CargoConnect April 2016

www.surecommedia.in Postal Registration No.: DL (S)-01/3372/2016-18 Postal at IPMBC on the 4th-5th same month RNI No.: DELENG/2009/31040 Published on the 2nd of the same month

VOL VII ISSUE V april 2016 `20

SPECIAL FEATURE

Freight Forwarding Seeks Paradigm Shift

Budget 2016: Revitalising Logisticonomy

Lean is ‘in’?

E-commerce Logistics Exploring the Unexplored

Contents

Volume VII • Issue V • april 2016

Editor and Publisher Smiti Suri Assistant Editor Dr Kirti Mudgil Pathak Principal Correspondent Ritika Arora Bhola Roselin Kiro Special Correspondent Joydeep Banik

12

22 COVER STORY

E-commerce Logistics: Exploring the Unexplored

SPECIAL FEATURE

Freight Forwarding Seeks Paradigm Shift

INTERVIEW Anshul Singhal, CEO, Embassy Industrial Parks ...................................................54

conomy ...........................................38

Director Marketing Ajeet Kumar

Marketing Executive Chetan Pathak Rajesh Basu Asad Mohammad

Vivek K Kumar, Regional Vice President, India, Expeditors International (India) Pvt Ltd .......56

Administration Vipin Marwah Lavish Thakur

Percy Avari, Regional Manager- South Asia, Aramex International, India Regional Office ....58

Designer & Visualiser Shaique Ahmad Mayank Bhatnagar

Anwar Mumtaz, Incharge - Cargo Operations, Pakistan International Airlines ......................60 Alexis Von Hoensbroech, Board Member Product & Sales, Lufthansa Cargo ........62 Tony Tyler, Director General, International Air Transport Association ......................64

• Lean is ‘In’? .................................48

Reporter Shikha Sourav

Manager Marketing Niti Chauhan

FEATURE

• Budget 2016: Revitalising Logisti-

Feature Writer Kiran Sabherwal

FOCUS ......................................10

NEWS ..........................6-8 & 70-78

supply change ...............66-67

We bring you a wide spectrum of updates that will keep you informed about the industry’s plans, performance and initiatives.

GUEST COLUMN ......................68

TOTAL PAGES: 88 (inclusive of covers)

PEOPLE CONNECT ..................86

appointments ......................80 EVENTS ..............................82-85

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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news

Shipping Corp to buy only Indian ships from 2025 State-owned firms such as Shipping Corporation of India Ltd (SCI) and Dredging Corporation of India Ltd (DCI) and other government departments will have to buy only India-built ships from 2025 onwards when a ten-year financial assistance scheme is approved by the cabinet.This stipulation forms part of draft guidelines written by the shipping ministry outlining the criteria for evaluating and awarding new shipbuilding orders including criteria for evaluation of bids by local shipyards.

India has a shipping fleet of 1,246 ships with Shipping Corporation having the largest share of around 36 per cent. The existing Indian fleet is ageing, according to an economic survey for 2015-16.

G ITH N I V EW T R SE ENC MEN L EL MIT C EX COM

Sagarmala Projects to create one crore jobs The Indian Government has recently identified over 150 projects under its ambitious ‘Sagarmala’ initiative that will mobilise more than `4 lakh crore investment and create one crore new jobs. “The projects will mobilise more than `4 lakh crore of investment and enable creation of one crore new jobs, including 40 lakh direct jobs in the next 10 years,” Ministry of Shipping said in a statement. The Sagarmala programme aims to promote port-led development in the country by harnessing India’s 7,500km long coastline, 14,500 km of potentially navigable waterways and strategic location on key maritime trade routes.

Reconsider 5/20 rule: AirAsia Tony Fernandes, CEO, AirAsia recently said that he was upbeat on the Indian civil aviation market and his airline will continue to expand its network in the country. Reiterating the airline’s request to the government to reconsider the 5/20 rule, he said if this provision was relaxed, the number of flights will go up significantly.

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ETHIOPIAN AIRLINCE NAMASTE

news

India to become global aerospace hub

Rivers to be converted into national waterways

President Pranab Mukherjee recently said India is poised to become a major manufacturing base for the aerospace sector and is expected to add about 800 aircrafts by 2020 to meet the growing demand. He said that the Centre is planning to invest over $120 billion in development of airport infrastructure and navigation services. The President said the country is at the threshold of a major change in the aviation sector which is poised for fast growth with the development of 100 smart cities, new economic corridors, and more than 50 new airports. He also mentioned that India will require at least 800 aircraft by 2020 to cater to the phenomenal increase of freight traffic. This will facilitate investment, foster innovation, protect intellectual property and build a world class manufacturing infrastructure, the President further added.

The government is looking to harness the country’s 50,000 km of sea and river fronts as waterways, Union Minister Nitin Gadkari said recently in a statement. Passing the crucial bill to declare 111 rivers across the country into National Waterways, the government has paved way for development of these stretches as transport carriers. “India has its unique advantage.

Fourteen of its states are bestowed with 7,500 km of coastline with 14,500 km of potentially navigable waterways. In total, we have about 50,000 km of waterways which on development will change the face of India,” he added. Now the government is committed to work to develop these as the environment-friendly mode of transport which is bound to decrease significantly the huge 18 per cent logistics cost in India.

Container handling to revive at KP After nearly four years, the container cargo handling at Kandla port (KP) is expected to revive with Port Trust signing a concession agreement with JM Baxi Group to start operations. The operations had run into legal trouble after KPT terminated the license agreement with the then operator ABG Kandla Container Terminal Ltd.

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focus

Chennai Express Elates on First Auto Hub

Keeping the promise made by the Railway Minister Suresh Prabhu in the Railway Budget 2016, the first auto hub at Walajabad near Chennai was inaugurated

on March 1, 2016. It is a first-of-its-kind facility to attract the transportation of cars from roads to rail.

The Walajabad station of the Chennai division of Southern Railway is being developed as the first common user auto hub of the Indian Railways.

The station is located near the major auto units of Oragadam, Sriperumbudur and Singaperumal Kovil areas which are having the manufacturing facilities of top auto companies Nissan, Hyundai, Ford and Daimler Chrysler. This hub will cater to over one million four-wheelers produced per annum in these areas. It takes 36 hours to move one load of six cars to the port through trucks due to congestion. Through this facility, 300 cars can be moved to Chennai Port and Ennore Port in just 2-3 hours. Spread over 5,000 sq meter, this hub will have a loading capacity of 300

four-wheelers and would cater to over 1 million units of four wheelers being produced every year in this area. It will also act as an ideal distribution centre for the inward traffic of Tata, Honda, converging for distribution into Tamil Nadu and the adjoining areas.

Prabhu, inaugurating the centre by a video link, said that the Chennai site was only the first step in the development. He also highlighted the importance of working across vehicle brands.

“Indian Railways is further working on how to get more auto transportation into the railway track,” he said. “Railways cannot rely upon only one business partner and this is the way to do business and thus a reach to cargo is essential to generate increased freight revenue.” The railways target is to increase its share to 20 per cent by 2026.

Delhi Metro Gears Up to Ferry Cargo In a recent development, Delhi Metro Rail Corporation (DMRC) has decided to start cargo services on the Airport Express line; from March 1, 2016 onwards, cargo services for transportation of non-perishable goods and e-commerce items will be facilitated through the line. The service will be implemented on an experimental basis for three months between New Delhi and IGI Airport Metro. The move is directed towards cutting down fuel emissions by lessening the number of cargo vehicles plying on city roads. DMRC has also signed a Memorandum of Understanding (MoU) with a specialised cargo agency for this purpose.

“This will be the first ever occasion when a metro system in the country will be used for the transportation of cargo. These trials will help in accessing the cargo volumes that could potentially be generated on this route on both directions, especially e-commerce cargo. Based

on the experience, a tender for a long-term arrangement shall be floated,” said an official spokesperson at Delhi Metro.

The Airport Express line trains have dedicated coaches for luggage separate from the passenger coaches. Therefore, the introduction of the cargo services will not cause any inconvenience to the general commuters. As per an earlier announcement, Metro stations will double up as terminals for e-commerce sites, with customers being given the option to receive delivered products at select stations and collect them according to their convenience.

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SPECIAL feature

Freight

Forwarding

Seeks

A freight forwarder’s job is not any easy task anymore as it used to be, simply moving cargo on time from point A to point B. In today’s fast-moving business environment, many shippers rely on forwarders as the key building blocks in implementing a logistics programme pertaining to their ‘special’ demands, therefore creating a challenging market scenario. Roselin Kiro with inputs from the industry experts scrutinises the new security regulations, technology tools, and infrastructure improvements and tries to find out whether the Indian freight forwarders are ready to pull up their socks to meet a full range of logistics requirements

12 CargoConnect - april 2016

SPECIAL feature

N

etscribes’ latest market research report titled ‘Freight Forwarding Market in India 2015’ states that India is expected to witness considerable growth in freight market, provided freight companies diversify their business to other logistics segments. The Indian freight market is rapidly being aided with latest infrastructure and technology necessitating robust freight network. Comparing the international freight forwarding market with India, Sanjay Goel, CEO, Bolloré Logistics highlights, “India spends 13 per cent of its GDP on logistics activities, which is higher than that of the developed nations due to relatively higher level of inefficiencies in the system, poor infrastructure, high turnaround time at ports and administrative delays. Transportation cost in the US and China is high due to large and immensely widespread geographies. Increase in the logistics spends in India largely depends on the losses, which leads to opening up of skills in relation to quality managers, supply chain consultants and process consultants to streamline the SCM process with IT Support, bringing in more systems, etc. and the lean to reduce losses.”

Diversification of Business Freight plays an important role in the economy of a country, more so in a developing economy like India.

As international trade amplifies, freight forwarding in India has received the well-deserved impetus to grow further. Due to robust and steady growth of the economy, the freight forwarding sector has also witnessed a significant growth over the last decade. Aided by the development of infrastructure, freight forwarding companies, whether domestic or foreign, have become extremely competitive and are looking forward to provide quality service to their clients.

Also, freight in India has grown leaps and bounds. The freight transportation is expected to reach over 900 billion tonnes by 2020 which will be carried by 8 million commercial vehicles on the road.

With this expected growth and change in the freight forwarding sector, how much ready are the freight forwarders to come out of their shell and take up the new challenges and risks to meet the needs of the customers? Bharat Thakkar, Co-Founder and JMD, Zeus Air Services Pvt Ltd opines, “Recently,

arril 2016 - CargoConnect 13

SPECIAL feature It is survival of the fittest with innovation and

therefore an integrated approach is the only way

forward. My understanding is that unless air freight forwarders, airlines and airports work in tandem, forwarders will become redundant.”

Bharat Thakkar Co-Founder and JMD, Zeus Air Services Pvt Ltd

India’s gross domestic product (GDP) growth for the year 2014-15 was revised to 7.2 per cent from an earlier estimate of 7.3 per cent by the Central Statistics Office. The government has forecast growth to range between 7 and 7.5 per cent in the current financial year. Despite a number of global economic headwinds, India’s economy remains strong, though the pace of growth should be stronger. In changing times, it is survival of the fittest with innovation and therefore an integrated approach is the only way forward.

For a start, my understanding is that unless airfreight forwarders, airlines and airports work in tandem, forwarders will become redundant; unless we meet the challenges of e-commerce, Amazon, Foxon, Uber, etc. will take over the space between forwarder and airlines. The one offering the last mile will be the winner.”

Freight companies diversifying their work from their traditional methods is a way out.

14 CargoConnect - april 2016

The Indian freight market is rapidly being aided by improved warehousing infrastructure and growth in containerised cargo.

Adding more information, Suraj Agrawal, MD, Monopoly Carriers & Cargo Pvt Ltd says, “We have to agree that road infrastructure in India has improved a lot. On the other hand, with improved technology, surface transportation timing has also improved. As this is the cheapest mode, clients and operators are focussing more on this mode.”

Most Preferred Mode of Freight Transport Air and sea freight together contribute maximum to the market in terms of value, however volume-wise they carry the minimum freight. Further, inland water transportation has tremendous scope in the domestic market. An overall comparative analysis of the domestic transport sector highlights the modal composition in freight movement, and indicates the advantages of coastal shipping and inland water transport.

Global comparison highlights that the Indian transportation sector has tremendous scope to improvise, invest and improve in order to exploit the potentials of the freight market.

About 70-80 per cent of freight is transported via roads, while only a small percentage is transported by railways. The immense potential of growth of freight in India has prompted the government to plan bet-

SPECIAL feature Bonded warehousing is a top needed thing at

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is an organised and systematic privately managed

bonded warehouses offering top class services at par with developed nations.”

G S Chawla Managing Director, Ocean King Shipping Services Pvt Ltd

The Freight Forwarder‘s Evolution Customs Broker Provided customs brokerage services

Source: Issa Baluch

Freight Forwarder Architect of transport; Books space on all transport modes; may own some warehousing and transport assets, such as trucks for distribution; becomes the custodian of cargo; collaborates with customer and carrier; requires IT to automate clerical functions

ter transportation facilities. According to G S Chawla, MD, Ocean King Shipping Services Pvt Ltd, “Cost of air freight is much higher than any other freight modes; sea freight these days is utterly low but volumes are fairly large, thus accounting for maximum revenue earners. See if we compare commodity export, for example gold, then value of exports may reach millions or billions but freightwise the quantities shall be very small. Similarly rail and road carry bulk loads but freight revenue counts for less as compared to air/sea.”

It is true that in India we have three mode of transportation, air, train, road and the gap of tat among them is reducing. Whereas road being the

16 CargoConnect - april 2016

Freight Logistics Provider / 3PL Books space on all transport modes; provides a range of value-added logistics services; collaborates with multiple supply chain players; uses IT to manage information and to keep customer informed about shipment status

cheapest mode of transportation, clients try their best to convert their Air or Train shipment to Road shipment. Thakkar bifurcates domestic and international logistics and tells, “Internationally, ocean freight followed by air freight will always be on top, as we do not have a Europelike Trade Across Border environment, nor motorway; but, this is expected to be realised by 2025 when China Silk Route takes shape which has global trade support passes through our region on north side all the way to East Africa. Whereas domestically, it is trucking. Hon Minister for Transport and Shipping recently announced that the current 300 km per day average running of trucks, will be improved to 600 km a day with improvement of road and motorways. Rail is another mode, but not reliable due to transit times. Indian coastal and waterways is the only way forward to reduce pollution and bring down transport cost.”

The Air Cargo Growth Story

Time being a critical factor; customers demand IT-enabled real time information systems.

The air cargo sector continues to demonstrate a consistent growth compared to rail, sea and road freight. Today, the customer expects delivery on the same day as the cargo is offloaded from a ship or aircraft. They are looking for scheduled hinterland connectivity from ports and airports matching with the arrival time of a vessel or aircraft. Time being a critical factor; customers demand ITenabled real time information systems.

Freight forwarders have to match the best global standards to retain their business in India. Ever growing customer needs is

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SPECIAL feature We have to agree that road infrastructure in India has improved a lot on other side with improved technology; surface transportation timing has also improved. As this is the cheapest mode, clients and operators are focussing more on this mode of transportation.”

Suraj Agrawal MD, Monopoly Carriers & Cargo Pvt Ltd

Bonded warehousing is a top needed thing tation requirements to express the major reason which at this trucking service and railways. leads to demand-supply hour Unless airport facilities are imgap. Air cargo is bound to carry only those loads which are absolutely vital in reaching customers’ hands and with the way demanding customer trends are changing every day, supply has to be fulfilled immediately via air freight. Thakkar however gives a different viewpoint, “Unfortunately, due to global slowdown and dip in demand, the Indian air freight fraternity for the first time post 2008 is feeling low. While domestic traffic grew by almost 4.5 per cent, international export was just under one per cent. IATA release of 2015 indicates global cargo traffic was up 2.2 per cent, while domestic was almost flat (up just 0.1 per cent). Having said that, due to congestion at airports, e-commerce companies have diverted their focus for transpor-

18 CargoConnect - april 2016

proved, domestic airfreight will face a further drop. Facility also means quick deliveries on arrival of aircrafts and short acceptance before departure.” Agrawal has a different tale to tell. He says, “The cost of air mode in India is too expensive and terminal cost and service tax add fuel on this. The fact is the growth of air cargo in the six months has gone down as the clients are now looking at cheapest mode like surface transportation.”

Growth in Warehousing=Growth for Freight Companies The Indian freight market is rapidly being aided by improved warehousing infrastructure and growth in containerised cargo, re-

sulting in robust freight network. It is talked about that freight companies will benefit from the rapid growth in warehousing infrastructure in the country. Chawla highlights the necessities in the industry and says, “Bonded warehousing is a top needed thing at this hour, because what the industry largely lacks is an organised and systematic privately managed bonded warehouses offering top class services at par with developed nations, like systematic congestion-free 24X7 vehicle entry, bar coded inventory management, etc.”

Talking about the roll-out of GST, Agrawal says, “All are eagerly waiting for GST to be implemented and it is been assumed that after that distribution systems will change in India. It will be too early to say what will be the impact of this on logistic industry.” Thakkar adds, “Warehousing is the backbone of the logistics and this needs to be organised. Unless one offers this service, be it owned or rented, customers will go away. At this point of time integration is the mantra - the one-stop-shop solution.”

Government’s Initiatives Government is also taking various initiatives like FDI regime to sectors pertaining to the freight forwarding industry, development of the dedicated freight corridor, shift to GST tax regime, etc. The current market is largely mulled by rising freight costs due to volatile fuel prices, lack of skilled manpower and infrastructural bottlenecks. However, a surge of government initiatives in the form of National Highways Development Project (NHDP), Special Accelerated Road Development Program in North East (SARDP-NE) and Left Wing Extremism (LWE) in the road sector, development of Dedicated Freight Corridor of Indian Railways, port sector initiatives and

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SPECIAL feature Still 60 per cent of Indian sea freight cargo is being handled by JNPT. Lack of world-class logistics infrastructure, old and inefficient transportation systems of ports and ships, and no industry status for logistics services, are some of major challenges for Indian freight forwarding industry which must be addressed as soon as possible.”

Sanjay Goel CEO, Bolloré Logistics

shift to GST regime are providing the necessary impetus to the freight industry. Emergence of EDI platform UPLIFT, an universal platform for logistics and integrated freight transport and 4S eTrans built on J2EE platform are some recent technology trends in the freight industry.

According to Thakkar, “FDI in freight forwarding was introduced some time back and with it, almost 80 per cent of airfreight is handled by MNCs. Post GST, the regime should provide exciting times for logistics, and particularly so for 3PL/warehousing industries. GST is an evolution of the current tax regime, transforming the complex and cascading structure into a unified value added system of taxation. Under this, a value added tax would be levied at every point of the supply chain providing for credit for any/all taxes paid

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previously. Keeping in line with the governance structure of the country, GST would be levied simultaneously by the Centre and State (CGST and SGST respectively). All essential characteristics in terms of its structure, design applicability, among others would be common between CGST and SGST across all states.

GST is expected to replace most of the current applicable indirect taxes. Let us not expect miracles. Let us stakeholders also do their bit. GOI cannot get every requirement.”

Agrawal adds, “Government is taking lots of initiative but results on the ground level are yet to be seen. Implementations of initiative are still to be done.” Chawla is also not much pleased with the government’s initiatives towards the freight forwarding sector and says, “Government has not done enough.

Indian government lacks to identify freight forwarding as an organised sector. They have spent millions on developing private and public sector sea ports and airports, but what they are gravely missing are systematic infrastructure to support cargo movement–precisely speaking, organised warehousing, organised and dedicated freight corridors, abolition of octroi and other unnecessary paperwork and taxing systems between state borders, special attention to speedy clearance of trucks meant for export and import cargo and proper customs clearance facilities. Most important is to properly develop import export customs clearance facilities at customs stations. Like in most developed nations, all importers and exporters are required to file self-clearing basis customs entry, agents only facilitates logistics support and in case cargo requires physical exam by the customs then agent’s assistance is needed–this primarily helps in completely stopping MISUSE of IEC by unscrupulous agents who try to smuggle import/export goods on fake documents.”

Conclusion Information Technology is one of the most powerful enablers at the disposal of freight forwarders. It has changed and continues to change the way freight forwarders operate. Freight forwarding industry leveraged IT for improving experience of their customers, handling more shipments with same size of team, reducing shipment handling cycle and communication lead time, supporting expansion of business. Focus on emerging trade lines and diversifying business portfolio to multiple logistics segments are the key strategies to expect a sustainable growth trajectory in the sector.

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cover story

22 CargoConnect - april 2016

cover story

E-commerce lOGISTICS Logistics Exploring the Unexplored Indian e-commerce industry is witnessing a great revolution with a huge surge in demand from tier 2 and tier 3 cities. As per reports, there are as many as 3,133 tier 2 and tier 3 cities, and 1,233 rural hubs that are getting onto the online retail bandwagon.

Ritika Arora Bhola talks to industry experts about the growing trend, market reach and expansion, cost involved, challenges and the future

arril 2016 - CargoConnect 23

cover story

T

hanks to the rapidly growing e-commerce market, wide reach and penetration of broadband connection, small towns have literally created a revolution in the Indian e-commerce market in the last few years. It is actually the tier 2 and tier 3 cities that have contributed the most to the significant growth of India’s e-commerce industry, which is contrary to the common perception that metropolitan cities like Delhi, Mumbai and Kolkata have pushed the growth.

According to an e-commerce giant, eBay’s Census 2014 report, against the 10 metro cities where e-commerce has seen grip, there are as many as 3,133 tier 2 and tier 3 cities, and 1,233 rural hubs, that are getting onto the online retail bandwagon.

The top 10 rural hubs for e-commerce include Tada and Guntur in Andhra Pradesh, Ghattia in Madhya Pradesh, Cachar in Assam, Karthikappally in Kerala, Chorayasi in Gujarat and Budgam in Jammu and Kashmir. Surprisingly, eBay and many other e-commerce players like Snapdeal, Jabong, Flipkart, etc., have reached out to these small towns successfully.

These findings are reportedly based on the analysis of all transactions by Indians on eBay between January 2013 and June 2014.

The census covers trends in online buying, selling and exporting across all the 28 states and seven Union Territories in this period.

Reaching the Unexplored Markets!

Observing the growing trend, an e-com-

merce logistics player, K Satyanarayna, Director, Ecom Express Pvt Ltd shares, “The continuing reach and expansion in a direction to cover the entire country’s footprint is key to e-commerce industry growth. There is significant latent demand in tier 3, 4 towns and rural areas which has a low presence of offline stores. The key drivers of this demand are rising disposable income and increasing internet and smart phone penetration.”

Sandeep Padoshi, Co-Founder and Director, WOW Express agrees, “As internet penetration increases and mobile commerce gains prominence in tier 2, tier 3 cities and rural areas, these will become potential hot markets for e-commerce companies. The fact that tier 1 cities are also getting saturated to some degree, these companies are actively looking at tier 2 and 3 as growth options.

The potential in tier 2 and 3 cities is huge.

Disposable incomes have increased and the population is exposed to latest trends and fashions. However, rural demand is still very nascent and might be only for certain categories of products. With the advent of 4G, mobile commerce is expected to penetrate deeper into the category 3 towns and rural hubs. But with six lakh villages in India, it would be every e-commerce company’s dream to achieve the reach that is comparable to FMCG companies.”

Meanwhile, Percy Avari, Regional M a n a ge r-S out h A s i a , A r a m e x International, India, talks about partnering with suppliers for distribution services in remote areas. He says, “The e-commerce industry and online shopping is rapidly increasing around the world. In order to meet

inside Reaching the Unexplored Markets!

Challenges faced

by LSPs Market Shift and Expansion Cost of Expansion Conclusion

24 CargoConnect - april 2016

arril 2016 - CargoConnect 25

cover story

K Satyanarayna, Director, Ecom Express Pvt Ltd The continuing reach and expansion and in a direction to cover the entire country’s footprint is key to e-commerce industry growth.

There is significant latent demand in tier 3, 4 towns and rural areas which has low presence of offline stores. The key drivers are rising disposable income, Internet and smart phone penetration.

the growing demand in certain areas in the country, we are working on entering strategic tie-ups with a number of partners and suppliers who have extensive distribution network in these areas.”

Stressing on the importance of distribution channels and lack of cash on delivery (COD) services in some of the remote areas, LR Sridhar, Founder and CEO, Connect India avows, “India has 26,000 pin codes, out of which India Post services 19,000 pin codes. However, services are available in 4,000-5,000 pin codes of India. Digital money has not penetrated into the tier 2 and 3 cities and the rural markets and hence cash

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codes out of which India Post services 19,000 pin codes.

Courier services are available in ONLY 4,0005,000 pin codes of India. on delivery service is not available in these markets. Thus, the industry requires a distribution channel which has cash on delivery embedded in its business model. Connect India has 6,000 centres with 3,200 centres in deep rural pockets and every centre is enabled with cash on delivery as we use smart

cover story

Sandeep Padoshi, Co-Founder and Director, WOW Express As Internet penetration increases and mobile commerce gains prominence in the tier 2, tier 3 cities and rural areas, these will become potential hot markets for e-commerce companies. The fact that tier I cities are also getting saturated to some degree, these companies are actively looking at tier 2 and 3 as growth options.

rural wireless Tele-density still shows poor performance at only 44.32% as of September 2014.

28 CargoConnect - april 2016

trade wallet to transact COD shipments.”

Tamil Rajan, Director, LexCare Global Consultants Pvt Ltd talks about the transportation of goods in rural areas.“Movements of goods are usually planned by road transport overnight from the regional warehouse point to tier 2 and 3 cities in order to avoid traffic and road congestion. Railways are also considered for distances beyond 500 to 600 km for overnight transit reach.”

Challenges Faced by LSPs No doubt, e-commerce players are reaching out to rural areas, but it is a great challenge for the logistics players to deliver the products on time considering poor road conditions, lack of proper air-road-rail

network and trained manpower.

Products such as electronics (handsets, mobile phones and accessories), footwear, kitchenware, cosmetics and garments are being sold maximum in tier 2 and tier 3 cities, say e-commerce logistics players. The North East is said to be a huge market for cosmetics. Books and study material also see good demand in these markets.

Focussing on the challenges faced by LSPs while transporting goods in small towns, Satyanarayna stresses that States’ Tax authority is not clear of e-tail distribution, which hampers faster movement of goods. He adds, “The industry growth impetus can be achieved by seamless endto-end distribution across the country and LSPs play an integral role. LSPs currently face challenges due to States’ Tax authority not being clear of e-tail distribution, which hampers faster movement of goods in addition to other hardships. GST can bring the much needed relief in this direction. Otherwise, delivery of goods into the rural foothold poses not much of a challenge except that players need to have a strong network design to cover the rural footprint to address end-to-end forward and reverse movement.”

Padoshi jots down some of the key challenges: a.) “Although e-commerce companies are beginning to focus on tier 2 and 3 cities and rural areas, actual volumes are still low and do not justify a full-fledged set by the LSPs. Hence, LSPs have to invest and wait for volumes to build. b.) Besides, lack of proper air, road networks to rural hubs, delays the pro-

cover story

Percy Avari, Regional Manager – South Asia, Aramex International, India The e-commerce industry and online shopping is rapidly increasing around the world. In order to meet the growing demand in certain areas in the country, we are working on entering strategic tieups with a number of partners and suppliers who have extensive distribution network in these areas.

cess of the products reaching the end consumer. c.) Line haul, long haul reach is also an issue.

COD management at remote locations has its own risks. d.) Return management is a tedious proposition because of lack of proper air and road network.

e.) Talent acquisition is a challenge.”

Agreeing with Padoshi, Sridhar also mentions some of the important challenges which need to be addressed. a.) “Managing cash on delivery b.) Locating address in rural areas might be a challenge

c.) Sellers in rural markets find it impossible to find logistic partners and hence the seller ecosystem is limited to 18-20 cities in the country. d.) Customer returns is almost impossible to handle as a specific staff needs to be sent for the same, which means loss of productivity of three to five hours.

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cover story

LR Sridhar, Founder and CEO, Connect India Digital money has not penetrated into the tier 2 and 3 cities and the rural markets and hence cash on delivery service is not available in these markets. Thus, the industry requires a distribution channel which has cash on delivery embedded in its business model.

Key Challenges • Although e-commerce companies are beginning to focus on Tier 2 and 3 cities and rural areas, actual volumes are still low and do not justify a full-fledged set by the LSPs. Hence, LSPs have to invest and wait for volumes to build.

• Lack of proper air/road networks to rural hubs, thereby delaying the process of the products reaching the end consumer.

• Line haul/Long haul reach is an issue.

• COD (cash-on-delivery) management at remote locations has its own risks.

• Returns management is a tedious proposition because of lack of proper air and road networks.

• Talent acquisition is a challenge.

32 CargoConnect - april 2016

e.) Viability of sending small orders 50 –100 km away from the nearest city.”

Srinivas Sattiraju, Chief Executive Officer, Delex Cargo India Pvt Ltd elaborates on the importance of on-time delivery of products and challenges associated with it, especially in remote areas. He opines, “With the rapid advent of e-commerce logistics players and hyper local companies competing with each other to deliver their products within the fastest possible time to their customers, we are witnessing a rapid growth and expect a significant further growth for service providers in the Last Mile Delivery (LMD) space. Consumers’ expectation is growing over the period and all the e-commerce companies are competing in promising their customers the best deals and faster deliveries.”

Sattiraju continues, “This vertical has its own ups and downs for service provid-

ers. There is a huge volume to deliver, but managing a large army of delivery boys/ bikers and controlling an error-free, cashon-delivery process through them is becoming challenging. The current scenario is that there are too many players in the market.

New ones are entering with large expansion plans, but the resource pool remains the same for everyone. This scenario might push up operational costs for service providers and will prevail for some time till major consolidation process starts. But the LMD sector is here to stay and grow as long as the e-commerce industry thrives.”

Rajan agrees,, “Every company believes that ‘on-time delivery’ shall remain the primary factor. There are two challenging areas for e-commerce companiesmovement of goods between locations and last mile delivery. Both are related to capacity planning.”

cover story

Tamil Rajan, Director, LexCare Global Consultants Pvt Ltd Movements of goods are usually planned by road transport by overnight from the regional warehouse points to the Tier 2 and 3 cities. Railways are also considered for distances beyond 500 to 600 km for overnight transit reach.

e-commerce (including e-tail) e-tail

21.3 21.3 16.4 12.6

3.8 0.4 2009

5.3 0.6 2010

7 1 2011

9.5 1.5 2012

2.3

3.5

2013

2014

6 2015 (estimated)

e-commerce ecosystem Online travel, ticketing, etc.

Ticketing for air, rail, bus, movies, events Online retail Retail products sold through online route Online marketplace Platform where sellers and buyers transact online Online deals Deals purchase d online, redemption may or may not happen online

compared to 36 per cent in 2014. According to the officials at Amazon, the demand for books from Coimbatore has gone up by almost 200 per cent over the last one year, indicating significant increase in tier 2 cities. Amazon has also taken essential steps to reduce the delivery time in these cities by opening fulfilling centres in 12 major cities, including Pune, Bengaluru, Ludhiana and Ahmedabad.

Fashion e-tailor, fashion and you, which started operations three years ago, mainly in metro cities, realised the huge opportunity in cities like Tiruchi and Bellary, where consumers tend to spend around `3,000-`6,000 per purchase.

Ecom Express also invested close to $133 million from Warburg Pincus in June this year. Delhivery also raised $85 million courtesy a pool of multiple investors this year.

Logistics Analytics companies e.g. LogiNext raised $10 million last year. Their technology solutions optimise the logistics functions of these larger players and they also do last mile delivery.

Hence, as per the research and facts available all over the web, the growth of the online retail sector will be driven by these unexplored towns and cities. Most of these towns are still currently not in picture due to the inefficiency of last-mile delivery of e-commerce companies. However, logistics companies will be streamlining the processes to make it work for their e-commerce clients in the coming months.

Cost of Expansion Includes ca r, job, proper ty and matrimonia l portals

Source: IAMAI, CRISIL, Gartner, PwC analysis and industry experts

Market Shift and Expansion According to experts, these smaller towns have actually become the force behind the growth of the online retail market in India. Many online players say the potential market has shifted to tier 2, 3 and 4 towns, with over 50 per cent of sales coming from these areas.

Amazon India witnessed 50 per cent growth in tier 2 cities in 2015

34 CargoConnect - april 2016

The size of online retail in India is poised to touch $18 billion by 2018. Other than the major cities in the country, unexplored towns and cities will also play a major role in contributing to this huge number. According to Ken Research and Deutsche Bank Markets Research, the size of the e-commerce logistics sector alone is touted to reach $2 billion by 2019.

With the huge amount of investments pouring in from ecommerce players like Snapdeal, Jabong, Amazon, Flipkart and Koovs, etc., the majority of the cash has been planned to be utilised for improvement of the infrastructure in remote areas/ tier 2, 3 cities.

Also, mobile penetration is the future and seems to be bringing a revolution in rural hubs.

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cover story

Srinivas Sattiraju, Chief Executive Officer, Delex Cargo India Pvt Ltd There are too many players in the market. New ones are entering with large expansion plans, but the resource pool remains the same for everyone. This might push up operational costs but the LMD sector is here to stay and grow as long as the e-commerce industry thrives.

figures, the penetration of mobile devices in remote rural markets will increase in the coming years. With an increase in mobile penetration, these rural areas, towns and cities will provide a lot of avenues for profit in the e-commerce segment. A major chunk of the population in these cities will be looking to order goods through their mobiles. The e-commerce logistics companies must use the investments to fasten the process of expansion.

The report further states that the Active Internet User (AIU) base across rural India in 2014 accounted for 61 million users. 4.4 per cent of the total rural population used a mobile device to access the internet; a figure that stood at a meagre 0.4 per cent in 2012. The reports suggest cash-on-delivery (COD) is still the king in smaller towns and cities. E-commerce logistics firms must explore these markets and work on implementing proper infrastructure.

Conclusion

Source: Technopak; Accel Partners

According to a KPMG-IAMAI report, ‘India on the Go: Mobile Internet Vision 2017’, the contribution to mobile penetration in India comes majorly from the urban areas where wireless tele-density has reached 142.39 per cent.

On the other hand, the rural wireless tele-density still shows a poor performance at only 44.32 per cent as of September 2014. To increase the overall

36 CargoConnect - april 2016

It seems technology is the future of e-commerce and is set to bring a revolution in tier 2 and tier 3 cities. With increased awareness, smart phones available in cheap rates starting from `2,000- `3,000, more number of people using smart phones, and with the penetration of broadband connection in rural areas, the future looks really very bright and the scope for growth is very high. Also, shopping online is a growing trend as the availability of all the products is not great in such cities. The craze for purchasing online is a matter of excitement for people who stay in rural areas as they can now purchase products – apparel, footwear, kitchen appliances, accessories, cosmetics, mobile devices and books and a lot more online in one go with just one click from home. Also, cash on delivery feature has added a feather to the cap as they can pay the amount later on. However, on-time delivery is still a question especially in these areas because of poor connectivity and infrastructure. Great investments are being done by e-commerce giants in this sector and we are hopeful that by the year 2020, the growth chart will definitely see an upward swing with many more positive outcomes and innovations.

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#Budget Pe Charcha

With the Government presenting the Union Budget 2016, an economic roadmap has been set for the year. The Budget was preceded with a lot of expectations from the logistics industry, and as always, there seems to be an element of dissatisfaction when these expectations are not fully realised.

Joydeep Banik tries to analyse the mixed reactions from industry stakeholders and points out the sectors that remain unaddressed

Revitalising Logisticonomy

38 CargoConnect - april 2016

#Budget Pe Charcha

A

close look at this year’s budget math indicates that the country’s revenue growth expectation is highly optimistic for the fiscal. On the whole, this year’s budget looks reformative, pragmatic and growth-oriented and is focussed on creating a strong economic foundation for the country’s future. The prime focus is heavily on infrastructure with roads, highways and rural links being the thrust point. The proposed investment plans look promising for the Indian logistics industry. Progress in infra projects is expected to create more investment in the country, leading to more job opportunities.

As far as the country’s EXIM stakeholders are concerned, the budgetary moves pertaining to input tax credit are found to be in line with industry expectations as these are expected to improve the competitiveness of Indian companies as against foreign flag vessels. The Indian Prime Minister’s vision of ‘Transforming India’ was well articulated in the budget speech of the Finance Minister. The agricultural sector which contributes a major part in the Indian GDP has been emphasised in the current budget. On the one hand, measures announced in agriculture, rural and healthcare sectors are bound to increase the confidence of rural India while on the other, financial and tax reforms would be increasing the confidence of investors in corporate and SME sectors.

Boost to Ease of Doing Business The overall Union Budget 2016-2017 is believed to be an optimistic step by the government towards the entire e-commerce and start-up industry. Bimal Tanna, Partner and Leader, Industrial Products, PwC India reacts, “While the Union Budget’s focus is on rural economy and infrastructure sector, tax incentives provided to start-ups and MSMEs are indeed positive for the manufacturing sector; however, some reduction in

PILLARS OF UNION BUDGET 2016

AGRICULTURE

RURAL DEVELOPMENT

SOCIAL DEVELOPMENT

REFORMS IN EDUCATIONAL SECTOR

DISCIPLINE IN GOVERNMENT SPENDING REFORMS FOR FINANCIAL SECTOR DISCIPLINE IN GOVERNMENT SPENDING corporate taxes and a re-look at MAT would have improved the sentiments of the large players in the manufacturing space.”

Rajeev Vyas, Director, Steel Users Federation of India (SUFI) feels, “It is a positive budget as neither import duty nor VAT has been tweaked.

Increase in rural spending and exemption of house rent will improve the housing sector, thereby giving a boost to steel consumption. Steel users’ apex body SUFI would have liked if issues pertaining to MIP, safeguard duties and BIS were addressed in this budget and some relief was given to users of steel. The government has to strike a fair balance between the legitimate needs of the steel user industry as well as steel producers.”

Raghubar Das, Chief Minister, Jharkhand also lauds the budget announcements and says, “Our popular Finance Minister has laid out a good budget. If we look at the announcements closely, reducing inflation while simultaneously giving due thrust to

INFRASTRUCTURE DEVELOPMENT BETTER GOVERNANCE REDUCING TAX BURDEN ON CITIZENS economic growth and reforms are the twin objectives of this budget.” Sunil Kanoria, President, ASSOCHAM agrees, “Yet another positive feature of the budget is a slew of measures to reform the tax regime and dispute resolution mechanisms. Rationalisation of TDS (Tax Deducted at Source) should help small taxpayers, besides relaxation of presumptive tax rules for SMEs and professionals, which would make lives easier for them. Realising well the limitations brought in by slow demand and global slowdown, the budget has rightly put emphasis on the creation of employment through ‘Start-up India’ and ‘Skill Development.’ However, rationalisation and simplification of tax rates would have benefitted the overall ease of doing business; especially keeping in mind that GST implementation seems to have been pushed ahead.”

Arguably, one of the boldest decisions that came up in the recent Union Budget was the announcement that start-ups will be getting 100 per cent tax exemption for three years (ex-

arril 2016 - CargoConnect 39

#Budget Pe Charcha Share of the Logistics Industry This year’s budget had some excellent announcements to develop the existing infrastructure of the logistics industry in India.

Vineet Agarwal, MD, TCI Group shares, “The government’s decision to focus on the development of roads and highways would prove to be very beneficial for the growth of the logistics sector with the allotment of `97,000 crore towards the sector.” He continues, “Besides investment in infrastructure, the government should also have focussed on ‘soft’ logistics infrastructure to ensure smooth facilitation and transit of cargo and minimal paperwork through electronic data cept MAT), applicable from April 2016-2019.

Chirag Haria, CEO, Aarogyam Energy Jewellery welcomes the recent developments, “We applaud the government’s decision to support start-ups by increasing the limit for 44 AD from one crore to two crore; this will help start-ups to efficiently focus on work rather than taxations.” Adarsh Chilukuri, CEO, Bulkhouse Trading India Pvt Ltd speaks on similar lines, “Modi’s new ‘Start-up India’ initiative is an excellent and encouraging move to enable the entrepreneurs to stand up for themselves and to change traditional Indian trade to a modern e-commerce based economy. With increased

industry stakeholders about the rollout of GST and extinguishment of indirect taxes.

Disappointingly, this budget was not clear on taxes as they would apply to the logistics sector. However, in a post-budget press conference, FM himself said that GST will be implemented by constitutional amendment and this year’s budget is a step in that direction. Brijesh Lohia, Managing Director, Global Ocean Group feels a positive vibe as he says, “Just the fact that the Hon’ble Finance Minister used the word ‘warehouse’ more than ten times indicates the Union Government’s focus on warehousing and logistics. The move to set up logistics support to e-commerce players by providing designated pick-up centres at identified stations will be extremely beneficial. It would offer supply chain and e-commerce industries an alternative to the expensive air cargo route that they now rely on for deliveries. Rail cargo will be much cheaper than the existing rates. Increasing 24x7 customs clearance at ports and airports shows a solid intent to implement Goods and Service Tax (GST) in the coming year. Introduction of GST has been given a thrust.”

Praveen Somani, Director, Inland World Logistics tells more about the post-budget taxation perspective, “The industry expected announcements and some firm commitments

Sunil Kanoria, President, ASSOCHAM “Realising well the limitations brought in by slow demand and global slowdown, the Budget has rightly put emphasis on creation of employment through ‘Start-up India’ and ‘Skill Development;’ however, rationalisation of and simplification of tax rates would have benefitted the overall ease of doing business, especially keeping in mind that GST implementation seems to have been pushed ahead.” support through more funding sources, insurance and infrastructure, the Indian agricultural business is set to boom. The ecommerce schemes announced in these lines are the most desirable way of enabling the farmers to sell their produce at a fair price; even the end customers will get to purchase it at a relatively lesser price.”

40 CargoConnect - april 2016

interface, seamless connectivity between multimodal transport and ease of taxation.

Given the high growth in e-commerce and other consumption sectors, incentives to build world-class warehouses would have been far reaching.”

Since the last year, there had been a lot of deliberations among freight forwarding

on GST framework and timelines to align the existing central indirect taxations. But it was skipped in the Budget. Being in the service industry, no increase in the service tax is a positive sign. However, corporate tax was expected to be reduced to give the necessary boost to the sector, but unfortunately there has been no change in corporate taxations.”

“Continually Innovative”

#Budget Pe Charcha In a post-budget press conference, FM himself said that GST will be implemented by constitutional amendment and this year’s budget is a step in that direction.

Infrastructure and SectorFocussed Concerns India has a long way to go in terms of the development of supply chain infrastructure.

Knowing that the logistics industry has not received the desired attention or recognition in India, it will be good to see how infrastructure is put on a fast-track mode, especially with the development of more road networks post the budget announcements this year. Agarwal welcomes the decision of reshaping national and state highways and says, “This would prove to be a great enabler in moving cargo in high traffic density corridors efficiently. The proposed investment into railways, ports and inland waterways should help in the growth of multimodal logistics, strengthening the country’s competitiveness.”

According to Vikash Kuma r Sharda, Director-Capital Projects & Infrastructure, PwC India, “Enhanced

Resolution Body and Guidelines for re-negotiation of PPP contract are important to provide the necessary impetus to the PPP model of procurement in roads and highways sector, which has suffered due to disputes and litigations.”

Meanwhile, Lohia renders a detailed outlook on both the Union Budget and the

corridor will improve overall infrastructure, connectivity and lend efficiencies to the supply chain. Developing inland navigation in certain areas will showcase newer opportunities and cost advantages to the industry. There is a decision to increase public investment in infrastructure development, including national highways. Better service connectivity will provide better speed and cost-effectiveness for logistics service providers and consumers alike. The logistics sector gets a boost with the railway budget emphasising on augmenting freight handling capacity through a slew of measures like increasing the speed of trains, transport development and coming up of multimodal depots which are bound to improve connectivity and efficiency with airports and railways.”

Somani echoes, “Increasing budget spends on constructing new state and national level highways will positively impact the logistics industry which will allow deeper penetration and improved delivery and services.”

Shashi Kiran Shetty, Founder and Chairman, Allcargo Logistics “The government’s impetus on increasing efficiency, modernising ports and improving road infrastructure will definitely provide a fillip to our sector. Overall, this is a realistic budget with more focus on rural and infrastructure development.” allocation in road and highways sector by around 22 per cent is definitely a positive outcome. However, the role of private sector investment would be the key to achieve the target of 10,000 km of National Highways construction during FY 2016-17. Therefore, two initiatives such as Public Dispute

42 CargoConnect - april 2016

Railway Budget 2016, “This budget promises to address several issues faced by the roads, power, ports and airport sector. The proposed huge financial investment into NHAI and state roads and a specific focus on the development of select expressways in parallel to the development of the industrial

But, he also feels that “associated facilities and infrastructure should also have been part of the budget and the focus of our government, like increasing and improving the conditions of Seva Kendras, which are the truck drivers’ well-being centres. Improving the numbers and conditions of these Kendras

#Budget Pe Charcha As far as the country’s EXIM stakeholders are concerned, the budgetary moves pertaining to input tax credit are found to be in line with industry expectations. with good food, training programmes and healthcare initiatives are equally important to improve the truck driver’s health and make our highways a safer haven.”

Shashi K iran Shetty, Founder and Chairman, Allcargo Logistics avows, “The government’s impetus on increasing efficiency, modernising ports and improving road infrastructure will definitely provide a fillip to our sector. Overall, this is a realistic budget with more focus on rural and infrastructure development while keeping fiscal deficit in check.”

However, unlike the road sector, the aviation and maritime sector did not witness any game-changing investment proposals.

Conrad Clifford, Regional Vice President, Asia Pacific, International Air Transport Association (IATA) figures out, “The bud-

address three priority areas–retract the two per cent Regional Connectivity Fund levy, abandon the plan to auction traffic rights, and allow AERA to perform its functions

ity. Budget 2016 had a few announcements which can facilitate creation of necessary infrastructure for enhancing regional air connectivity and provide access by air to more parts of the country, as told by experts.

Kabir Bogra, Associate Partner, Khaitan & Co elaborates on the takeaways of the aviation sector from the Union Budget 2016, “The FM has mentioned that the government is

Conrad Clifford, Regional Vice President, Asia Pacific, IATA “The budget had a minimal focus on aviation. The significant hike in excise duty on ATF will add to the high cost environment for airlines in India. We do hope the government will do a better job with the National Civil Aviation Policy.” get had a minimal focus on aviation. The significant hike in excise duty on ATF will add to the high cost environment for airlines in India. We do hope the government will do a better job with the National Civil Aviation Policy. While the NCAP is a step in the right direction, there are areas of concern, especially where it adds costs to the industry or where it deviates from well-established global standards. We hope the government will

44 CargoConnect - april 2016

independently by not enshrining any ‘Till’ for airport charges in the policy document.”

The growth of civil aviation and the air cargo sector in India over the last decade has been phenomenal and India is on course to become the third largest aviation market. The Ministry of Civil Aviation, through its Draft National Civil Aviation Policy 2015 proposed an inclusive expansion plan for the aviation sector by promoting regional air connectiv-

looking to develop 160 non-functional airports at a cost of 50 to 100 crore each and will also develop ten defunct airstrips with state governments. If effectively managed, these investments would provide a huge impetus to regional airlines and help in unlocking a significant potential in civil aviation in India. This is likely to be undertaken under the PPP model.” He continues, “The other significant announcement for the aviation

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#Budget Pe Charcha Shipping companies engaged in export assignments will be allowed input tax credit–to boost the ‘Make in India’ initiative kick-started by the government.

industry comes in the form of incentivising the MRO sector. This has been done in two steps. As a first step, the customs exemption under notification number 12/2016 has been extended to a wider variety of equipment and tools required to be imported by a MRO service provider, and secondly, customs duty on aircrafts imported for undertaking repairs has also been completely exempted.

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On the other hand, keeping in mind the

in India’ initiative kick-started by the government. However, the coastal shipping industry remains disappointed as no incentive schemes were announced for this segment.

sector looks unhappy with announcements like imposition of a 14 per cent service tax on shipping companies on importing goods, it is expected that construction of Greenfield ports in the eastern and western parts of the country will be a boost to EXIM trade.

Simultaneously, inland waterways will be developed further to facilitate commerce, as told in the budget.

Conclusion If the budgetary investment is executed as planned, infrastructure in the logistics sector will receive a massive boost, consequently providing an impetus to the logistics sector cascading laurels to the domestic economy. Improvement in the logistics sector translates to more competitive prices, better delivery times and in general, an economy

Praveen Somani, Director, Inland World Logistics “Being in the service industry, no increase in the service tax is a positive sign. However, corporate tax was expected to be reduced to give the necessary boost to the sector, but unfortunately there has been no change in corporate taxations.” drying top lines of domestic shipbuilding companies along with the future prospects before them to attract orders, the budget has exempted shipbuilding companies from excise duty on capital goods and spares, raw material and material handling equipment for the repair of ocean-going vessels. Besides, shipping companies engaged in export assignments will be allowed input tax credit–a move to encourage export to boost the ‘Make

46 CargoConnect - april 2016

Kiran Kamat, Managing Director, Link Shipping & Management expresses disappointment, “There was absolutely nothing for the coastal division. When the ministry is planning to make a shift of transportation from road to sea and can even announce a slew of measures for the road sector, it is unable to do anything for the coastal division which is supposed to be the cheapest mode of transport.” Even though the maritime

that functions better and in a stabilised manner. Chilukuri rightly concludes on a positive note, “Overall, the Modi government has set an extremely encouraging budget for the Indian market to keep the engines running even faster when the global markets are melting down. India could take a major advantage of the current international economic situation and emerge as a new leader in the global market.”

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feature

is ‘In’?

Currently, organisations across sectors are stuck in a dilemma as they consistently feel the stress to reduce costs, time and the amount of inventory, pushing them to innovate their business strategies. Lean logistics has emerged as a way out to improve the supply chain process of an organisation substantially. Joydeep Banik, with views from experts, performs a SWOT analysis

48 CargoConnect - april 2016

feature

L

ean logistics, simply put, is a way to eliminate wasteful activities from the supply chain in order to increase product flow efficiency. Lean thinking originated from manufacturing methods practiced by Japanese automotive manufacturers. Due to minimal resources, they employed a production process that worked with minimum waste. This thinking soon spread virally to manufacturing, product development and supply chain management sectors across various countries.

Indian logistics industry has shown exponential growth in recent years and the demand for logistics services has improved up to a great extent.

More and more customers are moving away from ‘cost plus’ mechanisms to variable models of payment for their logistics outsourcing. At this point, lean logistics has become a significant part of the value chain, because except for adding value by elimination of waste, it can help companies in their organised growth of logistics activities-from planning to procurement, warehousing and distribution.

Extending the Lean Factor to the Supply Chain In recent times, an intersection can be seen in the supply chain arena between logistics and production activities. Although the lean factor is traditionally applied to manufacturing, ‘lean’ concepts are applicable anywhere and at any stage of the entire supply chain. Hence, extending the lean factor beyond the four walls of manufacturing and into the supply chain undoubtedly makes sense. Lean logistics is a system of interdependent partners that operate in unison to accomplish supply chain objectives. The metrics involved to monitor these objectives to ensure success across the supply chain should be reviewed frequently.

The main aim of lean logistics is to eliminate waste; in logistics, excessive lead times and energy usage, leftover space for inventory, impractical human effort, defective products, overproduction, excess motion, unnecessary processing steps, etc., translate to waste. Today’s logistics organisations, be it in-house or 3PLs, are facing serious problems in inventory man-

Lean Thinking Waste

1. SPECIFY VALUE

Waste

agement, transportation, cost optimisation and systematic flow of freight forwarding. In order to achieve maximum optimisation and to eliminate wasteful activities from logistics, adaptation of lean methods is indispensable.

According to G Durai Aravind, Assistant General Manager and Section Head, In-plant Logistics, Hyundai Motor India, “In modern times, the supply chain/logistics costs are not so negligible to be ignored, and at large, adopting lean logistics will generate enormous value to the organisation in terms of• Reducing expenditure (Profit) • Enhancing quality of service to the customer • Improving the work morale of the team involved.”

Sushil Rathi, COO, Mahindra Logistics indulges into an analytical insight, “A lean supply chain is the one that provides just what and how much is needed, when it is needed, and where it is needed. Lean supply chains are designed to have minimal inventories in the system, minimal amount of warehousing space required to store these inventories, and optimised shipments to reduce the cost of moving inventory.

Some may argue that traditional mass production minimises unit costs. But times are changing and today consumer is the king! Companies can no longer indulge in over production just to reduce unit costs. Market competition has compelled them to adopt demand-driven manufacturing. In such a scenario, a lean supply chain becomes the key to reduce overall supply chain costs.”

Effectivity of the Lean Supply Chain 4. ESTABLISH CUSTOMER PULL

Waste

SEEKING PERFECTION =MINIMAL WASTE

3. CREATE A PRODUCT FLOW

2. MAP OUT VALUE STREAM

Waste

Creating a smooth flow of the supply chain requires all departments and functions in an organisation to work in collaboration. Organisations that incorporate lean thinking into their supply chain benefit from improved customer service, reduced environmental impact and can even gain a competitive edge in the market with corporate social responsibility.

According to Rathi, “Companies that run successful lean programmes not only save money in operations but enjoy more flexibility and better service without significant capital investments. Logistics providers stand to gain, too. With contract logistics margins under pressure, developing truly lean operating systems dramatically reduces costs. Even more important, it serves as a powerful value proposition to customers in a market where providers struggle to differentiate

arril 2016 - CargoConnect 49

feature

Lean logistics has emerged as a way out to improve the supply chain process of an organisation substantially. their offerings. In such a scenario, lean concepts are proving to be very handy in managing the variations in demand and adjusting costs, thereby protecting the margins for customers and service providers alike.”

Aravind adds a whole new angle to this much-talked-about concept and opines, “Lean

effective lanes and routes • Reduction in ‘total cost’ through constant value analysis

Lean vs Just-in-Time Lean manufacturing is a way of working that eliminates all forms of such waste that does

and sharing of production schedules, production data and consumer demand by the logistics user. IT-enablement is crucial for the success of JIT operations. It is very important to have trust and confidence in your logistics provider if you want to have a Just-in-Time supply chain.”

Sushil Rathi, COO, Mahindra Logistics

Lean supply chains are designed to have minimal inventories in the system, minimal amount of warehousing space required to store these inventories, and optimised shipments to reduce the cost of moving inventory." logistics would result in improvising the efficiency and effectiveness of the process and thereby could translate to better customer satisfaction. We, at Hyundai Motor India had adopted lean practices in our inbound logistics, which paved the way for standardisation and helped in implementing many cost-saving innovations. For us, lean logistics is a tool which can trigger innovation at work, and above all, we can also achieve total employee participation.”

Some of the notable results that can be achieved by the implementation of lean strategies in the supply chain are as follows: • Increased customer fulfilment and customer satisfaction • Visibility in the supply chain • Reduction in risk of cross-docking • Reduction in inventory • Reduction in transportation lead times by using Transportation Management System (TMS) to optimise freight using the most

50 CargoConnect - april 2016

not add value to the production process and the supply chain. Another significant and talked about ‘practice’, especially for automotive manufacturers is Just-in-Time. Rathi enlightens, “Just-in-Time is a key element in lean manufacturing. JIT is aimed at reducing waste, maximising cost efficiency and securing a competitive advantage in the process. JIT typically involves small lot sizes, short setup and changeover times, efficient and effective quality controls, and most importantly, designing the whole production process to minimise backups and maximise the efficiency of human and machine labour.” He continues, “JIT supports lean manufacturing by reducing the inventory, holding costs and ensuring visibility and availability of goods at the right time and place. JIT works on the concept of ‘pull’ and not ‘push’ and hence necessitates transportation only as and when required by the next link in the supply chain. Developing a JIT approach requires sophisticated planning

Viewing from another angle, Aravind says, “Adopting Just-in-Time technique would definitely help an organisation to achieve lean manufacturing and not the vice versa. Any organisation should target to achieve lean manufacturing, as the scope is wider (and sky is the limit!) when compared to JIT.”

Lean Thinking, High Living To overcome the complexities and challenges faced in supply chain markets, logistics organisations are pushing themselves to implement lean tools. But, there is a hitch in a practical approach to implement lean in a logistics platform.

Lean thinking involves a constant cycle of seeking perfection by eliminating waste and maximising the value of the product, which means that end-customers need not pay for organisational inefficiency.

To achieve leaner logistics, organisations

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feature

Organisations need to change their mindset about the lean logistics process and how people can work together. need to implement leaner thinking.

Aravind prefers to call it ‘simple thinking’ rather than ‘leaner thinking’ and tells, “We at Hyundai Motors ask ‘Why’ for every step/process to identify the hidden potential or the best

the end result desired by the customer. Waste, therefore, is defined as anything that does not add value from the customer’s perspective.

Understanding the difference between value and waste and value-added and non-value-

mand, without which they may fail to cater to customers’ expectations at times.”

Conclusion A lean supply chain is not only more ef-

G Durai Aravind, Assistant General Manager, Hyundai Motor India

We, at Hyundai Motor India had adopted lean practices in our inbound logistics, which paved the way for standardisation and helped in implementing many cost-saving innovations. For us, lean logistics is a tool which can trigger innovation at work. alternate solution to march towards lean logistics.” According to him, “a) The question ‘Why?’ will generate an innovative idea, b) ‘How?’ would really narrate the way to implement the idea for improvement, and finally, c) ‘What?’ will take to destiny (where we want to go).”

Rathi discusses in detail, “The crux of lean thinking lies in deriving more output/results from the resources employed while giving the end customer exactly what he or she wants. This means focussing on each product and its value stream. To do this, organisations must be ready to ask and understand which activities truly create value and which ones are wasteful. The most important thing to remember is that lean is not simply about eliminating waste-it is about eliminating waste and enhancing value.

Value, in the context of lean, is defined as something that the customer is willing to pay for. Value-adding activities transform materials and information into something a customer wants. Non-value-adding activities consume resources and do not directly contribute to

52 CargoConnect - april 2016

added processes is critical to understanding lean. Lean thinking, to become truly beneficial, needs to be applied to every component of the supply chain.”

He also tries to figure out the negative aspects, “The downside of a lean supply chain is that low inventories make the supply chain vulnerable to not being able to fulfil orders if the demand suddenly spikes, or if there are changes in demand that were not foreseen.

Inability to change orders with the suppliers also constrains the supply chain’s ability to react to any changes in demand and may saddle the supply chain with unwanted inventory.

Having no secondary suppliers also limits the ability of the supply chain. The focus on being lean prevents this supply chain from building redundancy by design which reduces the supply chain’s ability to manage variability. Hence, it is important to apply the lean factor to products with a stable demand. Companies must also see to it that they have a back-up plan or buffer stock for products with a volatile de-

ficient and cost-effective, but also faster.

It enhances the speed at which an organisation can respond to its customers’ demands and hence enables customer delight. It also reduces inventories dramatically. However, this makes it equally challenging for the companies to operate with minimum inventory levels and forces them to become efficient in their operations.

Nowadays, many research firms are coming up with lean solutions, but the concept is still in a nascent stage in India.

It has been noted in the recent past that only the higher level of management across top-notch manufacturing companies are aware about lean procedures, but core operation teams have hardly any knowledge of lean practices. The time has come to embrace the practical induction of this tool into logistics so that ‘lean’ can actually be ‘in.’

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Interview

“Today, businesses expect a revolution in the logistics arena�

Embassy Industrial Parks, a partnership between leading property developer Embassy Group, and private equity firm Warburg Pincus, was formed to address the challenges in building and managing industrial and warehousing spaces across a large and diverse market like India. The well-planned, technologyenabled industrial parks constructed

by Embassy are targeted at industries like e-commerce, automobile ancillaries, FMCG and retail. Anshul Singhal, CEO, Embassy Industrial Parks talks to Joydeep Banik on their outreach, recent developments, and explains how the warehousing boom is set to revive the real estate demand in the country

54 CargoConnect - april 2016

Tell us about the genesis of Embassy Industrial Parks and the journey so far.

It has been a good journey so far, and we are delighted with the progress and efforts. Today, investment into the warehousing business is also slowly gaining momentum in India as businesses expect a revolution in the logistics arena. Embassy Industrial Parks has been formed to address the demand for modern, high-grade industrial and warehousing spaces in India. It was primarily formed to address the challenges of companies grappling with building and managing industrial and warehousing spaces in a large, diverse and geographically distributed market like India.

For companies who wish to expand their operations while limiting upfront capex, what are the built-to-suit space land provisions that you provide?

We offer a complete built-to-suit space to augment the existing operations of the organisation. This expansion is limited to land building and fit outs in return for a rental which will be on a long term flexible lease basis.

Which are the Indian cities where you plan to have operational logistics and industrial parks? What are the special amenities provided in your industrial parks?

The primary offering will be industrial and warehousing parks housed in land parcels between 50-200 acres near the seven key cities of Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune. These parks will be planned to specifically

The industrial and warehousing parks are housed in land parcels near the seven key cities of Ahmedabad, Bangalore, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune

cater to the industrial and logistics traffic movements and will boast a host of special amenities such as truck parking, canteens, rest areas, dormitories, business centres, etc.

This will ensure that the park becomes a selfsustaining business environment.

Developers like Embassy Group are setting up warehousing spaces in the city suburbs. Is the warehousing boom set to revive the real estate demand in India?

Today, the Indian logistics sector is at the threshold of a major transformation, largely driven by the booming e-commerce industry in the country. Add to this, impending implementation of GST, rise in import-export and the ‘Make in India’ campaign has given a major push to the overall logistics industry.

All of these factors have given a major impetus to the logistics industry in India. Moreover, the conducive policy environment that allows for 100 percent foreign direct investment (FDI) in warehousing and increased demand for food storage facilities have acted as the catalyst for this partnership. Thus, more and more relators are beginning to focus on warehousing, and the entire warehousing

boom has therefore set to revive the real estate demand in India.

more about the project and its potential?

All the industrial parks by Embassy Group are master planned to specifically cater to industrial and logistics traffic movements.

Comment.

Yes, a MoU was signed for the development of three industrial parks around Gurgaon with a projected investment of `1,910 crores and an employment potential of 4,000 people. The proposed warehousing projects will span the development of integrated industrial and logistics parks with support facilities and also target industrial light manufacturing clients to set up built-to-suit manufacturing facility/ready built factories in these parks. The projects will be developed in the outskirts of Gurgaon, on NH-8 or within 10-15 kilometers from NH-8.

The projects are intended to support the booming e-commerce sector as well as the retail and FMCG companies to consolidate in a post-GST scenario.

Embassy Industrial Parks is committed to bring in Grade-A industrial, light manufacturing and warehousing spaces in close proximity to leading consumer and industrial centres across India.

We are working across the ecosystemfrom identifying strategic locations to designing, development and management of properties. Our aim is to develop close to 15-20 million sq. ft. of warehousing and light manufacturing space over the next five years bringing in a flexible ,builtto-suit model that addresses all your business needs.

India has an extremely limited supply of high quality industrial and logistics-related real estate. Do you agree with this statement?

Yes, indeed; India does have an extremely limited supply of high-quality industrial and logistics-related real estate. Land acquisition, the lack of experienced industrial real-estate development professionals, and access to long-term capital are some of the major challenges faced by warehouse developers in the country currently.

Embassy Industrial Parks has recently signed a MoU with Government of Haryana at Global Investors Summit 2016. Tell us

With the growth of e-commerce and possible roll-out of GST, logistics has become all the more important and challenging. What are the new opportunities coming up?

I think supply chain efficiency is going to become the single biggest differentiator in the e-commerce space as organisations strive to make same day delivery a costeffective reality. Modern warehousing facilities that allow for consolidation of distribution hubs will be a vital component in making this a reality. While the advent of GST will lead to more consolidation, in the warehousing sector, it should provide the ideal platform for the emergence of large scale nationwide players.

arril 2016 - CargoConnect 55

Interview

“We pride ourselves on exceptional customer service” Expeditors, a global logistics company, has successfully completed two decades of operations in India and has seen enormous growth.

Holding head high with pride, Vivek K Kumar, Regional Vice President, India, Expeditors International (India) Pvt Ltd in a têteà-tête with Roselin Kiro shares the company’s achievements and how they plan to reach out to new heights of success

When did you start your operations in India and what is the growth story of Expeditors till date?

Expeditors officially started in 1996 in India from a one room office in Delhi. We are celebrating our twentieth anniversary this year. We are planning employee and customer events to celebrate the occasion and our CEO Jeffrey Musser will be visiting to grace the occasion. Our growth in India has been very satisfactory over the years.

We now have 19 offices in India and our management has been pleased with our progress. This can be seen from the responses on our 8K filings in the United States.

How do you ensure to maintain consistent quality and provide customer services across the globe?

We have grown organically throughout our history of more than 36 years (although we have made small strategic acquisitions; we have not had any big mergers or acquisitions). This has helped us to have a very strong culture. Our commitment to our employees and culture has been key to our consistency. We also operate on a globally unified systems platform and this helps to maintain a consistent process and customer experience.

You claim to live up to the promise as you say‘You’d be surprised how far we’ll go for you.’

Please justify.

The adage encapsulates our endeavor to go above and beyond the expectations of the customer. We have proved this many times whether it is managing tough situations like port congestions, strikes, airline disruptions, weather or even when there is a customer situation requiring us to exhibit a sense of urgency. Our people step up and go out of the way to work with our

56 CargoConnect - april 2016

service provider partners to find alternate solutions to move shipments and ensure that our customers are satisfied. This also covers our commitment to consistently deliver to the customer expectations on a day-to-day basis. We pride ourselves on our customer service and we believe it is the best in our industry and we are committed to raising the bar further.

Which is the strongest segment you cater to?

We offer the entire gamut of services in India from air, ocean, customs brokerage, Transcon (domestic transportation), warehousing and distribution, project cargo, order management and Network Solutions. We cater to a variety of segments; customers who look for compliant, technology driven, end-to-end supply chain providers are the ones who we appeal to the most.

Tell us about your expansion plans. What are the other products and services in pipeline?

Expeditors is committed to India and our current investment and focus is on further developing our incountry services and expertise. We now have Transcon-our domestic transportation service developing well in India. We have also developed our customs brokerage capabilities including getting our own customs clearance licenses. Our warehousing and distribution services are quite mature and we are looking to further invest in them in light of GST roll-out. We also plan to launch our FTWZ this year. In addition, we have developed our Network Solutions capabilities (Logistics Network Redesign and Optimisation) to help customers in India become more efficient and prepare for the changes that GST will bring. If necessary, we will add offices to our network based on need and opportunity. So, a lot is happening.

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Interview

“Aramex has achieved solid growth across its geographies” Aramex is among the leading global providers of comprehensive logistics and transportation solutions. It combines modern day methods of transportation with techniques like developed software application to reduce the gap with customers and to make their logistics services easy to avail and enjoyable.

Percy Avari, Regional Manager-South Asia, Aramex International, India discusses with Dr Kirti Mudgil Pathak about recent acquisitions, their doorto-door solutions and other factors that make them outshine their competitors

58 CargoConnect - april 2016

Aramex recently announced a strong revenue growth for 2015. Please share the secret behind this success story.

Aramex has had another strong year with revenues in 2015 increased by 5 per cent to AED 3,837 million, compared to AED 3,643 million in 2014. Revenues in Q4 2015 increased by 5 per cent to AED 1,003 million, compared to AED 957 million in Q4 2014.

Our 2015 performance was very solid in revenue growth, primarily in international and domestic express, led by continued expansion of our e-commerce business across key growth markets. Aramex has also achieved solid growth across its geographies, with the GCC remaining the largest contributor to revenues in 2015.

With the acquisition of Fastway Ltd, Aramex has expanded its global footprint. Please comment on your ever-increasing domain.

Fastway Ltd’s acquisition comes as part of the company’s wider strategy to expand its global footprint and strengthen its operations in Asia-Pacific. The deal is in line with Aramex’s asset-light business model and further expands its global e-commerce proposition.

Having scalable synergies with Aramex’s infrastructure and extending our reach across the region, the acquisition now makes Aramex present in New Zealand for the first time and strengthens the company’s existing operations in Australia. Enhancing and expanding Aramex’s operations in the region also allows the company to further contribute to the development of Asia Pacific’s e-commerce sector and facilitate cross-border trade. This deal

Please shed light on your reliable door-to-door solutions for time critical packages.

gives Aramex significant opportunities to expand its e-commerce proposition and take advantage of the increasing demand for online shopping delivery solutions and small parcel delivery services in the Asia-Pacific.

What height of success do you foresee ten years down the line for the organisation?

Aramex will always continue to upgrade its operations globally and invest in talents.

Some major initiatives will be launched soon and we will keep exploring more ways to enhance our e-commerce platform. We will also continue to invest in the latest innovative technologies to enhance our business model and maintain our position as a dynamic global logistics player.

Moreover, we will soon be launching our new innovative app that will give the power to customers through higher visibility, payment flexibility, more locations delivery options and a rating system. We will also be unveiling a new ‘Rapid Scaling Up’ model based on partnerships in cities around the world, giving us access to delivery partners to enhance our variable business models and meet the last-mile delivery capacity issues.

We offer a wide range of Express Shipping solutions for our customers. This includes export, import and domestic express.

With Export Express, customers can ship packages, large or small, door-todoor and to anywhere in the world. We offer a range of reliable and cost-effective international shipping solutions to meet their needs. Also, Aramex provides a global solution for importing and receiving time-sensitive documents and parcels from countries worldwide.

Aramex Domestic Express offers reliable door-to-door solutions for timecritical packages to be delivered within a country or city. We also pick up and deliver packages within agreed delivery times. Customers can track their

samples domestically and globally. It comes with its own special boxes which can maintain the required temperatures during shipping. The solution is ideal for transporting blood samples, human fluids and medications that need to be preserved under specific temperatures and delivered within a certain time-frame.

Aramex Bio caters for both infectious and non-hazardous samples.

What are the products that you generally cater to?

We have successfully introduced market leading express delivery and logistics services to the Middle East and other emerging economies. As a leading global provider of comprehensive logistics and transportation solutions, our breadth of services include express delivery, freight forwarding, logistics, supply chain

Our 2015 performance was very solid in revenue growth led by continued expansion of our e-commerce business across key growth markets. shipments online at any time.

In addition , we have launched Aramex Bio, a new cold supply chain service available across Aramex MENA and South Asian markets and an innovative solution for the healthcare sector, providing an end-to-end temperature-controlled delivery solution suitable for laboratories, hospitals and pharmaceutical companies, to move clinical specimens and medical

management, e-commerce and record management services.

Please tell us about the clientele that usually avail your services.

Our services cater to all kinds of clients, from big corporations (B2B), to medical institutions and Art exhibitions, to individuals (e-shoppers / B2C).

arril 2016 - CargoConnect 59

Interview

Restoring Faded Glory Pakistan International Airlines (PIA) is a historic milestone in aviation. It has some interesting facts to its credit that acclaim it as the pioneers in many sectors. But the glory started to fade away as the airlines faced rough weather. Anwar Mumtaz, Incharge-Cargo Operations, Pakistan International Airlines in a heart-to-heart with Roselin

Tell us about the beginning of your cargo operations in India.

PIA being the national carrier of Pakistan, started operations in 1954 and then started the Karachi-London via Cairo in 1955. PIA Cargo commenced operations in 1974, with flights to the USA, Europe, and Hong Kong on the B-707 aircraft. We first started our cargo operations in 1971, which was entirely 777. Its main hub is Karachi while Lahore and Islamabad/ Rawalpindi are secondary hubs. We were the second airlines in Asia to start the jet aircrafts.

There are some amazing facts of PIA; it was the first airlines in Asia which started screening movies. PIA was the second airline to introduce the vegetable market to the whole of Asia through their cargo connectivity. As far as Indian operations are concerned, we started with two flights a week, then we increased it to four, then we further increased it to nine, and if I give you a figure of three to four years back, we moved around 24 to 30 tons of cargo a month. At that time, we had operations of two jumbos, two 777 and we were having 310 airbus. We were one of the lucrative stations in the entire network of PIA. But later on, things started to change. When the political scenario of any country starts interfering with the corporate sector, it takes away the entire glory and that is exactly what happened with us.

Kiro shares some memories of

What is your current cargo capacity in India?

the prime time that PIA enjoyed

We operate two flights and as of now we carry around three tons in each flight.

in the recent past and optimistically looks forward to get back the glory once again

60 CargoConnect - april 2016

How crucial and challenging is the Indian market for your cargo operations?

The Indian market as of now is booming, and the economy is very good, but it is obvious that there are ups and downs. But being the national carrier of Pakistan airlines, we were moving around eight to nine tons

When the political scenario of any country starts interfering with the corporate sector, it takes away the entire glory and that is exactly what happened with us.

and are looking forward to get some more movement like that. But keeping in mind the two country’s relationship, people become very apprehensive about moving their cargo through a carrier which belongs to the neighbouring country. India is a very lucrative hub of cargo where so many carriers operate and the competition is so high. Currently, there are around five airlines which operate in the Pakistan sector via Dubai, via Oman, via Tehran, etc. If , in any case our flights get cancelled, we carry the cargo through other flights. So keeping that competition in mind, and also the cost which is much cheaper, we look forward for people to patronise our service. Having said that, relationships play heavy on their minds and it is very difficult to convince them of our services.

What are the destinations that PIA operates from?

From Delhi we have all the flights via Lahore or via Karachi. We operate single sector flight from Karachi- Delhi- Karachi and LahoreDelhi- Lahore. So the sector which we are looking for and where we are good at are the Far East, the Middle East, Saudi Arabia ,and of course, in Europe, we have in London, but

we don’t have cargo going from Pakistan to London. In India we operate from Mumbai and from Delhi.

Any plan to expand your cargo destinations in India?

We look forward to expand provided the government gives us the opportunity. In the domestic front we move at around 30 sectors and internationally we move at around 38 sectors. This is quite an achievement for us.

Of course, we keep having a lot of movement for Nairobi, Kenya, etc.

How far do fluctuating diplomatic relations between the two neighbours affect the cargo operations?

Well, they do to a large extent since exporters and importers of both the countries start having a very aggressive attitude. But there has not been any damage and we look forward to good relations and the moment the relationship becomes normal, the cargo boom will be back for the airlines. The cargo movement will be back on track. If the people of India, who are educated, do not believe in all such things, and if the services are good, there will always be

buyers for such services. It all depends on how well-equipped we are. PIA is going through a procedure of privatisation to shift the management from government to the private sector which will of course benefit the airlines.

What are the various products imported and exported through PIA to and from India?

PIA Cargo transports goods across Pakistan as well as to international destinations.

Pharmaceuticals are mostly exported. In Bombay, we are doing very well in this line and we have the clientele for famous pharmaceutical companies going to Saudi Arabia, Far east, Gulf etc. We uplift pharmaceuticals of around three to five tons on every flight. What comes more is leather because Pakistan is very good in leather we have a big market in India for dental equipment for which Pakistan is good since people there are very good in handicrafts. It also transports meat and vegetables, textiles, paper products, laboratory equipment and postal mail. We also have introduced some vegetables and fruits like Kinoo, mangoes, etc., which are very well sold here.

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Interview

Indian Air Freight Market Faces Tough Competition In a recent visit to India, Alexis Von Hoensbroech, Board Member Product & Sales, Lufthansa Cargo in an interaction with CargoConnect, shares Lufthansa Cargo’s growth story in the Indian market and how in the coming years they plan to expand their hold in the country

Lufthansa Cargo’s capacity is being built up where there is demand to catch up, so does it pose a challenge for a quality ensured in this establishment.

Of course it does. Once you see over capacity in a market it is getting more and more difficult these days to realise the prices we need to finance the superb quality that we aim for.

They anticipate growth and that is why they are building up capacity which would be growth for everybody. Does it also indicate a very positive sentiment?

Of course, if growth comes then you are right. But right now, we see airfreight demand pretty flat worldwide but the capacity is crawling the demand significantly right now. I think in the long run, I am not worried if the general trend continues, airfreight will continue to grow worldwide. But on the short run, this is really a challenge because right now the air freight demand is relatively flat while the capacity is growing. And then, there are some carriers that are growing far-far stronger than the old air freight market and this is creating fight for market shares which is not healthy for any industry.

certain extend. Apart of our capacity, the bellies are fixed but the freighters are of course more flexible. For instance, it would be possible to adopt our capacity in China if necessary. In China, we see shakeups in the stock market; but we do not see yet a large effect on the real economy. The amount you can do is limited, because there are handfuls of large air cargo markets like China, Europe and US, but everyone shifts his capacity to the same speed in the market.

When you cannot react by re-deploying the capacity, then you have to think about reducing capacity. And this is the reason why we decided to temporarily take out 2MD11; we did not take them out forever. Although freighters currently run relatively well, they are the only point where we can manage our capacity. So, we did take these two freighters out. We hope to have them back again n the future but for the time being with a low demand development it is rather beneficial to take out some capacity.

In terms of network, only one of these two aircrafts has been scheduled, and other one was reserved aircraft used for technical and charter demands. We did close down some routes, those which have the least possibility, for example stations like Chongquing in China, Quioto in Ecuador and Bogota in Colombia.

Can we see any additions in India and what As a result of the capacity and massive is the load capacity out of India? What is growth, and negative demand growth, the the growth prospect in? global cargo carriers have to re-deploy First of all, the loads are goods out of India, i.e., 86 per their capacity. At large, it has been men- cent across the whole network on passenger flights and tioned that about 75 per cent of the freight- freighter. As per as commitment of growth in India, we are operating five destinations which already cover 88 er capacity between Europe and Asia Pa- per cent of the international trade market. Its presence cific is on freighters. What are your plans is directly there in Delhi, Mumbai, Bangalore, Hyderabad regarding redeploying the excess capacity and Chennai. These cover 88 per cent of the international freight. As far as remaining 12 per cent is concerned, we which you had in other markets to India?

Of course, we are constantly looking at our network and whenever we see that the demands shift, we can react to a

62 CargoConnect - april 2016

also touch Kolkata, for example, currently we are offline but we do cover from other carriers as well.

Interview

Civil Aviation Policy: The Way Forward in Indian Aviation The National Civil Aviation Policy, which proposes various tax sops and setting up of no-frills airports across the country, is likely to get Cabinet approval by the end of this month.

Tony Tyler, Director General, International Air Transport Association (IATA) in conversation with CargoConnect gives an analytical insight on the Policy and its future prospects

What are your views on the draft National Civil Aviation Policy?

I am very excited about the prospects of Indian aviation.

IATA forecasts that India is going to be the third largest aviation market within ten years. So, clearly it is a good thing that the government has put forward an aviation plan. Certainly, having an aviation plan like this is a step in the right direction; but I am concerned about some aspects. Particularly where it is going to rise cost to the industry, or in some cases, deviate from what are well accepted, tried and tested global principles. I have written to Ashok Gajapati Raju, Minister of Civil Aviation and also the Civil Aviation Secretary about these issues.

What are the major concerns about NCAP? I have three main concerns. The first one concern is the proposed 2 per cent regional connectivity fund levy.

Then, there is an issue about the proposed auctioning of traffic rights. And finally, I am pretty much concerned about the proposal to use dual or multiple till when we are looking at how India’s charges should be regulated.

What are you concerns on the 2 per cent connectivity fund?

The 2 per cent connectivity fund levy is going to add a huge burden of cost to the industry in India. It is already a very expensive place to operate; putting this regional connectivity fund levy on is going to add something like $350 million a year further to additional costs for airlines in India. And rest assured, in the end it is the airlines which are going to pay because of the competitive market and the fact that the amount passengers pay is set in the market. So, it is going to be a real drain and a financial strain on airlines.

64 CargoConnect - april 2016

Why is the auctioning of traffic rights a concern?

I have never heard of the auctioning for traffic rights before.

This is something that no country does. If you auction traffic rights, the consequences will be very hard to predict.

One of them would be the concentrating of the market in a few powerful hands. After all, the only people who will be able to afford to buy traffic rights will be the ones who are making lots of money already. It could be a very anticompetitive move and is unprecedented in world aviation.

Why is IATA so concerned about the hybrid till approach?

The civil aviation policy is one place to determine the hybrid till approach. Airport regulation is a complicated issue which involves a lot of different factors like the rate of return, the sort of till you want to use, the amount of investment required, etc. There are various elements and it is wrong just to take one of them and regulate it as a hybrid till. The AERA should determine what sort of till should be used. Putting it into law and regulation through the Civil Aviation Policy is the wrong approach.

So, what should India do?

India should develop its aviation policy to try to realise the huge potential of this market. Indian aviation will support 19 million jobs and $170 billion in GDP. We see an enormous potential for the airlines and of course, for aviation to play a vital role in connecting the Indian economy to the world. But to do that, the government needs to move forward with the right policy approaches and those policy approaches are the ones that embrace the idea of partnership and deep consultation with the industry because we all want the same in the end. If the government consults the industry and talks to experts, we can do this together.

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“ Warehousing and logistics central to the overall growth of business�

How important is the role of logistics and warehousing for your overall growth?

Easyday has a store base of 200 plus stores across eight states with a plan to grow exponentially over the next three years. Warehousing and logistics is central to the overall growth of the business. At Easyday, we co -create our warehousing and new store strategy to develop the most cost optimised network model to serve our customers. Warehouse and logistics strongly impact both the revenue stream and margin stream. We strongly believe that supply chain plays the pivotal role in delivering top line and bottom line for the grocery retail business and generating value for the customer. A good service level at the store helps in better sales and hence better revenues and at the same time, an optimised supply chain helps in managing margins in an industry where margins are wafer thin.

Being in the grocery retail business Vipul Aggarwal, Vice President – Supply Chain, Bharti Retail Limited, strongly believes that supply chain

How do you manage your warehouse and inventory management systems in terms of creating value for customers?

Warehousing and inventory management systems play the most important role in creating value for customers. We work on Auto Replenishment System (ARS) which runs accurately if we have the right visibility of inventory at warehouses and stores. ARS helps us to keep the optimised inventory between DC and stores. At warehouse, we have Warehouse Management Systems (WMS) which helps in right

plays a pivotal role in delivering top line and bottom line in this business, resulting in generating value addition for customers. In an interview with Roselin Kiro he shares the importance of logistics, supply chain and warehousing for their growth and other innovative practices they use for the smooth flow of goods

66 CargoConnect - april 2016

GST will help in bringing up optimised mega warehouses with the right technology and innovation.

The key lies in bringing in the right technological interventions at the right place.

are the key to deliver productivity and service.

Apart from traditional storage ser vices, warehouses now provide additional services such as merging and breaking up of cargo, packaging, classifying, bar coding, reverse logistics, etc. What are the value added services that you look forward to during the warehousing of your products?

allocation of stocks as per the priority defined, FEFO movement of stocks to store to keep freshness and handheld operations at every task of DC. ARS, along with WMS, are the two most important tools which keep the business running and deliver value to the customer. ARS and WMS help in optimised inventory, service levels at stores and freshness of the products, and hence an optimised supply chain with better inventory leads to creating value for customers. We follow the best in class IT infrastructure.

Is there any unique/specific strategy that you have adopted for a bet ter supply of the products at the right place at the right time?

Strong planning processes, IT support and good warehousing and logistics practices are at the core to provide the right product at the right time in the right quantity at the right place. Along with a clear strategy, disciplined execution is at the strategy level. We believe in creating a dense footprint of stores within a geography which is supported by the Distribution Centre (DC) which can serve this demand. Densification helps in reducing the challenges of a minimum order quantity from the supplier end as well as serving our customers at lower cost from the DC. At the tactical level, we have identified products by sale, pack size,

forecast accuracy and vendor fill rate and accordingly define our inventory strategy at DC i.e. keep them flowing through or keep the inventory at the DC.

There are issues and challenges that every company faces during the warehousing process. How do you overcome them?

Inventory accuracy, right allocation, picking efficiency and FEFO management are some of the key challenges for running smooth warehousing processes. Regular i nventor y aud its w ith i m med iate corrections, strong algorithm in line with business requirement for allocation, right warehouse design and time study of picking and inbuilt IT tool to follow FEFO followed by daily FEFO audits, help in overcoming some of these challenges.

Tell us about the significance of automated warehousing which is in trend in the overall supply chain process.

In retail industry, the need of the hour is continuous improvement and productivity without compromise on quality and service level. This can only be achieved through automated warehousing practices to manage your back-end supply chain. Automated warehousing helps in making the supply chain processes more consistent, reliable and predictable.

Reliability, predictability and consistency

Being in grocery retail industry, one of the biggest challenges we face is the right optimised inventory at stores. Suppliers provide big vendor packs whereas stores need smaller frequent supplies in EACHES which should mirror sales.

There is a huge requirement of break pack and kitting units as per store requirement Additionally, you need reverse logistics to redistribute the mismatched inventories or synergise your logistics network with supplier network.

With the roll-out of GST, there will be a uniform tax regime, and therefore, there is no longer the necessity of having a warehouse in every state where your firm operates. How will this simplify the building of warehouses for the companies?

With GST, warehouses would be built in alignment with customer demand VS regulatory environment. GST will help in bringing up optimised mega warehouses with the right technology and innovation.

With innovation and technology, it will drive productivity to the business and cut down on overheads.

Kelley claims that their High Volume Low Speed (HVLS) fans are of world-class standard and are designed to address many critical aspects in the w arehou s e s . Tell u s your experience of using the HVLS fans.

We have installed Kelley fans at two of our biggest DCs and found a satisfactory response from our operators at the warehouse. We are further planning to work with the Kelley team on how to build in some of the suggestions shared by our operators.

arril 2016 - CargoConnect 67

guest column

“Romanticising Supply Chain” irst, my reason for writing on ‘Romanticising Supply Chain.’

Recently I was on a panel discussion on ‘Logistics’ and my fellow speaker who is a senior professional shared how nobody willingly likes to join this profession since logistics jobs are callous, stoned and thankless. Since I am a logistics aficionado, I retorted with all due respect and wit that ‘being a logistician is a sexy thing,’ and I am proof of it, otherwise, I would not have joined the supply chain profession and rather would have been part of a branding and marketing team. And my young audience cheered me for that.

For long, supply chain has been underappreciated. Till recently, people from C-suites looked at it from the myopic lense of cost saving, but of late they have started to use supply chain as a powerful, strategic tool to address and achieve the company’s mission. Those companies which have understood its gravitas are ahead of the curve in the market. Some such companies are Dell, Amazon, Inditex (Zara) and Apple.

They have all mastered orchestrating the end-to-end supply chain.

Realistically also, supply chain is where the main action happens in a company. It starts from conceptualising of the product and lasts till it reaches the hand of the customer. So if we do the cranial scan of supply chain, it virtually controls everything and that is what makes it paramount.

Without disparaging any function, supply chain is a demi organisation in itself, and has plenty of number crunching, negotiation, procurement, people management, regulatory and compliance responsibilities, customer interactions, managing the everimproving warehouse and transport and now last mile deliveries.

Let us not kid ourselves and accept that supply chain has a gracious impact upon our lives. Just back roll the incident of today morning onto your mind screen.

This morning you got up and ate your

F

Amit Kumar

supply chain is where the main action happens in a company.

It starts from conceptualising of the product and lasts till it reaches the hand of the customer.

68 CargoConnect - april 2016

breakfast, e.g., eggs, milk, bread, fresh fruit, and likewise. After breakfast, you drove your car to work. At your office, you used your computer, perhaps the most latest and updated machine. During your break, you drank your favourite cup of coffee and played with your iPhone. So on, and so forth. You probably take enjoying these products for granted.

But if you take a micro look at how each of these products have been made and eventually delivered to you, you will realise this is nothing less than a miracle. This miracle can be named in two words, ‘Supply Chain.’

Let me stir the pot. Supply chain is beyond and bigger then business boundaries. It has an overreaching impact upon our life. You will agree with my view that supply chain plays an important humanitarian role in supplying emergency logistics specially in events like the devastating earthquake in Nepal, torrential rain in China, during the Olympics, or in the case of a tsunami, tornado or hurricane.

These are the times when supply chain play a vital role and such roles reach beyond top line, bottom line or business line.

As a true craftsman of the supply chain, I have loved the intensity, the artistry and the excitement of it.

Haven’t I said in the beginning- ‘Being a logistician is a Sexy thing.’

(The writer is the Supply Chain Specialist, Amway India Enterprise)

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news

AAI becomes world’s best Service Provider AAI’s persistent efforts to improve the services and passenger facilities at its airports have placed AAI amongst the best service provider in the world. AAI’s four airports are amongst the top five airports in the category of 2 to 5 million passengers per annum across the world.

Based on the results of the survey carried out by the Airports Council International (a global non-profit organisation of airport operators) on Airport Service Quality (ASQ), AAI’s Jaipur Airport has been rated as world’s no.1 airport in the category of 2 to 5 million passengers per annum and Lucknow Airport has been rated as world’s second best airport in the same category. Further, Jaipur Airport has also been rated as the best airport by ‘Regions & Size’ in the Asia Pacific Region in the category of 2 to 5 million passengers per annum. AAI’s Goa and Trivandrum Airports are at 4th & 5th position in the same category. In the category of airports upto 2 million passengers per annum AAI’s Srinagar Airport has been rated as the second best airport in the world. All the 11 airports where ACI’s ASQ survey is carried out AAI’s Airports are rated above the world average i.e. 4.13 on a scale of 5.

Jaipur Airport

Srinagar Airport Goa airport

Srinagar Airport

Lucknow Airport

Trivandrum Airport

70 CargoConnect - april 2016

www.surecommedia.in

VOL VII ISSUE IV MARCH 2016 `20

Postal Registration No.: DL (S)-01/3372/2016-18 Postal at IPMBC on the 4th-5th same month RNI No.: DELENG/2009/31040 Published on the 2nd of the same month

SPECIAL FEATURE

Inland Shipping:

In Search of the Lighthouse

PFT: A FILLIP TO COSTEFFECTIVE LOGISTICS

Budget 2016: Great Expectations

AEO: Securing the Supply Chain

Bonded Trucking: Rough Roads Ahead?

Pharma Logistics: One Mistake Can be Fatal

t

arril 2016 - CargoConnect 71

news

Allcargo to set Logistics Park in Haryana

Turkish Cargo eyes India’s Pharma industry

Allcargo Logistics is planning to set up a logistics park in Jhajjar district of Haryana, mainly to cater to the growing container traffic in northern India. The facility is expected to be operational by 2018, subject to necessary regulatory approvals and rail connectivity. The project will comprise of rail-linked private freight terminal catering to railway cargo movement, free trade warehousing zone, domestic tariff area and other related activities. The company has already identified about 200 acres of freehold agricultural land for developing the said project, which is in close proximity to Dedicated Freight Corridor (DFC).

“With a view to enhance the future growth of Indian business sentiment, we chose to set up a logistics park in Haryana, as it is a preferred industrial and manufacturing destination. We want to offer end-to-end logistics solutions to the customers,” Adarsh Hegde, Executive Director, Allcargo said in a statement.

Turkish Cargo, the dedicated cargo-operating arm of Turkey’s national carrier, had its sights on India’s booming pharmaceutical industry which has emerged as one of the world’s biggest suppliers of generic pharma products. Though he did not exactly quantify the share of the pharmaceutical products in Turkish Cargo’s traffic volume out of India, Halit Anlatan, Vice President (cargo marketing and sales) Turkish Cargo, was bullish about the role of the pharma segment in the overall traffic from India to the rest of the world via the carrier’s national hub in Istanbul.

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Govt decides to sell stake in CONCOR The Indian Government has decided to sell almost five per cent of its stake in logistics firm Container Corporation of India Ltd (CONCOR) through an offer for sale (OFS) recently. The government, which owns 61.79 per cent stake in the company as on December 31,2015, will sell as many as 9.74 million shares through OFS, a stock exchange filing said. CONCOR manages a network of 62 ICDs and CFS.The firm provides services such as inland transport by rail for containers, management of port terminals and air cargo complexes.

Ripley bags Haldia port contract Ripley & Co has bagged the contract to handle cargo at the two contentious berths of Haldia port, capping a three-year struggle to make the port as one of the most mechanised in the country. The Calcutta Port Trust, which operates the Haldia port, recently issued a letter of intent to Ripley to move cargo on shore in berths 2 and 8. The CPT will also award a contract for more cranes for berth 13 next week, making the entire movement of bulk cargo at the port mechanised and driving down the operational cost for users. Following this, seven berths will be equipped with mobile harbour cranes to move cargo from ship-to-shore.

Since 2012, CPT had floated several rounds of tenders to fill up the vacuum to re-install cranes and also find an operator to handle shore operations. Ripley quoted Rs. 104.02 per ton for work, beating AM Enterprise, the only other operator in the fray and acquired the contract.

news

ACCAI Bangalore region elects new chairman G.Balaraju, Chairman and Managing Director of Sindhu Cargo Services (P) Limited – Bangalore has been elected unanimously as ACCAI Chairman Bangalore Region.

Balaraju is in the business of import/ export logistics for more than 29 years and has vast experience. He is well-known in the trade and expected to contribute immensely to the new profile at ACCAI, Bangalore. He also holds the position of Hon.President at Air Cargo Club, Bangalore.

Balaraju is well-supported by young team consisting of V Chandra kumar, Hon Secretary and S Magesh, Hon Treasurer, V Chandra Kumar – Branch Head and International Business Development Manager of Shaan’s Cargo (P) Ltd,to name a few.

India in urgent need to increase shipping fleet India’s troubled shipping sector is in a dire need to change its fleet, which has as many as 42 per cent of the vessels that have crossed 20 years of age. In addition, 12 per cent of the fleet is in the 15-19 years bracket, while the ship-breaking sector continues to be in turmoil, the Economic Survey for 2015-16. “The shipping sector has been passing through tumultuous waters in recent years. There is urgent need to increase India’s shipping fleet. With asset prices currently being low, the time is right to acquire new generation ships to replace ageing ones,” it said.

Govt relaxes cabotage rules for transshipment ports Government has relaxed cabotage restrictions for ports which transship at least 50 per cent of the container handled by them. The cabotage relaxation will enable shipping lines to consolidate EXIM and empty containers at transshipment ports in India for onward transportation to destination ports by main shipping lines.

Now foreign vessels can also transport EXIM and empty containers from any port in India to transshipment port and vice versa, in addition to Indian vessels.

news

Ports see growth via car cargo route

Two port projects await cabinet approval

A recent move by Hyundai to transport cars through sea for the domestic market has cheered ports.

This virtually unlocks a huge potential for coastal shipping in India, especially for automobile cargo.

Hyundai Motor India Ltd recently shipped 800 cars made at its Chennai plant to its markets in western India using a roll on-roll off vessel. The cargo was loaded at Chennai Port and it reached Pipavav Port in Gujarat last week.

India has already established itself as a major automobile manufacturing hub, with most vehicles sold in the country being made domestically. This necessitates huge cargo movement (by rail and road networks) from the manufacturing clusters (in and around Chennai, Pune, Gujarat and the National Capital Region) to the consumption centres spread across the country.

Two mega port projects entailing an initial investment of approximately `15,000 crore are likely to get cabinet approval soon. The ports are proposed to be built in Colachel in Tamil Nadu and Dahanu in Maharashtra under PPP model. The Colachel port is being envisaged as a southern transhipment gateway for the country. Sources said that the construction of the port will be completed in three phases, at a total cost of `21,000 crore and total capacity of about 50 million tons.

ATSG confirms Amazon freighter deal Air Transport Services Group (ATSG) recently announced agreements with Amazon Fulfilment Services, an affiliate of Amazon.com, to operate an air cargo network of 20 Boeing freighters to serve Amazon customers in the US. “Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customised air cargo network can be a strong supplement to existing transportation and distribution resources,” said Joe Hete, President, ATSG.

WCA members get free access to WIN e-AWB platform Independent forwarder members of the WCA network can now have free access to WIN’s e-Air Waybill platform for the remainder of this year. The WIN platform, designed for independent cargo agents and which connects to over 90 airlines, will now allow WCA members to submit any IATA Resolution e-AWB free of charge, as well as make electronic bookings and receive tracking alerts.

“We are at a tipping point, with the level of e-AWB adoption in the industry approaching the halfway mark,” said John DeBenedette, MD, WIN.

news

Major Logistics Centre to come up in Amaravati The Andhra Pradesh government has decided to develop a major logistics centre in the new capital region, Amaravati. The proposed centre, which will be based on rail, road, air and water transport connectivity, is likely to come up in Tadepallemandal in Guntur district. Nulakapeta, Bapujinagar and Undavalli areas of Tadepalllimandal are likely to be picked by the panel for the dream project, according to sources.

The State government set up a committee to finalise the concept, time frame, financial implications as well as PPP model for the proposed centre. Former IAS officer RC Sinha was appointed chairman of the panel while former state PWD secretary of Gujarat, Jamdhar and Ex Transportation & Communication Head CIDICO & MADC RK Jha were some of its members.

Kerala Govt slashes container handling charges As part of the promotion of coastal shipping activities in non-major ports of the state, the Kerala Government has slashed the container handling charges at some ports by 50 per cent. The ports to benefit from the move include Vizhinjam, Kollam, Beypore and Azheekkal. The handling charges for loaded containers not exceeding 20 feet in length has been reduced to `1,000 from `2,000 and for containers exceeding 20 feet, the rate has been slashed from `2,850 to `1,425. The handling charges for empty containers have also been slashed by 50 per cent.

Maritime summit to focus on coastal, inland shipping The Union Shipping Ministry will showcase projects worth $18 billion in the Maritime India Summit 2016, which would be held from April 14 to 16 in Mumbai.

Delegates from 57 countries are expected attend the event, which is being jointly organised by CII and Ministry. Shipping Minister Nitin Gadkari said that the focus of the summit would be on inland and coastal shipping, which is offering huge opportunities for shipping companies.

news

Cathay Pacific’s new Livery makes debut on freighter fleet

Planned Colachel port could recapture India transshipment cargo

Cathay Pacific Airways welcomed its first freighter showcasing the airline’s brand new livery. The freshly painted freighter, a Boeing 747-400ERF (Extended Range Freighter) arrived in Hong Kong from the HAECO facility in Xiamen on 19 January.

The new livery comprises three key design elements: the incorporation of the updated and streamlined brushwing; a simplification of the colour palette to Cathay Pacific green, grey, and white; and a more prominent display of the Cathay Pacific wordmark and brushwing. These updates are most evident on three areas of the aircraft: the nose, the fuselage, and the tail. Overall, these elements give a more contemporary feel to the livery, which is better aligned with the direction of Cathay Pacific’s overall brand redesign.

A new deep-sea container transshipment terminal at Colachel on the southwestern coast of India should be able to capture a significant portion of domestic cargo currently relayed over other hub ports in the region, especially Sri Lanka’s Port of Colombo, a preliminary feasibility study for the port project shows.

A report by Typsa Group and Boston Consulting Group, two global management consulting firms, found that transshipment traffic via the proposed facility should go up from 700,000 twenty-foot-equivalent units in 2020 to 2.8 million TEUs by 2025 and to 3.9 million TEUs by 2030.

The consulting consortium was hired by V.O. Chidambaranar Port Trust, also known as Tuticorin, to determine the location and design of the new terminal, as well as to evaluate the long-term viability of the project.

The study recommended that the project be set up at Enayam, near Colachel, which offers a natural water depth of 20 meters (about 66 feet) and is close to the busy Suez route.

“The port will mainly accommodate containers and operate largely as a hub, leveraging its location on the international trade route between countries in Southeast Asia, the Middle East and Europe,” the feasibility report said.

India, US to pact to share military logistics India and the United States are closing in on an agreement to share military logistics after 12 years of talks, officials said, a sign of strengthening defence ties between the countries as China becomes increasingly assertive.

The United States has emerged as India’s top arms source after years of dominance by Russia, and holds more joint exercises with it than any other country. It is in talks with New Delhi to help build its largest aircraft carrier in the biggest military collaboration to date, a move that will bolster the Indian navy’s strength as China expands its reach in the Indian Ocean.

After years of foot-dragging by previous governments over fears that the logistics agreement would draw India into a binding commitment to support the United States in war, Prime Minister Narendra Modi’s administration has signaled a desire to move ahead with the Logistics Support Agreement (LSA). That would allow the two militaries to use each other’s land, air and naval bases for resupplies, repair and rest, officials said in a statement.

news

Bangladesh, India launch direct cargo shipments For the first time in their history, neighbours Bangladesh and India launched direct cargo services that would enable goods shipped by sea to reach each other’s ports in a maximum of four days. Previously, goods sent from India took more than three weeks to reach Bangladesh’s Chittagong or Mongla ports because shipments first had to pass through Colombo or Singapore. Businessmen said the direct routes would also boost trade between India and Bangladesh and allow India to ship products to its seven north-eastern states via Chittagong port. “The coastal shipping is a good move to increase trade in the sub-region comprising Bangladesh, landlocked north-eastern states of India, Nepal and Bhutan,” Q K Ahmad, Former President, Bangladesh Economic Association told in a statement.

Perishables to get fast clearance at JNPT Vegetable and fruit exporters across the State have a reason to cheer as the Maharashtra Government has decided to give immediate clearance to their containers for export at the Jawaharlal Nehru Port Trust (JNPT) in Mumbai. At present, these containers have to wait for at least four days for their turn.

The decision to facilitate and boost export of vegetables and fruits from the State is expected to be implemented soon. Milind Akare, Managing Director, Maharashtra State Agriculture Marketing Board (MSAMB), confirmed the development during an agricultural workshop in the city.

At present, there is heavy traffic congestion at the JNPT because of which the containers for sea export purpose have to remain in a queue for around four-five days. The State exports around 80 per cent of the total vegetables and fruits from the Country. Around 100 containers of grapes from Nashik district reach the JNPT daily for export by sea during the harvest season. Moreover, onions, pomegranates and other fruits as well as vegetables are exported at large from Nashik and other districts in the State.

Kolhapur-Vaibhavwadi may get port connect The Kolhapur-Vaibhavwadi railway line may be connected to Vijaydurg port on the Konkan coast. Railway minister Suresh Prabhu recently said that he will follow up on the proposed Kolhapur-Vaibhavwadi railway line to be connected with Vijaydurg port.

New highway along coastline to promote trade Nellore and other parts of south coastal Andhra Pradesh are going to have dedicated beach-cum-coastal highway as part of the Sagarmala Project, which is aimed at promoting port-led direct and indirect development and also to provide infrastructure to transport goods. The Union government had considered Krishnapatnam port, which would be useful for movement of raw materials and finished goods, while approving Sagarmala Project from Krishnapatnam to Naidupet along the Buckingham Canal.

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news

CSIA voted Best Airport in India Mumbai’s Chhatrapati Shivaji International Airport (CSIA) has been voted as the Best Airport in India and Central Asia at the Skytrax World Airport Awards held at the Passenger Terminal Expo in Cologne, Germany recently.

Attended by CEOs, Presidents and senior management of airports from around the world, the awards ceremony recognised product and service quality in the world airport industry and provided further testimony to CSIA’s continued excellence in customer service. The results reflect the world’s best-in-class airports, as appraised by the passengers themselves in an online survey.

The Skytrax World Airport Award is the latest feather in CSIA’s cap, which already won several prestigious awards over the past two years for its structure, design and world-class facilities and services.

Ekart ties up with Apollo Pharmacy Ekart, the logistics unit of Flipkart, is rolling out two new initiatives aimed at improving efficiency and capacity utilisation. It has tied up with Apollo Pharmacy for delivery and pickup of products like smartphones and apparel ordered by customers.

The unit is also launching a Fulfilled by Ekart (FBE) initiative to tap merchants selling goods on other etailers, which will be a big area of growth in future, according to a top executive.

Over the last three months, Ekart has tied up with over 300 Apollo Pharmacy outlets, delivery personnel can now drop-off shipments at these locations, offering customers the option to pick it up at a convenient time. Ekart plans to expand this initiative to a 1,000 stores. While this offers more options to customers, it will also help Flipkart solve the problem of failed deliveries. “About 15 per cent of pan-India deliveries at any point of time are not going through because customers are not available,” said Neeraj Aggarwal, senior director, last-mile operations at Ekart.

Half of India’s entry points yet to adopt paperless platform According to the World Bank, India fares poorly on “trading across borders” More than half of India’s ports and customs points are yet to be covered by Electronic Data Interchange (EDI), a trade facilitation system, even 22 years after the project began, according to official sources. There are as many as 298 ports and customs points (excluding those in the Special Economic Zones) and over half of these are not covered by the EDI or the ‘paperless’ international trading platform.

Concerned that only 132 of the 298 ports and customs points are on the EDI platform, the commerce department recently asked the revenue department to formulate an action plan soon to help link the remaining 166 also to the EDI gateway at the earliest.

BlackBuck aims to be India’s largest freight transporter BlackBuck is looking to become the largest player in India’s intercity road transport space within the next year. The seven monthold start-up has so far raised $30 million in venture capital funding and says it already aggregates over 10,000 trucks on its platform.

BlackBuck is the Uber for the trucking industry, bringing together fleet owners and customers, while the cost of the trip varies based on the demand and supply in real time. Rather than focus on the booming intra-city and hyperlocal logistics space, the firm has set its eyes on the B2B intercity trucking industry. “A lot of supply chains really don’t penetrate to the consumer, so 95 per cent of the overall road transport market is made up of intercity logistics.

Hyperlocal and intracity transportation which is often consumer facing only makes up the balance 5 per cent,” says Rajesh Yabaji, Co-Founder and CEO, BlackBuck.

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appointments

Lufthansa Cargo announces key management appointments Lufthansa Cargo has appointed new area managers for the regions Europe, Africa and America as well as new Head of Global Handling Management.

As of June 1, 2016, Achim Martinka will be in charge of sales and handling in the region Europe & Africa. Since October 2010 Martinka has been in charge of Lufthansa Cargo’s activities in North and South America as Vice President Area Management. Previously, he had been responsible for France, Switzerland and the Benelux countries as Regional Director Sales and Handling.

Lufthansa Cargo manager, Bernhard Kindelbacher, will move to Atlanta to take over as Head of Area Management as of June 1, 2016.

Since 2010 Kindelbacher has been in charge of Strategy, Subsidiaries and Business Development at Lufthansa Cargo.

In that position, he is responsible for strategy development and equity investment management as well as cooperation agreements and the cargo airline’s longterm fleet strategy. From 2000 to 2004, he had already worked for Lufthansa Cargo in the USA.

As of April 1, 2016, Dr Jan-Wilhelm Breithaupt will be the cargo airline’s new Director of Global Handling Management. The holder of a doctorate in engineering has been with Lufthansa Cargo since July 2010 and is currently in charge of Global Handling Development and Solutions. Breithaupt had previously served as Director ,Global Passenger Processes with responsibility for the digitalisation of worldwide check-in and gate processes for Lufthansa Passage. Breithaupt succeeds Thilo Schäfer, who had left Lufthansa Cargo at his own request in late February.

New CEO for DB

Schenker in Asia Pacific Ditlev Ingemann Blicher, 44, is appointed Chief Executive Officer of Asia Pacific for DB Schenker with effect from May 9 2016, and will be based at the Regional Head Office in Singapore.

Blicher, a Danish citizen, joins DB Schenker from UTi Worldwide, where he was most recently President of Asia Pacific & Europe; Co-President Global Freight Forwarding and Executive Board Member.

Blicher takes over from Jochen Thewes, who is now the Global CEO for DB Schenker.

Blicher has over a decade of experience based in Asia and will now oversee the 13,000 strong employees across an extensive network of more than 400 locations covering 20 countries throughout Asia Pacific. He received his Bachelor’s degree in Business Administration from Northwood University and completed executive studies at Oxford University.

A handbook on Warehousing- packed with information, data, trends, projections, views/articles by senior industry professionals, columns by leading research companies in an easy read format. Hard bound, aesthetically designed with superior publishing quality.

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events

ICC organises 6th edition of Supply Chain Logistics Summit & Excellence Awards

ICC recently organised the sixth edition of annual Supply Chain Logistics Summit and Excellence Awards in the capital. The summit was attended by around 150 delegates, comprising logistics and supply chain professionals, bankers and senior bureaucrats from various ministries from across the world. The summit was inaugurated by the Union Cabinet Minister of Roads, Transport, Highways and Shipping, Nitin Gadkari.

Yaduvendra Mathur, Chairman & Managing Director, Exim Bank was ‘Guest of Honour’ and Dr Ashok Lahiri, Chairman-High Powered Committee on Taxation-Ministry of Finance; Govt of India and Chair of newly found Bandhan Bank was a Special Guest. The awards for excellence in supply chain and logistics were distributed by the Guest of Honour, Sanjay Mitra, IAS; Secretary to Govt of India on Roadways to the companies, which are associated in various spheres of supply chain and logistics.

APM collaborates with BARC APM Terminals Inland Services, South Asia has collaborated with Bhabha Atomic Research Centre (BARC) to address the long standing need of a safer, more efficient and environment friendly in-situ biodegradation technique for treating perishable cargo. The logistics industry, especially CFS and ICDs, witness frequent cases of abandonment of containers carrying perishable cargo.

“This initiative has the potential to make a remarkable difference to the environment and we are glad to be able to make a positive difference. This wouldn’t have been possible without the support from BARC and we are extremely thankful to his team,” says Ajit Venkataraman, Managing Director, APM Terminals India Pvt Ltd.

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DB Schenker receives ‘Int. Award for Excellence in Air Cargo’ Schenker India Pvt Ltd; part of global logistics service provider DB Schenker, has received the “International Award for Excellence in Air Cargo” recently.

“Our customers are our drivers to excel in freight and supply chain solutions. This award is an affirmation of our continuous efforts to serve the customer with the best in class solutions,” said Oliver Bohm, CEO Schenker India Pvt Ltd. “We are honored by this recognition from the industry and would like to dedicate this to our customers and employees in India, without which this would not have been possible,” he added.

events

GVK MIAL wins two prestigious cargo awards GVK Mumbai International Airport Private Limited (MIAL) bagged the ‘Cargo Airport of the Year –India’ international award for the second consecutive year at the prestigious STAT Trade Times International Awards for excellence in air cargo operations. The award was presented at the ‘Air Cargo India 2016’ convention held in Mumbai recently.

MIAL also recently won the ‘Air Cargo Terminal 2014-15’ award at the prestigious Economic Times Logistics Awards 2016, as recognition for Excellence in Indian Logistics Industry.

Lufthansa Cargo honours partners

CRWC provides sanitary facility

Lufthansa Cargo held its first ‘Supplier Awards’ ceremony for service partners in Berlin recently. With these awards the cargo airline wants to thank the winners for their outstanding achievements in the quest for quality. Awards were presented in the two categories: ‘Best Customer Solution’ and ‘Best Performance.’ And there were further awards for best cooperation in Lufthansa Cargo’s four business regions: Germany, Europe & Africa, America and Asia-Pacific as well as at its hubs in Munich and Frankfurt. There was also a special award for Best Software Implementation.

“At Lufthansa Cargo every effort goes into offering our customers the very finest quality. This is only possible thanks to a close and trustful cooperation with our many service partners.

They see themselves as part of the Lufthansa family and we have a common understanding of quality and performance. We are extremely proud of our powerful network and expressly wish to thank all of our suppliers. But even among the best some are simply outstanding and deserve the Supplier Award in its different categories,” said Thomas Sonntag, Vice President Procurement & Infrastructure, Lufthansa Cargo.

Central Railside Warehouse Company Ltd (CRWC) has under its corporate social responsibility initiative, identified school in Langra village, Haryana, nearly 50 kms from Delhi, still lacking basic sanitation facilities and constructed a toilet block with six toilets and washing facility. The facility has been developed with the help of implementing agency- school authorities in the function held at the school in the presence of schoolchildren and the villagers.

arril 2016 - CargoConnect 83

events

Celebi inaugurates Gems & Jewellery Facility & Import Cold Storage Celebi Delhi Cargo Terminal recently inaugurated New Import Cold Storage Facility and Gems and Jewellery facilities for the users.

Ananya Ray, Member Central Board of Excise & Customs, was present as chief guest to inaugurate the facilities. She was accompanied by Kamal Jyoti – Chief Commissioner Customs and S.R Baruah – Commissioner of Customs along with other customs officials, trade partners, airlines and management and staff of Celebi. Ramesh Mamidala, CEO-Celebi Delhi Cargo Terminal highlighted the facilities

• Freezer Room of approx. 81 sqm area with temperature range = -2 to -20oC. • Cold Room of approx. 80 sqm area with temperature range = +2 to +8oC The above is in addition to the existing cold rooms of 140 sqm available in Import area.

Gems & Jewellery Facility

1) A facility for Gems & Jewellery customers for EDI assessment of precious cargo.

2) The facility has been set up at an area of approximately 50 sqm with a capacity to process more than 100 shipments per day.

3) 24X7 Strong Room facility 4) 24X7 Security under CCTV monitoring 5) 24X7 Dedicated Helpdesk

Basic Features of the Import Cold Storage Facility: • Capacity to handle 200 MT of cargo on a daily basis.

Kale wins ‘Best IT Solution Provider’

Air India unison with ALAFCO

Maini Materials Movement recently participated and exhibited its material handling and warehousing solutions at CII MHE summit 2015 at Bombay Convention and Exhibition Centre (BCEC) in Mumbai.

Yale Maini Reach truck and Diesel forklift truck along with the Armes Maini storage and racking modules were on display showcasing comprehensive warehousing solutions to the visitors.

The group has a strategic alliance with the NACCO Materials Handling Group (NMHG); USA for the sale and marketing of the Yale brand of counterbalance forklift trucks, reach trucks, order pickers, very narrow aisle equipment and the manufacture of the RCF series and MR series in India. This partnership is the pathway to the amalgamation of latest technology and manufacturing practices in the field of materials handling equipment in India. Armes Maini (JV between Maini Group and Ferretto Group, Italy) offers comprehensive storage solutions for a large spectrum of storage requirements across industry verticals and is a leading brand in Indian storage industry.

Air India signs an agreement with ALAFCO, a Kuwaitbased leasing company for leasing 14 Airbus A320neo aircraft. The delivery of aircraft is likely to start from early next year. The historic agreement was signed between Ashwani Lohani, CMD, Air India and Ahmad Al Zabin, Vice Chairman and CEO, ALAFCO in the presence of Paul Abanga, CEO, CFM and Philippe Combet, Vice President Sales and his team from Airbus. This induction will augment Air India’s capacity in domestic market. Air India already has strong infrastructure maintenance facilities for the Airbus A320 family.

84 CargoConnect - april 2016

events

Maini Materials Movement launches 25-ton Electric Tow Tug Maini Materials Movement (MMM) recently launched its 25-ton Electric Tow Tug for aviation support applications. The 25-ton Electric Tow Tug is designed to tow small aircraft, ground support equipment, baggage trolleys and air cargo containers, among others. The Tug has been tested rigorously in the Indian environment at various airports and military bases. MMM is proud to be the first mover in this product range as a ‘Make in India’ initiative and will soon launch the 15-ton class of tow tugs. G V Sanjay Reddy, Vice Chairman, GVK said, “I am happy and proud to know that Maini has come up with electric tug for the aviation industry. It shows that good Indian companies can come up with fantastic design and compete with the best in the world.”

Sandeep Maini, Managing Director, Maini Materials Movement Pvt Ltd said, “MMM has many firsts to its credit in the Electric Equipment space. We believe, today an indigenous electric tug is one of the most needed equipment for the Indian aviation sector. We have recognised the severe impact of long lead times for spares and after-sales service in this product range and have leveraged our present pan-India after sales network to mitigate this pain point of domestic stakeholders.”

Panasonic organises Bloggers Meet

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International Exhibitions

Panasonic India recently organised ‘Panasonic Toughbook Bloggers Meet’ at Ambience Island, Gurgaon. The event showcased an exclusive preview of the Toughbook and Toughpad portfolio as a part of its effort to focus on product differentiation. Gunjan Sachdev, General Manager & National Business Head, Toughbook Division, Kosuke Kagawa, Assistant Manager-Asia Pacific, AVC Networks Company and Yoshihiro Nakanishi, General Manager, Toughbook Business, Panasonic were present on the occasion and interacted with the audience.

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PEOPLE CONNECT

Merchant Navy Helped “understand customer needs and vision better�

A very confident Capt Naresh Kundlas, General Manager-Business Development, Wallenius Wilhelmsen Logistics (India) Private Ltd switched over from shore to sea after a fruitful 11-year-old stint with the Merchant Navy. A Formula 1 fan and also a music buff, Kundlas shares with Dr Kirti Mudgil Pathak his professional challenges and the high goals he aspires for the future. Excerpts: Merchant Navy & Current Job It is great. I feel that working in Merchant Navy has exposed me to most aspects of Operations and I have also gained commercial knowledge which has allowed me to understand customer needs and vision better specially their concerns for factory to dealer network.

Switching Over I had started my sea career with WWL and sailed for 11 long years. I thoroughly enjoyed the Scandinavian working culture and when I got the opportunity, I did not hesitate to grab it with both hands.

Extracurricular Activities Formula 1 is close to my heart and I am simply mesmerised with the on field action of speed and the tremendous technology which goes with F1. I listen to soft music to relax.

Biggest Challenge The biggest challenge faced was when I was switching from sea to shore in 2009.

But with all professional support from the immediate team and family, I was able to overcome the same very soon.

Future Goals I am still very young so no question of STILL. Frankly, I would like to dedicate the latter half of my life to the weak and the underprivileged. On the professional front, I would like to be known as a respectable person in the industry.

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