Bhatnagar All material printed in this publication is the sole property of CargoConnect All printed matter contained in the magazine is based on the information of those featured in it. The views, ideas, comments and opinions expressed are solely of those featured and the Editor and Publisher do not necessarily subscribe to the same.

CargoConnect is printed, published and owned by Smiti Suri, and is printed at Compudata Services, 42, Dsidc Shed, Scheme–1, Okhla Industrial Area Complex, Phase–II, New Delhi-110020, and published at 6/31-B, Jangpura–B, New Delhi-110014. Editor–Smiti Suri

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Upfront The Cabinet has approved the biggest ever highway development plan to develop and expand approximately 83,000 km of roads at an investment of `6.9 lakh crore by 2022. The plan includes the new 28,400 km Bharatmala highway programme connecting border areas of the country.

“The GST has eliminated check posts on borders. Trucks do not have to wait for days and corruption at check posts has stopped. Now, those who used to take contracts for ensuring passage of your trucks through the check posts are naturally very angry with me.”

Narendra Modi, Pime Minister of India, said while addressing a rally in Gujrat

Piyush Goyal

Minister of Railways of India

Indian Railways is working to improve transparency in procurement……and to enhance speed, scale and safety in rail operations”

“The Union government has been taking many initiatives such as improving road connectivity, ports and other infrastructural facilities and inland waterways for the development of Andhra Pradesh”

M Venkaiah Naidu

Vice President of India, said while laying foundation stone of an Inland Waterway and 13 National Highways projects

“We are working towards reducing cost via waterways………by 2019, roads and transport sector will contribute 2-3 per cent to the country’ s GDP, that is our target”

Nitin Gadkari Union Minister for Road Transport and Highways

Highway Projects on a Roll

BHARATMALA LAUNCH

NHAI to be empowered for approving Bharatmala projects No need for CCEA approval for Bharatmala projects Move to ensure faster clearance for projects Only build-operate-transfer projects requiring viability gap funding will

44 economic corridors with a total highway length 24,000 km

need CCEA approval Currently, all highway construction projects above rupees `1000 crore need CCEA approval

Prof G Raghuram Director, IIM Bangalore.

CargoConnect - November 2017

Cabinet nod for `5 lakh crore project soon

80%

of funds required to come from government, remaining projects through PPP

focus

Poor Roads breaking the Pace of Indian Logistics Roads play a predominant role in the transportation of cargo. Nearly 60.2 per cent of the cargo is moved by roads in India. Still, it is plagued by numerous discrepancies and face several infrastructural challenges. Unavailability of proper road infrastructure puts a direct impact on Indian logistics industry. Severe traffic congestion on National Highways, less than 10 per cent of motorable roads and slow pace of development of expressway network are some of the immediate challenges that need to be addressed. Gaurav Dubey talks about the effect on the profitability of poor roads and viability of Indian roads for the transportation of heavy cargo with the help of industry leaders in this short report.

CargoConnect - November 2017

ogistics undoubtedly plays a vital role in driving economy of the country to the next level. It is a backbone of every commercial sector as it provides efficient and cost-effective flow of goods in each and every business. Logistics industry in India is evolving rapidly as LSPs are proactively embracing technologies and improving their infrastructure with a motive to reduce cost and providing effective services to its clients. The logistics industry is continuously evolving, despite weak economic sentiments, thanks to the growth in retail, E-Commerce and manufacturing sector. The global logistics sector approximately grew at 10-15 per cent in the period 2013-14. Logistics industry is expected to reach over USD 2 billion by 2019. Rise of E-Commerce logistics and increased domestic consumption will dive the industry in the coming years. The growth doesnâ&#x20AC;&#x2122;t end

focus “The poor state of our road network not only limits the reach of our vehicles, but it reduces the speed of the trucks as they need to navigate slowly through the unpaved concrete. Due to lack of roads and highways the country would soon not be able to accommodate the increasing number of vehicles.”

Oliver Bohm, CEO, Schenker India

here. The service oriented logistics industry is ready to expand beyond the horizons in the latter half of this decade.

Present scenario The present government has been spending exorbitant amounts in improving logistics infrastructure of the country. Inadequate logistics infrastructure is creating bottlenecks in the growth of the economy. The logistics management regimen has the capability of overcoming the disadvantages of the infrastructure in the short run while providing cutting edge competitiveness in the long term. Logistics

industry is also facing several challenges in India - Insufficient integration of transport networks, information technology and warehousing and distribution facilities is the foremost challenge. Apart from this, unavailability or insufficient trained manpower is also a challenge in front of third-party logistics sector, lack of IT standards, equipment and poor system integration also a challenge for the industry. However, here we would specifically focus on unavailability of appropriate road infrastructure in the country and will touch the following points – • Viability of Indian roads for transporta-

tion of cargo • Effect on profitability of transportation business due to bad roads • GST’s role in facilitation of transportation activity • Rise in demand of trucks in the post GST period

Transportation – A vital link in logistics It is virtually inconceivable in today’s economy for a business to function without the aid of transportation. Transportation is an essential and a major sub-function of logistics that creates time and place

Major challenges transporters face due to bad roads Sub-standard quality of Roads and Highways Although India is home to several national highways, the sad state of affairs is that most national highways aren’t appropriate to carry load of heavy vehicles. The design of the highways is a matter of great importance since only properly designed highways can withstand the pressure exerted by heavy vehicles. Apart from being narrow, they are also highly congested since quite a large part of India’s freight is carried on these highways.

Poor rural roads India is home to quite a large rural population. Most of the rural areas in India do not have access to all weather roads and hence have a tough time during the monsoons. This problem is more significant in the northern and northeastern part of the country. However, Government of India has set earmarked 20 per cent of the investment of US$ 1 trillion reserved for infrastructure during the 12th Five-Year Plan (2012–17) to develop the country’s roads.

Traffic congestion in urban areas Traffic is one common problem in most of the metropolitans today. Cities like Mumbai, Delhi, and Kolkata get extremely congested during office hours. This is mainly because of industrialisation and the sudden rise in vehicle ownership over the last few years. If India wants to be in tandem with the growing traffic, the government will need to construct around 15,000 km expressways in the next ten years. One of the major reasons behind this huge expenditure on maintaining roads is due to the problems of overloading and poor maintenance. It is said that about 70 percent of funds meant to be spent for the maintenance of roads actually goes behind paying laborers. The magnanimity of the expenditure incurred in order to repair roads is alarming and hence the government is stressing on building large scale concrete roads instead of the common bituminous roads. Although building concrete roads is a little expensive but it is beneficial for the country in the long run.

CargoConnect - November 2017

focus “Under-utilization of assets increase the lead time of transportation. And, the other challenges stem up from poorly kept roads which lead to greater wear and tear of vehicles and higher fuel consumption. Together, these elements escalate the overall cost of movement of goods and thus impact the profitability of transportation industry.”

R Shankar, CEO, TVS Logistics Services Ltd India

utility in goods. In fact, the backbone of the entire supply chain is the transportation management that makes it possible to achieve the well-known 7 ‘R’s- the Right Product in the Right Quantity and the Right Condition, at the Right Place, at the Right Time, for the Right Customer at the Right Cost. Transportation decisions affect the other sub-functions, and there is a close linkage between them. Hence, transport decisions cannot be made in a vacuum. This part of the role of transportation in logistics may be termed as “Micro Logistics,” where at the firms’ level; the companies optimise this function for competitive cost advantage. Oliver Bohm, CEO, Schenker India opines that quality of roads in India is still in need of further improvement and road network in rural areas needs to be strengthened to facilitate smooth transportation of goods across the country. Following are his inputs regarding various topics:

Viability of Indian roads for transportation of heavy cargo “Our road infrastructure supports the transportation of cargo in the best of its capacity. But unfortunately, the quality of the road network infrastructure in India is still in need of further improvement. We particularly need to develop our rural roads which are critical when we deliver goods across the states. This is even more important when businesses and customers continue to expand in areas outside the urban cities – outside the reach of our comparatively more-developed roads. “The state of our road network not only limits the reach of our vehicles, but it reduces the speed of the trucks as they need to navigate slowly through the unpaved concrete, in some cases. Also with the lack of roads and highways, the country would

CargoConnect - November 2017

soon not be able to accommodate the increasing number of vehicles.”

Effect on profitability of transportation business due to bad roads “India has one of the lowest average speeds for trucks with the average being 32 to 35 kmph, which is very low as compared to the US, Europe and our neighbors in Asia. This means that our trucks spend more time on the road, which then means that a customer

Total freight transport modal mix Coastal shipping 7.4% Rail 32.1%

Road 60.2%

has to wait longer to get their goods from the port to their warehouses. This time difference then means lost man hours, lost time in production, unsupplied production chains and – ultimately – financial losses. On a country scale, poor road infrastructure costs India at least 2 per cent of its GDP annually.”

Readiness of country’s transportation sector to cater high need of trucks “Our road infrastructure is neither prepared to take on more trucks on its network nor more routes within or outside the urban areas. But, we have to consider the

movement of the logistics players that the GST may bring. We could expect consolidations by some players and even optimisations of hub warehouses. As such, goods would be consolidated and transportation optimised. “As a logistics company, we welcome the efforts by the Ministry of Road Transport and Highways to improve national highways and to connect existing roads to most of ports, airport and freight corridors. But these are changes that we do not see happening before the expected boom in the local transportation industry. Still, with the recent developments by the government to prioritise such projects, we do believe that the road infrastructure would – albeit slowly – be able to cater to this said upcoming demand.”

Rise in demand of trucks in the post GST period “Consolidation has been happening in warehousing in the post GST period. Now, companies are working with a hubbased warehouse system instead of having warehouses in all major consumer states and will minimise the number of warehouses. “This will help them to gain synergy and more savings in terms of logistics cost. Since there are big volumes to handle, demand for large tractor-trailer and high-powered vehicles would increase for sure. However, there will be accuracy in planning as per the demand forecast in thepost GST scenario which will further boosts FTL utilisation. Yes, we can say it’s a welcome growth and Schenker will do its best to continue offering optimised solutions.” R Shankar, CEO, TVS Logistics Services Ltd India says, except certain remote locations all parts of the country including national and state highways and all

focus for this service. If at all there was a CAPEX cycle, it was for enabling replacements and not for acquiring additional fleet. Unless economic activity increases substantially and this may take many months after GST, Make in India and other reform impetus – I believe the industry will not witness any capacity shortfall anytime soon.

Rise in demand of trucks in the post GST period centres of production, road infrastructure is fairly well developed for transport of heavy cargo. On other issues like effect on profitability due to bad roads and possibility of rise in demand of large trucks in the post GST period, Shankar had a lot to say, which are discussed under the following heads:

Viability of Indian roads for transportation of heavy cargo “National Highways Authority of India (NHAI) and RBI statistics indicate that India has one of the largest road networks in the world at 47 lakh kms, which cater to the transportation of over 65 per cent of total freight movement in the country. Barring certain remote locations, in most parts of the country, including national and state highways, and all centres of production, road infrastructure is fairly well developed for transport of heavy cargo. “The North-South Corridor, the Golden Triangle, most parts of Western and Southern India and some parts of North and East India also cater well to district headquarters. There is increasing connectivity between main centres of production and distribution. “The Union Budget of Financial Year 2017-2018 increased allocations for NHAI by 24 per cent. So, while infrastructure projects were on the back-burner last couple of years, the government has started to put a lot of thrust into these investments and we can expect the sector to pick up pace.”

Effect on profitability of transportation business due to bad roads “As logistics service providers, we face some transportation bottlenecks that emerge from either bad quality of roads or their shoddy maintenance. Key among them is the under-

utilisation of assets as the lead times are very high. The other two challenges stemming from poorly kept roads are the greater wear and tear of vehicles and higher fuel consumption - fuel costs are almost 50-55 per cent of the total cost of transportation, vehicle maintenance accounts for another 7-10 per cent. Together, these 3 elements escalate the over-all cost of movement of goods and thus impact profitability of transportation industry. Apart from impacting profitability,bad roads also lead to safety hazards and are a major cause of accidents leading to loss of human life and damage to goods being transported.”

Readiness of country’s transportation sector to cater high demand of trucks “GST will definitely add buoyancy to the economy because of which business activity will increase, leading to upsurge in demand for transportation. However, logistics cost as a percentage of GDP is already very high at 13 per cent in India compared to developed markets where it approximates 8-10 per cent. Therefore, there is always scope to enhance the efficiency of logistics and make transportation leaner in India. Hence, though the demand will rise due to the overall economic activity, the demand for nature of trucks - rather than their required quantity - may change depending upon the hub and spoke network. This means greater demand for heavier vehicles for longer hauls and small sized vehicles for short hauls; whereas medium duty vehicles may not be that efficient in this scenario. “Last couple of years, as 3PL service providers we have been able to comfortably meet the transportation demands of our customers and provide competitive rates

Today, most companies have their logistics networks planned based on tax compliances, which we expect, with the onset on GST, to shift in the favor of optimisation of warehousing space and network capabilities. There will be strategic relocation of facilities to drive better efficiencies and vehicles are likely to travel larger distances to and from production centres. In this scenario, the higher the capacity of the vehicles, the lower, per ton kilometer cost – which will be one of the biggest factors contributing to greater demand for larger vehicles. GST is also expected to lower travel time - this is a bottleneck now due to delays at inter and intra-state check posts and other entry points. With the improvement in infrastructure, the average speed of vehicles will also go up and they will be able to cover greater distances in shorter time. Trucks that cover 350-400 kilometers per day now may be able to run more than double this distance every day and bigger trucks can be utilised better.

Conclusion Apart from poor road infrastructure, h igh leve l of f rag mentat ion of the trucking industry also adds to high road transportation cost. An estimate suggests that nearly 70 per cent of the truck owners in India own between 1-5 trucks. This leads to fierce competition amongst operators leading to tr uck owners restoring to overloading to recover investments. However, removal of multiple checkpoints in the post GST era has created a positive impact on the trucking industry. But then, we still have a long way to go. There is a lot to be done in the direction of road infrastructure to bring down logistics cost at par with developed countries of the world. November 2017 - CargoConnect

cover story

CargoConnect - November 2017

cover story

In a bid to cut costs, save time and reduce theft, shipping and logistics companies are increasingly moving towards the use of containers to transport cargo, especially ones that have been traditionally transported through open trucks or general cargo ships. While commodities such as iron ore, steel, benzene, project machinery, copper concentrates, sugar, cement, cars and carbon black are now being moved in steel containers, some firms are even experimenting with scooters and motorcycles in 20 or 40 foot containers for transporting by rail, road and sea. Deepashree Banerjee, with inputs from the industry experts, delves deep into the subject.

November 2017 - CargoConnect

cover story inside Indian container market: CONCOR view Warehouse facilities Hopes on GST Containerisationone of the most vital factors of multimodal transportation The Genesis Container lines tap Indian heavy cargo for growth

n 1973, when a container ship first called at the Kochin Port, it marked the advent of containerisation in the country. Since then, several container handling terminals have been set up across India following the increase in such cargoes. “The main advantage of containerising cargo is that it will help reduce pilferage,” said Sudhir S Rangnekar, Managing Director and group Chief Executive Officer, Sical Logistics Ltd. The Essar group is also looking at how to transport steel coils in containers for ease of handling. “We have not yet started, but we are examining the possibility of shipping coils in containers from our Hazira (Gujarat) facility,” said an Essar spokesperson. “India has a fairly long way to go to achieve higher levels of containerisation of cargo,” said S N Srikanth, Senior Partner at maritime consultancy firm Hauer Associates. “only about 50 per cent of India’s trade by volume is shipped in steel containers. In comparison, the global average is 80-90 per cent.”

Shipping Container Size Comparison

20-foot Container

20-foot Half Height Container

40-foot Container

Is promoting containerisation an essential step? Mega Crisis in Container shipping

40-foot High Cube Container

Over supply woes Chase for profits

45-foot High Cube Container Sources: en.wikipedia.org/wiki/Intermodal_container, www.marineinsight.com

“A container is a standard. A lot of equipment and support systems can operate as per that standard. It encourages and facilitates multi-modal transportation that can move seamlessly from one mode of transport to another,” said G Raghuram, Director at the Indian Institute of Management, Bangalore. According to Srikanth, containerisation cuts port time, saves on packaging costs and reduces inventory and transportation costs. The Jawaharlal Nehru Port Trust, or JNPT, Navi Mumbai, is the country’s largest container port, handling some 60 per cent of India’s container trade. The Indian Railways also opened rail container transportation to private players in 2007. As a result, 16 companies including three state-run firms have picked up

CargoConnect - November 2017

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cover story Various Government initiatives such as the Sagarmala National Perspective Plan, the modernization undertaken of Ports, Connectivity Projects of Railways, Highways and Inland Waterways, Coastal Shipping and development of Coastal Economic Zones will definitely augment the market. V Kalyana Rama, Chairman and Managing Director, CONCOR

licences to run container trains across India. “Traditionally, cars were moving in second-class rail coaches after taking away seats and were able to carry 150 cars in a single rake,” said Yogendra Sharma, Chief Executive Officer, Adani Logistics Ltd, part of the Ahmedabad-headquartered Adani group. But, by using containers now, they can carry 220 cars, and handle other cargoes on the return journey, he added.

in talks with manufacturers such as Hero Honda Motors Ltd and TVS Motor Co. Ltd. The company has started transporting Maruti Suzuki India Ltd’s cars from northern India to Mundra, Gujarat, from where it is shipped to Kochin along the coast in smaller container ships owned by Shreyas Shipping and Logistics Ltd. Boxtrans Logistics (India) Services Pvt. Ltd, owned by JM Baxi and Co., also moves

Growth of Container Traffic in India Container handling at Indian ports has grown at a CAGR of 8 per cent over the last 10 years. In terms of throughput top three container ports are JNPT, Mundra and Chennai together controlling almost 75 per cent of India’s total container traffic. 30%

14 26%

25%

20%

18% 14%

15%

17%

12%

10%

5% 4

2 0

10%

2006

2007

2008

2009

0% -5%

-5% 2005

Y-o-Y growth in %

(Throughput (million teu)

2010

2011

2012

2013

2014

2015

-10%

Calender year India’s historical container traffic (million teu)

“We are also handling cargoes such as benzene and carbon black in 20-foot containers. Otherwise, this would have been carried in tankers by road and wasted time,” Sharma said. According to him, more commodities would be containerised, based on volumes generated, cost benefits and convenience. Adani Logistics plans to carry scooters and motorbikes by container trains. It is already

CargoConnect - November 2017

Throughput

Annual growth - RHS

cars by containers from northern India to Visakhapatnam, Andhra Pradesh. Meanwhile, Sical Logistics has signed a deal with Hindustan Copper Ltd to transport 250,000 tonnes of copper concentrate in 20foot containers. Hindustan Copper used to deal with nearly 10 different logistics operators to transport copper concentrate from Malanjkhand in Madhya Pradesh to its Taloja plant in Maharashtra.

Rangnekar said earlier this commodity was moved in different modes of transport as bulk cargo. According to him, containerisation will help Hindustan Copper save 10 per cent in logistics cost. Sandeep Mehta, chief executive officer (Mundra Port), Mundra Port and Special Economic Zone Ltd, said an increasing amount of cargo is getting containerised and traditional cargoes such as sugar and cement are now moved in boxes. A senior executive with leading shipping company APL, a wholly owned subsidiary of Singapore-based Neptune Orient Lines Ltd, said even refrigerated cargo was being containerised for ease of handling with the help of advanced technologies. Certain small project cargoes, including oddly sized machinery, are handled in specialized 20-foot containers. “Cargoes such as oil cakes, iron ore, steel billets, ferochrome etc., are now getting containerised. It is an efficient mode of cargo handling,” said DK Tewari, chief executive officer with MSC Agency (India) Pvt Ltd, the India unit of Geneva-based Mediterranean Shipping Company SA, the world’s second biggest container ship operator.

Indian container market: CONCOR view As per the Containers India Market Report 2016, Indian container ports handled 11.9 Million TEUs of Exim container traffic in FY 2015-16, which was 3.83 per cent higher than 2014-15. It is expected that the current trend will be continued with modest increase in the first quarter of 2015-16 wherein the total handled volume was 3.16 Million TEUs, which is 7.37 per cent higher than the corresponding figure of 2015-16. Usage of rail transportation for containers movement to

cover story Traditionally, cars were moving in second-class rail coaches after taking away seats and were able to carry 150 cars in a single rake. But, by using containers now, we can carry 220 cars, and handle other cargoes on the return journey. Yogendra Sharma, Chief Executive Officer, Adani Logistics Ltd

and from terminals decreased in the first quarter of the current Financial Year. This downward trend not only creates a situation of underutilisation of ICDs in the hinterland but also create congestion at the port side CFSs. However, various initiatives like Double stack rakes, rationalisation of empty containers tariffs can spur the industry,

parks (MMLPs) in the vicinity of ports and in the hinterland to bring down cost and promote containerisation, according to Kalyanarama.

Warehouse facilities At the East Coast Maritime Business Summit in the month of February, the CMD informed the reporters that the Visakhapatnam MMLP

West Vs East coast ports Traditionally, ports on the west coast of India have dominated cargo traffic compared to east coast. This supremacy can be credited to the historical context as well; British India had trade contacts mainly with the western world which was facilitated by ports on the west coast. Geographical advantage is also one of the reasons, since west coast is closer to India’s major consumption centers and the industrial belt of Northwest India. 100% 80% 60% 40% 20% 0% 2005

2006

2007

2008

2009 2010 Calender year Share of containers handled at west coast and east coast ports

On the Government initiatives taken, V Kalyana Rama, Chairman and Managing Director, CONCOR adds, “Various Government initiatives such as the Sagarmala National Perspective Plan, the modernisation undertaken of Ports, Connectivity Projects of Railways, Highways and Inland Waterways, Coastal Shipping and development of Coastal Economic Zones will definitely augment the market.”

CONCOR focuses on logistics parks; Vizag park ready: CMD Container Corporation of India (CONCOR)) is mainly focussing on building multi-modal logistics

CargoConnect - November 2017

2011

2012

2013

East coast ports

2014

2015

West coast ports

built on 100 acres is ready for operations, with warehouses and other facilities, including a railway line. “We have spent 450 crore on building the MMLP. Further, we are taking up such parks at Kakinada and Krishnapatnam ports also. We have acquired the land and we will begin the work shortly,” Kalyanarama said. He also added that containerisation was happening in the country, but not at the desired pace, and the east coast, especially Andhra Pradesh, would play a key role in the future. “Even now, container trade is largely concentrated on the west coast, but it is moving now to the east,” said he.

Sagarmala and containerisation in India: Anil Singh, Sr VP and Managing Director, Indian Subcontinent, DP World believes the Sagarmala programme propounded by the Modi government can undoubtedly be considered to be one of the best shipping and ports related initiatives to have emerged at national level in the period since India’s Independence. Sagar ma la is centered on the modernisation of the country’s ports and development of infrastructure that can move goods to and from ports quickly, efficiently and cost effectively, to increase the competitiveness of the country’s export sector by cutting logistics costs. Port hinterlands are to be industrialised and lead an economic transformation of the country’s coastal regions, which already account for more than 60 per cent of national GDP. At the heart of the Sagarmala initiative is the swift and unfettered movement of cargo from the country’s ports. Yet, the exportimport container trade in a country the size of India is just 10.7 million TEU (twenty foot equivalent units), with 95 per cent of this EXIM (Export – Import) traffic being handled by seven ports, and 45 per cent of the throughput handled by a solitary port – Jawaharlal Nehru port (JNPT), off the Mumbai coast. A few European countries that are smaller than any single Indian state like Maharashtra or Tamil Nadu handle twice that quantum of container throughput. If we compare India with Germany, for example, this country’s biggest port, JNPT, has nine railway sidings, whereas Hamburg port has 135 railway sidings, Singh points out. “In recent times, fueled by initiatives like ‘Make in India’ and higher consumption

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cover story In recent times, fueled by initiatives like ‘Make in India’ and higher consumption demand, the container trade in the country is expected to grow at a rate more than 5 per cent of GDP growth. Steps are increasingly being taken to improve the flow of container traffic in and out of India, partly through the proposed setting up of a container transhipment hub port in Enayam, near Colachel in Tamil Nadu. Anil Singh, Sr VP and Managing Director, Indian Subcontinent, DP World

demand, the container trade in the country is expected to grow at a rate more than 5 per cent of GDP growth. Steps are increasingly being taken to improve the flow of container traffic in and out of India, partly through the proposed setting up of a container transhipment hub port in Enayam, near Colachel in Tamil Nadu. In February 2011, a transhipment hub at Cochin was initiated, a port that is fairly close to the southernmost tip of India, and within reasonable distance of the main EastWest shipping lines,” informs Singh. As per the reports, with a view to enhancing port connectivity and boost the performance of Indian ports, the

up of more logistics hubs, establishment of industries and manufacturing clusters to be served by ports in the EXIM and domestic trade for further solving the existing challenges faced by those who have invested in various PPP opportunities in ports and rail,” Singh adds. Kalyanarama further revealed CONCOR would take up construction of an MMLP at Paradip port in Odisha. “We have already begun the work in a small way. We will expand it,” he said. Fifteen MMLPs were in various stages of construction and 12 more were planned. He said at least 100 acres would be required for an MMLP. He said the GST

He praised the Andhra Pradesh Government for concentrating on port-led development in the aftermath of bifurcation of the State. Container Corporation of India (CONCOR), the only listed company of Indian Railways, is expanding rapidly to double its turnover to `12,000 crore in the next five years. Dinesh Goyal, Head - Rail Division, DARCL Logistics Limited shares that the operations which are under their control like terminal handling, first mile and last mile, they improve it on day to day basis to make these flawless but operations which are under Railway, they monitor and coordinate closely with Railways only. Whether the road infrastructure improving and traffic slowly shifting from rail is a challenge for them, Goyal replies, “If we compare with Road transportation then, definitely it will be a great challenge for Rail movement as Transit time and operational cost in Road movement will be reduced approx 15-20 per cent after GST.”

Containerisation- one of the most vital factors of multimodal transportation

government’s Maritime Agenda 2020 defines the minimum required connectivity to the major ports as four-lane approach roads and double line rail connectivity. “To further facilitate containerisation, it is important to have a collaborative approach. It is time India looks in great detail at setting

CargoConnect - November 2017

would be a game changer and it would usher in a paradigm shift in the maritime trade in the country and it would also give a great boost to containerisation. He expressed happiness that many of the non-major ports also were evincing great interest in setting up container terminals.

Professor G Raghuram, Director, IIMBangalore opines, unless a source to destination within the country is purely by road, multimodal transport is an essential for most movement from source to destination (exceptions would be high volume raw material movement from mines to industries, where railway sidings exist at both ends). The same applies for export-import movement too, Raghuram says, since the export segment is mostly by air or sea. He further continues, even for domestic movement, since, rail and water based transport are considered more environmentally friendly, it is important

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cover story Good multimodal transport technologies and systems can play a facilitating role to change the way cargo is transported. The goal by 2030 is to ensure a 50 per cent share by rail from the current 30 per cent plus share. Professor G. Raghuram, Director, IIM- Bangalore

PERFORMANCE OF INDIAN CONTAINER TERMINALS Volume Handled

Annual Growth

APM Terminals Pipavav

Medium

Low

Mundra International Container Terminal

Medium

Low

Adani Mundra Container Terminal

Medium

High

Adani International Container Terminal

High

Adani Hazira Container Terminal

Low

High

Names

Paradip Container Terminal

Low

High

Chennai Container Terminal

Medium

PSA Chennai International Terminal

Medium

Low

Visakha Container Terminal

Low

High

Krishnapatnam Port Container Terminal

Low

High

Kattupalli International Container Terminal India

Low

High

Jawaharlal Nehru Port Container Terminal

High

Low

JNPT - SWB

Low

High

Nhava Sheva International Container Terminal

Medium

Low

Nhava Sheva (India) Gateway Terminal

Low

High

APM Terminals Mumbai

High

Low

Medium

Haldia International Container Terminal

Low

Vallarpadam ICTT

Low

High

Mumbai Port - Containers

Low

Medium

Low

Dakshin Bharat Gateway Terminal

Low

High

New Mangalore Port - Containers

Low

High

Mormugao Port - Containers

Low

Medium

Bharat Kolkata Container Terminal

PSA SICAL Tuticorin Container Terminal

Reference Volume(Mi TEUs)* Annual Growth Low

0-0.5

<5%

Medium

0.5-1

5-10%

High >1 10%+ * Mi TEUs - Million Twenty Foot Equivalent Unites

CargoConnect - November 2017

that we move towards a higher share of rail and water transport than road. This will increase the demand on multimodal transport, since the first mile and last mile will most often be by road. Hence, good multimodal transport technologies and systems can play a facilitating role to change the way cargo is transported. The goal by 2030 is to ensure a 50 per cent share by rail from the current 30 per cent plus share. Industry insiders believe that Indian logistics industry has a long way to go, be it any mode of transport. However, with the regular transportation modes reaching their limits, there is a pertinent need to explore the potential that the multimodals offer in an era that demands an efficacious and highly competitive supply chain network. The growth of multimodal logistics is driven by the need of customers to move cargo from hinterland to the door of a customer under a single contract. To keep the momentum of economic growth, the Indian government has recognised the value of multimodal logistics under the Sagarmala programme, to benefit containerised cargo movement in the country. Therefore, containerisation is considered to be one of the most vital factors of today’s multimodal transportation as the purpose is to gain flexibility on road, rail and sea. In India, it is growing at a fast pace, and will boost the growth of multimodal transportation. As part of the national perspective plan, prepared under the Sagarmala Programme of the Ministry of Shipping, seven Multimodal Logistic Parks (MMLPs) were proposed in Madhya Pradesh, Chhattisgarh, Rajasthan, Odisha, Telangana, Uttarakhand and West Bengal. This will have advantages for the transportation of containerised cargo, say experts. While explaining how promoting containerisation is an essential step in the current scenario, Professor Raghuram elucidates that there could

cover story The operations which are under our control like terminal handling, first mile and last mile, we improve it on day to day basis to make these flawless but operations which are under Railway, we monitor and coordinate closely with Railways only.

Dinesh Goyal, Head - Rail Division, DARCL Logistics Limited

be many multimodal transport technologies as following: (i) Coordinated and carefully handled transfer of cargo in the raw/ palletised form between modes (ii) Transfer of cargo in a containerised form (iii) Roll-on roll-off and (iv) Multimodal vehicles like road railer, amphibious vehicles etc. While (i) above may require the least investment, it is hard on the cargo and requiring significant coordination, at the other end (iv) requires higher investments with technologies that are yet to be proven robust. Roll-on Roll-off (iii) is a proven technology, but, requires higher investments than (ii), since the road motive power unit also idles while moving on other modes. Container based movement, where the container is seamlessly handled from one mode to the

CargoConnect - November 2017

other has established itself as the best via media for multimodal transport. It is not a surprise that it is the fastest growing mode of transportation internationally and in India. There is a significant development of supporting infrastructure like cellular ships, container carrying rail rolling stock (even facilitating two levels), customised road trailers, customised cranes, container depots and freight stations and systems and processes to document seal and scan containers.

available in the hinterlands of Indian subcontinent for benefit of the newly industrialised England According to Association of Multimodal Transport Operators of India (AMTOI), “The current size of India’s annual containerised EXIM cargo is approximately nine million TEUs, of which, a million are TEUs transshipments containers and Mty containers. Balance is equally divided between import and exports, of which, apex 50 per cent cargoes comes from various ICDs to the gateway ports. This entire cargo moves by either rail or road or a combination of both before commencing sea voyage or post sea voyage for import cargoes. Hence, the size of multimodal logistics for EXIM cargo in India is approximately four million TEUs. We have had 18 continuous months of drop in exports, however the port’s volumes are marginally up by four per cent, which means that there is an increase in imports. So we can say that the current growth rate is apex two per cent, which is likely to increase in the coming years.” Amit Kumar, Director, Pristine Logistics remarked that containerisation, itself, has immense potential and as a mode, has much more to offer than can ever be done by the road sector. “The story is only just unravelling and we need to see how the Government looks at both the modes from the futuristic point of view.”

The Genesis

Container lines tap Indian heavy cargo for growth

• The actual multimodal transport in the country started in 1853 when British rulers introduced railways • The objective of introducing railways in India was to gain access by then colonial rulers to the huge supply of raw materials

Container ship operators to and from the country are increasingly tapping break-bulk or heavy cargo opportunities to make up for a prolonged slump in global container markets. Evidencing that trend, DP World-operated Nhava Sheva (India) Gateway Terminal at

cover story Containerisation, itself, has immense potential and as a mode, has much more to offer than can ever be done by the road sector. The story is only just unraveling and we need to see how the Government looks at both the modes from the futuristic point of view. Amit Kumar, Director, Pristine Logistics.

Jawaharlal Nehru Port Trust (JNPT) handled an oversize shipment weighing 79 metric tons, reportedly the heaviest-ever lift at the country’s busiest public container harbour. The out-of-gauge cargo was loaded on the Maersk Guayaquil operating as part of the Danish carrier’s Europe-Middle East (ME1) service, according to a trade announcement issued by DP World Nhava Sheva recently. NSIGT includes a quay length of about 1,083 feet, a draft of 44 feet, a 68-acre storage yard, four

rail-mounted quay cranes, and 12 rubber-tire gantry cranes, with capacity to handle 1 million TEU annually. NSIGT’s fiscal year 2016 to 2017 throughput more than doubled to 445,111 TEU from 202,328 TEU in the prior year, according to a recent report. India’s ongoing trade reforms and accelerated investments in infrastructure development make global transport providers bullish about long-term growth prospects for the emerging Asian economy. They believe those efforts will drive up project cargo demand

in the country, and to position themselves to compete for such growth opportunities, many leading carriers, including Zim Integrated Shipping Services, Pacific International Lines and “K” Line, have established strategic partnerships with domestic third-party logistics providers in recent months.

Is promoting containerisation an essential step? According to Kruti Jobanputra,

APM TERMINALS MUMBAI APM Terminals Mumbai (APMT) Mumbai is India’s largest container terminal handling facility in terms of container throughput and installed capacity. APMT volumes handled in FY 2016 represents approximately 41.42 per cent of JNPT's total capacity. This terminal has witnessed a CAGR of 3.32 per cent during FY2011-FY 2016. APMT contributes approximately 16 per cent to the total Indian containers volumes handled in FY16.

DRAFT (meters)

14.0

1,860,283

INSTALLED CAPACITY (million TEUs)

1.8

THROUGHPUT (TEU s)

880

GROUND SLOTS (TEUs)

REEFER PLUGS

9723

REACH STACKERS

Source: www.maritimegateway.com

QUAY CRANES

BERTHS

CargoConnect - November 2017

712

103 CAPACITY UTILIZATION (percentage)

RMG CRANES

MSC, CMT, OEL, Sima Marine, Sea Consortium, CMA CGM, Maersk Line, GLD, Emirates, NYK Line, HSI, HLI, CSAV Group, SCI, X -Press Feeders, Sea Consortium, SMS, MOL, UASC, HJS, OOCL, Hamburg Sud MSP, Hanjin, KMD, HMM, EGI, Wanhai, APL, Yangming

CARRIERS CALLING

QUAY LENGTH (meters)

POST PANAMAX

CARGO PROFILE

1.4

AVERAGE TURNAROUND TIME (DAYS)

Chemicals, Machinery, Plastics, Vegetable oils, Electrical equipments, Aluminum, Non-ferrous metals, Equipments, Motor Vehicles, RMG, Sporting products, Carpets and other Home textile, Embroidery equipments, Frozen meat, and Engineering goods

AVERAGE CRANE MOVES PER HOUR

YARD AREA (hectares) RAIL CONNECTIVITY

FORK LIFTS

Operated approximatley 150 trains in a month and 90% of this terminal's EXIM handled by CONCOR's rail connectivity. 15 export trains are placed on daily basis to Delhi, Ludhiana, Mulund, Ahmedabad, Hyderabad, agpur,Jodhpur, Aurangabad, Vadodara, etc.

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cover story

In India, we were using traditional methods for Multimodal Transportation, but, from the past few years containerised transport is picking up and has also become more preferable mode for most of the customers.

Kruti Jobanputra, Director, JWC Logistics Park Pvt Ltd.

Director, JWC Logistics Park Pvt Ltd, Containerisation has always been a very vital factor in Multi-modal Transportation all round the world. “In India, we were using traditional methods for Multimodal Transportation, but from the past few years Containerised transport is picking up and has also become more preferable mode for most of the customers,” she says. Moreover, there are a few advantages of containersation such as the safety of the

cargo and the easy portability. Additionally, maximum load can be carried at once through containerisation apart from being weather proof, dust free, theft and damage free. Today, along with containersation transport; containersation storage is also gaining more awareness and industries are seeing a drastic advantage from it. “We, at JWC Logistics Park Pvt Ltd are already providing containerised solutions to our customers with containerised storage and containerised transportation by

which our customers are enjoying the benefits and cost saving,” she adds. Yashpal Sharma, Managing Director, Skyways Group believes that Containerisation has surely been a big boon for quicker and more effective movement of goods. Although, Ocean, Road and Rail movements have been very well worked out their infra to suit the containerised goods movement but the airfreight industry has kind of stayed alienated to this. The air and ocean industry

JAWAHARLAL NEHRU PORT CONTAINER TERMINAL Jawaharlal Nehru Port Container Terminal (JNPCT) is a port owned container terminal of JNPT, largest major port in india. JNPCT has registered a 10.45 per cent growth in FY 2016. Despite, exhausted installed capacity, congestion across the port and tough competition from its peers, still the port maintained impressive growth. This terminal has an excellent connectivity by rail and road to the hinterland with backup infrastructure of 34 CFSs and connectivity with 46 ICDs. With the current trend, JNPCT is projecting to handle around 1,600,000 TEUs during the year 2016-17, which will again result 10 per cent increase over the previous year.

DRAFT (meters)

14.0

1,429,277

INSTALLED CAPACITY (million TEUs)

1.2

THROUGHPUT (TEU s)

390

GROUND SLOTS (TEUs)

REEFER PLUGS

10482

REACH STACKERS

Source: www.maritimegateway.com

QUAY CRANES

BERTHS

CargoConnect - November 2017

680

114 CAPACITY UTILIZATION (percentage)

RMG CRANES

HLI, OOCL, NYK Line, CMA CGM, APL Newark, Norfolk, Savannah, Charleston, Port Said, Jeddah

CARRIERS CALLING

QUAY LENGTH (meters)

POST PANAMAX

CARGO PROFILE

1.4

AVERAGE TURNAROUND TIME (DAYS)

Chemicals, Machinery, Plastics, Vegetable oils, Electrical Equipments, Aluminum, Non-ferrous metals, Motor Vehicles, Knitted garments, Sporting products, Readymade Garments, Carpets, Other home textile, Embroidery equipments, Frozen meat, Medicaments and Engineering goods

AVERAGE CRANE MOVES PER HOUR

YARD AREA (hectares) RAIL CONNECTIVITY

FORK LIFTS

90% of this terminal's EXIM handled by CONCOR's rail connectivity. 15 export trains are placed on daily basis to Delhi, Ludhiana, Mulund, Ahmedabad, Hyderabad, Nagpur,Jodhpur, Aurangabad, Vadodara, Moradabad etc. Direct rail connecitivity to 46 ICDs.

RTG CRANES

cover story The air and ocean industry need to collaborate and bring about common units that can move by air and by sea. This in true sense will mean multi-modal movement of containerised or unitised cargoes. Yashpal Sharma, Managing Director, Skyways Group

needs to collaborate and bring about common units that can move by air and by sea. This in true sense will mean multi-modal movement of containerised or unitised cargoes.Â

Mega Crisis in Container shipping Regarding the Container shipping and trade, interestingly, it is not American but European lines that dominate the container trade. Currently about 30 lines operate container shipping services to different parts of the

globe. The largest six of them are Maersk Line, Mediterranean Shipping Company, CMA/CGM, Cosco Shipping, Evergreen and Hapag-Lloyd. The top 30 container shipping lines seem to control about 80 per cent of the total container fleet. The world fleet of container ships by January 2017 consists of 5,098 container ships with a total capacity of 19.7 million twenty-foot container boxes (twenty-foot equivalent unit, TEU, is a standard measure of container capacity).

According to Clarkson Research Services, total container trade volumes amounted to 175 million TEU (about 1.7 billion tonne) in 2015. For many decades, containerised trade has been the fastest growing market segment, accounting for less than 20 per cent of global seaborne trade but earning two-thirds of the total global trade value. A new trend that is unfolding globally now is the continued penetration of containerisation into bulk trade.

ADANI INTERNATIONAL CONTAINER TERMINAL Adani International Container Terminal(AICT), a joint venture of MSC S. A. and Adani Ports & SEZ Ltd(APSEZ), is emerging as a transshipment hub on Indian West Coast with direct connections to Middle East, South Asia markets. Strategic joint venture with MSC, is a fillip to handle highest transshipment volumes of around 30 per cent in the FY 15 when compared with all the other Indian terminals. This terminal recorded an impressive CAGR of 16.73 per cent during FY 2013- FY 2016 with growth of 18 per cent in total volume handled in FY 16. The major advantages of this terminal include deep draft to handle large container ships & seamless rail and road connectivity to the cargo catchment centres in Northern and Western hinterland.

DRAFT (meters)

16.0

1,073,728 THROUGHPUT (TEU s)

705

INSTALLED CAPACITY (million TEUs)

1.3

810

82.6 CAPACITY UTILIZATION (percentage)

GROUND SLOTS (TEUs)

REEFER PLUGS

REACH STACKERS

Source: www.maritimegateway.com

QUAY CRANES

BERTHS

CargoConnect - November 2017

8260

QUAY LENGTH (meters)

POST PANAMAX

CARGO PROFILE

0.8

AVERAGE TURNAROUND TIME (DAYS)

RAIL CONNECTIVITY

RTG CRANES

AVERAGE CRANE MOVES PER HOUR

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cover story

Neeraj Bansal, IRS, Deputy Chairman of Jawaharlal Nehru Port Trust, a major player in this domain, sheds some light on their further improvement plans on multi-modal transport operations and existing challenges in the wake of strengthening road conditions and road infrastructure. Excerpts:

How do you plan to improve your multi-modal transport operations?

The multi-modal logistics is a new step taken by the Ministry of Surface Transport in India. They are creating multi-modal hubs where the trade can choose the best mode of transport for their cargo. If the trade can choose and switch from one mode of transport to another i.e. Road, Rail and Water, then this would be an efficient model. This will only be possible if automatic switch of mode of transport happens and cargo moves in the most efficient and economical manner with minimal stoppage. The Ministry of Road Transport has identified few stations where they will set up this kind of facility. It will require a joint effort between the Shipping Ministry and that of Surface Transport to work out these formulas. The Road Ministry recently signed 34 memorandums of understanding with investment potential of over 2 lakh crore, which will improve multi-modal logistics.

How do you plan to double your turnover in the current year?

JNPT has been recording impressive performance in the last few quarters and recorded the highest volume of 4.5 million TEUs for the year ended March 2017. JNPT port first quarter of the current financial year has already begun on a positive note with container traffic registering a 5.11 per cent by handling 1.20 million TEUs as compared to 1.14 million TEUs in the corresponding quarter of the last financial year. We hope to sustain the momentum in the coming quarters as well. With economy poised to grow over 7 per cent annually, the export import trade too is expected to rise sharply in the coming years. JNPT is gearing to meet this challenge by increasing its capacity to 10 million TUEs in the next few years. Infrastructure facilities are being set up to meet these requirements. A few positive that will be play catalyst are the rise in infrastructure investment during the year, two important projects at JNPT are on track, investment of `3,000 crore for a road connectivity project, Rs 2,000 crore (for) dredging project. The port entered into an agreement to raise US$ 400 million from State Bank of India and Development Bank of Singapore, to improve the infrastructure required for doubling its existing capacity to 10 million twenty-foot equivalent units (TEUs) annually. Direct Port Delivery (DPD) at JNPT is a game changer, an initiative which is path breaking and an out of the box idea. The DPD scheme spearheaded jointly by JNPT and JNCH has helped in saving at least 5-6 days of unproductive detention which used to happen at the CFSs once terminals cleared the cargo. Logistics saving also was significant, ranging from `10,000 to `15,000 per box. So, these factors go a long way in creating value for the trade and we are seeing positive results in terms of the quantity of cargo handled at JNPT.

Will you be focusing more on domestic market? What will be the changes your company will undergo in post-GST scenario?

We will continue to focus on markets that have business potential and explore newer markets. The implementation of GST has been seamless with no major challenges as of now.

With road infrastructure improving, traffic is shifting from rail. How do you see it as a challenge for Jawaharlal Nehru Port Trust?

With sustained economic growth, the export-import trade too will rise significantly as has been witnessed in the last few years. Thus, the volume handled by JNPT will continue to show substantial growth. To meet this new demand, JNPT is undertaking investment of `3,000 crore for a road connectivity project, `2,000 crore (for) dredging project and about `1,000 crore within the port for improving both the rail and road network. First, we offered subsidy for container handling charges to promote rail share and now we have equalised the cost to further promote the rail traffic. This helped us in improving the rail share by 3 per cent and helped reduce the pressure on the port roads. Though the contribution is not significant, it is important to note that despite the arrest of rail share this 3 per cent growth helped in maintaining the same levels of cargo handled by the rail. We continued to maintain 14-15 per cent rail share. These are some of the significant ones which also helped tackle the congestion issue successfully.

Recently, Sri Lanka has been a major trans-shipment point for Indian cargo. Trying to become a base for Chinese manufacturing and re-exporting as well could be seen as a geopolitical move by India. Sri Lanka stands to lose Indian shipping money by encouraging a large Chinese presence. What is your take on this?

Sri Lanka has been a major transshipment point for Indian cargo. However, Sri Lanka’s “grand port strategy” has several contradictions. The most important is the growing conflict between trying to be the logistics gateway of India as well as an Indian Ocean hub for China. The Indian Government sees Chinese owned and managed critical infrastructure on its periphery in geopolitical and not commercial terms. 34

CargoConnect - November 2017

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cover story Railways are always a different ballgame as we have to depend on the vagaries of Indian railways for allocation of rakes. But, with more and more containerisation, it is expected that companies will move to multiple modes thereby resulting in lower costs and better service levels. Sandeep Chatterjee, Senior Manager, Deloitte

With containerisation, this is going to be less tedious as it is the container or pallet which moves via multiple modes. Another perceived drawback that he points out is that somebody who owns a fleet of trucks does not want to switch to say barge (waterways) as he loses his control and there is a third party. “But the point which is missed here is that total cost of ownership decreases if we explore multiple modes. Railways are always a different ballgame as we have to depend on the vagaries of Indian railways for allocation of rakes. But with more and more containerisation, it is expected that companies will move to multiple modes thereby resulting in lower costs and better service levels,” hopes Chatterjee.

Drivers for container growth

Sandeep Chatterjee, Senior Manager, Deloitte states that in India, multimodal transportation is heavily skewed. There has been no real analysis on why a particular commodity is transported via a particular mode. Chatterjee cites an example, when we talk of transportation from Trivandrum to Diu, we always think about road or railways. “We have a huge coastal line and nobody talks about transporting it this way which is way cheaper than roadways and railways. In fact, transporters are not willing to go for a multi-modal delivery due to the hassles of unloading and loading multiple times,” he says.

CargoConnect - November 2017

E n n a r a s u K a r u ne s a n , CEO, Ap s e z Mundra and Tuna Ports, Adani Ports and Sez Ltd thinks India’s GDP has grown progressively over the past two decades due to a combination of factors, including the export-import (EXIM) trade volume, which has been increasing at a higher rate than the GDP. This has driven growth in container traffic, as shippers are increasingly digressing from general or bulk shipping to container transport. Rising containerisation levels for erstwhile breakbulk commodities have increased India’s share in global container traffic. “I see that trade has begun to pick up from the second quarter of the year 2016 in comparison to the previous quarter,” Karunesan shares his view.

Containerisation levels About 22 per cent of general cargo is containerised in India where as in China, the scope of containerisation is 65 per cent. All other developed nations have 80 per cent

containerised cargo. This tells us that there is a huge gap between containerised cargo and general cargo in India. Containerised cargo is proven to be more efficient and cost effective by providing faster mode of transportation, informs Karunesan.

About 22 per cent of general cargo is containerised in India where as in China, the scope of containerisation is 65 per cent. All other developed nations have 80 per cent containerised cargo. Growth of Container Traffic in India According to the Containers India Market Report last year, Container handling at Indian ports has grown at a CAGR of 8 per cent over the last 10 years. In terms of throughput top three container ports are JNPT, Mundra and Chennai together controlling almost 75 per cent of India’s total container traffic.

West Vs East coast ports: It is also observed in the last year’s report that, traditionally, ports on the west coast of India have dominated cargo traffic compared to the east coast. This supremacy can be credited to the historical context as well; British India had trade contacts mainly with the western world which was facilitated by ports on the west coast. Geographical advantage is another reason, since west coast is closer to India’s major consumption centres and the industrial belt of Northwest India.

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special feature

Hidden

Opportunities & Challenges in

Indian Air Cargo New Civil Aviation policy has created a positive atmosphere in the Indian air cargo sector. The policy aims to take up the volume of air cargo to 10 million tonnes by 2027 and to give major boost express delivery services. Establishment of free trade and warehousing zones for facilitating transshipment of cargo is another objective of the policy. However, still, there is a lot to do for the improvement of infrastructure at the airports of tier2 and tier3 cities which is one of the important challenges for the Air Cargo sector. Apart from the challenges, there are several unexplored opportunities which the sector can offer. Gaurav Dubey takes the opinion of industry professionals and presents a short report on the subject.

CargoConnect - November 2017

special feature

t would not be an exaggeration if we say Air Cargo industry is considered as a barometer of the economic health of the country. Air cargo is a crucial sector and its development requires massive planning and meticulous implementation of a set plan. This sector touches life of every common man of the country as it involves shipment of high value goods, time sensitive and temperature controlled items like pharmaceutical, live animals, electronic goods etc. A wide network of service providers is required for faster and efficient delivery of goods in the present competitive logistics space. Specifically, in the air cargo ecosystem the importance of Express Delivery System has been rising with a great pace due to boom in the e-commerce space.

In order to ensure smooth flow of air cargo, it is critical to enhance safety, security and strengthening of value proposition of air cargo. Air cargo is an emerging market and as per reports, the Middle East and Africa is expected to deliver the fastest growth in air cargo volumes over the next five years. Trade lanes between Asia and Middle East, within the Middle East region and between North and South America are showing a strong growth forecast. Adoption of open sky policy by the Indian government for the air cargo sector in early 1990s has given a major boost in international air cargo movement. As per the statistics furnished byÂ Airports Authority of IndiaÂ (AAI), total passenger traffic (both domestic and international) at all Indian airports during 2016-17 (April 2016-February 2017) witnessed a growth rate of 18.9 per cent. Total air

November 2017 - CargoConnect

special feature

Tier 2 and Tier 3 airports of the country are plagued by the lack or relative scarcity of wide body airline operators and presence of these operators at airports is necessary for any significant cargo uplift. Not only this, smaller airports also have issues with availability of suitable infrastructure for handling special cargo which entails cool chain or heavy/odd sized freight. Huned Gandhi, Managing Director, Dachser India Pvt Ltd

Volume: Trends and Growth The Indian logistics sector is valued at US$120 billion about 2.5 percent of global market (US$ 4.0 trillion globally) India’s international Air Trade to GDP ratio has doubled from 4 percent to 8 per cent in the last twenty years. Yearly traffic trends trends & growth 2011-12 2009-10 2007-08 2005-06 2003-04 2001-02 1999-2K 1997-98 1995-96 0

500

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Intl

cargo at all Indian airports during 201617 (April 2016-February 2017) witnessed a growth rate of 9.3 per cent. However, the air cargo volumes in India are very low as compared to other leading countries. C argo C onnect ’s R e p o r t e r, Gaurav Dubey, interacted with the industry professionals and asked them questions around various subjects like challenges involved in handling of cargo at the airports of tier 1 and tier 2 cities, unexplored opportunities in the Indian air cargo sector, on development of dedicated cargo airports and possibilities of India’s development as a transshipment hub. Huned Gandhi, Managing Director, Dachser India Pvt Ltd, pointed out that scarcity of wide body airline operators and issues of unavailability of suitable infrastructure for handling special cargo at airports of tier 2 and tier 3 cities are major

CargoConnect - November 2017

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3500

4000

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point of concern. His inputs regarding various issues have been discussed here below under different heads-

Challenges in handling cargo at smaller airports of Tier 2 and Tier 3 cities “Largely, tier 2 and tier 3 airports of the country are plagued by the lack or relative scarcity of wide body airline operators and presence of these operators at airports is necessary for any significant cargo uplift. Not only this, smaller airports also have issues with availability of suitable infrastructure for handling special cargo which entails cool chain or heavy/odd sized freight. “From a logistics point of view, shipments can be handled via larger airports to alleviate any constraints at smaller locations. We at Dachser India fully cover the country with its 20 branches. Customers can rely on sales, operations and service teams close to their

location who arrange supply chains the most effective way.”

Opportunities which have not been explored yet in Indian Air Cargo “Available transshipment opportunities, wherever allowed by Customs, can be explored and leveraged in a much larger and consistent manner. “Domestic cargo is another area where the existing capacities can be utilised in a much better way. Also, more capacities are being added due to the regional connectivity scheme of the National Civil Aviation Policy which will prove to be very beneficial for cargo (including perishables) to fly at competitive rates and linking the smaller airports to the larger ones.”

Available transshipment opportunities, wherever allowed by Customs, can be explored and leveraged in a much larger and consistent manner

Thoughts on developing dedicated Cargo Airports “Dedicated cargo airports couldn’t be selfsustainable as limited number of airlines operates freighter aircrafts in India. If dedicated cargo airports want to be

special feature

Capacity building with ultramodern equipment and adequate investment for developing skilled manpower for world standard cargo operation would be the challenge to match the demand and supply sides in future. Ashish Pednekar, Managing Director, GVP Forwarders Pvt Ltd and Chairman of FFFAI

Volumes: Forecast Studies have highlighted an annual growth rate of 6-7 per cent in the long term basis. As per industry estimates the growing cargo market in India 90 freighter aircrafts in the international market would be required by 2025 to meet growing demand : Air India 14000 12000 10000 8000 6000 4000 2000 0 Airbus

Forecasted Growth Rate

MoCA Agen

AAI

Air bus: 4 times

MoCA: 7.5 times

AAI: 6.1 times

Source: www.slideshare.net

successful, it is necessary to have their buyin for consistent operations to these green field airports. These kind of cargo airports could work in major cities like Delhi, Mumbai and Chennai due to high demand of cargo transportation. “As of now expansions, refurbishment and modernisation of cargo facilities at existing airports will be more viable. Any new upcoming airport projects must focus and invest from the very beginning in having adequate scale and modern cargo facilities.”

Possibility of developing India as a transshipment hub “Cargo transshipment in India will pick up scale only when Indian airlines pick up momentum in international cargo

CargoConnect - November 2017

operations. Indian carriers, which are currently plying international routes, and those domestic carriers which are poised to start international routes need to leverage on the vast opportunities that India’s international cargo market offers. This market even offers enough loads for freighter operations on selected key trunk lanes like ex China to India and onwards to base port in Europe and USA. Certain sectors to Africa also have steady traffic from India which can be explored.” Ashish Pednekar, Managing Director, GVP Forwarders Pvt Ltd and the new Chairman of FFFAI gave very elaborate responses on each and every issue and seems very optimistic as major thrust has been given on the air cargo sector in the New Civil

Aviation policy. Here are his inputs on the various topics.

Challenges in handling cargo at smaller airports of Tier 2 and Tier 3 cities “Air cargo industry in India is now on the verge of a great leap forward both in terms of potential for increase of volume and quick clearance. Thanks to the Government’s recent policy initiatives especially the announcement of a New Civil Aviation Policy with adequate importance on air cargo, reduced dwell time, single window clearance, 24x7 customs clearance and skill development through institutional mechanism, we are witnessing an apparent happy time as far as cargo operation at our airports is concerned, irrespective of metro and non-metro (T-2 and T-3) airports. However, the perennial issues are still continuing maybe with lesser intensity. It is true that capacity enhancement for cargo operation at most of our airports including small airports and at the same time less pressure from customers owing to a sluggish international market provided a breathing space to air cargo terminal operators across India. However, issues related to Customs System, EDI connectivity, cargo operations at different stages often take us decades back when everything was manually done. Real tests are still awaited in case of sudden volume increase for any reason. “We will have to take the fact into account that our manpower is still not well equipped and trained to manage extra pressure, despite some skill development initiatives started of late. Small airports fortunately suffer less for two reasons: less international cargo and comparatively better

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special feature terminals likely to be reduced for ensuing years owing to initiatives at the policy level on infrastructure development and fast clearance of cargo. In the near future airport/ terminal operators would be under scanner of concerned authority/authorities both in terms of capacity building and efficient handling of cargo for quick movement.”

Possibility of developing India as a transshipment hub

coordination among different agencies. At the same time, they are the most potential spots for air cargo operations in and out of the country thanks to the government’s “Make in India” initiatives. Airports near manufacturing hubs would be the only viable option to keep India’s logistics cost at per international level to make our exports competitive. Hence, capacity building with ultramodern equipment and adequate investment for developing skilled manpower for world standard cargo operation would be the challenge to match the demand and supply sides in future.”

Thoughts on developing dedicated Cargo Airports

Opportunities which have not been explored yet in Indian Air Cargo

India has tremendous geographical advantage for transshipment of cargo especially in an airport like Delhi Airport

“Apart from traditional products from India, the present government’s focus has been on new areas like agro-based products, perishables and burgeoning retail exports based on MSME sector. Accordingly, there is huge potential to tap those sectors, provided the required end to end logistics infrastructure and a firm policy are in place. This is crucial to offset the sliding trends of traditional export items viz Gems and Jewellery, Drugs and Pharmaceuticals, Carpets, RMG and textiles. It is pertinent to mention that about half of our agro-products are being spoiled due to lack of a scientific cold chain system. On the other hand, as identified by experts, India is blessed with high quality artisans and women entrepreneurs. The E-commerce market place is ideally suited to them as both genuine buyers and payment is ensured by the market place (E-commerce portals). Unfortunately, the issues in E-commerce retail exports have not been resolved despite recognising E-Commerce in the Foreign Trade Policy.”

CargoConnect - November 2017

“The demand for dedicated cargo airports is a long-cherished wish. And of course, though the viability seems to be bleak in terms near future, we can see great possibility in long term future, especially when the results of “Make in India” come out strongly. Additionally, Trade Facilitation and multimodal transport initiatives by the Government of India and its foreign trade

“World experience suggests all major i nter nationa l ca rgo a i r por ts a re predominantly fed by transshipment cargo. India has tremendous geographical advantage for transshipment cargo especially in some airports like Delhi which has substantial capacity now. Similarly, other green-field airports are also able to handle transshipment cargo efficiently. Here too, we need proper policy guideline, especially for Customs. Of late, there are some initiatives from the government and airports, though things have to further expedite and hasslefree to woo international transshipment cargo with world standard facilities and services. Significantly, the new Civil Aviation Policy has given adequate importance to transshipment cargo and suggested for setting up of Free Trade and Warehousing Zones to facilitate the same. Also, the Policy directed the Air Cargo Logistics Promotion Board (ACLPB) to give more insights and accordingly promote this sector. We are informed the ACLPB is constantly monitoring the potential and facilities for transshipment cargo from different foreign/ Indian airports to Indian Gateway airports and vice versa.”

In a nutshell... allies (countries) would definitely necessitate all-cargo airports at major manufacturing and consumption centres in the country. However, there should be a thorough study on the present scenario of demand and supply side as regard to the viability of allcargo airport now. We should recall the fact that at present more than 50 per cent international cargo are belly-hold and there are possibilities of further enhancing the capacity thanks to increase of international tourists to and fro India and so the passenger aircraft with belly-hold capacity for cargo. On the other hand, hassles at existing cargo

Despite present challenges in the air cargo sector, available transhipment opportunities could be explored and harnessed in best possible and consistent manner. Similarly, domestic cargo is another area where potential opportunities and existing capacities can be utilized much more efficiently. Regional connectivity scheme of the civil aviation policy has been playing a vital role in connecting smaller airports to the larger airports and it will ultimately prove beneficial for the air cargo consignments as rates would become much more competitive due to this scheme.

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Technol Transforming the Cold Chain

CargoConnect - November 2017

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ogy An uninterrupted series of refrigerated production, storage and distribution activities, along with associated equipment and logistics, which maintain a desired low-temperature range. That’s the definition of an unbroken cold chain. And what keeps the chain intact? Technology, of course! Let’s have a closer look at how technology is aiding the cold chain to keep it controlled and uninterrupted. Tariq Ahmed talks about technologies that have been looking at the cold chain with a newer perspective and gathers some expert opinions on the subject as well.

et’s pause for a moment and get a good look at all the gadgets, screens and devices that are in our immediate line of sight. Maybe you were too busy to notice it earlier but now it must be undoubtedly clear to you that our lives have been slowly taken over by technology. Technology’s influence on the cold chain logistics industry is equally profound. From the implementation of temperature monitoring to the optimisation of product putaway and selection, technology has and always will be an industry game changer. The challenge the cold chain logistics providers face is leveraging that technology to bring efficiency and optimisation opportunities to their customers’ businesses. As an example, the Lineage Logistics facility in Santa Maria, California deploys hundreds of temperature sensors in its receiving, storage and shipping areas to provide constant visibility into the operations of the refrigerated systems and to help maintain quality control. From the data collected via these sensors, managers were able to make adjustments to the system to minimise temperature variability, protecting customers’ product and dramatically decreasing their energy bills. In addition, the system can predict when maintenance of the systems will be required and avoid costly shutdowns. In today’s world, Internet of Things (IOT) is playing a big part in shaping the future of cold chain industry. Food safety has been a topic of discussion for many years and we are well aware of its importance. Yet food borne illness is a common phenomenon. In addition, a large portion of the food in India is wasted during storage and transportation due to poor monitoring and handling of food and food products. With the advancement in technology, business such as food processing plants, food distributors, food retailers, restaurant owners, supermarkets, bakeries etc. are investing in obtaining real time data about their stored food and food products.

Balancing Technology and Process The Government of India is playing the driving force today towards developing the cold-chain industry and it supports private participation through various subsidy schemes and grants. Critical missing links in cold-chain infrastructure were identified in MIDH operational guidelines for XII Year Plan. Suitable changes were made and following new components were added to the central support scheme: • Integrated pack house • Pre- cooling unit • Cold room (staging) • Bulk and Hub Cold storage units • Refrigerated transport • Ripening chamber

November 2017 - CargoConnect

feature "Phase Change Materials are special thermal energy storage materials being extensively used as a reliable source of energy to maintain required temperatures in various industries. Phase Change Materials are highly cost effective, stable and environment friendly."” Samit Jain, Managing Director, Pluss Advanced Technologies Pvt Ltd

Maintaining a cold chain is a science, especially in today’s global market. There are numerous factors that must be considered at all times to secure the integrity of the temperature sensitive products being transported. Successful cold chains require planning, communication, and the right technology at every step of the journey. The science behind transporting materials at specific temperatures to maintain or extend their shelf life is an ongoing process. From the first fishermen

tropical fruit all year long. As the world shrinks, so too does our idea of “seasonal produce” and “regional products.” This trend has led to increased maritime transportation of temperature sensitive products. Perhaps not the most recent invention, but certainly one of the most popular resources used in temperature controlled shipping are refrigerated containers. In fact, in 1980 only 33 per cent of refrigerated capacity was containerised, whereas in 2010 this share was up to 90 per cent. Thanks to these containers,

who transported their daily catch on ice blocks to more modern inventions—gel packs, quilts, liquid nitrogen—people are continuously searching for a better (and often more cost effective) way to safely transport temperature controlled items around the world. This stems from a combination of globalisation, increased safety regulations, and growing customer demands. Let’s take fresh produce for example; customers in northern regions are coming to expect the availability of fresh

temperature controlled products can withstand longer transit times without spoiling and consumers around the world can experience exotic foods and goods— perhaps for the first time—without leaving their local grocery store.

CargoConnect - November 2017

Demand for Temperature Controlled Warehouse Temperature controlled warehouses are a critical piece of infrastructure for any industry. The quality of stored produce

Major Technological Innovations in Cold Chain in India

• Pluss Advanced Technologies has developed alternative thermal energy storage solutions through the use of Phase change materials (PCMs) in the field of medicines, serums, agricultural products. Phase change materials are chemicals that help maintain a certain required temperature range by absorbing large amounts of heat thereby acting as thermal batteries which once charged adequately can help maintain the temperature of the payload for as many as 100 hours. • New Green Dynamic Technologies developed a GreenCHILL system (using VAM renewable Technology) where farm waste is used to heat water to 120°C, which is then fed through the VAM to compress the refrigerant R717. This technology can produce about 7 KW of cooling and can cool to 4°C necessary to cooling most horticultural produce and milk. • Simplicool, an Ohio based USA Company along with NCCD worked for development of solar photo voltaic application for off grid cold room. • PlugnChill systems which use Phase Change Materials from PLUS S eliminates the use of diesel for reefer operations reducing its operating costs by more than 60 per cent while ensuring temperature stability of the container. The system charges within 6 hours using any power source and thereafter maintains the required temperature range in the container for upto 24 hours for a point to point transport.

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100% power back up with multi generators Fire fighting & fire prevention systems LED eco-friendly lighting ISO 22000:2005 & HACCP certified Rr Vans to support distribution Freezer\Chiller Chamber

15-23, National Highway 4B, Panvel-JNPT Highway Village Padeghar, Panvel-410206, Maharashtra Tel: +91 22 66280700-98, +91 22 66280781 | Email: raaj@jwllogic.com, vaman@jwllogic.com, cs@jwllogic.com

feature "Ease of installation, quality, reliability, affordability and a userfriendly monitoring screen are the salient features that have helped in successful penetration of Sitrad in the cold chain industry throughout the world." Deepak Takkar, Founder and Partner, Amtrac Solutions LLC

and raw material depends upon the reliable and precise functioning of the cold storage. Temperature, humidity, fresh air, air flow etc. are important parameters to be taken into account while designing a warehouse. The suppliers and distributors of products that are sensitive to temperature and humidity fluctuations seek temperature controlled warehouses. The major industries where its importance is sought after are food, chemicals, pharmaceuticals and electronics.

and agri-produce, but also pharmaceutical, dairy, poultry and meat product exports, as well as the fast-growing quick service restaurants. Against an overall market growth of around 10 per cent, organised outsourced services are expected to grow at around 20 per cent a year. Developing of cold storage alone shall not greatly mitigate losses incurred by domestic perishable produce, unless allied infrastructure like pack-houses and transport links are also developed.

According to the Global Refrigerated Warehousing Market 2014-2018 report, the demand for deep freeze warehouse storage is growing and this trend is set to continue with warehouse space increasing by more than 14 per cent over the next 4 years. According to the draft red herring prospectus filed by GDL with the Securities Exchange Board of India, less than 10 per cent of India’s produce passes through cold chains. Moreover, service providers in the industry are fragmented. The prospectus estimates that the current share of organised players is only around 6-7 per cent in the warehousing segment, while it is 15-20 per cent in temperature-controlled transportation. What is also raising demand for cold chain services is not only an increase in the movement of perishable horticultural

Modern pack-houses created in the country are 250 in numbers. A recent study by NCCD evaluates a shortfall of almost 70,000 pack-houses. Pack-houses can be justified only with associated link in form of transport. Refrigerated transport has been underdeveloped with estimated 9000 reefer vehicles in the country and zero reefer containers for rail movement. According to the, ‘All India Cold-chain Infrastructure Capacity’ study, there is an associated requirement of 62000 refrigerated transport units in form of vehicles or multi-modal containers.

CargoConnect - November 2017

Technology that stands out To get a very firsthand view of the transformations that cold chain technology solutions providers claim to deliver, we got

India’s cold storage may be classified as follows • Bulk Cold Storage- for storage of single commodity, which operates on seasonal basis e.g. potatoes, chilies. • Multipurpose cold storageDesigned for variety of commodity which operate round the year like vegetables, dry fruits, pulses, milk products etc. • Frozen food stores- freezing facility for fish, meat, poultry, dairy products and processed fruits and vegetables with or without processing facility. • Mini cold rooms/walk in cold stores-suited in hotels, restaurants • Controlled Atmosphere- stores for fruits like apples, pears and cherries.

Classification Based on product storage temperature • Chill (0 oC to 10 oC): fresh fruits and vegetables, pasteurized milk, butter, eggs, chilies. • Mild Chill (10 oC-20 oC): mango, banana, dairy product like milk powder, seeds etc. • Frozen (below -18 o C): frozen vegetables, pineapple slices, icecream, fish and meat products. • Normal (>20 oC): whole onion, roasted foods, pickle, jams; ready to eat foods, oil and extracts.

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feature COOL Packs are non-toxic, organic phase change material (PCM) products engineered for high latent heat storage to provide temperature control in the +36°F(+2°C) to +46°F(+8°C) range, keeping biological products refrigerated. Energy is stored as a combination of sensible and latent heat. During the process of phase change between solid-liquid, thermal energy is absorbed or released while the temperature remains constant. in touch with two major players in India who are putting the best foot forward to bring about a significant change to the cold chain sector in India. Samit Jain, Managing Director, Pluss Advanced Technologies Pvt Ltd tells us about how they are harnessing the potential of Phase Change Materials (PCM) to maintain the required temperature. He said, “PLUSS is a materials research and manufacturing company involved in the field of Specialty Polymeric Additives for enhancing polymer properties and Phase Change Materials for thermal energy storage. Phase Change Materials are special thermal energy storage materials being extensively used as a reliable source of energy to maintain required temperatures in various industries. Phase Change Materials are highly cost effective, stable and environment friendly.” There are diverse known applications of PCM in this industry (and beyond). Let’s have a look at the some of the areas of application that this revolutionary technology could possibly have an impact on. • Freezers and Coolers - Major freezer and cooler manufacturers have started using phase change materials in their freezer to avoid the spoilage of products during power cut-offs, which is a major problem in India. • Cold-chain Logistics - The PCM

CargoConnect - November 2017

based eutectic plates offer solutions to existing challenges in the cold supply chain issues such as power outages, poor infrastructure, high fuel costs and critical last mile etc. When compared with traditional reefer trucks, this technology offers up to 80 per cent savings in operating cost by virtue of the reduction in diesel consumption. In addition PCM enables multi-temperature transport improving the payload factor thereby improving feasibility of part load transportation. • Building HVAC-Phase Change Materials having a high thermal energy storage capacity which uses power during off peak hours to store the energy and release it during peak hours. This strategy allows almost 50 per cent of the HVAC load to be shifted to the night time/off peak hours, which translates to an overall reduction of more than 25 per cent in the total electrical load of a building. • Pharmaceutical Shipping - PCMs provide an innovative, efficient and cost effective way of transporting temperature-sensitive pharmaceutical products and it can bridge the gap between the regulatory policies and guidelines and the need of the consumer concerning product safety. • Solar Energy Storage - Thermal storage

can also address the problem in trying to match supply to demand where maximum solar availability occurs during the day, but maximum demand occurs at times when there is a little, if any, solar availability. • Building Materials - PCMs in buildings enable storage of free natural energy for heating or cooling purposes reducing the energy consumption by over 30 per cent. • Retail Products -There are numerous applications among home appliances and consumer durable products which can be enhanced with the integration of Phase Change Materials. Moving on, we have Deepak Takkar, Founder and Partner of Amtrac Solutions LLC. Amtrac Solutions offers innovative yet affordable proprietary solution called Sitrad for Real-Time Monitoring and management of temperature, voltage quality, humidity, pressure, defrost and electric power consumption of cold rooms, display cabinets and refrigerated trucks. He said, “Ease of installation, quality, reliability, affordability and a user-friendly monitoring screen are the salient features that have helped in successful penetration of Sitrad in the cold chain industry throughout the world. This solution has helped the food industry significantly by reducing food wastage and by saving lives from food poisoning. Full system diagnostics capability of Sitrad has also helped in reduction of equipment breakdowns, while improving productivity and energy efficiency.” Sitrad allows two-way communication between the service technician and system. Service personnel can get the current status and historical data of compressor, evaporator fans, door, defrost, voltage and currents etc. remotely via a Smartphone or computer. This feature allows the user to reset the system or change the settings remotely to avoid unnecessary service calls. For example, if a high temperature alarm gets diagnosed due to a door open condition, the recipient of the alert can just ensure door is closed properly rather than sending a technician to the site, thus saving time and money. He added, “Our PhaseLOG plus, a 3 Phase Voltage Monitor and Protector is uniquely different than the conventional single-phase preventers currently used. In addition to protecting the compressor or

feature

Refrigerated transport has been underdeveloped with estimated 9000 reefer vehicles in the country and zero reefer containers for rail movement. there is an associated requirement of 62000 refrigerated transport units in form of vehicles or multi-modal containers. other electrical equipment, it keeps a history of voltages with real time and date stamp in its internal memory or on a remote computer running the Sitrad software. This helps detect voltage imbalances that can be by rectified to lengthen the life of the motor.”

Change that is revolutionary In India, significant part of the food produced each year for human consumption is either lost or wasted due to inadequate storage or transportation. Most of this can be avoided by keeping the food within safe temperature limits and monitoring and management techniques. Samit said, “India is one of the world’s largest food producers with more than 20 crore people currently estimated to work in agriculture, around 10 crore of them farmers and the remainder working as agricultural

CargoConnect - November 2017

laborers. Agriculture is the principal source of livelihood for more than 58 per cent of our population. Technology for farmers is one of the focus areas under e-Kranti, a key pillar for realising the Digital India vision. The future of agriculture lies in bringing digital services to the farm as agriculture is increasingly becoming more and more knowledge intensive.” Today’s business environment brings with it immense challenge. It is therefore imperative for companies operating in the agro industries to continuously invest in innovation such as real time temperature monitoring and management to deliver the best value for their customers.

Suggestive Measures Integrated cold-chain has a far greater boost to farm-level productivity. By countering

perishability and bridging farms with cross regional markets, the cold-chain empowers the producers by allowing them to expand their market reach. Let’s have a look at the various ways in which technology will play a vital role for cold chain development. Cold-chain necessitates preparing and preconditioning the farm produce for long distance travel. To support small farmers involved in high perishable crops, cold-chain infrastructure that serves as a supply chain link to markets and the one that opens multiple market access is lacking. Perishable fruits and vegetables have a limited life span in normal conditions. However, unless the selling cycle will fall within this natural period, cold-chain intervention is required to mitigate food losses and to be future ready. Pack-house and reefer transportation are the missing links in the overall value chain for horticulture produce and its development is critical to integrated development of supply chains for this sector. Introduction of simple mobile services designed to help small-scale farmers in emerging markets can boost the farm gate income. Using the remote sensing and GIS technologies, natural and other agricultural resource should be mapped at micro and macro levels and effectively used for land and water use planning as well as agricultural forecasting, market intelligence and e-business, contingency planning and prediction of disease and pest incidences. Alternate energy options such as a renewable energy source, thermal energy banks or other non-conventional technologies that can be used to operate the equipment or serve as an energy buffer at a cold chain facility. It allows India’s cold-chain to maintain a lower carbon footprint. For an industry that’s constantly improving, the question soon becomes: “What’s next? How can we improve refrigeration technology for the changing industry?” Whether or not you decide to employ the latest technology, it’s important to remember other tried and true methods to protect your temperature sensitive freight. From clear communication to process improvements, it is critical to encompass all involved parties in any changes.

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For far too long, India paid insufficient attention to the centrality of the business environment for wealth creation, which in turn has resulted to critical situations to combat poverty. As a consequence, entrepreneurs, the engines of wealth creation, struggled to do

business in the face of onerous policies and regulations that were designed to choke rather than enable business. By and large, India remained a tough place to do business. The present government has eased the business environment as said by various sources, especially for small and medium businesses, a clear area of focus. Competitive federalism, which taps into the competitive instincts of the states, offers a powerful framework within which to reform the business environment. After all, in terms of population, large Indian states are bigger than most G-7 countries. Sheena Sachdeva brings an exclusive piece from the happenings in GST compliance and challenges faced by the traders.

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SHREEJI TRANSLOGISTICS LTD M 23, 3rd Floor, Menzies Aviation Bobba Cargo Terminal, Bangalore International Airport Limited, Devanahlly, Bangalore-560 300 Tel: + 91 80 2768 8331 / 32 Fax: + 91 80 2768 8334 Email: shreejibt@airtelmail.in Web: www.shreejitranslogistics.com

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uch of the publ ic d ebate on growth in India has focused on the unexpectedly strong deceleration observed in the last quarter. This unexpected slowdown is generally attributed to a combination of three forces. Some commentators claim that it is a delayed consequence of demonetisation, the large withdrawal of currency from circulation that took place in November 2016. For instance, it has been argued that demonetisation disrupted supply chains in manufacturing, with impacts that have only become apparent now. A second force, somewhat related to demonetisation, is the sharp decline in the growth rate of public expenditures during the second quarter of 2017. Public expenditures were boosted to provide economic stimulus in the aftermath of demonetisation. The subsequent reversal could have affected aggregate demand and hence growth. Finally, a third plausible reason behind the growth surprise of the last quarter is the uncertainty created by the introduction of the Goods and Services Tax

CargoConnect - November 2017

(GST). While GST is expected to increase both efficiency and transparency, the complex transition to the new regime might have encouraged a wait-and-see attitude. Further, India’s economic momentum has been affected by disruptions from the withdrawal of banknotes and uncertainties around the Goods and Services Tax (GST), the World Bank says in its latest report. Sound policies around balancing public spending with private investment could accelerate growth to 7.3 per cent by 2018, the World Bank said in its South Asia Economic Focus, a biannual economic update. While sustained growth is expected to translate to continued poverty reduction, more focus could be made to help benefit the informal economy more, said the report released ahead of the annual meeting of the International Monetary Fund and the World Bank recently. According to the bank, GST is expected to disrupt economic activity in early 2018, but has momentum to pick-up. Evidence suggests that post-GST manufacturing and services contracted sharply, it said adding that however, activity is expected to stabilise within a quarter – maintaining the annual GDP growth at 7.0 per cent in 2018. Growth is projected

to increase gradually to 7.4 per cent by 2020, underpinned by a recovery in private investments, which are expected to be crowded-in by the recent increase in public capex and an improvement in the investment climate (partly due to the passage of GST and Bankruptcy Code, and measures to attract FDI), the bank report said.

Post GST scenario of Ease of Doing Business The confusion and frequent alteration of tax rates of products under the goods and services tax (GST) may dent India’s hopes of improving its ranking on the ease of doing business index brought out by the International Finance Corporation. Despite the government’s continuous reform process, India was placed at 130 among 190 countries last year, just one notch above the previous year’s ranking. One of the major thrust areas of the NDA government was focus on ease of doing business in the country to improve its ranking. The government had aimed to be among the top 50 countries in relation to the ease of doing business. But that hasn’t happened so far. “GST was meant to create one nation, one tax but the existing uncer-

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The Goods and Services Tax regime has improved the ease of doing business in the country. This database will eventually be used for public procurement purposes and would also be used by public sector enterprises to scale up their purchases from small enterprises.” Keku Bomi Gazder, CEO, AAICLAS

tainty over tax rates and the problems faced by the businesses in filing returns will have a direct impact on the ease of doing business index. GST was meant to make things more seamless,” Soumya Kanti Ghosh, chief economic adviser of the State Bank of India group has been quoted as saying. A KPMG report said that the industry has

and small traders the most, as most of the business operations are done by them in house and they have no advisors to guide them through the crisis. “GST implementation in the country has turned out to be a nightmare coupled with great hustle and bustle for the traders who are bound to follow different compliance

Relationship between GDP per capita and World Bank’s Distance to Frontier for India 2017

In per capita GDP (USD)

7.8 2016

7.7

2015 2014

7.6 7.5

2013 2012

2011 2010

7.4 48

Source: Constructed using DTF data from the World Bank and per-capita GDP from the CSO

52 In GDP (USD)

to go through the cycle of re-fixing final consumer prices if GST rates are revised within two months of its launch. Besides, businesses that are affected would have to communicate the changes through the supply chain and revise consumer demand projections and realign discounts and marketing policies. “Making changes so often also gives an impression of uncertainty in doing business in India, which had always been a complaint of global businesses,” the report said. “There is confusion not only over GST rates but also the portal (where businesses need to file their sales records) has not been working and it is unable to take the load, which is creating more problems for the industry and these need to be addressed at the earliest,” Waman Parkhi, partner, indirect tax, KPMG said. The gross mismanagement has hit the medium

CargoConnect - November 2017

Fitted value

formalities under the new tax structure,” the Confederation of All India Traders (CAIT) said in a statement.

Challenges Faced by the Economy Implementation of GST has also led to various challenges by the economy not only to cash inflows but also to GSTN portal, exemption and data upload. However, Association of Tax Lawyers (ATL) has given few inputs on the problems faced by the industry which are provided by many Tax Advocates and their clients engaged in different trade, and all efforts are made to keep it very precise and to the point as under:1. GSTN Portal Problems:Inconsistency in GSTN Portal, i.e. fields available in login of one dealer is not avail-

able in the login of other dealer. Option to chose composition scheme and cancellation of registration not available, even though composition scheme opted, it is not reflected in RC issued and getting message to file Form No.3B. In some cases, even though return filing options are available on dash board, return service option for month and year not available. In many cases, ARNs not generated, show pending processing even after the lapse of time resulting in no action. Amendment, rectification and revision of Reg. Certificate and Forms within some specific stipulated time are required in the GSTN Portal. Govt. should increase nodes at receiving end of GSTN Portal to enable more assesses to give compliance at a time and should direct all broadband service provider to maintain consistent speed during due date for filing returns. Govt. should also consider the suggestions of Tax Professionals to file GSTR-1, 2 and 3 returns on quarterly basis on paying tax on monthly basis in GSTR3B. This scheme should be applicable only to Non-Corporate dealers and for corporate dealer, due date to file returns should be changed to avoid due date rush in the GSTN Portal. 2. GST Helpdesk:Reply in helpdesk contradicts/overrides other sections of GST Act and there is no consistency in reply provided, in some cases replies are not given which may results in future litigation. Further, there is disclaimer clause in FAQ issued by Govt. i.e., can the stakeholder presume that the Council is not sure about the legal validity of FAQ issued? Further, opinion given in GOI Twitter and hand books issued by Govt. are contradictory and there is no fixed authority to hear

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GST is the biggest indirect tax reform which will be a harbinger of new India. GST, as a concept, has been welcomed by exporting community as it adds to the competitiveness of exports, efficacies in logistics and reduces compliance cost with the merging of hosts of Central and State Taxes. However, GST has added liquidity problem since exporters have to pay first and get a refund upon exports, after a time lag, depending upon the production cycle.” Ajay Sahai, DG and CEO, Federation of Indian Export Organisations

Figure 4.1

Figure 4.2

Knowledge of Single Window System (enterprises)

Knowledge of Single Window System (experts)

Did you use a single window system for setting up a business?

% of all enterprises

Observations 141

Yes 20%

% of experts

Observations 129

No 68%

Don’t know 12%

Yes 41%

No 49%

Don’t know 10%

Figure 4.3

Figure 4.4

Knowledge of Environment Categories (enterprises)

Knowledge of Environment Categories (experts)

Are you aware of the category under which your enterprise has to apply for environment clearances?

% of all enterprises

No 27%

Are enterprises in your states categorised as Red, Amber, Green for inspection purposes?

% of experts

Deciphering GST for business

Observations 129

Observations 1,701 Yes 64%

Is there a single window system for setting up a business available in your state?

Don’t know 9%

Yes 74%

No 15%

Don’t know 12%

Note: Percentages in Figures 4.1 and 4.2 and throughout this report are calculated using appropriate weights associated with enterprises.

the voice of Tax Payers in local office. “Do whatever you feel, we will correct it later” is the reply received from higher authority in local offices. 3. Goods and Service Tax Act: Simplification of India GST law is the need of the hour to get good support for voluntary compliance. Taxes should be collected by the Govt. like plucking flowers from the plant. Tax Law and procedure should be assessee friendly to meet cannons of good tax system.

CargoConnect - November 2017

from dealers who come under exemption limit of `20 Lakhs. Govt. can definitely consider this suggestion by reducing registration limit from `20 Lakhs to `10 Lakhs. On looking at `92,283 Crores GST collections for the month of July 2017, that too only from 64 per cent registered tax payers, We hope our Central Govt. will recognize Tax Advocates for the purpose of Certification in GST regime. Because, major portion of GST collections has come by the efforts of related tax professionals who took much strain and strenuous efforts in filing returns, sacrificing the time to be spent for their families. One cannot imagine the contribution of related tax professionals to achieve this target, that too coping with the troubles given by GSTN portal. If our Central Govt. is really concerned about our fraternity, it will consider this request.

The procedure for filing returns should not result indulging in compliance round the year. If our Central Govt. roll back RCM in GST, major complication in India GST can be solved by making necessary changes in the return forms. Our Central Govt. can take decision in this regard because output tax that goes to exchequer either with or without RCM is same. Very purpose of introduction of RCM in GST is to exempt certain class of persons from the ambit of GST and also to cover up URD purchases

Exporters and especially small business are facing problems in terms of capital crunch because of post filing tax credit. According to industry claims, about Rs 1.85 lakh crore of working capital will get stuck annually due to the implementation GST. Several exporters said they are already facing a capital shortage and have begun to turn away orders. Prior to the implementation of GST on July 1, exporters were exempted from paying duties. Now, they have to pay the tax first and then seek a refund, a process that ties up a portion of their working capital and pushes up manufacturing costs as they have to pay duties on inputs. This has particularly hit small exporters, who work on meagre resources and for whom getting bank financing is tough. The primary verticals of export and import in logistics are through air and sea.

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AAI Cargo Logistics and Allied Services Company Limited (AAICLAS) is a subsidiary of Airport Authority of India which primarily looks into cargo departments of the country. Keku Bomi Gazder, CEO, AAICLAS added, “The Goods and Services Tax regime has improved the ease of doing business in the country. Government of India is creating a comprehensive database with real-time information on different enterprises. This database will eventually be used for public procurement purposes and would also be used by public sector enterprises to scale up their purchases from small enterprises. The databank would be a one-stop source of information on small enterprises, including their credit and technology requirements as well as raw material and marketing needs. An online finance facilitation web portal is also unveiled by the National Small Industries Corporation that provides credit support to medium and small enterprise units for raw material purchases. The portal will allow applying for loans from the various banks.” Exporters have petitioned the government for an outright exemption on payment of goods and services tax, saying that the time it takes to get reimbursements under the current mechanism was causing a working capital crunch. Ajay Sahai, DG & CEO, Federation of Indian Export Organisation, “GST is the biggest indirect tax reform which will be a harbinger of new India. GST, as a concept, has been welcomed by exporting community as it adds to the competitiveness of exports, efficacies in logistics and reduces compliance cost with the merging of hosts of Central and State Taxes. However, GST

CargoConnect - November 2017

has added liquidity problem since exporters have to pay first and get a refund upon exports, after a time lag, depending upon the production cycle. On a rough estimate, exporters are losing competitiveness between 1 to 2 per cent on exports.” To understand the ground realities, few examples will help to understand the current scenario. Moradabad-based brass handicraft manufacturer and exporter Paragon Metals has `6 lakh of drawback blocked with the government. Proprietor Ajay Kumar Gupta said it might have to lay off artisans and those doing job work if the refund claim is not processed soon. Similarly, Rajkot-based exporter of bathroom accessories, Valiant Overseas, has stopped shipments for the time being and refused orders worth `1 crore in the past few weeks as `50 lakh of capital is blocked for the past two months, proprietor Kalrav Malaviya said. “We have no idea when we’ll get the refund. As of now, we have said no to fivesix clients from Dubai.” Besides seeking a blanket exemption from payment of GST and a deferred payment on goods not exported, as a likely solution to the problem exporters are also favouring use of e-currency where no physical exchange of money is involved. While, for the implementation of GST, businesses have to migrate from the present value-added tax (VAT), service tax and central excise registration to a GST registration. Given the very large number of assessees and the plethora of details required to be furnished, migrating to a new tax regime was never going to be a cakewalk. As anticipated, there are a slew of challenges businesses are facing, the most common being of integra-

tion and upgradation of existing IT infrastructure to make it GST compliant. Though there is a certain level of IT enablement even today in excise and service tax, GST will significantly enhance the dependence on the IT interface. While larger organisations are better equipped to overcome this hurdle, small and medium sized enterprises are struggling. Manual invoicing will soon be a thing of past. For a country of our size, migrating to a unique and customised GST regime is nothing less than historic. Though beneficial in the long-term, but, right now with two main challenges i.e. invoicing and correct rate applicability.

Refund and consumer redressal mechanism in place The government has put in place a twopronged refund mechanism for exporters. They can export by furnishing a bond instead of paying the integrated GST, and claim the refund of unutilised input tax credit. Alternatively, they can export after payment of IGST and then claim the refund. In the first scenario, exporters get a 90 per cent refund within seven days of acknowledgement of the refund application and the rest in 60 days. In the second, they get 100 per cent refund within 60 days. But many exporters are unsure about the process. However, the GST Council has looked into the concerns of the export sector and provided some relief as under: • Refund of held up IGST paid on goods exported outside India in July and August and other refunds of IGST paid on supplies to SEZs and of inputs taxes on exports under Bond/LUT. • Extension of the Advance Authorisation (AA) / Export Promotion Capital Goods (EPCG) / 100 per cent EOU schemes for duty free sourcing of inputs etc. from abroad as well as domestic suppliers and deemed export benefit to domestic supplier on supplies to holders of AA / EPCG and EOUs. • Merchant exporters will now have to pay nominal GST of 0.1 per cent for procuring goods from domestic suppliers for export. • Introduction of “e-Wallet” w.e.f. 1st

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April, 2018, - a permanent solution to cash blockage mooted by FIEO. • Allowing import of Gold by specified Banks and Public Sector Units (PSUs) without payment of IGST which can then be supplied to exporters as per a scheme similar to Advance Authorisation. This will benefit Gems and Jewellery exporters. • Reduction of GST from 5 per cent to 0 per cent on sale/purchase of duty credit Scrips issued under MEIS.

However, some of the concerns of the export sector which still remain to be resolved are as follows:• Electronic Legal Undertaking: The Legal Undertaking (LUT) is required to be submitted in physical form which entails contact with Tax Authorities adding to transaction cost and time. Since exporters are not required to contact the Tax Authorities for refund, it would be much convenient if the LUT in physical form can be replaced by Electronic LUT which can be uploaded by the exporters on the GSTN. This will also avoid the need of submitting physical copy to the Customs Authorities (as few Customs insist for the same) and in case of doubt, they can verify the same from the Portal. Electronic LUT was initially envisaged in the GST and we

CargoConnect - November 2017

need to push the same for adding to the Ease of Doing Business. • Uniform GST Rate of 5 per cent for all Job Works: There was no tax on the Job Work in the pre-GST regime. In post GST regime, Job Work for Textile sector (Chapter-50 to Chapter-63) attracts 5 per cent GST rate while most of the job works are subject to 18 per cent GST. The GST rate on the Job Work basically allows transfer of credit between job worker and principal (exporter). A uniform GST rate of 5 per cent will not only reduce the burden of taxation but will also avoid classification dispute. We would, therefore, urge that for simplification of the process of job works, the uniform rate of 5 per cent may be made applicable on them. • IGST payment through Input Tax Credit: Exporters and suppliers may have Input Tax Credit (ITC) in IGST, CGST and SGST. The credit in all three heads is allowed to be used for payment of IGST. However, the ITC is not allowed to be used for payment of IGST on imports. We have been given to understand that the same is not permitted as IGST on imports is on RCM basis which has to be paid in cash. We need to revisit such a provision as it will burden the exporters/suppliers who have sufficient ITC to arrange extra funds for payment of IGST on imports. • Utilisation of MEIS for payment

of IGST: The premium has declined substantially as the utilisation of the scrip is confined only to basic customs duty. Moreover, the incidence of basic customs duty being much lower than GST rate (earlier Central Excise/Service Tax), the purchaser would require a longer period to utilise the same blocking his money and thus reducing the premium. Therefore, the utilisation of the scrip should be permitted for payment of IGST on imports. Since imports are charged on RCM basis, the scrip can be used for payment of IGST easily. This may require little amendment in software so as to allow use of scrip for payment of GST but the same is easily possible if a decision to this effect is taken. • GST on freight: GST @ 5 per cent has been imposed on sea freight and 18 per cent on air freight which has affected exporters particularly where such freight constitute a very high percentage of exports value. Exporters in fruits and vegetable sectors are paying very high percentage of their exports on air freight particularly when there is no GST on vegetables. Government should consider providing exemption from all the services including air freight and sea freight used by exporters so as to provide some relief to the sector. There are few concerns of the export sector with regard to GST rates also particularly in respect of handicraft, leather, textiles and chemical sectors. Since the GSTN portal and connectivity are still cause of concern for micro and small exporters, some challenges are being faced in meeting the compliance requirement. However, Government has been sensitive to the need of small businesses and has extended payment of tax as well as return from monthly basis to quarterly basis. The small businesses have been benefited with the abolition of GST on reverse charge basis while taking supplies from unregistered supplier. GST will add to the growth of Indian economy and will impart much needed competitiveness to exports and manufacturing once compliance issues are resolved and complete input tax benefit is availed by the industry.

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Interview

Catalysing the Growth Story of

Indian Logistics Providing world class facilities and integrated supply chain, TVS Logistics has spread its wings across many countries around the globe. TVS Logistics Group is a big conglomerate providing various services along with steady approach towards growth. R Shankar, CEO, TVS Logistics Services Ltd â&#x20AC;&#x201C; India, in an exclusive interview with Sheena Sachdeva, talks about the conglomerateâ&#x20AC;&#x2122;s forthcoming plans and its strategies to pave through the transformative epoch.

CargoConnect - November 2017

Organisations are looking at more and more technological solutions to better serve their clients. So, how have you implemented technology to better streamline your logistics services? Technology has been the platform under which we have managed logistics services. It has been the foundation from the standpoint of enabling our business and has become our differentiator in the market. We have been able to provide value added solutions to our customers through the robust implementation of technology and software solutions. All vehicles operated by TVSLSL are GPS enabled, and our ERP is integrated with these GPS systems to give real time, part level, visibility to our customers. We also use technology at our warehouses for inventory control, to mitigate risks and shrink costs. Apart from this, TVSLSL has invested in developing Control Tower Operations that is responsible for preventive and contingent actions for managing our fleet. This is entirely IT enabled and will actually be able to give real time KPIs to our customers. TVS Logistics has also implemented mobility solutions that provides SMS alerts for deliveries, event updates in TMS and enables soft copies of POD in TMS. TVS Logistics has a home grown MSYS platform which provides a suite of ERP services, master data management, e-catalogue, supplier portal, business reporting etc. which enables us to operate end to end supply chain services for our customers, starting from procurement, planning and right up to end deliveries. TRACE is another platform we have for last mile, spare parts and distribution services, which allows customers’ systems to integrate with our systems. TRACE provides end to end visibility to our technology customers - from the time order/indent is raised for us till the time the part is delivered to their service engineers. Apart from this, we will be cross deploying in India, Vendor Managed Inventory (VMI), in-sequencing operations and value added services for manufacturing units. Technological solutions are provided for our packaging businesses with smart RFID and tracking of returnable packaging.

In the recent news, TVS Logistics quite vehemently said that the multinational player shall deploy global expertise in India. How have you been strategising this whole process along with fundamental changes involved? What are your further initiatives in pipeline? TVS Logistics is focussed on providing end

to end value added supply chain solutions to our customers by identifying gaps in the market in terms of service delivery, cross deployment of our international capabilities and customisation of these services to each of our markets including India. We are an entrepreneurial company and our growth has always been influenced by how we add value to our customers’ operations, and how we provide differentiated services. Another catalyst for our growth has been our CUBE strategy – which focusses on three pillars – customer, capability and geography. We are an Indian multinational company with several international companies within our fold that specialise in niche capabilities; and we are steadily bringing each of these

We take pride in being an Indian logistics company, rooted here but with global capabilities and footprint, and able to deliver value to our customers. capabilities into India. This coupled with our deep understanding of Indian market and domain expertise; puts us in a unique position to appreciate our customers’ supply chain challenges and take a consulting approach for addressing these bottlenecks. That is, not just providing advisory services but actually executing the solutions on ground and delivering on the claims made in our consultations to the customer – in this sense we are both 3PL and 4PL provider.

GST has started to affect the economy somehow. How are you coping up with its challenges? Highlight both its pros and cons. We have skirted major challenges so far by staying proactive and responsive to developments in GST. As and when the Government notified the industry regarding progress in GST law, rules and regulations, TVS Logistics took timely steps to ensure that our IT and accounting systems are modified and made capable to handle the migration into the new environment. We also realigned certain processes in anticipation of post-GST changes and successfully transitioned in this period with seamless customer operations

as our top priority. However, these are early stages and there are still processes that all companies would need to do (including filing the returns) which we are confident we will be able to complete without any major challenges to our business.

Initiatives like 100 percent FDI are attracting a lot of MNC players which has brought not only the best practices but has geared up the market in terms of competition. How have you been planning to wade through this competition? Any further collaborative ventures? FDI has been here for many years in our industry; most of the MNCs are already in India and TVS Logistics is fully prepared to compete in terms of service quality, delivery standards and compliances. Our global acquisitions have given us access to international best practices and technical know-how and their application to the Indian market is allowing us to differentiate ourselves especially as an Indian company with deep knowledge of ground level realities of doing business in India. We take pride in being an Indian logistics company, rooted here but with global capabilities and footprint, and able to deliver value to our customers.

How does TVS Logistics minimise the risk of cargo in transit and maximises satisfaction of clients through innovative practices? TVS logistics takes appropriate steps to mitigate two major types of cargo risks. ‘Shortages and pilferages’ are prevented with the use of smart locks and SMS alerts in case where corrective actions are required. ‘Damage in transit’ is prevented by adopting correct vanning practices, truck interior design, engineering load balance through simulated software and technology, smart packaging designs, survey of routes, driver training (for safety, adhering to compliances, not driving at particular hours) and use of GPS and control tower operations etc. As an example, for a customer who is a leading 2 wheeler manufacturer in India, TVS Logistics designed an innovative packaging solution for their engine movement that led to 34 per cent reduction in packaging costs and 50 per cent reduction in number of vehicles required for transportation. It also enhanced carrying capacity (part density) of number of engines per vehicle by 100 per cent. The use of returnable packaging assets for this project contributed immensely to TVS Logistics’ GoGreen initiative by generating zero scrap. November 2017 - CargoConnect

Interview

A Man of Action

Started as a Messenger company in 1907 in the USA, UPS has come a long wayÂ and turned into a multi-billion dollar corporation by focusing on the goal of enabling commerce around the globe. UPS has not only facilitated international trade and deployed advanced technology to more efficiently manage the world of business but has also become a global leader in logistics, offering a broad range of solutions, including transporting packages and freight. Rachid Fergati, who has been recently appointed as the Managing Director for the Indian Sub-Continent, UPS, in an exclusive interview with Yukti Malhotra, talks about how he plans to utilise his global expertise in order to gain a strong foothold of the India operations of the â&#x20AC;&#x2DC;Parcel Gaintâ&#x20AC;&#x2122; and how he plans to overcome the uncertainties of Indian market.

CargoConnect - November 2017

Being the new Managing Director of UPS for the Indian sub-continent, how do you think your previous experience as the country manager for Middle East will help you in your operations here? I have worked in diverse markets such as India, France, Belgium, UAE, Bahrain, Oman, Kuwait and Qatar as well as with teams consisting of a mix of 25 different nationalities. India has a highly talented pool of professionals. I had the opportunity of working with them and leading them while I was in the Middle East. Their skill sets and entrepreneurial mindset was definitely an advantage in leveraging some of the growth opportunities there. Each market has its own cultural and business nuances, which you have to be mindful of in order to manage the business and grow. Also, I must say I have had the privilege to work in some of the most challenging situations, all of which have led to learnings, which will continue to help me in my role here and going forward. My experience in countries like France, Belgium and Middle East has taught me to constantly seek the unchartered territory of a ‘Blue Ocean’ to create new and dynamic markets for the future. UPS is aligned to the changing business dynamics in India, which presents a huge opportunity for local businesses to grow internationally.

India is expected to become a USD 307 billion Logistics Industry with the assistance of initiatives like ‘Make in India’. How do UPS plan to contribute to the growth? According to PWC, the gap between the three biggest economies (i.e. China, India and the US) and the rest of the world will widen over the next few decades. India could have the potential to just overtake the US as the world’s second largest economy by 2050 in PPP terms. The Indian Government has outlined a clear direction towards development and growth to realise India’s future potential. Government has implemented an integrated approach to achieve these goals, which directly impact local businesses and international trade across sectors as well as facilitate new businesses and investment. India’s urban transformation represents a huge opportunity for domestic and international businesses that can provide capital, technology, and planning knowhow, as well as the goods and services urban consumers demand. Cities and businesses that will connect and grow through this

integrated development approach will need efficient access to the international markets. UPS is an enabler of global trade for local businesses in India and is well positioned at the intersection of connectivity, technology and efficiency to provide a SMART business network through our network spanning 220 countries and territories, to realize that goal. India’s commitment to creating ‘Smart Cities’, where infrastructure and information technology will play a key role, will help UPS align our network so that we can enable SMEs in those cities to connect to the global marketplace. UPS is already present in some of the Smart Cities that have been identified.

Diversity and inclusion are one set of the organisational values you follow. What other organisational values do you believe in, in order to maintain a positive and productive work environment? We promote from within – it is one of the most important policies we have in UPS. When we need to bring in new talent, we develop the skill sets of our people to make

We launched UPS’s Women’s Leadership Program in India, which focuses on collaborative efforts to develop skills for senior leadership roles. sure they are in the best position to take on the available opportunities and chart a growth path. Like our CEO and many other leaders in the organisation, I had the opportunity to start from a hub unloader job.

What according to you would be the challenges that you will face in achieving your objective as India is still a developing nation? The high cost of entry, resulting from the soaring and differential real estate prices across country. This levitates the cost of warehousing as well, which is a critical element of the logistics industry. These high cost and delays are also a result of high regional concentration of manufacturing and geographically diversified distribution activities and customer base. This variance and many other factors creates high degree

of unpredictability and variability, which according to World Bank further pushes the logistics cost by two to three times of the global benchmark. Hopefully, initiatives such as Ease of Doing Business and GST will, in the long term, mitigate some of these challenges.

As the MD for the Indian Subcontinent, what sort of innovative practices and technological integrations can we expect under your leadership? What will be your key focus areas? UPS has a strong growth potential in India driven by our focus on sectors, speed to market, reduction in costs and increase in efficiencies. We have a deep segment focus in India across automotive, hi-technology, healthcare and aerospace. In automotive, UPS in India works with some of the prominent automotive brands in the industry. We have a dedicated task force for the auto industry in India. We work closely with our Global Solutions Group and offer solutions that help build efficiency and improve on a constrained supply chain. Healthcare is a sector that continues to be a focus area for us. UPS PharmaPort™ 360 provides shipment monitoring and protection for temperature sensitive pharmaceuticals and vaccines. Additionally, India is the largest export market for generic medicines globally. UPS works globally with United Nations, PEPFAR (President’s Emergency Program for AIDS Relief) in India to aid its humanitarian efforts to supply generic medicines and vaccines from India to the under-developed markets of the world and Africa in particular. In Aerospace, we provide solutions ranging from critical part supplies, routine maintenance requirements to Aircraft on Ground (AOG) situations.

It was seen that under your leadership 30 per cent more women took up the pivotal roles. How do you strategise to bring the same change in the Indian market? We launched UPS’s Women’s Leadership Program in India, which focuses on collaborative efforts to develop skills for senior leadership roles. It is a combination of women achievers sharing their experiences coupled with skill and knowledge development in order to groom more talent. It is our priority to develop young and diverse talent and we hope to prepare the next generation of women leaders as we move forward in this initiative. November 2017 - CargoConnect

Interview

Driving standards across the Industry

CargoConnect - November 2017

Hong Kong Air Cargo terminal has been a leader in the air cargo industry for years. What practices and strategies make the terminal distinct in the whole air cargo community globally? Hactl has had a strong policy of innovation, investment and leadership since its launch over 40 years ago. From our early days, then as the airport’s sole cargo handler, we recognised our key role in the reputation and development of Hong Kong Hong Kong Air Cargo as a hub. However, we operate in a competitive Terminal Limited environment and play a lead (Hactl) is one of the role in the way the global leading terminals in industry perceives Hong the world with state- Kong. So we will continue of-the art facilities to drive standards, and to and innovative do everything in our power technology. As one to support the airport and our carriers. of the booming

industries, the air cargo sector has been driving the economies across the globe. To understand the current scenario, Mark Whitehead, Chief Executive of Hactl, in a candid conversation with Sheena Sachdeva talks about various perspectives and prevailing standards of optimizing the whole air cargo processes.

What do you think is the key to success in air cargo operations and how do you ensure secure, timely and efficient ground handling practices?

Everyone accepts that it is what happens on the ground that creates the differential between air services. This makes our role as ground handler critical to the quality of our client carriers’ services, contributing to the competitiveness of their offerings. To ensure this, Hactl always provides optimum service standards, we comply with and exceed all recognised quality standards. But, beyond that, we proactively seek ways to improve our efficiency and processes through the establishment of an in-house Performance Enhancement team, which looks for areas where greater efficiencies can be achieved, and then collaborates with all departments to introduce enhancements to processes, systems and equipment.

Please brief us on how the turnaround time plays an important part in ensuring on

time performance. Turn round time is critical in the modern aviation business, as carriers seek to extract the maximum revenue flying hours from their aircraft. Aircraft can be delayed inbound for a number of reasons, and it is Hactl’s role to try to regain as much lost time as possible through optimum ground handling performance. Adherence to take off slot times is very important in a busy airport like Hong Kong. And for passenger flights, cargo cannot be seen to damage the airline’s on-time performance.

Recently, A ir C ar go Europe reaffirmed that creating supply chain efficiencies through digital solutions would be a key demand from shippers in the future. How do you see this innovation further catering to the customers in the global market? What technological innovations are practiced across the industry to optimise the whole process of air cargo? Hactl believes wholeheartedly in the need to digitise supply chains, to eliminate outdated paper processes, eradicate re-keying errors, reduce costs and improve visibility for customers. Hactl has been digitally ready for some years, but we feel the E-Freight movement is taking too long, and there is a clear reluctance on the part of large sectors of the industry to fully adopt the concept. This is regrettable, as the non-digital elements of air cargo supply chains are holding the industry back.

Asian airlines continue to register strong improvements in cargo demand, repor ted Air Cargo News. In what ways HACTL suppor t all the connec ting airlines to further enhance the global air cargo community? With over 100 airlines handled under one roof at Hactl, there are clear opportunities for interconnecting various carriers’ networks via interlining. We support such activity both physically and digitally. The trend is growing, and this shows in our ever-increasing transhipment traffic.

What specific initiatives in terms of air cargo connectivity are taken at

HACTL? What specific efforts should be made to enhance the air cargo connectivity among countries? The success of interlining via Hong Kong will always be driven by commercial considerations such as availability of alternative routings or lower rates and sales activity. We facilitate interlining by providing fast ramp transfers of cargo and seamless flow of data. The fundamental issue is that all airlines want to maximise revenue and cooperation is essential for all players to achieve this goal.

How much importance of Indian market you perceive in the overall growth of air cargo industry? India is an important market for air cargo and for Hactl; we handle many carriers

“Hactl believes wholeheartedly in the need to digitise supply chains, to eliminate outdated paper processes, eradicate re-keying errors, reduce costs and improve visibility for customers.” which serve this market. Pharma in particular is a growing sector, which we strongly support with our WHO GDP and IATA CEIV Pharma compliant services. India is a growth market and will increase dramatically with the easing of regulations.

The task of transporting dangerous goods and perishable cargo comes with a number of regulator y approvals. Give us a brief idea about the kind of regulations or recommendations that the companies handling these products specifically need to comply? The IATA Dangerous Goods Regulations are the “Bible” for all involved in this sector. Hactl goes further, with a dedicated DGR zone in our facility, specially-trained staff, our own DGR training facilities (also used by airlines and forwarders) and a hands-on involvement with IATA’s Dangerous Goods Board, which steers policy and regulation. November 2017 - CargoConnect

guest column

Sustainable Hospitality Supply Chain Management

he Hospitality Supply Chain, which embraces many service sub sectors needs significant groundwork to provide appropriate deliberation on operation, management and creation of sustainable supply chain management delivery system to fulfill the desired activities and processes required to realise and bring about marketable service products. The industry needs to look at the total environment and the formation of umbrella concept to build up a holistic hospitality supply chain in the country to responsively serve the relevant sectors. The hospitality sector is defined as any businesses focusing on customer satisfaction and meeting leisurely needs rather the normal basic ones. They are at least three categories of the hospitality industry- Food and Beverage; Accommodations; and Travelling and Tourism. They are driving by and dependent on strong economy. The current uncertainties in a country, regional and global businesses have very significant impact on hospitality industry. The stakeholder should review the status of hospitality industry from a supply chain perspective. It suggests that many countries have critical issues in hospitality supply chain management. Is this the impact of uncertainties in country, region and/or global security issues? Given the facts that government policies and instruments to promote higher growth have poor results, this may indicates hospitality supply chain is immature and unable to handle the balance between efficient and responsive supply chain so as the capability to adapt and adjust to volatile market. The rapid changing consumer preferences amidst ease of internal searches for latest information

CargoConnect - November 2017

makes hospitality product lifecycle fast shortening. The stakeholders focus on the quality and capacity of hospitality supply chain as follow: • To identify and assess the structure of country’s domestic hospitality supply chain in connection to the global supply chain. • To assess the sub sectors of hospitality supply chain, compare and contrast their issues and opportunities to determine the patterns. • To appraise the value creation capacity of each supply chain sub sector • To correlate the interdependencies and/or linkage of country’s hospitality supply chain and adjacent region • To identify the potential of country to be one of the main player in regional hospitality supply chain. One should also look at country and the regional connection on how likely to benefit from each other. This will appraise the regional and global supply chain connectivity as system and process, not ad hoc reactionary programme.

The hospitality supply chain involves both products and services industries. It engages a very broad industry study. The review on sustainable hospitality supply chain management is to examine if this industry can be cost efficient and at the same time responsive and adaptive in using resources and strategy to match volatile demand with supply. The exploration into the logic of hospitality supply chain suggests the following hypothesis: Sustainable hospitality supply chain management is the result of a combination of strategy, i.e. competitive advantage of industry; country’s comparative advantage, supply chain location, supply chain connectivity, government policy and instrument, resources, technology, and market. The hospitality supply chain involves

By Dr Lai Ving Kam

both products and services industries. It engages a very broad industry study. In today’s global supply chain environment, the macro and micro-economic conditions of targeted countries must also be studied. Stakeholders should not only innovate but also align themselves to innovations of their regional and global supply chain partners. This also means that hospitality industries must not develop in isolation. Services industry has become the main engine of economic growth for many developing countries but the domestic supply chains are seen to be disorganised and uncoordinated, suffering from a lack of domestic investment. The industry necessitates significant improvement in supply chain to support the market profitably. Stakeholder may need to evaluate the intended outcomes: • To re-position country with sustainable enhanced infrastructure which can handle business volatility adaptively and responsively yet efficiently • To make the country enhanced hospitality supply chain one of the main GDP contributor • To equip domestic Supply Chain to compete and connect with regional and global countries- the prime sources of tourist arrivals. • Strengthen supply chain to be larger than business The hospitality industry is in the midst of a sustainability awakening specifically in developing region. Adopt sustainability business practices to secure a competitive advantage is the obvious choice given the existing slow down in global business. In particular to appraise the role of resources and technology and innovative capabilities in nurturing and continuing the competitive advantage through the development of sustainability business practices in the hospitality industry, firms need to pay attention on value, paucity, scalability and organisation of the business. (The author is Associate Professor of Logistics and Supply Chain Management, Berjaya University College of Hospitality)

News

Cabinet clears `7 Lakh Crore investment for Highway Projects The Union Cabinet, on the 24th of October, gave approval for road building projects worth `7 lakh crore, including the ambitious Bharatmala programme launched by Narendra Modi’s Government. The investment will target constructing 83,677 km of roads in the next five years, the government announced. These road building projects, including the Bharatmala project of around 35,000 km with an investment of `5.35 lakh crore, is likely to create 14.2 crore man-days of jobs, the government said.

Bharatmala is the biggest ever road building programme after National Highways Development Project (NHDP) that saw development of about 50,000 km of roadways, and aims at improving connectivity in border and other areas. “The Bharatmala project includes 9,000 km of economic corridor to smoothen connectivity of manufacturing hubs,” the government announced at a media briefing after a meeting of the Union Cabinet. Under the Bharatmala project, 6,000 km of inter-corridor and feeder routes will be constructed to ensure holistic connectivity, Finance Secretary Ashok Lavasa said. The government also approved construction of 2,000 km of roads along the eastern and western borders of the country to boost border roads and international connectivity. Meanwhile, to boost tourism and industrial development, 2,100 km of coastal roads have been planned. Port connectivity will also be increased by building 2,000 km of roads in conjunction with Sagarmala, the Government said. Finance Minister Arun Jaitley said that the government has consistently increased public expenditure on infrastructure in order to boost employment and provide renewed impetus to economic growth. Taking forward its commitment to providing more efficient transportation, the government has debottlenecked the roads sector and significantly stepped up the highway development and road building programme, he said. The National Highways Authority of India, the National Highways and Infrastructure Development Corporation, the Ministry of Road Transport and Highways and state public works departments have been given the task of ensuring completion of the highways projects by 2021-22, the government said.

Efforts on to boost air cargo The AAI Cargo Logistics and Allied Services Company, a subsidiary of AAI, is looking at developing the air cargo facility in Coimbatore in the short, medium, and long term. Keku Bomi Gazder, the Chief Executive Officer, of the company held meetings with officials and the industry recently in this regard. “Cargo movement from and to Coimbatore is seeing 15 per cent to 20 per cent growth every year,” he recently said at a press conference. The company is looking at potential for investments here to give a boost to air cargo movement. He told the industry that the AAI and the company are looking at development of Coimbatore cargo facility for three, five and ten years. Automation of cargo handling facility will be implemented here by the end of November. the AAICLAS will work towards bringing freight carriers to Coimbatore airport which will attact businesses. With exporting hubs such as Tirupur and Karur in the vicinity and substantial volume of engineering goods exported from Coimbatore, the potential is high here, said a senior official of the Customs. According to the clearing and forwarding agents of Coimbatore, only persishables and low quantity cargo go by air.

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news

69th Indian Pharmaceutical Congress to be held in December at Chitkara University, Punjab Indian Pharmaceutical Congress Association, which was founded in December 1948, with an aim to advance and promote the cause of pharmaceutical sciences and profession of pharmacy is organising the 69th edition of Indian Pharmaceutical Congress from 22nd to 24th December at the sprawling campus of Chitkara University situated in Rajpura, Punjab. The theme of the 69th IPC “Skill and Will to Make and Serve Quality Pill” will focus on how Pharmacist can play a leading role in the country to promote and realise the vision of Healthy India as well as stimulate discussions and thought process centered around how the country and the pharmacy profession respond to realise the vision. This year’s IPC will be graced by several top dignitaries and office bearers. Few of the most prominent names are V P Singh Badnore, Governor of Punjab, Capt. Amarinder Singh, Chief Minister of Punjab, J P Nadda, Minister of Health and Family Welfare, Govt. of India and Kirron Kher, Member of Parliament (Chandigarh). The Indian Pharmaceutical Congress is a National annual event

of pharmacist from all walks of pharmacy profession to deliberate various issues relating to industry, regulatory, academia, hospital and community pharmacy and to evolve collective wisdom for formulating newer policies for the country in the relevant fields and for the betterment of mankind. The IPCA organises the IPC every year at various places throughout the country in which professional and academic representative’s get together to discuss matters relating to pharmacy with an aim to project the image of pharmacist as a health care professional and to create the awareness about the pharmacy and pharmacy profession amongst the public. The 69th Indian Pharmaceutical Congress 2017 is inviting leaders from Pharma Industry, Regulatory, Academia, Research, Hospital and Community across the globe to deliberate and present their vision in their respective areas and present their views about their role in the health care system of the country in years to come. The local organising committee has reserved numbers of rooms in various hotels, guest houses, dormitories and hostels that have been carefully selected for the convenience of the visitors and members. All accommodations are located close to the venue with a good connectivity by public transport. Notably, the last date for registration for the 69th IPC is 30th November, 2017. For more details, log on to www.69ipc.com

Optimum use of 12 govt ports can save `30,000 cr investment

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A fresh assessment carried out by the shipping ministry has found that 12 major ports, which are under central government, have additional capacity of handling about 300 million tonnes per annum of traffic. This capacity can be de-blocked with minor operational interventions, which can help save up to `30,000 crore of additional investment. Sources said this came to light when a presentation was made to shipping minister Nitin Gadkari recently .The ministry has issued directions to all the port authorities to notify the reassessed capacity so that the management can take measures to improve efficiency. “Going by the assessment, the traffic handing capacity of these major ports can be increased by at least 30-40 per cent by taking steps such as efficient use of cranes and other machineries deployed at ports, improving procedures and digitisation,” said an official. He added already implementation of similar interventions has helped the 12 major ports to increase their annual cargo handling to 650 million tonnes per annum in the past two years. “It’s like getting more juice from the same fruit. Operational efficiency can push the capacity to handle more traffic from the present 989 mtpa to 1,396 mtpa,” the official said.

news

PM Modi launches ‘Ro-Ro’ ferry service in Gujarat

Railways operates parcel train to transport garment

Prime Minister Narendra Modi recently inaugurated the first phase of the `615 crore ‘roll-onroll-off’ (Ro-Ro) ferry service between Ghogha in Saurashtra and Dahej in south Gujarat. He launched the first phase at a rally in Ghogha in the presence of Chief Minister Vijay Rupani and Deputy Chief Minister Nitin Patel. “This is the first of its kind project not only in India but also in South-East Asia,” PM Modi said at the rally which comes ahead of the Assembly polls in the State. “This is also a unique project as the State government has used the latest technology to make this ferry service possible,” he said. While speaking at a public meeting in Bhavnagar after the inauguration, PM Modi said, “I am happy to be in Gujarat to personally convey New Year greetings. This programme may be for a ferry between Ghogha and Dahej, but this programme is of vital importance for the entire nation.” The Prime Minister said, “The history of human civilisation illustrates the vitality of rivers and maritime trade. Gujarat is the land of Lothal. How can we forget these aspects of our history? This programme is to bring back to life our glorious past, connect Saurashtra and South Gujarat.”

Indian Railways recently rolled out a novel hands-on initiative with apparel industry stakeholders to send the garment cargoes from Tirupur knitwear cluster to various upcountry destinations through non-stop parcel cargo express train (PCET) named Cotton Express. “The concept is first of its kind in the entire Southern Railway”, Divisional Railway Manager (Salem Division) Hari Shankar Verma said in a press conference. Senior Divisional Commercial Manager of Railways A. Vijuvin pointed out that the Cotton Express services were tentatively planned on a weekly basis from Tirupur with the day of journey and the destinations to vary from week to week as it would be basically a demandbased operation. The first service was to Howrah carrying garments produced from across the Tirupur knitwear cluster. The Cotton Express has been attached with 20 parcel vans and one second class luggage van-cum-guard coach holding a total cargo capacity of 468 tonnes.

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News

Railways plans elevated corridors for suburban rail in Mumbai, Delhi, Bengaluru An ambitious plan for elevated corridors over existing rail tracks in Mumbai, Delhi and Bengaluru that will improve safety and decongest networks is being considered by the railways in partnership with state governments and central agencies. Preliminary estimates have pegged the cost of an elevated corridor in Mumbai at around `25,000 crore and the state-run transporter hopes to complete the project in the next 3-5 years. The elevated track will come up over the existing Mumbai suburban rail system and be spread over nearly 425km in length, excluding the single-line Metro and a short monorail system. “For Mumbai, DFCC (Dedicated Freight Corridor Corporation) has already given a preliminary report, now we will put formal teams in place. For Bengaluru, I have told the railways... they are looking into this,” railway minister Piyush Goyal said in an interview, adding a study has been commissioned for Delhi as well. Asked whether the railways will partner with the Delhi Metro Rail Corporation (DMRC) for the Delhi project, Goyal said, “All options are open. It is a preliminary stage. Let the studies and costing come.” Goyal said elevated tracks equipped with elevators and escalators will make suburban rail travel safe as trespassing will not happen and the system will help differently-abled passengers. The construction of elevated corridors also includes developing shopping malls and commercial spaces.

New BT transmitter provides package-level visibility Logistics and asset monitoring company RoamBee says that visibility, down to the package-level, and end-to-end asset management are now possible with “BeeBeacon,” its mobile monitoring technology that was launched recently. RoamBee’s CEO Sanjay Sharma told Air Cargo World that the device was already in use by a major Mexican beer manufacturer that shipped up to 900,000 pallets a month, and that other customers from cool chain to E-commerce were adopting the technology. “The device allows companies to identify high-risk hotspots and reroute their supply chains accordingly,” he explained. The new transmitter, combining Bluetooth/Wi-Fi/and Global System for Mobile (GSM) hotspots and beacons, can be attached to individual packages and assets, sending out location and condition information to sensors-in-transit or in-storage, and in real-time through BLE protocols. The devices address two major gaps in the industry: visibility and actionable data, RoamBee said. There are two initial models; The first monitors location (movement history, idle time, geo visibility and estimated time of arrival), plus light exposure (for signs of tampering), while the other tracks location, temperature and humidity deviations (to monitor spoilage). This accumulated oversight allows companies to take steps to improve their operations, the company said.

news

India’s E-commerce market to hit $200 billion by 2026: Morgan Stanley report India’s E-commerce market will grow at a 30 per cent compound annual growth rate for gross merchandise value to be worth $200 billion by 2026, according to investment bank Morgan Stanley. In a report titled India’s Digital Leap–The Multi Trillion Dollar Opportunity, Morgan Stanley said this growth in e-commerce will help grow market penetration to 12 per cent in the next nine years, versus 2 per cent today. An increasing number of internet users, all new to e-commerce, will help lead this growth, the report said. “Our analysis of some global e-commerce companies highlights that two-thirds of the growth in their e-commerce sales happened due to new users coming online and shopping, while the balance was driven by existing online shoppers buying more frequently and/or driving up order values,” the report said. India had 60 million online shoppers in 2016, which is 14 per cent of the internet user base of the country. This will rise to over 50 per cent by 2026, the report said. “What we have seen through proprietary consumer surveys in the past is that it takes time for consumers to get comfortable with a channel,” Parag Gupta, executive director, Morgan Stanley, said in an interview. “Generally, people who have been on the internet for less than two years, don’t transact on the internet (including mobile banking). So generally, they are engaging in basic activities like messaging, social media, and search, things that don’t involve a monetary transaction,” he said.

Cochin Shipyard eyes inland waterway foray Basking in the IPO success, Cochin Shipyard is now drawing up huge expansion plans, including one of foray into inland water transport. Its IPO in August turned out to be a blockbuster that received more than `1.11 lakh crore worth of bids as against the offer size of `1,442 crore. “We have currently undertaken three major expansion projects - a dry dock in Cochin with an investment of `1,800 crore; second, an international ship repair facility on the port trust land at a cost of `970 crore and third, we are making a foray into inland waterways transport,” Cochin Shipyard Ltd CMD Madhu S Nair told . The PSU, Nair said, is on the same page with the government when it comes to thrust on waterways, given the huge opportunities in the sector. CSL intends to build an international ship repair facility within the yard, for which it has already leased a 42-acre plot from the Cochin Port Trust.

Profile

Gandhi Automations : High Performance Doors for Reliability and Versatility High Performance Doors are automatic doors used for f a st acc e s s bet wee n i nte rnal and external a reas of bui ldings. High Speed Doors designed a n d m a n u f a ctured by Gandhi Automations are sturdy, dependable and are the ideal solution for medium and large entrances. The doors are manufactured with European collaboration and technology with innovative and creative engineering. Many manufacturing industries nowadays need a controlled environment in which you limit the amount of dirt and dust in the manufacturing premises. Medical instrument manufacturer, electronics and computer manufacturer, food industry, pharmaceutical industry and some military applications are but a few of the examples

CargoConnect - November 2017

that have strict requirements for maintaining dust free environment. High speed doors have become integral part of every industry. Fast moving functional and reliable doors are needed in industrial and commercial contexts. Gandhi designed and manufactured High Speed Doors are versatile and solid ensuring long-lasting reliability. The modular structure of the curtains, assembled and joined by anodized aluminium extrusions, provides for a wide range of polyester sections available in a variety of colours. Wide, full-width window panels ensure a safer traffic and allow more light in. Their fast and easy replacement, in case of accidental tearing, saves money and time. The alternating metal tubular structure there inserted ensures high wind-resistance. Prime High Speed Doors are the ideal solution for internal and external entrances and effectively operate in any situation, even when strong winds are blowing and in rooms with high volume traffic. Sturdy and dependable, Prime is the intelligent door for medium and large entrances. High Speed Doors for external entrance are equipped with spring steel wind lock in curtain pocket that ensures silent door travel, higher wind loads and curtain stability.

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events

Society of Indian Automobile Manufacturers organised Automotive Logistics Conclave in New Delhi

Society of Indian Automobile Manufacturers (SIAM), the apex body of the automobile industry recently held its 4th SIAM Automotive Logistics Conclave, a two day event, where delegates discussed emerging challenges in India’s fast moving automotive logistics sector and called for concerted efforts from the industry players and the government, especially the Indian Railways for the sustainable development of the sector. Speaking at the inaugural session of the annual event of SIAM Automotive Logistics Conclave themed: “Changing Facets of

Automotive Logistics”, Dr Abhay Firodia, President, SIAM and Chairman, Force Motors Ltd said developments in the sector are happening in a very exciting pace in these changing times with active participation of the government. “Presence of Chairman, Railway Board here indicates that the government is desirous to be pro-active to smoothen and transitioning to the new era. The Railways has been a major catalyst and a lever in transformation of our country. It has the power to move things, people and freight, which have huge impact on efficiency and cost,” Dr Firodia asserted. Terming Indian Railways as the movers of nation, Ashwani Lohani, the Chairman, Railway Board, who was the chief guest at the Conclave assured the industry that he is trying to bring in culture of work at Railways and has initiated the process of reforms. Prem Verma, Chairman, SIAM Logistics Group and Project Leader – Logistics, Tata Motors said that this annual event is an excellent initiative to bring in the industry on one platform to discuss issues and concerns confronting the sector.

Dual laurels for Gandhi Automations at ELSC Leadership Awards 2017

Gandhi Automations Private Limited bagged dual awards for Best-In-Class Loading Bay Equipment Company and Exemplary Leadership Award, which was presented to Samir Gandhi, Managing Director of the company, for his outstanding contribution serving the industry with commitment, expertise, integrity and passion. The Express Logistics and Supply Chain Leadership Awards

CargoConnect - November 2017

2017 were held at 11th Express Logistics and Supply Chain Conclave, conceived and managed by Kamikaze B2B Media at Taj Lands End, Mumbai. On receiving the award, Samir Gandhi, Managing Director, Gandhi Automations Private Limited, expressed, “Gandhi Automations is glad to serve the industry and stand tall as a trusted partner for past 21 years into Entrance Automation

and Loading Bay Equipment. We continue to evolve and deliver the best to our customers.” With 70 per cent market share and more than 100,000 installations globally, Gandhi Automations are recognised as pioneers in delivering solutions for Entrance Automation and Loading Bay Equipment in India. The company specialises in designing, manufacturing and installing customised Entrance Automation Systems and Loading Bay Equipment products that comply with the highest safety standards accompanied with reliability and energy efficiency. It is an astute leadership and expertise of Directors - Samir Gandhi and Kartik Gandhi, who passionately drives their commitment to quality and further towards customers by exceeding all expectations. Gandhi Automations invested strategically into R&D, factory and warehouse further reinforced with European collaboration and technology since two decades delivering innovative and creative engineered products.

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RCPL wins Supply Chain Leadership Award

Agility, TEVA Pharmaceuticals Win Top Collaboration Award

RCPL has received “Best-In-Class Supply Chain Innovation Award” at The Express Logistics and Supply Chain Leadership Awards 2017 which was a part of The 11th Express Logistics and Supply Chain Conclave, conceived and managed by Kamikaze B2B Media at Taj Lands End, Mumbai. RCPL is one of the leaders in multi modal logistic solutions with an aim to provide distinct logistic solutions across the nation, and are committed to deliver cargo on time and safely for the last 20 year.

Leading logistics provider Agility and its customer TEVA Pharmaceuticals won Best In-Class Client and Supplier Collaboration Award at India’s 11th annual Express, Logistics, and Supply Chain Leadership Awards, where Agility also was named Best 3PL Company - Pharma. The collaboration award recognized the two companies for their close, long-time partnership. Agility began working with TEVA Pharmaceuticals in 1999, handling all road, air and ocean freight shipments, inventory management, and import customs clearance, among other services. Agility and TEVA have worked together to launch generic medications in Europe, the United States and Canada. The companies continue to implement cost-effective solutions.

ACCD celebrated Diwali with new vigour Air Cargo Club of Delhi followed the tradition of celebrating this year’s Diwali with pomp and grandeur on October 6 at the spectacular poolside lawn of Hotel Atrio in New Delhi. The event was graced by its members along with their spouses in colourful attire which added more sheen to the show. The evening was further complemented by the Dandiya theme along with several performances by the dance troop who enthralled the members with their act. The event also marked the announcement for the Annual ACCD Ball which will be held on December 16 at Hotel Atrio.

CargoConnect - November 2017

events

Kerry awarded Asia Pacific Regional E-Com LSP of the Year Kerry Logistics Network Limited has recently announced that its subsidiary, Kerry Express, has been named the Asia Pacific Regional E-Commerce Logistics Service Provider of the Year at the 2017 Frost & Sullivan Asia Pacific Best Practices Awards. Organised annually by global business consulting firm Frost & Sullivan, the Awards recognise best-in-class companies in the Asia Pacific for their outstanding achievements and performance in areas such as leadership, technological innovation, customer service, and strategic product development. The results were measured by industry analysts through in-depth interviews, analysis, and extensive secondary research to identify the best practices in each field. “We are delighted to earn such a prestigious honour from Frost & Sullivan for our express operation,” said Alex Ng, Executive Director of Kerry Express, “The accolade is a testament to our dedication in providing reliable and cost-effective B2C/ C2C e-commerce solutions to some of the biggest e-retailers and small sellers on social media in the region.”

va-Q-tec and Lufthansa Cargo cooperate in transporting pharma va-Q-tec, a leading supplier of highperformance thermal containers, and Lufthansa Cargo will be cooperating in the passive temperaturecontrolled container market in future. Due to the new cooperation, the containers from va-Q-tec are now available worldwide at numerous stations of the cargo airline. Customers with pharmaceutical goods in particular profit from the combination of the close and extensive network of Lufthansa Cargo with the advanced container rental service of va-Q-tec. “We are delighted to be able to offer the innovative vaQ-tainer directly to our customers. The broad portfolio of Lufthansa Cargo is thus being expanded to include an excellent choice in the passive refrigeration segment,” said Dr Alexis von Hoensbroech, Head of Product and Sales of Lufthansa Cargo.

Shreeji Translogistics becomes 2nd company in the Transportation - Logistics Sector to be listed on the BSE SME Exchange Shreeji Translogistics Limited (formerly known as Shreeji Transport Services Pvt Ltd) is now a public listed company. The company successfully completed their IPO and their shares were listed on October 13, 2017 on the SME Exchange of BSE Ltd. With Shreeji Translogistics Limited getting listed on the Bombay Stock Exchange’s Small and Medium Enterprises portal, the total number of enterprises listed on the portal has increased to 207. The Listing Ceremony held at the International Convention Hall at BSE, Mumbai was attended by family, friends and many stakeholders. The Directors marked the listing by sounding the ceremonial bell. The company strongly believe that listing will benefit the Company by giving it a greater recognition and a motivation to increase overall shareholder value. Notably, Shreeji Translogistics Limited is the 206th Company to be listed on the BSE SME Exchange. Also, Shreeji is 2nd Company in the Transportation Logistics Sector to be listed on the BSE SME platform. Deelipa B.M., who is the CEO (Bonded Trucking) at Shreeji Translogistics Limited, also received an appreciation award from the company due to his

outstanding contribution on the occasion of the listing ceremony. Other chief guests who adorned the event included Ashishkumar Chauhan - MD and CEO, BSE Ltd and Ajay Thakur - Head SME Exchange, BSE Ltd, among many others. November 2017 - CargoConnect

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events

UPS and SF Holding JV receives regulatory approval UPS and SF Holding, the parent company of SF Express, announced approval of their planned joint venture by China’s Ministry of Commerce (MOFCOM). The JV enables UPS and SF to collaborate on development and provision of international delivery services from, initially, China to the U.S. and, in the future, to other trade lanes. The JV approval is a positive development for international trade and allows the two leading companies to leverage their complementary networks, service portfolios, technologies and logistics expertise. “We’re delighted to help the many customers in China who will now be in a position to trade more easily across borders and better compete on the global stage thanks to product offerings from the UPS and SF joint venture,” said Ross McCullough, President of UPS Asia Pacific.

Peli BioThermal expands global network

The production of Peli BioThermal’s Crēdo™ Cargo bulk shipper system expands as the company opens additional facilities and service centres worldwide. Its growing global network has seen a rise in the range’s rental options. Peli BioThermal’s Crēdo™ on Demand rental program for reusable cold chain shippers, including the recently launched pallet accepting Crēdo™ Cargo, continues to provide a comprehensive, range of temperature-controlled passive shipper rental and leasing options as the company’s operations increase globally. Their rental program offers a cost effective alternative to expensive and complicated active container systems allowing customers to choose the application that best fits their company’s requirements, logistics profile and budget.

CargoConnect - November 2017

ANTONOV transports giant compressors to Turkmenistan

ANTONOV Airlines has transported four compressor skids on behalf of Bolloré Logistics China from Calgary, Canada to Mary, Turkmenistan on one of its seven AN-124-100 aircraft. The compressor skids were recently transported for a Chinese Oil & Gas Engineering, Procurement, and Construction (EPC) company on four separate flights for a gas field in Turkmenistan. “Efficient communication between ANTONOV Airlines and Bolloré Logistics China, along with support from Bolloré Logistics offices in Canada and France ensured the seamless execution of the project,” said Paul Bingley, Commercial Manager, ANTONOV Airlines. The AN-124-100 was the ideal aircraft to accommodate the oversized cargo. Due to the size and weight of the cargo, both the AN-124100’s unique on-board crane system and extension ramps and mobile cranes were used for safe loading and offloading. With almost thirty years of experience in the oil and gas sector, we provide cost-effective solutions worldwide in the shortest possible time. The consignment included a main skid, which measured 13.75m long, 5.30m wide, and 4.16m high, and weighed 81.5 tonnes, and a sub skid, which measured 7.65m long, 5.00m wide, and 2.44m high, and weighed 13.9 tonnes, in addition to miscellaneous equipment. ANTONOV Airlines carries an adaptor on-board each of its aircraft, extending the lift capacity of its system to a total of 30 tonnes. “The level of expertise and professionalism of ANTONOV Airlines combined with their unparalleled flexibility were key factors for the successful completion of this project,” said Sun Hongbo, Managing Director of Bolloré Logistics North China. ANTONOV Airlines recently completed a series of flights to the Caribbean, delivering humanitarian and relief cargo from the governments of France, the Netherlands, and the United Kingdom.

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APPOINTMENTS

upcoming events Automotive Logistics Conference on November 7-8, 2017 at The Leela Palace, Chennai organised by Ultima Media

India Warehousing and Logistics Show 2017 on November 16-18, 2017 at Auto Cluster Exhibition Centre, Pune organised by Reed Manch Exhibitions

ICE 2017 on November 17-18, 2017 at Chennai Convention Centre, Chennai organised by ICE Centre of Excellence

India Cold Chain Show 2017 on December 12-14, 2017 at the Bombay Exhibition Centre, Mumbai organised by Reed Manch Exhibitions

PHARMACONNECT 2018, Pharma Logistics Conference on January 18, 2018 at Shangri-La’s-Eros Hotel in New Delhi organised by CARGOCONNECT.

Air Cargo India 2018 on February 20-22, 2018 at The Grand Hyatt, Mumbai organised by The Stat Trade Times.

Global Logistics Show on February 22-25, 2018 at Bombay Convention and Exhibition Centre, Mumbai organised by Infinity Expo.

Ecom Express appoints new CFO E-commerce logistics solutions provider Ecom Express has appointed Mayank Gupta as its new Senior Vice President and Chief Financial Officer (CFO). Gupta will be operating from the company’s headquarters at New Delhi, and will also report to Ecom Express’ founders and board. In this new position, Gupta will oversee finance, accounts, legal, secretarial, commercial and administration functions. Before Ecom Express, Gupta served at General Electric group for over 14 years in different senior management roles. He began his career at Maruti Suzuki India Limited and has since served in numerous CFO positions.

Kale Logistics appoints head of Business Development for India and APAC region Krishnamurthy Gopalakrishnan has been appointed as head of Business Development for India and Asia Pacific region of IT solutions provider Kale Logistics. Krishnamurthy comes with a wealth of experience in the IT, Telecom, Power & Technology dealing across Government organizations, Defence and private enterprises. He joins Kale Logistics to develop their growing position in India and Asia Pacific. Kale Logistics Solutions, a trusted IT Logistics partner for Fortune 500 companies, announced the joining of Krishnamurthy Gopalakrishnan (Krish Gopal) as Head of Business Development for India and Asia Pacific region. In his new role, Krishnamurthy will be responsible for sales team leadership and driving revenue across the Indian and Asia Pacific markets.

Schenker India appoints Paul George as Director Sales Schenker India Pvt Ltd, part of DB Schenker, the transport and logistics division of the Deutsche Bahn Group, has appointed Paul George as the new Director Sales, with effect from October 1, 2017. He will be succeeding Marcel Opitz who has moved to a new role within DB Schenker. Responsible for devising and driving the sales strategy of the company, Paul George will be reporting to Oliver Bohm, CEO, Schenker India. Paul George has held senior positions in reputed engineering, automotive organizations and other leading logistic service providers. Currently, he is a member of Confederation of Indian Industry Institute of Logistics, National Council Member for Indian Institute of Material Management – National Headquarters, Global Logistics Council, Bengaluru Association of Chambers of Commerce and other leading Organisations in supply chain management. November 2017 - CargoConnect

Report

3PL Market registered ‘Lukewarm’growth in 2017

rmstrong and 3PL revenues by industry 2008: Associates, the 2018E for the Fortune 500 Global leading supply 83.4 chain market 80.5 (US$ billions) research com77.2 71.4 pany, has recently released a 69.1 72.3 global forecast report of the 66.8 third-party logistics provider 63.0 Technological market. The organisation’s chairman Richard Armstrong 56.9 termed the growth rate in 3PL 54.9 53.9 market as ‘Lukewarm’ of the 53.2 51.9 52.5 48.5 48.1 year 2017. Automotive 49.0 47.8 46.5 According to the report “Third-Party Logistics Mar41.0 50.7 ket Results and Trends for 49.0 40.1 42.0 34.3 46.6 2017” there was not anything 40.4 39.4 42.7 Retailing 37.4 too great or spectacular recorded in the past 12 months. 34.4 32.6 The impact of softening global 32.4 36.8 29.4 28.6 36.7 28.3 35.2 economy has been reflected 28.1 34.6 Elements in supply chains worldwide 30.3 28.9 27.0 and thus nothing too great 18.7 Food, groceries 18.1 17.5 16.2 17.4 was even expected out of the 15.6 15.2 14.4 18.2 13.1 report. Moreover, 2016 had Healthcare 17.7 16.8 15.3 11.4 12.5 14.3 13.3 12.9 12.6 also been a mediocre year for 11.1 9.1 10.1 15.3 15.7 14.9 14.6 14.6 13.5 13.0 Industrial 12.1 the 3PL industry in USA and 10.3 10.1 9.7 Other the world. The net revenues 11.6 10.7 11.7 13.7 14.7 13.4 15.0 13.0 14.0 14.1 14.6 6.2 5.9 6.5 6.0 6.1 5.6 5.5 6.2 5.0 5.2 5.4 Consumer goods grew at a modest rate of 2.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E per cent over 2015 to $73.5 Source: Armstrong & Associates billion, while overall gross revenues increased 3.5 per cent, expanding the total U.S. 3PL market to $166.8 billion. The biggest deal last year was FedEx’s acquisition of TNT Express in the second quarter. Other big deals included DSV’s acquisition of UTi Worldwide in January and HNA Group’s purchase of Ingram Micro for $6 billion. In 2016, the third-party Domestic Transportation Management (DTM) segment saw an increase of 5.3 per cent in gross revenue and 7 per cent in net revenue, while DTMs was holding up operations in an effort to compensate for ample truck capacity that existed. On the other hand, International Transportation Management (ITM) providers saw an increase of 2.6 per cent in gross revenue, but net revenue saw a downfall of 1.9 per cent. It is Interesting to note here that ITM had a strong growth rate 10 years ago. Heavy capacity of air and ocean in the market, according to the report, seems to have been severely impacted both domestic and international providers. However, providers with strong dedicated contract carriage grew 3.5 per cent, segment leader Ryder being up to 14 per cent.

CargoConnect - November 2017

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