CargoConnect February 2017 by Surecom Media

www.surecommedia.in

VOL VIII ISSUE III FEBRUARY 2017 `20

Postal Registration No.: DL (S)-01/3372/2016-2018 WPP No.: U(S)-81/2016-2018 Posted at NDPSO on the 4th-5th same month RNI No.: DELENG/2009/31040 Published on the 2nd of the same month

New Era Logistics

Contract Logistics in India

Rise of Greener Airport Movement

Air Freight Stations

Contents

Volume VIII • Issue III • february 2017

Editor and Publisher Smiti Suri Principal Correspondent Ritika Arora Bhola Feature Writer Tariq Ahmed Nicin Varghese Gaurav Dubey Director Marketing Ajeet Kumar

16 COVER STORY

The Outbound Trend Rushes To Meet Investment

SPECIAL FEATURE

New Era Logistics: The Urban Version

FEATURE

INTERVIEW

Asst Manager Marketing Asad Mohammad Marketing Executive Rajesh Basu Mehuli Choudhury

Mohammed Al Musafir, Senior Vice President – Commercial Cargo, Oman Air .........................60

Administration Vipin Marwah

T Manivannan and A Venkataraman, Vice Presidents, ProConnect ............................62

Senior Designer & Visualiser Shaique Ahmad

Samir J Shah, Chairman, FFFAI .....................64 Contract Logistics in India: In dire need of positive disruption ............36

Manager Marketing Niti Chauhan

Bhaven Shah, Co-founder, FreightBazaar.com .........................................65

NEWS ..................................70-78 shippers speak ....................66

Designer & Visualiser Mayank Bhatnagar

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

GUEST COLUMN .......................68 Rise of Greener Airport Movement .......................................48

profile ...................................79 EVENTS ................................80-84 UPCOMING EVENTS .................85

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

appoinments ........................85 SURECOM MEDIA

PEOPLE CONNECT

Johnson MRV, CSO, KION India Pvt Ltd .....86 Air Freight Stations: Is India Lagging Behind? ...........................................54

TOTAL PAGES: 88 (inclusive of cover)

6/31-B, Jangpura-B, New Delhi-110014 Tel: +91-11-24373365, 24373465 Mob: 9711383365, 9810962016 Email: cargoconnect@gmail.com info@surecommedia.in Website: www.surecommedia.in

Upfront Third Party Logistics (3PL)

3.5%

market is expected to grow at a CAGR of by 2024 Research Report by Hexa Research Ministry of Railways has come up with Mission 41k to save `41.000 crore in the next decade in Railways’ energy costs. Along with implementing comprehensive strategy with the participation of various stakeholders, there is a need to take advantage of regulatory frameworks, and look at new technologies.”

Suresh Prabhu, Minister of Railways

Dr Guruprasad Mohapatra Chairman, Airport Authority of India (AAI)

“Airports Authority of India will focus on cargo to increase revenues and has formed a separate entity or subsidiary for the purpose with an initial capital of `25 crore.”

the newly appointed Secretary General of TIACA

“I have to give credit to the advancement of the electronic documentation at many airlines and airports, as well as in other units of the supply chain. This innovation will evolve, creating a larger global footprint, and modify itself, adjusting to maturing global requirements and local (sometimes restrictive) conditions”.

CP Gurnani CEO, Tech Mahindra FEBRUARY 2017 CargoConnect - february

During the first eight months of the current financial year, passenger traffic has grown 19 per cent, aircraft traffic has grown by 15 per cent and cargo traffic has grown by nine per cent, according to the report.

Vladimir D Zubkov

“Skills required for tomorrow are very different and it can be an opportunity. But if we don’t adopt and change, every opportunity can be a threat, too. We will have to change; otherwise we won’t be ready with right skills.”

Note ban pulls down air cargo trafffic by 12% in November: ICRA

Abhishek Chakraborty Executive Director, DTDC Express Limited “This budget will be crucial in terms of understanding and getting clarity on the implementation of the GST especially over the first two quarters in FY17-18. Strengthening of all IT related infrastructure and projects will be a key to extract the best out of the entire demonetization drive. It will be great to have the Govt take concrete measures to ensure a secure IT infrastructure for rapid technology adoption to empower citizens to go digital. Lastly, measures that will increase operational efficiencies such as infrastructure development and boost trade is what we are hopeful for.’ ’

SPECIAL feature

New Era Logistics: The Urban Version City logistics aggregation aims to reduce the nuisances associated with freight transportation while supporting the sustainable development of urban areas. It proceeds generally through the coordination of shippers, carriers, and movements and the consolidation of loads of different customers and carriers into the same environmentfriendly vehicles. Nicin Varghese, with the help of some aggregation startup companies, analyses the trends, benefits and challenges in this emerging sector.

CargoConnect - FEBRUARY 2017

SPECIAL feature he transportation of goods constitute a major enabling factor for most economic and social activities taking place in urban areas. City logistics aggregators are expected to offer high quality, reasonably priced delivery services in the environment of congested urban areas. The role of city logistics aggregators have become more and more important in these recent years, since just-in-time concepts have found their way into complex supply chains. This is reflected by challenging restrictions

consolidated into the same “green” vehicles. The term ‘logistics aggregation’ encompasses these ideas and goals and explicitly refers to the optimisation of such advanced urban freight transportation systems.

What is Aggregation? Logistics is currently understood to target the analysis, planning, and management of integrated and coordinated physical, informational, and decisional flows within a potentially multi-partner value network.

Aggregation (consolidation) of supply: Aggregation of supply means, when the aggregated demand is presented in a consolidated way to the market, a single supplier, or fewer suppliers than before, may respond and make contract – leading to a supply base for new requirement that is rationalised to a greater extent than previously. Indeed, in many cases, this is a likely market response to aggregated demand presented in a consolidated way to the market. Ag g regat ion of dema nd need not necessarily lead to aggregation of supply, and steps can be taken to specify requirements in such a way as to encourage suppliers to bid for distinct elements of the requirement. Whether or not to do this would depend on features of your requirement and organ isation, includ ing the costs of letting and managing contracts, but also on the structure and properties of the market. For example, you may decide after having considered the potential impact of aggregation on the structure of the market, that it would not be beneficial to long-term competition to aggregate or bundle all requirements together in a way that results in sourcing from a single supplier.

Is There a Need for Aggregation? The fundamental idea underlying the logistics aggregation strategy is that one must stop considering each shipment, firm, and vehicle individually; rather, one should consider them as components of an integrated logistics system for delivery in terms of tight-delivery time windows. Furthermore, city logistics aggregators are often the only physical and legal activity perceived by the customer, leading to increasing importance of reliability and service quality of delivery. Online retail, for example, makes consumers believe that goods are available 24x7 (at all times, in almost no time, at almost any cost), but delivery concepts are actually very demanding. The fundamental idea underlying the logistics aggregation strategy is that one must stop considering each shipment, firm, and vehicle individually; rather, one should consider them as components of an integrated logistics system, where shippers, carriers, and movements are coordinated and loads of different customers and carriers are

Logistics aggregation can be termed as both aggregation (coordination) of demand and aggregation (consolidation of supply). Aggregation (coordination) of demand: • Analysing historical purchased data to provide the management necessary information to assess purchasing practices and trends. • Drawing together information on common or similar current or future requirements within an organisation, and with other organisations. • Assessing the potential for collaborating with other business units within an organisation, or with other organisations, and agreeing to present these requirements in a coordinated way to the market.

Yes, there is! In this day and age of technology, the logistics industry in India needs to undergo fundamental changes in order to be more efficient and more advanced in every context. City logistics aggregation is a way for achieving advancement in the industry. The concept is still evolving and in the path of betterment. There are some potential advantages analysed over the concept of logistics aggregation.

1. Better management of information through aggregation of demand The a g g r e gat ion of d e m a nd c a n deliver benefits through better quality management information as well as providing opportunities for aggregating supply. Aggregation of demand can also allow price benchmarking within an organisation and with others in the market. Aggregating demand can enable more consistent application of best practice, and can reduce the procurement costs associated with gathering price and

FEBRUARY 2017 - CargoConnect

SPECIAL feature How trucks impact the urban people with respect to traffic and pollution is insignificant compared to the overall vehicles plying in any city. However, the Fortigo Network will provide a significant improvement to the quality of life of the driver with the secure parking and rest points” Anjani Mandal, co-founder and CEO, Fortigo Network

market information. It can also create opportunities for learning, through collaboration with other organisations.

2. Greater leverage Aggregation may facilitate improved management of suppliers at a strategic level – for example, by enabling buyers to discern patterns and raise issues in a coordinated way at senior level in companies. Aggregating requirements ca n a lso strengthen depa r tments’ negotiating position in contracting with their suppliers. The ability to realise these benefits depends upon the competence of the buyers and contract managers.

3. Lower prices through reduced production costs Opportunities to achieve economies of scale can be exploited, including enabling smaller organisations to benefit from the same advantageous deals achieved by larger ones if the contract is set up to allow multi-access. However, it is important to understand how the potential for economies of scale varies between different markets.

4. Lower transaction costs

10 CargoConnect - FEBRUARY 2017

Aggregation across or within departments can simplify the tendering process leading to reduced procurement costs for buyers and reduced bidding costs for suppliers. Reduced project management and contract management costs can be achieved – as long as project managers, negotiators and contract managers are sufficiently skilled and adequately resourced. Process savings can free up (scarce) front line procurement staff to concentrate on the most strategically important issues.

5. Better management of the market Aggregation of demand can allow capacity constraints in the market to be identified and managed across governments. There may be potential to transfer more risk to suppliers – which may result in better certainty around cost and delivery (as long as the right risks are transferred). Aggregation can result in simplified stock management and logistics, placing responsibility with a single supplier.

6. Better management of the supply chain Ag gregation (or more speci fica l ly

bundling) may place the responsibility for managing the supply chain with a prime contractor. In some cases, this may result in better supply chain management and overall value for money. There may be opportunities for exploiting economies of scope through bundling. Economies of scope occur where there are significant costs common to different goods or services in a supply chain. So, it makes sense for these to be integrated within the same firm. With the advent of mobile, social and cloud technologies, customer expectations continue to increase. More than ever, customers dema nd a more sea m less experience. For many businesses, customer ex perience is the new battlefield, a competitive advantage that attracts and keeps customers. The direct-to-consumer model gives companies an opportunity to build their brand relationship with customers. City logistics aggregation can help to increase direct to consumer deliveries. Though a little challenging, many companies consider this as an opportunity for betterment. Pranav Goel, co-founder and CEO, Porter says, “Many companies are trying to reduce delivery cost through directto-consumer deliveries. This can be achieved only by eliminating the inefficiencies in the value chain which have traditionally resulted in disproportionate cost inflation. Porter’s efficient routing engine along with its intelligent flagging and monitoring system enables superior control over various events and provides optimisation solutions for companies which was not possible in the previous decade.”

Quality of Life: A Major Worry However, freight transportation is also a major disturbing factor to urban life. Freight vehicles compete for the street and parking space capacity and contribute significantly

SPECIAL feature Digital technology in e-commerce influence the intra-city aggregation in a big way. The aggregators like Foodpanda, Swiggy, Grofers, Bigbasket, etc. are using online tracking and online platform in a big way." B B Somani, CEC, Logistics Junction

are more than enough to accommodate the growing demand in future. In the long term, the number of vehicles plying on the road through the aggregator model will be a lot lesser compared to what is expected in the traditional model, thereby reducing congestion and pollution. Additionally, at Porter, we do regular vehicle audits to ensure that only optimum quality vehicles are on our platform. All this combined, intracity logistics aggregation will increase the quality of life of the urban people.” With proper planning and efficient d e l ive r y me ch a n i sm , c it y lo g i st ic s aggregation will improve the life of urban people. The best example of successful city logistics aggregation (intra-city) is Mumbai DABBAWALLAHs.

City logistics aggregation is a way for achieving advancement in the industry. The concept is still evolving and on the path of betterment. to congestion and environmental nuisances, such as emissions and noise. These nuisances impact the life of people living or working in cities, productivity of the firms located in urban zones and of the associated supply chains. They also contribute to the belief that “cities are not safe” that pushes numerous citizens to move out of the city limits. The number of freight vehicles moving within city limits is growing and is expected to continue to grow at a steady rate, in particular due to the current production and distribution practices based on low inventories and timely deliveries, and the explosive growth of business-to customer electron ic com merce that generates significant volumes of personal deliveries. Moreover, a world-wide urbanisation trend is emptying the countryside and small towns and is making large cities even larger. But, most of the players in the industry have a very positive outlook towards the effect of city logistics aggregation on the quality of life of the urban crowd. Anjani Mandal, co-founder and CEO

12 CargoConnect - FEBRUARY 2017

of Fortigo Network says, “Active inter-city trucks mostly comprise of medium and heavy load vehicles that ply from industrial estates, transshipment centers, warehouses, transport hubs, etc. that are close to the city boundaries and often outside the city boundary. How trucks impact the urban people with respect to traffic and pollution is insignificant compared to the overall vehicles plying in any city. However, the Fortigo Network will provide a significant improvement to the quality of life of the driver with the secure parking and rest points at IOC Network outlets, roadside assistance facilities available to the businesses on the Fortigo Network.” Agreeing to Mandal, Goel says, “In the traditional model, on an average a vehicle only does one to two trips per day due to information asymmetry between supply and demand. In an aggregator model, a vehicle has a potential to do three to four trips per day. For example, in Mumbai, our vehicles take over three trips per day. If used effectively, the existing vehicles in the market

Hike In Demand With E-commerce The rise of online internet sales and e-commerce gave a big boost to retail companies’ sales and gave rise to new and different business models. Enabled and driven by an increasing internet penetration, mobile phones and other technology, e-commerce has seen a double-digit growth over the past few years. It is important to realise that having to transport goods to consumers’ homes rather than to retail stores is going to increase the number of freight movements. Furthermore, as the size of the deliveries are typically small, the relative increase in number of freight movements is even larger. Thus, from a city logistics perspective, the increase in directto-consumer deliveries is a curse rather than a blessing. The concept of city logistics aggregation enables e-commerce merchants to seamlessly integrate with a wide range of courier service providers in India on the single platform while maintaining uniformity of entire logistics and fulfilment process with all courier partners. Regarding this,

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SPECIAL feature With features like real-time tracking and digital trip logs, we give greater market visibility and transparency to the client which helps him keep a track of the driver." Pranav Goel, co-founder and CEO, Porter

Multi-echelon networks One of the most commonly seen designs for handling and reducing the many freight vehicles going into cities, each delivering small quantities per drop, is to consolidate this fragmented volume at the border of the city, in so-called urban distribution centers. From these centers, the freight is then forwarded into the city with clean and highly utilised vehicles.

Pick up points

With proper planning and efficient delivery mechanism, city logistics aggregation will improve the life of urban people. The best example of successful city logistics aggregation is Mumbai’s DABBAWALLAHs. B B Somani, CEC, Logistics Junction says, “Digital technology in e-commerce influence the intra-city aggregation in a big way. The aggregators like Foodpanda, Swiggy, Grofers, Bigbasket, etc. are using online tracking and online platform in a big way.” Speaking on the same lines, Goel says, “At Porter, we have a sophisticated flagging and monitoring system in place. We have some system generated interventions and some manual interventions as the last fallback option to avoid fraudulent practices. We can easily identify between driver delays and traffic based delays, intentional driver stalling and traffic based stalling, longer route taken by the driver or initiated by the customer (multiple pickups/drops) or a driver not accepting trips and infrastructural issues. We use a sophisticated incentive structure and

14 CargoConnect - FEBRUARY 2017

analytics to flag misuse by drivers or customers. These checks enable us to detect frauds from the supply side. With features like real-time tracking and digital trip logs, we give greater market visibility and transparency to the client which helps him keep a track of the driver. Additionally, all our drivers undergo a thorough background check and appropriate training before getting on-board, which ensures that all the drivers who get associated with us are trustworthy and efficient.”

Miles To Go Because the challenges of city logistics aggregation change continually, so do the opportunities to improve it. Logistics aggregation is still an evolving topic and a few things can be done to make the concept ‘happening and better’.

Pickup points are locations where customers can pick up their orders. They can be unattended, or attended. The kind and number of goods that can be stored in locker boxes, but also the services offered at a station, depend on the features of the boxes and the layout of the stations. Pickup point networks provide a mechanism for mitigating some of the negative effects of direct-to-consumer deliveries by reducing the congestion and environmental pollution generated by urban freight trips. Pickup point networks also have economic benefits as they increase the number of successful first-time deliveries and allow more effective optimisation of delivery routes. “The inter-city logistics version of ‘pick-point networks’ are the transshipment and distribution warehouses that are typically located at the city periphery in or near ‘Transport Nagar’ or truck parking areas and transportation hubs of the city. These are already operational and getting increasingly organised and efficient with respect to loading and unloading turn-around times, missing packets percentage, etc.” says Mandal. Fu r t he r more , b e c ause t he world p opu l at ion cont i nue s to g row a nd urbanisation advances unabated, city logistics will impact the lives of more and more people, and, if not done well, will cause unnecessary congestion and greenhouse gas emissions, and hence negatively impact the quality of life.

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cover story

THE OUTBOUND TREND RUSHES TO MEET INVESTMENT

16 CargoConnect - FEBRUARY 2017

cover story

The planning process for moving project cargo continues to grow in detail and complexity, especially as manufacturers factor transportation into design and production. Building intricate components intended for assembly on-site has made the project logistics supply chain almost machine-like in precision. “In the past, companies stick-built equipment on-site at destination or wherever components were being fabricated. Modularisation has changed the process,” says Adrian Hawkins, vice president projects at global logistics provider Kuehne + Nagel. “Every part is now a critical component. If one unit isn’t available at the right time and in the right place, it can affect a whole plant. Moves have become much more critical.” Global complexity only adds to the challenge. Parts and modular packages are being produced in far-flung parts of the world, then shipped to final destinations. The packages are more critical; therefore, planning has to be detailed and partnerships consummated well in advance of the actual moves. Sana Husain shows why project cargo makes one of the most interesting business areas in the logistics industry, with special characteristics containing the individual processes and complexity of planning and implementation that make this field very attractive and challenging for the logistician.

FEBRUARY 2017 - CargoConnect 17

cover story Project Logistics: Moving the Big, the Heavy, and the Wide

and around the world. Every project move is unique, and companies routinely find Project cargo logistics has always been themselves in a trial-and-error cycle as they a gritty aspect of the supply chain. But plan for the unexpected, learn from experience, increasingly, shippers and service providers and continue to perfect the process. are becoming more sophisticated in how they plan and partner for success when The 2016 Turn transporting oversized and heavyweight Having invested in B2B logistics startup shipments. Blackbuck, Flipkart has announced that it During the day, Route 12 is a visitor’s will be putting in $2.5 billion into logistics paradise. The 175-mile route from the needs over the next four to five years. Besides, Washington state line in Lewiston, Idaho, roping in GoJavas, Snapdeal made six to Lolo Pass and the Montana border follows acquisitions last year–most in technology and the Clearwater and Lochsa rivers through logistics sectors–reducing its delivery times the remote Bitterroot Mountains. By night, by 70 per cent. however, the scenic byway—and its passing Transportation expert Jaspal Singh, turnouts, road construction barrels, and 15Partner at Valoriser Consultants, said, mph hairpin turns—belongs to the megaloads. “Logistics system in India is underdeveloped Lacking bridges, tunnels, and utility and there is no big player that can provide wires, Route 12 is the preferred highway for pan-India access at economical cost. We many over-dimensional loads moving west to east before they veer north through Missoula will surely see some strategic partnership on Montana Highway 200 to the U.S.- among logistics players to distribute the Canadian border. The loads come through delivery load.” the Port of Lewiston, the farthest inland seaport on the U.S. West Coast, served by the Columbia and Snake rivers. It is primarily an export hub for transporting grains to Asia. But on the inbound side, the port has become an intermodal pivot for refinery equipment moving to the oil sands in Alberta, Canada. In 2011, Imperial Oil, a division of ExxonMobil, began using Route 12 to transport shipments to the Kearl Oil Sands project in Alberta. But public outcry from environmentalists and area residents forced the company to consider other options. “Imperial Oil has reduced load heights so they can now move on highways through Lewiston,” explains Doug Mattoon, executive A lot of the trends observed in 2015 are director of Valley Vision, a public-private expected to continue in 2016 too. The Ekart organ isation that promotes econom ic spokesperson said that while technologydevelopment in the Lewiston-Clarkston region. enabled supply chain will see greater “Depending on the size of the loads, some penetration into Tier II and III cities, highly are offloaded from barge in Washington’s personalised and specialised services are also Tri City area, then transported over land to required. Ekart added that specialised cargo Canada,” he notes. “Others move through delivery is bound to increase the complexity the Port of Lewiston and head north on U.S. Highway 95 to Interstate 90 and into of delivery in 2016. Roads are sure to continue as the Montana. Imperial Oil isn’t moving anything on Route 12 now, but other companies most important mode of transport, but improvements are essential here as well. transport one-off loads at night.” Imperial Oil’s dilemma reveals many The Union government’s decision to earmark challenges shippers and logistics service 20 per cent of the $1-trillion reserved for providers confront as they transport heavy infrastructure brings hope in this direction. equipment and oversized loads through Jaspal believes since the cost of manpower communities, between states, across borders, is rising, there is a possibility of sharing

Companies get set in their ways or become compartmentalised, especially between design, manufacturing, and shipping. When transportation and logistics fall off the radar, costs can accrue quickly.

18 CargoConnect - FEBRUARY 2017

of resources among logistics companies to reduce the delivery time. “There is need to look for consolidation and sorting of packages at a central location irrespective of the e-commerce company,” he said. After Loginext and Grey Orange, there is a possibility that the likes of Roadrunnr and Delhivery might be the next ones to tie up with the biggies. With Amazon, Flipkart, Snapdeal, and even Paytm expected to overtake even offline biggies, taking a leap of faith in logistics seems like the inevitable next step.

RECIPE OF SUCCESS Detlev Janik, CEO South Asia, Agility says, “A professional project forwarder must be financially stable and able to procure the necessary services for all stages of transportation – whether this is movement by ocean, air, land, warehousing and storage. They also must have the capacity to provide the infrastructure required by clients. Experience is also key – there are inherent complexities to moving not only oversized cargo, but also regular cargo. Your team has to conduct road surveys, ensure that your vehicles not only have sufficient capacity for the cargo, but is also up to date on maintenance. There are a lot of details, and a good freight forwarder must be able to handle these details to get the cargo to its destination safely and ensure customer satisfaction. As a global company with over 500 offices in 100 countries, Agility has handled a number of megaprojects, that show the strength of our organisation. In India, Agility has a specialised project department that has the experience and capacity to manage large projects.” Gopa l R., Globa l Vice President, Transportation & Logistics Practice, Frost & Sullivan believes that project logistics requires movement of large and project specific cargo often too hard to reach locations. This necessitates the service provider to have experience in reaching such project locations within stipulated time, which is critical for the success of the project. Necessary insurance and financial stability are key for the service provider to be able to fulfil project commitments in a timely and effective manner. Insurance serves as a cover for eventualities, while financial stability helps deploy necessary resources and equipment to accomplish objectives. Tobias König, Managing Director, KOG Transport states, “In today’s market

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cover story

In the recent times, many companies have jumped on to the bandwagon, by just looking at the opportunities available. However, proper understanding with respect to load handling, loading and movement is needed.

Praveen Somani, Director (Strategy & NBD), Inland World Logistics

situations affected partly by weak order books of our clients and, therefore, financial threat on both – the forwarder and the client, the financial stability of the client as well as the forwarder is getting more and more important. Thus, we realise that both sides make more use of tools like bank guarantees and performance bonds to secure project execution as well as proper payment of the provided services. Also, credit insurances become a mandatory tool in countries where they are available. Regarding the client expectations, in terms of liabilities,

the forwarder’s need to take over within a project has continued to increase. Thus, the insurance coverage of those contracts is an elementary part of every contract negotiation. The forwarder is taking a high risk if he is not taking care of a proper and gapless insurance coverage of its project contracts as well as frame agreements.” Praveen Somani, Director (Strategy & NBD), Inland World Logistics stresses that project cargo management and handling is a specialised process. In the recent times, many companies have jumped on to the bandwagon, by just looking at the opportunities available.

20 CargoConnect - FEBRUARY 2017

However, proper understanding with respect to load handling, loading and movement is needed. o Infrastructure in India is continuously evolving, on certain routes, where the old infra does not have the capacity to handle the kind of volume it requires, for e.g. bridges, on a similar note maximum highways have overhead electricity wiring a proper team should be put up to avoid snapping and endangering life and materials. o Looking at multitude of issues, it is paramount to be adequately insured avoiding unnecessary risk. o Si m i l a rly, t he c a r go movement also takes time and enrouting it might also be required to create reasonable infra, which also entails significant finances, and proper planning to be done. Harpreet Singh Malhotra (C.M.D.), Tiger Logistics agrees saying, “Yes, financial stability, insurance coverage and experience in handling big projects are some of the key success factors for the industry. Growing investments in key sectors of the economy is driving the project logistics market in India. Project cargo needs to be generally transported to remote locations that have accessibility constraints. These include increase in warehousing facilities, rise in infrastructural projects and growth in energy sector. These factors are contributing towards the rapid growth of the industry.” Ramesh Babu, Managing Director, Seashell Logistics informs that billions of dollars of project-critical equipment is

shipped around the world each year. High levels of risk are associated with these shipments due to nature of the cargo, transport logistics and tight timeframes. Failure of a shipment to arrive intact can quickly turn a $10 million cargo loss into a $20 million delay in start-up loss when factors such as re-fabrication, shipping, expenses, lost profits and other operational costs are contemplated. Other considerations that are not insured, such as loss of completion bonuses, may also have a financial impact on the client. These losses if an operator can insure to minimise for the cargo owner with his expertise, knowledge and technology adaptation the he can be well ahead of its rival operator. These are the skills which cannot be copied easily by any one. Vikram Mansukhani Head 3PLS, DIESL feels that project cargo is tricky business that needs excellent knowledge of product handling to ensure maximum damage control, knowledge of the route to be taken which would not pose any physical / structural blockades, ensuring the right size and load bearing vehicle is used, the team doing the movement is highly responsive to possibility of emergency situations and that one is aware of local geopolitical issues on the area that is being passed through. India being a country of diversity in terms of language, local practices and religious celebrations, a route that was free yesterday could well have a road block owing to a procession or temporary construction. This could throw a project plan off by many hours or days. Any such unplanned diversions or delays would always need the operating company to invest more than was planned without financial stability , insurance coverage and robust experience on the geography and handling requirements , project cargo would be like catching a wild bull by its tail.

cover story

Failure of a shipment to arrive intact can quickly turn a $10 million cargo loss into a $20 million delay in start-up loss when factors such as re-fabrication, shipping, expenses, lost profits and other operational costs are contemplated. Ramesh Babu, Managing Director, Seashell Logistics

THE COMPLEX DEGREE Companies often fail when they don’t consider transportation and logistics in the design. “When a company brings us in from the drawing board, we can tell it how much that design will cost to move,” says Bill Hedge, vice president, international growth and strategic planning for Salt Lake City-based England Logistics. “For example, turning a motor sideways might bring the unit under 14 feet, which will save $50,000.” Companies get set in their ways or become compartmentalised, especially between design, manufacturing, and shipping. When transportation and logistics fall off the radar, costs can accrue quickly. Tobias says, “Especially in the partnership with global clients, we realise that the planning process is getting more important and the project experts are involved at a very early stage of the project pre-planning phase. Covering this new or increased expectations KOG already hired transport engineers which support our clients from the very first minute and beside others prepare feasibility studies, technical calculations of bridges, roads and transport equipment. In terms of small and midsize clients, we still realise that the planning process is not implemented the same way as it is with the bigger companies. Thus, we often face the situation that the forwarder is involved at a later stage and changes in design and shape of the cargo is only possible very rarely and/ or for higher costs. However, we must also face the situation that not every necessary change in design and shape due to transport requirements can be done without losing the functionality of the cargo. Thus, if the cargos are getting bigger and bigger the complexity of project transports and the requirements for the infrastructure will further increase.”

22 CargoConnect - FEBRUARY 2017

Detlev opines, “Moving oversized cargo across India has always been complex, for a number of reasons: Cargo tends to be large and heavy, and there have been infrastructure and equipment constraints, as well as patchy communication coverage across the country. While there has been significant i mprovement on i n f rast r uct ure a nd communication in India, moving oversized cargo requires detailed planning, suitable

The economic and regulatory challenges in purchasing and supplying products on a global basis that now faces today's manufacturers and traders, is directly reflected in the complexity of shipping the goods. equipment, and a high level of understanding of I nd i a’s r e g u l ator y e nv i r on me nt . Anticipating transportation requirements during the design and manufacturing phase should actually lead to a reduction in complexity. That, in theory, should make the job of a project forwarder easier.” He confirms that project logistics has grown in complexity. While planning stage is one parameter, the other factor which increases the complexity is the nature of projects itself. These require logistics services for both conventional and non-conventional cargo. The supply chain for non-conventional cargo becomes complex in both cases – when the project is located in an urban set-up or

in a remote place away from connectivity. In both instances, complexity increases due to transportation challenges of operating in an urban set-up or reaching a distant location away from connectivity. Transport options are also limited in some cases. Thus, the need arises to plan in order to manage specialised or non conventional cargo transport to such project locations. This planning is aimed at trying to minimise the complexity involved in the Project Logistics operations. A g r e e a b l y, P r a v e e n t e l l s t h a t manufacturers have been giving thought keeping in the complexity of the logistics need for the consignment, and that is the reason they have been demanding better asset and experienced team to handle and deliver the cargo to its intended journey. The significant improvement in road infra along with ease of clearance from govt authorities have also helped the manufacturers in project design Harpreet finds that the overweight and/or over-dimension cannot be handled or moved using conventional assets and equipment are not challenging anymore. The current status of project logistics services market in India is nascent, but it has bright long-term prospects for the industry. However, service providers need to address a few challenges such as execution delays within end-user industries and rising costs to make most of the opportunities in this market. At the same time, understanding the related practices and preferences of enduser industries are of prime importance for logistics service providers. Differing on a negative note, Ramesh says, “I do agree with the fact that India is still not well equipped or specialised in handling project cargos and this field needs latest and regular technology upgradation. The conventional assets and equipment can handle limited project cargo with limited

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India being a country of diversity in terms of language, local practices and religious celebrations, a route that was free yesterday could well have a road block owing to a procession or temporary construction. This could throw a project plan off by many hours or days.

Vikram Mansukhani Head 3PLs, DIESL

safety, and other guarantee. For efficiently handling of these consignments, cargo have to be taken to remote locations with limited transportation infrastructure access using single or multimodal transportation services. With the growing focus on infrastructure development and expanding manufacturing activity in the country, opportunities for these services are expected to grow significantly. Replacement or modernisation of the conventional assets and equipment is growing. Understanding the project logisticsrelated practices and preferences of enduser industries is of prime importance for logistics service providers intending to tap the potential opportunity.” Vikram adds, “Over the years the need to ensure safety of product by customising temporary packaging or creating specialised vehicles (except the tughead) has been growing significantly. As manufacturers have focused on reducing cost of product by using alternate and lighter materials even in the construction of project based equipment, the need for the transportation industry to take increased care in transit has grown rapidly. Since project based cargo is not regular in nature, this increases the cost of transportation quite significantly, especially where permanent changes to the vehicle cargo hold area are required.”

PROJECT IS RISING Detlev observes, “The outbound logistics trend is growing at a much faster pace than inbound cargo. While project logistics in India was previously a result of inbound projects (such as engineering projects inside India in the oil and gas sector, cement plants, etc.). Now, the reputation of Indian engineering companies is growing internationally as suppliers of high quality components at economically sound price – heavily driving demand for

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outbound project logistics services is growing. At Agility, we are handling more outbound than inbound cargo – fitting the trend we’re observing in the country.” Gopal says, “Project Logistics is essential for supporting the following areas: • Offshore facilities • Construction of manufacturing or large scale processing facilities • Development of logistics facilities like ports, airports, rail terminals, cargo centers and logistics parks • Transport infrastructure building and similar facilities • Any large scale commercial development

With development being a key agenda in India currently, there is significant activity in developing these infrastructure related facilities. This triggers demand for Project Logistics. Due to better project governance, the facility developers prefer to outsource logistics aspects to be able to focus on core project milestones. This has led to the demand for specialised services like Project Logistics. Another driving force is the capability of global Project Logistics participants in

being able to deliver resource, cost and time optimisation when accomplishing large projects. This capability is the trigger for projects to resort to specialised support for logistics.” Praveen showing optimism, says, “Government regulation and newer technology has been the major contributor and we look forward to a further increase based on the impact of make in India driver by the government. The sector is fairly geared to handle the dynamic needs and look forward to newer learnings.” Harpreet voices, “The logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technology and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services (which are also growing). Changing government policies on taxation and regulation of service providers are going to play an important role in this process. Coordination across various government agencies requires approval from multiple ministries and is a road block for multi modal transport in India. At the firm level, the logistics focus is on moving towards reducing cycle times in order to add value to their customers. Consequently, better tools and strategies are being sought by firms in order to enhance their decision making.” Tobias defines that since many years, India is one of the biggest emerging markets in the world and considering that the Indian population is about 15 per cent of the entire world population, the demand in consumer goods as well as electricity, food, cars and machinery goods is escalating. Even if India has been an import market and still is, India is in the process to increase the local content and under the program “Make in India”, India wants to change its economy to a more export orientated country. Paying heed to the government’s role,

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There has been significant improvement on infrastructure and communication in India, while moving oversized cargo requires detailed planning, suitable equipment, and a high level of understanding of India’s regulatory environment. Detlev Janik, CEO South Asia, Agility

TECHNOLOGY

COMPLICATEDNESS UNCERTAINTY

INFORMATION PROCESSING

PROCESS/PRODUCT (STRUCTURE)

MANAGEMENT SYSTEMS (INFRASTRUCTURE)

Skills and know-how required to operate processes or to manufacture the product (e.g investment in AMT)

Process capability of the focal firm (quality failures)

Number of tasks and sub-processes

Throughput time variation and stochastic set-up time

Process capability of suppliers

Number of parts/components Level of interactions between parts/components Level of decomposability of processes

Product variety and customization Extent of supply network

Production scheduling changes

Extent of customer base

Demand volatility

Geographical span of suppliers and customers Number of echelons in the C supply chain

Ramesh says that the Indian economy is increasing at the rate of 7.5 per cent this financial year and will keep on growing at even higher rate. India is currently the fastest growing economy and will keep on retaining the position. Government of India is emphasising on “Make in India” initiative. Also, it is implementing long due government policies like GST and easing land bills. In the current scenario, access to the foreign funds by Indian startups is more accessible unlike before. Such collective economic environment is making the project logistics rising in India. Srinivas Sattiraju, Chief Executive Officer, Delex figures that the growth of d e m a nd for project log ist ics is directly associated with the growth and development of manufacturing sector,

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Late product delivery by supplier

especially the large scale industries that require heavy plant and machinery movements, erection and installation. Till recently, except for some core industries like cement, fertiliser, etc., commodity sectors, the growth of manufacturing in other sectors is largely limited to the end of the line assembly services where heavy industrial equipment and installation requirements are low. However, with the latest government push for “Make In India”, where even the defense sector manufacturing is being opened for private sector investments, he foresees multi-fold increase in demand for project logistics. It may not be an exaggeration to say the growth could be as high as 100 per cent. Vikram admits that as urbanisation in

India grows rapidly , the cities and towns with bustling population would force setting up of industry far away from city limits. This obviously increases the distance of the project site from the closest port and therefore results in longer hauls for project transportation. Fuelled by the increasing population factor, a vibrant economy (relatively compared to rest of the world), the need for higher levels of manufactured goods , energy generation and civic amenities will continue to lend themselves towards rapid growth in project logistics at least for the next few years. Global investment boosts hope for growth in project cargo. As reported, 38 per cent jump in global foreign direct investment last year was not matched by growth in high–value project cargoes. However, industry officials say spending on power generation, infrastructure and oilfield equipment will bolster gradual increase in cargo flow during the next few years. The sharp increase in global FDI, to $1.76 trillion last year – the highest level since the 2008 to 2009 financial. The figure would have caused many in the project shipping sector to rub their eyes in disbelief. “The increase was based entirely on a sharp increase in cross -border mergers and acquisitions, corporate reconfigurations and intra-company loans. So, it was no surprise that project and break-bulk cargo volumes remained subdued and have been under even greater pressure since the second half of 2015, as industry sentiment suggests. The increased money flows did little to stimulate economic activity and were weak in terms of productive capacity investment,” said James Zhan, director of UNCTAD’s division on investment and enterprise. Increased planned expenditure in these public infrastructure segments should bode well for project cargo demand.

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The current status of project logistics services market in India is nascent, but it has bright long-term prospects for the industry. At the same time, understanding the related practices and preferences of end-user industries are of prime importance for logistics service providers. Harpreet Singh Malhotra (C.M.D.), Tiger Logistics

THE END-USER DIKTAT Praveen says, “Its companies which have to face various hurdles when proper working isn’t done, leading to numerous reasons for delays in implementation of projects. Alignment of understanding and expertise is a key consideration to be able to deliver an outstanding result.” Ha r preet sha res, “To tap the potentia l opportunity in Project logistics, Logistics Service Providers must implant and improve ERP i.e. Enterprise Resource Planning. Enterprise resource planning (ERP) has become a buzzword in the logistics industry, with the realisation of the necessity of adopting IT for better process efficiency. However, a common dilemma faced by key project evaluation teams at leading global logistics service providers (LSPs) today is whether to customise their existing ERP for logistics business or to choose a best-of-breed and proven logistics solution which is readily available in the market. Each approach has its own merits and the best way to go about before taking this crucial decision is to look at the critical success factors (CSFs) that impact

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business. In evaluating an enterprise IT solution, apart from CSFs like project cost, implementation timeframes and risks related to vendor’s capability a project manager needs to also consider whether either of these IT options are aligned with the larger business goals. In case of a customised ERP involving development with a System Integrator (SI), most of the generic SIs have limited domain knowledge of logistics business, thus, the cost of project will not only shoot up but also cause further delays in system rollout. Also such developers have a high sourcing cost. Therefore, one needs to invest in a vendor who has an established product and has the inherent capability to enhance the solution based on industry needs. This is crucial in reducing the Total Cost of Ownership (TCO) for the LSP.” Ramesh informs that every project logistics is very specific in nature and is different from the other project logistics. Hence, it becomes very important for the LSP to know the requirement. This requirement can consist of the timeline for the completion of the project shipment, the type of risks involved in the project, if it gets delayed the possibility of losses at the end user’s side. This will enable to serve in a more customised way and hence can grab the opportunity in the best way.

1. WHEAT Wheat grain is said to be one of the most difficult and dangerous cargoes to carry in bulk due to its potential to shift in transit. In addition, a strictly controlled environment for its transportation is critical. In today’s global market place, WWL ALS Limited continues to position

itself as a leading edge “niche market” freight forwarding group specialising in break bulk and heavy lift cargo. The e conom ic a nd r e g u l ator y challenges in purchasing and supplying products on a global basis that now faces today’s manufacturers and traders, is directly reflected in the complexity of shipping the goods. As a leading globa l for wa rd i ng compa ny w ith project logistics expertise WWL ALS understands given the increasing size and complexity of today’s capital projects that many manufacturers look to turn to The WWL ALS Project Forwarding team, who are specialists in turnkey and large scale heavy lift projects within a number of industries. These industries include mining, energy, oil and gas, construction, infrastructure, engineering, paper, marine and other offshore industries. W WL ALS places a significant emphasis on forming reliable and long term relationships with both our clients and suppliers. As such WWL ALS has developed a continually expanding client and supplier list within these sectors, with projects running throughout the world on an ongoing basis. As heavy machinery and plant becomes more sophisticated the need to be able to blend the services of both heavy load movements and general standard trailer movements have taken WWL ALS into the more general freight market.

2. CRAFT BREWERIES MULTIPLY, ALONG WITH PROJECT CARGO OPPORTUNITIES “A lot of people look at Indiana and say, ‘Isn’t it challenging to operate a port that is hundreds of miles from an ocean? But we flip that around, and

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Due to better project governance, the facility developers prefer to outsource logistics aspects to be able to focus on core project milestones. This has led to the demand for specialised services like Project Logistics. Gopal R, Global Vice President, Transportation & Logistics Practice, Frost & Sullivan

say that we have a tremendous advantage, especially as it relates to project cargo and, in this case, beer tanks. We can offer a more efficient way to move those cargoes into the heartland of the country, as close as possible to the actual receiver.” Project cargo vessels carry such shipments all the way from Europe to the Port of Indiana-Burns Harbor, which is only 45 miles by road to Chicago. By that point, the cargo has crossed the North Atlantic, come up the St. Lawrence River, and into the Saint Lawrence Seaway and the Great Lakes. This routing means haulers do not need to worry about driving oversize loads across ten states to get to the American heartland.

Harbor, they deserve attention because of the fashionable nature of the product, and their potential for further growth. “An Exploratory Investigation of the Effects of Supply Chain Complexity on Delivery Performance.” The abstract says that as just-in-time delivery has become increasingly commonplace and customer demands continue to tighten, the importance of fast, reliable delivery cannot be overstated. This is particularly true for firms competing internationally, where the complexity of the supply chain must be managed within a global network. To explore the linkage

Pursuing Project Cargo Michel Tosini, Executive Vice President of Federal Marine Terminals, which operates stevedoring facilities at Burns Harbor and 11 other North American ports, notes that the traditional cargo on the Great Lakes has been steel. “For as long as the St. Lawrence Seaway has been open, steel has been the far dominant type of cargo carried. That commodity has fluctuated, especially in the last 10 or 15 years, dramatically from very high years of tonnage to very low years of tonnage. It was a conscious decision, not only from the steamship side and terminal side, to try to diversify our cargo — more so in the last ten years. Rather than just the traditional steel cargoes, which are still there, we’ve really gone after other kinds of breakbulk and project cargoes — including a lot of wind energy components,” Tosini said. At Burns Harbor, brewery equipment still comprises only a tiny share of general cargo — perhaps one per cent — compared with much higher volumes of lumber and steel, grain, chemicals, fertilizers, and other major cargoes. But while brewing tanks are still a small niche at Burns

30 CargoConnect - FEBRUARY 2017

chain complexity and provides a strong theoretical basis for linking different aspects of complexity to delivery performance. An exploratory empirical investigation using an international database focused on immediate upstream and downstream echelons of a supply chain at the firm level. Results show strong support for the linkages between delivery performance and both complicatedness of the product or process and uncertainty of the management systems. In contrast, little evidence was found that greater product variety and more complicated supply networks adversely affected performance. Thus, management initiatives to improve delivery performance are best focused on improving informational flows within the supply chain and leveraging new process technologies that offer flexibility to respond to uncertainty.

The Superload Lowdown

between supply chain complexity and delivery, a two-dimensional framework is proposed that conceptualises the degree of complexity embedded in a supply chain along two major dimensions: form of technology and nature of information processing. Technology is characterised using a conventional operations strategy framework of structural and infrastructural elements. In contrast, information processing captures both the level of complicatedness and of uncertainty that exists in the supply chain. Collectively, these two dimensions create a two-by-two framework that defines supply

California’s rampant restrictions make it one of the most challenging proving grounds for shippers moving project cargo. But, given the state’s location and proximity to all West Coast ports, project cargo moving between the United States and Asia is bound to travel its roads. Valencia-based ASC Process Systems knows the trials of transporting heavy equipment in California. The company is a leading manufacturer of specialised process equipment, control systems, and custom manufacturing software used in a number of industries including composites, plastics, glass, solar, lumber, and concrete. Among some of the units it produces are industrial autoclaves—behemoth-sized pressure vessels used to process parts and materials that require exposure to elevated pressure and temperature. On an average, the company annually produces two to three superloads—

cover story

The growth of demand for project logistics is directly associated with the growth and development of manufacturing sector, especially the large scale industries that require heavy plant and machinery movements, erection and installation.

Srinivas Sattiraju, Chief Executive Officer, Delex

units weighing more than 200,000 pounds. In 2011, ASC exceeded expectations with six moves. Approximately, 70 per cent of project equipment remains in the United States, while the rest moves offshore. Like most project cargo shippers, ASC has learnt from experience. When every project bears its own special challenges and requirements—and the price of transporting a $2-million piece of equipment can cover 20 per cent of the total product cost—lessons are learned fast. “Moving superloads is complex, especially with the permitting and planning necessary to transport large equipment,” says Dave Mason, president of ASC Process Systems. “Then add the hassle of working with the government and transporting units on California’s road system. Neither is predictable.” California infrastructure, both bureaucratic and physical, leaves much to be desired for heavy-duty equipment manufacturers such as ASC. “We’ve asked officials how long it would take to get permits for a move, and been told one to six months,” Mason says. “And they weren’t kidding.” Unpredictable administration is rivaled only by cost fluctuations. Quotes from heavy-haul bidders vary considerably. But the real cost of failure when moving million-dollar equipment

within tight time parameters places a premium on quality and service. “I’ve been burned too many times to let price be the only contributing factor,” Mason notes. Risk management is critical in project logistics. With GCC governments continue to explore and develop ways to diversify economies to offset exposure to the oil market, Thompson said transport and logistics infrastructure were both areas key to underpinning a lot of diversification. The role of the private sector was identified as a method important to achieving targets by financing some major projects with private sector investment either through Public Private Partnerships (PPPs) or privatisation of some public entities. This analysis of funding would go hand in hand with the necessity to look at the full lifecycle of projects, including the operations phase, not just the construction phase. Building on day one’s discussions, the role of risk mitigation was again a key aspect of the conference sessions, with experts examining its importance relating to more areas of the project logistics and break-bulk industries. Ken Long, Country Head of Energy Solutions – Saudi Arabia / Bahrain, Panalpina World Transport Saudi Arabia, said, “Vision 2030 will bring sweeping changes. Most

Project cargo boosts lagging Great Lakes-Seaway volumes. Rick Heimann, director of the Port of Indiana-Burns Harbor, said grain shipments in 2016 are more than double the year-to-date totals of 2015. “We are expecting a surge in end-of-year shipments of steel products and bulk commodities for the steel industry in Northwest Indiana. Based on current projections, November could prove to be a near-record month, especially for Seaway cargo,” he said.

32 CargoConnect - FEBRUARY 2017

significant for our industry will be the modernisation, streamlining, customs clearance, processes, and import regulations. It’s going to take time but one of things that is going to happen is that Saudi Arabia will move to become more of an exporter, not just an importer as it is now. First, Saudi Arabia will need to bring in industry with a view to export 30 per cent of all manufactured production. To do that it will need to have fundamental changes in the transportation infrastructure and regulations and that is now going to come about under the vision.”

BECHTEL AIMS TO INCREASE C E R TA I N T Y I N P R O J E C T LOGISTICS Project cargo logistics will always entail its share of surprises, but an innovationencouraging in itiative under way at construction industry giant Bechtel is taking aim at significantly reducing the probability — and cost — of unexpected occurrences. Bechtel’s Engineered Logistics approach deploys such leading-edge tools as 4D simulation and virtual reality to further improve the certainty in managing project cargo logistics. “Everyone knows it’s been a tough go for the industry with recent market conditions,” said Stephen R. Spoljaric, who is at the forefront of the Bechtel initiative. “Anywhere we can take out contingency and pin down real probability of risk and pin down schedules helps carriers, Bechtel and clients.” Spoljaric, who wears the dual hats of traffic and logistics manager and procurement innovation lead for Bechtel’s oil, gas and chemicals global business unit, couldn’t be more enthusiastic. Spoljaric readily recognises that, as he puts it, “a project can go in the wrong direction quite quickly.” However, if a potential issue is predicted ahead of time, measures — perhaps as simple

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The insurance coverage of those contracts is an elementary part of every contract negotiation. The forwarder is taking a high risk if he is not taking care of a proper and gapless insurance coverage of its project contracts as well as frame agreements. Tobias König, Managing Director, KOG Transport

as modifying a pipe rack system or adding a ship to the shipping program — can be put in place before a domino effect leads to expensive consequences. “A one-day arrival delay for a ship to a construction site could be ten times what the cost for a ship is,” Spoljaric said. “By our getting smarter and more predictive, clients will have a better sense of what to expect, and so will the carriers, so it takes away surprises.”

Advancing Tradition Bechtel, certainly no stranger to innovation, has a company catchphrase of “engineering the extraordinary,” and its forward-thinking approach has clearly paid off over the course of more than a century. Founded in 1898, San Francisco-based Bechtel, which in 2015 reaped revenue of more than US$32 billion, has been the top-revenue U.S. construction and civil engineering company for 18 consecutive years, according to an Engineering News-Record ranking. But to stay at the top of the engineering, procurement and construction industry heap, Bechtel, particularly in challenging times, isn’t satisfied with the status quo.

Intrapreneurial Innovation David Wilson, Bechtel’s Deputy Chief Innovation Officer, termed the program “intrapreneurial innovation,” noting that any of the company’s more than 50,000 employees worldwide may submit concepts that are preliminarily evaluated by a small team that includes Wilson and two or three colleagues. Wilson said more than 1,000 concepts have been received and put through a litmus test of whether they are truly disruptive, e x pa nd able to broader appl ication, translatable to prototype, testable “in

34 CargoConnect - FEBRUARY 2017

the sandbox” and aligned with corporate strategic objectives. After an idea is greenlighted for initial pursuit, it may be advanced in collaboration with an existing Bechtel team already working on a similar concept, or, if it’s all-new, the originator may take it to the proverbial sandbox. That high-tech “sandbox” is the Bechtel Innovation Center in Houston, a lab outfitted with 4D modeling software, 360-degree cameras, drones and a host of other virtual reality and augmented reality technologies.

4D Modeling Spoljaric pointed to four-dimensional, or 4D, modeling as a particularly helpful tool, with real data, not averages, applied in creating a visual portrayal of a sequence of events for project shipments that can give customers and carriers alike a superior view of what to anticipate. “We’re not just dealing with drawings on a piece of paper,” he said. “We’re dealing with something that’s a bit futuristic and that’s cool too.” The 4D modeling software enables Bechtel to accurately evaluate risk, cost and schedule in a module shipping program, allowing clients to see probabilities of how the shipping program will operate. For example, with further evaluation of upstream activities, Bechtel can determine the accuracy of readiness dates from the module construction yard.

Viewing Holograms Meanwhile, 360-degree cameras, drones, self-contained holographic computers and other advanced visual technologies can be used to view modules as holograms during preconstruction and then in real time throughout construction and transport. “Again, this innovation increases certainty in the plan,” Spoljaric said, adding that it may alleviate unneeded travel by carrier port

captains, project managers and Bechtel staff during the fabrication phase. “Dimensions can be taken virtually and the files will be shared with the carriers — and insurance — far in advance of vessel arrival so that there are no surprises during loading,” he said. “Improved safety and avoiding wasted time will be the biggest benefits.”

Getting Everyone Involved This impasse between the private sector and public interests remains a constant reminder of the challenges shippers face as they transport industrial cargo. It also raises the importance of communication and public relations between shippers and various jurisdictions that address safety and environmental concerns. “Getting transportation providers more involved in early stages of the planning process has been a trend for the past five years,” says Hawkins. “The emphasis is on safety and environmental awareness. Project owners need to get all parties involved much earlier and create more transparency. Everybody has to be more open about problems, as well as solutions to mitigate risk and create backup plans,” he adds. Increasing restrictions add more costs. Shippers, in turn, place greater value on transportation and logistics providers that offer quality service and reduce spend—no small task when it comes to transporting superloads. For shippers and service providers such as ASC and England Logistics, failure is expensive. So, it ultimately comes down to managing transportation. “Freight is not an exact science,” says Hedge. “Logistics is about controlling variables. The better you can control them, the better you can control the situation.” In the world of project logistics, control means everything.

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feature

Contract Logistics in India: In dire need of positive disruption

The logistics sector in India, including 3PL is a highly fragmented sector with highly inefficient supply chains of the firms. After GST implementation, companies will have an added incentive to either develop its own logistics arm or tie up with the domain experts which are the 3PL companies. This will benefit the companies as a system of seamless tax-credits throughout the value chain and across state boundaries will bring down the cascading effect of taxes and thus reduce the hidden costs of doing business. But for the 3PLs to work in a favourable environment, certain disruptive changes need to pave the way for the logistics sector. Tariq Ahmed, with the help of experts, tries to dig in to the world of contract logistics and tries to analyse what lies ahead for this sector in India.

36 CargoConnect - FEBRUARY 2017

feature What is ‘Contract Logistics’? A contract logistics is the outsourcing of resource management tasks to a third-party company. Contract logistics companies handle activities such as designing and planning supply chains, designing facilities, warehousing, transporting and distributing goods, processing orders and collecting payments, managing inventory and even providing certain aspects of customer service. Examples of major contracts logistics companies include United Parcel Service, Kuehne + Nagel, Exel, Genco and DHL. Logistics management is an important component of many companies’ profitability and overall success. While some companies manage their own logistics, others find it more efficient to hire specialised contract logistics companies to manage their logistics for them. Contract logistics companies often need to develop a deep understanding of how different industries work in order to manage the logistics of a variety of companies in the best possible manner. O utsourci ng of core log istics f unction of warehousing is rapidly becoming popular not only for MNCs with global operations but all organisations in medium and small sector too. Outsourcing may fall into two categories. One category would be the flow through warehouses, merging and distribution centers that are consolidation points in the supply chain network. These can be managing finished goods or raw material supplies or even spare parts, etc. The project size is relatively smaller and the warehouse is not expected to hold inventories beyond a few days. The second category of warehouses could be the larger distribution centers managing finished goods inventory and related operations in large scale, catering to exports or supplies to a region, continent or country level or inbound raw material warehouses managing JIT or VMI operations, in plant management, Plant FG operations, etc. These warehouse operations are critical in nature and are primarily categorised by the volume and value of inventory held, size of operations and its relative position and importance in the supply chain network.

The Indian Scenario India’s growth story is directly linked to the state of infrastructure in the country. The work done to improve this has not been very impressive over the past many decades. This has ensured a lethargic and infrequent growth for the Indian economy. It would be safe to say that owing to this road network is incomplete, rail network has not been upgraded significantly in a long time and sea and inland waterways are still underdeveloped. The present government has given enough indications that it is finally addressing these issues in a significant way.

top five reasons why you need a third party logistics (3pl) provider

I’m sure I can save, money if I figure this stuff out myself

Miss Conception

3PLs EQUIP YOU WITH VAST RESOURCES. They’ve got the tools you need. Let them do the work, so you don’t have to!

Partnering with a 3PL equips you with access to the vast network of connections and resources that have already been established: the dedicated manpower to process thousands of bills each day, access to private fleets and special contracts, massive buying power, expertise to properly slip your cargo across borders, or warehouses and shipping routes all over the world. The list is endless.

Please don’t break me.:’(

3PLs Save You Both Time and Money. Less headaches without breaking my piggybank? Why in the world not!?

You can save time and money with a 3PL by taking advantage of their purchasing power allows them to provide you with special deals and discounted shipping rates. Also, you’ll no longer need to invest in warehouse and waste time dealing with storage issues, nor worry about what technology to use to manage your transportation.

3PLs LOWER YOUR RISK.

They can’t guarantee lower risk of heart disease, but they do help lower stress levels!

3PLs offer the full extent of their expertise to navigate your shipment through the web of customs paperwork, declarations, planning routes and timelines. By utilizing their expertise, you minimize the risk of any problems occurring with your shipments in the complex world of logistics, and this consistency passes on to your customers as well.

headaches

Thou shall be controlled!

3PLs GIVE YOU MAXIMuM SUPPLY CHAIN CONTROL. TIME TO TAKE OVER THE WORLD! Just kidding. But at least you can have control over your company!

3PLs have the technology and real time tracking ability to give you full visibility of your entire supply chain, allowing you to better serve your customers. Instead of working with multiple vendors and trying to coordinate drop-offs and pickups yourself, your logistics partner is able to oversee the entire operation for you from start to finish. They’ll ensure that everything arrives safely and on time, keeping you reliably informed about the status of your shipments so that you can keep customers updated.

3PLs allow for scalability and flexibility.

hey, stop climbing that wall!

They can’t help you mountain climb or do the splits, but they sure can accomodate your company

As your inventory and transportation demands grow, your 3PL will be able to provide an organic solution for your warehousing and shipping needs. For example, if your company suddenly skyrockets in sales, it would be horrible for business if your operations weren’t able to keep up and you ended up with a ton of unhappy customers that didn’t get their orders on time. A logistics provider can set you up with appropriate firepower on a need-basis to provide you with flexible and customized service, so your operations never bottleneck your growth and success.

Source: www.worldtransinc.com

FEBRUARY 2017 - CargoConnect 37

feature “Due to commoditisation, large enterprises are replacing in-house logistics infrastructure with complete outsourced solutions due to a negligible incremental cost and additional flexibility. Within shipping, there’s consolidation among shipping lines and non-productive middlemen in freight as only businesses with the right value and margin are surviving this tough period.” Bhavik Chinai CEO and Founder, Vamaship

However, this has been marred by the complex nature of the logistics industry in India including the contract logistics sector. Improving the infrastructural deficiencies and improving the logistics industry involves a coordinated effort by different ministries which are different decision making bodies. The still imperfect coordination between the ministries has also led to inefficiencies when it comes to implementation. There is also the issue of constantly changing complex federal tax structures. Contract logistics sector in India is still underdeveloped and under penetrated. About one-third of all Indian companies utilise the services of logistics companies, which is lower than the international standards. Within the logistics valuechain, transportation is the most outsourced activity by industries or companies followed by freight forwarding. Cost reduction is the primary driver for outsourcing logistics in India, transportation accounts for almost half of their total logistics expenditure. Reputation and the ability to provide end-to-end solutions are the key factors favouring the selection of Logistics Service Provider (LSP) for outsourcing in India. Nevertheless, experts are positive about the growth of 3PL services in India in the upcoming years. In the recent years, 3PLs have grown with a CAGR of more than 20 per cent, but the scope to grow is phenomenal. In India auto companies have been major users of 3PL services so far and significant growth potential exist in information technology hardware and electronics, FMCG, pharmaceuticals and retail sectors. Initially, MNCs were using services of 3PL companies, but now domestic companies has started outsourcing

38 CargoConnect - FEBRUARY 2017

of Logistics and warehousing function and even few SMEs are using outsourced model in bits and pieces. Sudeep Narayan, Director (Integrated Services, Western India), Expo Freight Limited believes that with the traditional models of logistics being disrupted by changing customer expectations and influence of technology, logistics and supply chain activities, and not just product development and marketing, will increasingly dictate business success across industries irrespective of B2B or B2C business models. He said, “The contract logistics space will be dominated by nimble

3PL market is expected to grow at a CAGR of 3.5% by 2024

and adaptive logistics players who can offer tailor made solutions and are not just selling a network. Technology adaptation and synchronisation within the various stakeholders in the supply chain will be the key, along with talent acquisition.”

Emerging Opportunities at the onset of GST Contract logistics has been growing over the past few years and GST is going to change strategies for a large number of

enterprises, changing the contract logistics landscape. Most contract logistics players are planning their strategies around leveraging GST to create a better win-win for customers of different industries. Bhavik Chinai, CEO and Founder, Vamaship said, “GST is going to change the go-to-market strategy for thousands of companies, creating a larger last mile fulfilment need. With implementation of GST, companies will benefit from larger regional warehouses and smaller warehouses near markets for quick fulfilment. LTL is going to witness a huge jump and e-commerce logistics companies will leverage the additional boost in last mile delivery of small packages by using the same infrastructure, helping shippers fulfil shipments at tremendously economical costs.” Narayan is of the opinion that as the invisible interstate trade barriers come down with the roll out of GST, 3PL activities stand to change significantly with the hub and spoke model replacing the traditional “close to the customer” model which is driven by regulations than by any other considerations. A lthough ever y factor is going to positively impact the third party logistics (3PL) sector i n Ind ia. But, it is the introduction of GST that will incentivise the sector. Goods and Services tax is expected to act as the secondary factor wh ich w i l l bui ld upon the pr i ma r y foundation of a good infrastructure and the faster adoption of technology in the sector. GST will ensure that the nascent 3PL further embeds itself in the logistics space. Further, it is the implementation of the GST that would increase productivity and raise efficiency levels in the logistics sector and the economy as a whole. According to various industry estimates, freight times will come down by 30-40 per cent and logistics costs are expected to reduce by 20-30 per cent. The quantum of investment from the private sector, government regulation, the investment in infrastructure by the government year on year are all factors that determine whether the logistics sector will grow or be inhibited. The logistics sector in India has been performing well in the last few years growing at a rate of 15 per cent annum. However, it is the implementation of GST which will give the sector a much

People. Partnership. Performance...

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feature “Infrastructure development is one of the biggest bottlenecks in the development of 3PL market in India. Infrastructural problems such as poor road conditions, poor connectivity, inadequate air and sea port capacities and lack of development of multimodal transport infrastructure have been constant irritants.” Varun Bhat Senior Consultant, Transportation and Logistics Practice, Frost & Sullivan

needed impetus in India. The Goods and Services tax will be a comprehensive nationwide single tax which will subsume the plethora of taxes in the country. GST will be a single tax on manufacture, sale, and consumption of goods and services throughout India. The purpose behind this move is to have one indirect tax for India which will make the country a unified common market. The cent ra l ta xes wh ich w i l l be

subsumed into the GST are: Central Excise duty, Additional Excise duty, Service tax, Countervailing duty, and Special Additional duty of Customs. Also, the state taxes which will be subsumed by GST are: Sales tax, Entertainment tax, Central Sales tax, Octroi and Entry tax, Purchase tax, Luxury tax, and Taxes on lottery, betting and gambling. GST will be collected at every stage of sale or purchase of goods or services, based on input tax credit method. This simplification of the taxation system would make the inter-state transportation of goods more efficient. The logistics sector in India, including 3PL is a highly fragmented sector with highly inefficient supply chains of the firms. After GST implementation, companies will

40 CargoConnect - FEBRUARY 2017

have an added incentive to either develop its own logistics arm or tie up with the domain experts which are the 3PL companies. This will benefit the companies as a system of seamless tax-credits throughout the value chain and across state boundaries will bring down the cascading effect of taxes and thus reduce the hidden costs of doing business, especially the benefits of entering 3PL will increase. For logistics players, streamlined logistics processes and better bottom lines will lead to consolidation of the sector. Further, newer players will enter the arena and investors will find it lucrative to invest in the sector knowing that returns are guaranteed in a much more predictable business dynamics. Plus, existing players are fully expected to scale up the business environment that will follow GST implementation in the logistics sector in India. In general, the proposed roll out of GST, would impact the current network structure of the LSPs. LSPs are likely to be more agile, responsive and would need restructuring of their assets and operations to create an optimal network and infrastructure for fulfilling the demand from the changed operations of the customers. • Currently, LSPs have their warehouses located closer to the major distribution centers or manufacturing plants of key clients, even if these locations were logistically unviable. Post GST scenario, there would be a need to recalibrate the network model and build large integrated warehouses in specific, well connected and at logistically optimal locations, with a focus on reducing the overall cost of distribution. • A s c o m p a n i e s f a c e i n c r e a s i n g

competition, their supply chains would need to be more agile and responsive to face the changing demand. Clients would look to move into asset light model, which would provide opportunity for LSPs to acquire greater share for outsourcing and provide end-to-end logistics solutions to their clients. • GST aims to enable free flowing of goods across the country. Currently, the transportation volumes are not uniformly distributed across the country due to regulatory controls on goods transfer and usage of different LSPs for each region. Free flowing movement of goods would result in LSPs gaining larger volumes and nationwide contracts from clients. • With the growth and penetration of e-commerce, demand and distribution is becoming omni-channel in nature. In order to ser v ice om n i-cha n nel distribution, LSPs would need to invest in technology so that they have visibility and control over the entire range of distribution channels and can optimally tweak them in real-time.

Comparing the surge in outsourcing and consolidation by LSPs in India and globally The logistics sector in India is highly fragmented in nature, with several small and mid-size players dispersed across multiple regions, asset types and services. This limits the ability to offer true end-to-end and integrated services to customers. In many key logistics intensive sectors the source and destination locations of cargo are distant and often located in regions with poor access by any mode of transportation. Further, this physical distribution is impacted by an unfavorable modal mix, skewed towards usage of surface transportation modes, roads in particular. The share of road transport in the total freight volume has increased in the recent years, contributing upto 65 per cent of the total share of freight volume. The choice of transportation mode significantly impacts cost efficiencies, with road transportation having the lowest cost efficiency in comparison to rail and inland waterways. Most of the Indian ports are operating beyond 100 per cent utilisation. This results in congestion within the port resulting in

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feature “The logistics sector in India, including 3PL is a highly fragmented sector with highly inefficient supply chains of the firms. After GST implementation, companies will have an added incentive to either develop its own logistics arm or tie up with the domain experts which are the 3PL companies.” P S S Prasad President, Apollo LogiSolutions

Parameter

India

Global

Nature of Logistics Sector

Highly Fragmented

Moderately Fragmented

Modal Mix

Skewed Towards Road

Multi-Modal

Port Capacity Utilization

More than 100 per cent

Optimal

Penetration of 3PL

Low

Moderate

Penetration & Adoption of Technology

Low

High

bottlenecks throughout the logistics value chain. As businesses seek to focus on their core competencies, become cost competitive, agile and responsive in managing their supply chains, they are realising that outsourcing and partnering with a LSP is the optimal way to achieve these objectives. In the developed g loba l ma rkets, the focus of manufacturing and sales organisations shifted towards investments in core activities, with the non-core activities getting outsourced. With the service requirements and expectations from the logistics service providers in the outsourced model becoming more complex (both from a service and cost standpoint), economies of scale have become critical in meeting these demands. These changing dynamics, coupled with larger investment needs in long gestation supply chain business activities led to consolidation by logistics providers who leveraged their network strengths built across geographies. In India, while the core dynamics are shifting towards the same global models of integration, consolidation and outsourcing, the demographics and consumption growth in the smaller cities bring a different set of challenges as infrastructure growth has

42 CargoConnect - FEBRUARY 2017

been slow. The advent of the e-commerce delivery companies brings a different challenge into the mix for the traditional Logistics Service Providers. According to PSS Prasad, President, Apollo Logisolutions, “The logistics sector in India is on a growth curve today. The positive change is based on an increased focus on infrastructure and service delivery by the third party logistics providers, even more so than it has been in previous years. There is an increased focus also on infrastructural development in India, roads, rail, ports and aviation often in the form of public-private partnerships. Even the logistics service providers are providing integrated distribution solutions cutting across multiple modes of transportation right to your doorstep. The only gap is that this multi-modal connectivity has to develop higher efficiency and encourage optimal operation at competitive costs. There is definitely a transformation in the sector and that is also driven by investment in the sector by both investors and strategic operators. In comparison to the Indian contract logistics sector which though on a growth path, is still a nascent industry looking to consolidate, the global contract logistics

sector despite its endemic inefficiencies is a more consolidated sector being benefited by strong existing fundamentals. Globally, the contract logistics sector is being shaped by the introduction of newer, more disruptive technologies.The digital revolution will have a significant impact in the way contract logistics providers source and analyse their data which in turn will lead to new strategies adapted to a much more connected age. Also, automation is playing a key role in development of the industry which includes drones, autonomous vehicles and warehouse robotics.

Challenges faced by 3PL service providers The contract logistics space continues to evolve with changing consumption patterns and expectations. The traditional Indian business model built around long standing relationships is increasingly coming under strain. The core challenges for 3PL are, - We a k a n d s l o w i n f r a s t r u c t u r e development. - Volatility due to frequent changes in regulations. - Shortage of talent and the inability to attract the younger generation to invest their resources and future which could bring fresh and out of the box ideas. Infrastructure development is one of the biggest bottlenecks in the development of 3PL market in India. Infrastructural problems such as poor road conditions, poor connectivity, inadequate air and sea port capacities and lack of development of multimodal transport infrastructure have been constant irritants. Conventional road transportation is relatively costlier than inland waterways or rail transportation. But industries and LSPs are compelled to use the road transportation due to insufficient capacities of rail and port infrastructure as well issues in multimodal connectivity, thus escalating their overall logistics costs. Delays due to tolls, inter-state check points and other inspection stoppages, further add to the logistics costs. Var un Bhat, Senior Consultant, Transportation and Logistics Practice, Frost & Sullivan, said, “The logistics sector in India is highly unorganised and fragmented. Most of the truck fleet

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feature “As the invisible interstate trade barriers come down with the roll out of GST, 3PL activities stand to change significantly with the hub and spoke model replacing the traditional ‘close to the customer’ model which is driven by regulations than by any other considerations.” Sudeep Narayan Director (Integrated Services, Western India), Expo Freight Limited

Tools a 3PL Needs to be Sucessful 64%

Warehouse / DC management Transportation management (Planning)

60%

Visibility

60%

Transportation management (Scheduling)

60% 54%

Electronic data interc hange (EDI) Web portals for booking, order tracking, inventory management and billing

48% 42%

Network modeling and optimization Bar coding

41% 39%

Global trade management tools

36%

Transportation sourcing

35%

Customer order management Supply chain planning

29%

CRM (Customer relationship management)

27% 24%

Distributed order management Advanced analytics and data mining tools Cloud-based systems Yard management RFID

operators are small private players who are unable to get contract directly from the clients. To bridge this gap, mediators get involved to generate business for private fleet owners and take commission. Other than adding another layer of costs in the value chain, this also adds to the operational inefficiencies as private f leet owners typically overload their vehicles in order to increase profit margins. This unorganised and fragmented nature of the market is one of the resasons for low penetration and adoption of technological tools. Freight movement across the country is

44 CargoConnect - FEBRUARY 2017

22% 21% 17% 16%

exposed to multiple taxes under the current tax regime. Other than increasing the costs, this increases administrative burden as precious resource and time is consumed in reporting, compliance and audits. The current tax regime also locks in capital that could be invested elsewhere in the business. P rasad too th rows l ight i nto the challenges by saying, “The scenario is changing as the third party logistics providers are increasingly adopting leaner organisational structures, becoming more agile when it comes to service delivery and operation, are redefining relationships with

all stakeholders and are ready to adopt innovation. Additionally, challenges being faced by the sector include the need for more workforce innovation and an acute shortage of the right human resources talent pool. Further, tightening capacity, mergers and acquisitions and industry innovations are also altering competition, 3PL service offerings and shipper-3PL relationships.The ways in which shippers and 3PLs work together is changing as competition within the logistics industry ramps up. Tightened capacity along with increased consolidation within logistics service providers has resulted in fewer partners for 3PLs and increased prices. The challenge faced by 3PLs today is to be able to differentiate themselves owing to increased competition, to counter which 3PLs areworking towards providing sustained value, innovative solutions and information to facilitate data-driven decisions. 3PLs are also using technology and data to aid shippers in selecting the right shipment modes to maximise efficiency and reduce costs. More players in the industry has also meant increased freight, capacity and regulatory issues, as well as increasingly demanding customers and consumers, the answer to all this is continued innovation.

What the future holds? The growth of the 3PL market in India is linked to the consistent growth of the automotive, consumer retail, healthcare and other major industries, which depend on the services of third-party logistics (3PLs) to source and distribute their products and raw materials. Also, improvements in the logistics infrastructure in the recent past is enabling the 3PL providers to offer integrated transportation and warehousing services and have better control and deliver better services. Another important factor which is expected to lead to the growth of 3PL market in India is the introduction of Goods and Service Tax (GST). This single tax will simplify the current complex tax structure in India which requires manufacturers to pay a number of taxes. Further rapid globalisation, 100 per cent FDI in cold chain segment, private equity investment and foreign direct investment (FDI) in the retail sector in India are

“Continually Innovative”

feature current configuration of supply chain network and would generate demand for new integrated warehouses. Bhat adds to this by saying, “E-commerce, new business models and new formats of trade have put the consumer at the forefront. Meeting consumer expectations consistently, reliably and efficiently is considered to be one of the service differentiators in the market. Technology is increasingly being considered as a fast, reliable and cost effective enabler of achieving this

“Growth of 3PL service provider is on right track and expected to grow more than 20 per cent YOY till 2020. The growth will definitely will be fuelled by introduction of GST and 3PL market is expected to cross INR 50000 crore by 2020. Share of large organised 3PL player is going to increase in overall supply chain.” Vikash Khatri Founder, Aviral Consulting Pvt Ltd

3PL Users Say…

93% Relationships we have with 3PLs generally have been successful.

75%

83%

Our use of 3PLs has contributed to improving service to our customers.

adding to the growth trajectory of the 3PL service providers in India. Vikash Khatri, Founder, Aviral Consulting has a very important point about the future of 3PL service providers in India. He said, “Growth of 3PL service provider is on right track and expected to grow more than 20 per cent YOY till 2020. The growth will definitely will be fuelled by introduction of GST and 3PL market is expected to cross INR 50000 crore by 2020. Share of large organised 3PL player is going to increase in overall supply chain. The driver of growth in 3PL will be automotive, industrial, pharmaceuticals and consumer goods sector.” As supply-chains are becoming more complex and global in nature, logistics outsourcing is expected to move towards a more asset light, end-to-end integrated,

46 CargoConnect - FEBRUARY 2017

70%

3PLs provide new and innovative ways to improve logistics eectiveness.

Our use of 3PLs has contributed to reducing our overall logistics costs.

73%

Overall, we are increasing our use of outsourced logistics services.

demand-driven model, providing multiple growth opportunities. Investment in infrastructure development, capacity enhancement of ports, development of multimodal freight connectivity corridors, thrust on manufacturing etc. are expected to drive the transportation segment. With companies facing increasing competition, they are expected to increasingly outsource their logistics functions and focus on their core competencies. This will open up opportunities for integrated 3PL service providers. Warehousing requirement is expected to increase significantly due to growth in manufacturing, trade and consumption driven sectors. Growth in e-commerce and new channels in retail trade is expected to increase the demand for warehouses and cold storages. Implementation of GST would affect the

differentiation in the unorganised and fragmented market. Growth in consumer led demand is expected to increase the demand as well as pace of technology adoption in the supply chain.” Narayan believes that the demographics and consumption growth will continue to have a significant positive impact on 3PL business. Add to this the fact that India remains one of the few growing economies globally, 3PL activities will continue to attract global investments, talent and adaption of best practices and technology. For 3PLs, India is on the brink of an excellent period of improved infrastructure, easing of laws for conducting business and availability of excellent technology. As logistics is unavoidable, all 3PLs which add value to the supply chain would be witnessing unmatched growth in the next decade.

FEATURE

Rise of Greener Airport Movement India became one trillion dollar GDP economy in 2007-08. At that stage, it had two busy and overstretched international airports, Mumbai and Delhi, with Chennai, Bengaluru and a host of other cities sharing the rest of the international aviation traffic. It was not enough and it was a shame. Gradually airports were upgraded. It is a fair bet that a one trillion dollar GDP economy, especially with such a population, could sustain three or four major international airports and four to six somewhat smaller but very busy ones. Sana Husain reviews Indian airports that are witnessing tremendous commercial transformation through publicprivate partnerships, resulting in the development of dedicated retailing areas.

48 CargoConnect - FEBRUARY 2017

ach of the mega regions will need such an airport capacity in ten years. Where is it going to come from? The NCR has one admittedly impressive international airport. Work on a long-delayed second airport, in western Uttar Pradesh, is finally starting. To be honest, planning for a third international airport in the broader NCR megaregion expanse should also start, not to mention half-a dozen smaller airports. They will all be needed in next ten years. An extensive market research report from Stratview Research released in October states that the airport segment is expected to remain the growth engine of the global passenger boarding bridge market during the forecast period. The segment is expected to experience the fastest growth over the next five years, driven by on-going and upcoming airport infrastructure projects, modernisation of existing airports, and green field airport projects. There is a need to have a renewed look at the results of Indian public-private partnership in airport privatisation, a reduction in taxation and for India to join international efforts on sustainability for air transport, believes the International Air Transport Association (IATA). These will be key enablers of a vitally important industry to India to be an even bigger catalyst for social and economic development. “Air transport contributes enormous value to India, stimulating growth and development with increasingly accessible air connectivity. India’s air transport indus-

try has been through tough times. While many Indian airlines are now posting profits, the sector is still in loss territory with many challenges. These include a massive debt burden, onerous regulations, expensive airport infrastructure and high taxes. Addressing these will bring huge social and economic benefits to India,” said Alexandre de Juniac, Director General and CEO, IATA.

AAI selects Purandar taluka for greenfield international airport The Maharashtra Government gave a goahead for carrying out a detailed project report (DPR) for the greenfield international airport, which will come in Purandar tehsil of Pune district. The proposed airport will be spread over 2,400 hectares and the site has been already approved by the Airports Authority of India (AAI). “The proposed airport will have two airstrips-each having length of four km. It will handle cargo along with passenger traffic,” said Devendra Fadnavis, Chief Minister, Maharashtra. “Most of the land would be acquired from villages such as Pargaon, Munjewadi and Memane from Purandar teshil,” the Chief Minister added. On being asked about the proposed airport in Kolhapur, around 230-km from Pune, Fadnavis replied, “The state government is spending `40 crore for Kolhapur airport and it will be a domestic airport”. The Chief Minister also spoke about the Nagpur airport, which is also going to be a cargo terminal. “The request for quotation and request for proposal is completed. Six companies have submitted bids for it including Tata, Essel, IRB and GMR among others. For the

FEATURE India’s second eco-friendly airport comes up at Vadodara

first time, six companies have come forward for an airport,” he added.

Public-private partnership model The new Pune international airport at Purandar would be built on a public-private partnership (PPP) model with an obstacle limitation survey (OLS) expected to begin in a few months. A Maharashtra A ir port Development Company Limited(MADCL) official told that they would float tenders to select a consultant for the study. After this, a master plan would be drawn for the project and sent to the Union Government for approval. “With the project involving a lot of money, the Pune airport will be built on a PPP model. The total cost of the upcoming airport at Purandar cannot be guessed at this point. However, it will cost more than `15,000 crore. But before all this, an OLS needs to be carried out,” the official said. “It should take a month or two for us to finalize a consultant to carry out the OLS at Purandar. Once the report comes in, it will be sent to different ministries like the ministry of defence, ministry of home affairs, civil aviation ministry, etc. Apart from the main structure (the airport building), several infrastructural facilities need to be developed,” the official said. Under the OLS, authorities study and list details like overhead electricity lines, high-rise buildings in the area and wildlife habitat at the airport site.

India’s second eco-friendly airport in Vadodara is all set to open its doors to passengers. Located on the city’s outskirts, the new terminal is equipped with facilities of international standard. The facility has also been rated by Green Ratings of International Habitat Assessment, the highest national rating for green bui ld i ngs conceived by The Energy and Resources Institute (TERI). Narendra Kumar Shukla, Project in-charge and GM, Airports Authority of India, said, “This terminal building boasts of several features of a green building. Energy efficient glass has been used. A sheet measuring 164.4 mts has been used on roof top, which is a world record. As a green initiative, sugarcane pulp has been used for decoration at the VIP and CIP lounge. Several other features of a green building have been incorporated in the building.” The new integrated modular terminal building at Vadodara is part of the Central Government’s ongoing project to modernise existing airports and develop them at par with international airports. Constructed for a whopping `160 crores, the new facility is spread over an area of 17,500 square metres.

Mohali: Ready for a front-foot drive “With the international airport becoming operational and better road connectivity with upcoming sectors and integrated townships, Mohali is going to emerge as commercial hub soon and developers as well as investors are making their moves in anticipation of this already”, says Dipinpreet Singh, Director, Westcoast Investments.

What’s on offer? One of the major indications of movement in this segment is the launch of new projects as well as aggressive marketing of the ones that are already under construction. With World Trade Centre, Homeland Unity being the latest ones to enter the commercial and office space, Mona Townships’ Jade Business Park, Bestech group, JLPL, TDI etc have also been in a sale overdrive of late. The airport road area is emerging as a promising commercial realty hub going by

ANDHRA PRADESH

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Muzaffarpur goa

Mopa GUJARAT

Fedara

KARNATAKA

Bijapur Gulbarga Hassan Karwar Shimoga

MAHARASHTRA

Navi Mumbai PUNE

New Pune International Airport Shirdi Sindhudurg PONDICHERRY

Karaikal

RAJASTHAN

Ajmer (Kishangarh) SIKKIM

Gangtok TAMIL NADU

Chennai

TELANGANA

Kothagudem Nizamabad UTTRAKHAND

Pithoragarh

FEBRUARY 2017 - CargoConnect 49

FEATURE the number of new projects coming up here. Earlier this month, the Greater Mohali Area Development Authority (GMADA) also launched a scheme offering 200 industrial plots. As many as 145 plots of 500 square yards in IT city and 55 plots of 1,000 square yards near the international airport are on offer. The authority has fixed a rate of `14,000 per square yard in both the projects. GMADA had launched a commercial as well as a residential scheme for 131 sites, including two school sites, built-up booths and SCFs in different parts of the city.

PM Modi inaugurates terminal building of Vadodara airport Prime Minister Narendra Modi inaugurated the integrated terminal building of Vadodara Airport in Gujarat, which is now the country’s second green airport after

17,500 sq mt, the new integrated terminal has been built at a cost of `160 crore. It has been designed to handle 700 passengers, including international fliers, per hour with 18 check-in counters, which would help in a seamless boarding process. It took about seven years to complete the project as the then Civil Aviation Minister Praful Patel had laid the foundation stone in 2009.

CII seeks reactivation of Salem airport The Confederation of Indian Industry (CII) Salem district has urged the Airports Authority of India (AAI) to take effective steps for the reactivation of Salem airport. A delegation of the Salem district CII called on V V G Raju, Regional Executive Director, Airports Authority of India, Southern Region, Chennai, during his

Greenfield airport in Goa Modernised in India, GMR operates the airports in Delhi and Hyderabad. It recently won the project to build a greenfield airport in Goa. The compensation money is likely to be used by the company to fund the Goa airport that is estimated to see an investment of `3,000 crore. Analysts term it as a landmark judgement and a positive step for the company. “It’s a landmark judgement and positive for the company. This will help the company ease some of its debt burden. So, all in all, a progressive step for aviation and South Asia with regards to airport disputes,” says Mark Martin, CEO, Martin Consulting, an aviation consultancy firm. GMR Ma le Internationa l A ir port L i m ite d (GMI A L), a subsid i a r y of Bengaluru-based GMR Infrastructure Limited said that it has been awarded compensation of approximately $270 million by the three member international arbitral tribunal.

AAI’s pact with Singapore Cooperation Enterprise

Kochi, and said such projects will encourage people to take up environment-friendly constructions. The PM expressed his happiness on the occasion and said that two airports have now joined the green movement in the country. “I am happy that two airports in India have joined the green movement – one in Kochi and now another one in Vadodara,” he said. “It will be considered as one of the topclass airports of the country. Construction of such iconic buildings on green concept will encourage citizens to take up construction on these lines,” said the Prime Minister. He also said that the airport is constructed on the principle of green infrastructure using bricks of fly ash. Spread in an area of

50 CargoConnect - FEBRUARY 2017

recent visit to the city and appraised him on the immediate need for the reactivation of the Salem airport for the overall development of western region. According to CII sources, Raju informed the delegation that the Salem airport was a full-fledged facility in the region and could resume flight operations at any time. About the regional connectivity scheme, he said that the signing of memorandum of understanding among the State Government, the Civil Aviation Ministry and the Airports Authority of India will enable reviving of the airport under the recently introduced Regional Connectivity Scheme (RCS) of the Civil Aviation Ministry, without any delay.

Airports Authority of India’s (AAI) proposed tie-up with Singapore’s Changi Airport to operate and manage Jaipur and Ahmedabad airports might help improve efficiency and non-aeronautical revenue but experts doubt if airport management contracts can be awarded without bidding. “We welcome the move as management and commercial competence is missing at AAI. The terms and tenure of engagement are not clear and we are not sure if Changi will get to manage both the airports without bidding,” says Kapil Kaul, CEO, Centre for Asia Pacific Aviation (South Asia). While the government has scrapped plans to privatise airports, it is open to giving management contracts to private and global entities. AAI has signed an MoU with Singapore Cooperation Enterprise, a Singapore government agency, proposing Changi Airports International manages Ahmedabad and Jaipur airports. A formal agreement with Changi has not been signed yet. The public-private partnership for Mumbai and Delhi airports covered operations, management and development of two airports. However, the scope of the proposed project will be limited to opera-

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FEATURE tions and management of existing infrastructure of Ahmedabad and Jaipur airports. There will be no leasing of airport premises. “We will hold discussions with Changi Airport and the partnership model will be decided after negotiations,” informs R K Srivastava, Chairperson, AAI.

Airports: The next battleground for retailers in India Given the increasing number of air passengers every year in India and a crunch for quality retail space being faced by many foreign and domestic retailers across metros, airports are emerging as the next battleground for retailers. Following in the footsteps of major transit points globally, both the Delhi and Mumbai airports now offer a good tenant mix and demand for re-

sitting areas are provided by the airports. In case the F and B store is not in a food court or has limited store formats, it may have a sitting area within the store or if in the food court, reserved exclusively for its patrons.

India versus international transit airports Delhi International Airport Ltd (DIAL) surpassed the 48 million passenger mark in FY2015-16, witnessing a growth of 18 per cent in traffic over the previous year. Also, Indian airports are witnessing tremendous commercial transformation through public-private partnerships, which is resulting in the development of such dedicated retailing areas. Retail developments such as Worldmark at Aerocity (near Delhi

guidelines on taking into account noise pollution during the time of environment clearances. The revised standards come in the wake of National Green Tribunal’s recent order to monitor noise limits at the Delhi International Airport. Residents of Vasant Kunj, Bijwasan and Indian Spinal Injuries Centre had moved to the NGT alleging noise violations and its impact on health. Following NGT’s orders, civil aviation ministry ordered the country’s busy airports to monitor noise levels. Presently, airports follow the Noise (Regulation and Control) Rules, 2000, which categorises airports as ‘industrial zones’, where the noise limits are 75 decibels (dB) during the day and 70 dB during the night. But, for existing busy airports such as Mumbai and New Delhi, MoEFCC’s new draft standards has brought down the limits to 70 dB for day and 65 dB for night. For ‘other existing airports and upcoming or new airports’, the standards are 65dB for daytime and 60dB for night time. For airport operations and noise standards, day time is categorised as the period between 6am and 10pm, while night time is categorised between 10pm and 6am. The specified limits exclude the aircraft landing and takeoff noise as that breaches the 100dB mark. Aircrafts generate maximum noise during take-offs and landing and the noise levels depend on the kind of engines they use.

Chalking out the next plan tail space is expected to rise at other busy airports too. The current retail-tenant profile at Indian airports includes brands ranging from apparel to wellness, convenience, travel and books, electronics, fashion accessories, opticals/sunglasses, watches, jewellery, F and B, perfumes and cosmetics, wine and liquor as also travel accessories. More brands belonging to categories such as fashion accessories, F and B, opticals/sunglasses plan to expand by opening stores in airports too. The average store size varies according to the retail category. So while apparel stores can have a store size ranging anywhere between 500 sft and 5000 sft, bookstores have an average store size of 200-300 sft. F and B store sizes are generally smaller as common

52 CargoConnect - FEBRUARY 2017

airport) are good examples of the potential for branded retail to come up around these facilities. It would be interesting to see if some other airports see similar developments in the future, especially the upcoming international airport near Mumbai.

Threshold noise levels at airports reduced The country’s existing busy airports will now have to follow stricter noise pollution norms and airport operators will have to model noise for upcoming airports. The Union Ministry for Environment, Forest and Climate Change (MoEFCC) has come out with draft noise standards for airports, reducing the existing threshold for noise limits. The draft notification has also issued

India’s ‘zero mile’ marker, the center of the country, has been located in Nagpur since the British colonial era. Gadkari said he wants to accelerate construction of a long-delayed international cargo hub and expanded airport, spread over an area the size of 4,000 football fields, so that it provides 50,000 jobs by 2019, compared to 9,600 staff today. What is not clear is how quickly these ambitious projects will be completed. While a new expressway to Mumbai has been approved, critics say construction will mean acquiring land from reluctant farmers which is a slow process. Gadkari’s international cargo hub has been partly constructed and some tenants have arrived. But, the airport expansion has stalled, although a tender for the project is likely to be launched this year.

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54 CargoConnect - FEBRUARY 2017

FEATURE

Air Freight Stations: Is India Lagging Behind? Globally, Air Freight Stations have been approved as the successful model for decongestion in airports. Once fully implemented, AFS will substantially improve the air cargo infrastructure in India. Nicin Varghese delves into the concept of AFS and analyses the current scenario of the country regarding the same.

FEBRUARY 2017 - CargoConnect 55

FEATURE

t is very unfortunate, a project, conceived almost nine years before has not been fully implemented. The government can blame the industry, the industry experts can blame the government and the people can blame red tapism. But, ultimately this hinders everybody’s growth and everyone is in loss. Air Freight Station (AFS) was introduced in Chennai in 2007 to decongest the air cargo terminal. The first Air Freight Station at CWC, Virugambakkam in Chennai did not take off due to opposition from the airport operator on the ground that they will lose revenue from storage and handling, if the cargo is moved to an off-airport location. AFS is an off-airport common user facility equipped with fixed installations of minimum requirements and offering services for handling and temporary storage of import/ export goods, loaded and empty Unit Load Devices (ULDs) and cargo in bulk/loose for home consumption, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export. In the case of express companies, there could be a dedicated AFS for express cargo or they can also make use of an AFS meant for general cargo or ICD to handle air cargo. AFS will create an enabling environment for promoting international air cargo operations by reaching out to hinterland regions of the country besides de-congesting the congested air cargo terminals in some gateway international airports that face high dwell time. By also specially authorising some of the ICDs to cater to the international air cargo operations, the existing facilities in these ICDs could be fully utilised. These policy guidelines governing AFS would be common and binding on all stakeholders concerned in the supply chain of international air cargo operations such as airlines, air cargo terminal operators, airport operators, freight forwarders/ customs brokers, exporters/importers and all regulatory organisations. The Central Government directed staterun Central Warehousing Corporation (CSC) to set up ten new AFSs in busy cargo traffic cities in 2014. Hyderabad Menzies Air Cargo Pvt Ltd, a joint company between GMR Hyderabad International Airport Limited and London-based Menzies Aviation Plc, started AFS in Chennai in association with Central Warehousing Corporation, on

56 CargoConnect - FEBRUARY 2017

Existing Supply Chain Shippers

Road Transportation

Freight Forwarder Warehouse

AIRPORT TERMINAL Customs Documentation and Examination Cargo Acceptance and Examination Security Checks (X-ray Screening / physical check) Palletisation

Road Transportation

Transportation to Aircraft Air Transportation

Final Destination Distribution Centre

December 8, 2014. Currently, India has AFS at Chennai, Ludhiana, Kanpur and Mulund. India’s first private AFS, Indev Air Freight Station, started operating in Chennai in 2015. “The unit loads or ULDs will be moved directly from aircraft to bonded trucks and those will be moved to the facility where all similar operations to what is available at airport will be provided. The customs officers will be present there round the clock to do the entire formalities, including the online filing, assessment, inspection and delivery,” said Xavier Britto, Chairman, Indev AFS.

Consignee

How It Helps? It is hoped that in due course, AFS will give a great boost to the air cargo industry, facilitate its operations, and decongest the saturated cargo facilities and infrastructure at airports such as Mumbai and Chennai, which are experiencing tremendous problems due to congestion. Air cargo and logistics industries will derive tremendous benefits when more number of AFSs become operational. AFS will enable exporters, importers and the logistics and air cargo industries to function in greater harmony with one another. The customs, security and other regulators’ formalities can be completed at the AFS, and the cleared goods can be speedily transported to the airport in the case of export goods, and to the consignee’s premises in the case of import goods. It is expected that the facility will be able to cope with the high degree of vehicular movements, thereby, facilitating the speedy offloading and loading of export and import goods. AFS will be the one stop solution for all the stake holders involved, all the operational activities will happen at a singe customised facility which will help in keeping the operating costs very low. The basic idea of AFS is to provide airlines with nodes near the production centers. These AFSs will substitute the work which has done in the cargo facility of the airports

FEATURE

Future Supply Chain (through AFS) Shippers

Road Transportation

Freight Forwarder Warehouse

Air Freight Station

Road Transportation

Customs Documentation and Examination Cargo Acceptance and Examination Security Checks (X-ray Screening / physical check) Palletisation

Transportation to Airport Terminal Transfer of pallet to aircraft

Air Transportation

Final Destination Distribution Centre

Consignee

of India (AAI), that operates major airports controlling the air cargo operations, was not in favour of AFS as it felt that it may lose revenue and control if the cargo is moved out to an off-dock AFS facility from cargo terminals of airports. Other concerns rise from Operation, Management and Development Agreement (OMDA) between AAI and airports that makes cargo handling and terminal operation subject to airport business. Due to this, terminal operators have a mixed reaction towards the introduction of AFS concept in India. Alongside this, cargo terminal operators at airports are in receipt to demurrage charges and storage and facility costs provided to the airlines and businesses linked to the airport business. But as AFS coming into place, most of the business will be shifted from the cargo terminal operators to the new facility that will hamper airport business and dilute income of the operators.

Switch On The Positive Mode

before trying to draw benefits from AFS, we have to improve the infrastructure facilities. We need better connectivity between the AFS and airports. There should be dedicated lanes for cargo movement from the AFS to the airports. such as customs documentation, weighing of the cargo, parceling the cargo and security checks, etc. at the AFS instead of the airports. They will help to move proceedings at a much higher pace. “AFS has the scope and a unique opportunity to contribute meaningfully to enhancing and improving the air cargo industry. It will definitely decongest the saturated facilities and infrastructure at various airports. This is an urgent requirement, as the air cargo and logistics industries are currently undergoing unbearable stress and strain due to these factors. By virtue of their strategic location, AFS will become a median between the hinterland, where many manufacturing hubs are located, and the airports/seaports. Thus, the exporters and importers will be able to derive the dual benefits of speed-

and ease of access to such facilities,” says S L Sharma, Member, Board of Advisors, ACAAI.

What Hinders the Growth? Globally, air freight and air cargo are rarely viewed in isolation. Instead, the supply chains are viewed as seamless, multimodal elements hopping between air, sea and surface modes depending on the routes, destinations and other requirements. While all over the world AFSs have been successful, India has somehow lagged behind. As mentioned, the concept of AFS was first introduced in 2007, in Chennai but it failed to takeoff because of the fear that there would be a major revenue loss for the airports if the cargo operations are moved to an offsite venue. The government-controlled Airports Authority

Industry experts suggest that airport terminal operators, especially cargo, must not fear about the implementation of AFS, as it will help ease the knotted flow of the overall trade which is consequent to open new opportunities with increased business earnings from the airlines and cargo handling at airports. Successful implementation of the AFS model will also hugely benefit the EXIM trade. But, before trying to draw benefits from AFS, we have to improve the infrastructure facilities. We need better connectivity between the AFS and airports. There should be dedicated lanes for cargo movement from the AFS to the airports. The need of the hour is to develop infrastructure not only in the air cargo sector but also in road, rail and water transport, foreseeing a bright future in the interconnected network with a structured multi-modal transportation. A comprehensive policy framework governing air freight stations is needed in order to meet the target of $700 billion exports by 2018. Industry hopes are high as the Indian government has earmarked about `50,000 billion investment in the air cargo sector according to the 12th Five Year plan (2012-17). We should work towards developing a supportive ecosystem involving AFS that generates the benefit of symbiotic relationship; enabling efficiency, increase in transport feeder frequency and economies of scale.

FEBRUARY 2017 - CargoConnect 57

Interview

With their new Muscat Hub Cargo Facility coming online, Oman Air has great expectations for the year 2017. Tying its hands with the cloud technology, they are under the process of finalising a complete cloud based cargo management system. Mohammed Al Musafir, Senior Vice President â&#x20AC;&#x201C; Commercial Cargo, Oman Air, reveals their plans for this year, seamless relationship with Indian cargo industry and a lot more with Nicin Varghese.

Because We Understand It Is Valuable For You 60 CargoConnect - FEBRUARY 2017

Can you tell us about your ‘Cargo Wings’ system? How does it help to integrate various processes in Oman air cargo? Although Oman Air Cargo at the moment is using the ‘Cargo Wings’ system, we are in the process of finalizing a 100 per cent cloud based cargo management system to be used moving forward. A cloud-based system offers us a robust set of tools for managing warehouse and ramp operations, accessible from any device with a secure Internet connection. Every partner in the Oman Air Cargo chain will have instant access to shipment information. All this means that we remain in complete control of shipments from drop-off to delivery. With reliable, transparent, and real-time data, Oman Air Cargo offers around the clock tracking capability, giving our clients the peace of mind they deserve.

How does Oman Air Cargo ensure an uninterrupted and transparent cool chain to the end users? Across the globe, exporters and importers rely on our innovative temperature-controlled solutions to transport their temperature sensitive products internationally. We work tirelessly to ensure that these products are processed and transported with the utmost care and attention to detail. We are also looking at investing in more cool dollies and temperature-controlled ULDs (Unit Load Devices) to further improve our product line in order to serve our growing customer base and become the benchmark in end-to-end cool chain solutions.

Can you please tell us about the e-services you provide? E-services are quickly becoming integral in the development and evolution of our industry. We at Oman Air Cargo look at technology as an advantage to constantly improve our operations and services. Our new cloud-based system will offer end-to-end transparency and control, which means our clients will be able to track their shipments around the clock. This new cargo management system will also allow us to shift towards E-AWB to serve our clients better. Oman Air Cargo’s upcoming mobile application (available on IOS and Android), will give our clients access to real-time information, no matter wherever they are. From flight schedules, booking capability, and local agent support, to tracking the status of shipment throughout the logistic chain, all available at the tip of a finger.

A dedicated mobile application will also be available for our global agents, giving them the platform to offer better customer service, greater efficiency and instant information for better decision-making, all with client satisfaction being the ultimate goal.

What is Oman Air Cargo’s way of providing a hassle free cargo service for valuable goods? We look at all cargo transported on Oman Air Cargo as ‘valuable’ because, no matter what it may be, it is valuable to the client. However, when our clients opt for our special valuable products, we understand the importance of added security, safety and speed of delivery. Be it jewellery, precious metals, or currency, whatever the valuables may be, we provide our utmost security solutions to ensure their safety. Along with a custom-built storage area, VAL boxes, and an innovative chain of delivery process, we have dedicated security personnel to escort the cargo to and from the aircraft, ensuring its safety from drop-off to delivery.

Can you please explain about the customised services provided by Oman Air Cargo, especially for ‘live animals’? Oman Air Cargo follows the industry standards in terms of customised services. Depending on our client’s special requirements, we offer tailor-made solutions to meet the needs for each shipment. Our ‘Live Animals’ offering will be upgraded with better quality in the next 12 months. With our new Muscat Hub Cargo facility coming online at a later stage in 2017, we will have a dedicated AVI center with highly efficient and trained staff to ensure a safe, secure, hygienic, and most importantly comfortable journey across our worldwide network. We treat our client’s animals like our own, with tenderness and care.

What is your take on the much debated Open Skies Policy by the Government of India? We are excited about the steps taken by the Government of India to promote Open Skies with their new policy. We believe that the consumer gets a better choice through fair competition and we are looking forward to expanding air services in India. Oman and India have long established trade ties and any increase in services will only help the two countries to expand their economic and cultural relations even more. India is an extremely important and the biggest market for Oman Air. We remain positive about future growth.

How has the Indian market evolved for the group till date? The Indian market is of major focus in our expansion plans to ‘become the best’. We are constantly studying the market to see how we can strengthen our presence in the region. At the moment we serve 11 destinations across India, and we hope to increase this number in the near future. We were honoured to receive the award for ‘Best Cargo Airline for Valuable Goods – North and East’ this year at the India Cargo Awards 2016 as a testament to our focus on customer satisfaction and offering best-in-class services to our clients.

What kind of challenges do you face while transporting dangerous goods? In accordance with the IATA Dangerous G oo d s Reg u l at ions, we e nsu re t he highest standards of safety at all stages of transporting dangerous goods. Our operations team are periodically sent for DGR training in order to be informed on the most recent processes, procedures and regulations to handle DGR using the latest industry standards. Our new Muscat Hub Cargo facility will have constant security supervision and surveillance in its dedicated DGR storage depository, with further dedicated storage for radioactive material. Our expert teams ensure the secure movement of goods throughout our transportation chain, ensuring safe delivery under the most secure operating conditions.

How does Oman A ir maintain a standard to keep a check in terms of risk-free supply chain systems for pharmaceutical products? We take pride in knowing that we have an active role in delivering life-saving medicine on time and perfect condition across the world. Our team works tirelessly to ensure that pharmaceutical products are dealt with using our arsenal of temperature-controlled equipment to maintain an end-to-end cool chain solution. We have various processes in place to track and monitor special shipments across our logistics chain, along with a prealert system to inform delivery destinations of inbound special consignments. Pharmaceuticals are of special interest to us at the moment as we look to expand our special product offerings and maintaining the quality and condition of temperature-sensitive products throughout our logistics supply chain. We look to offer innovative solutions with several levels of protection during air transportation, handling and ensure that we continuously conform with meticulous quality assurance standards.

FEBRUARY 2017 - CargoConnect 61

Interview

Focussing on highest value creation for the customers and shareholders

T Manivannan Vice President

T.A. Please tell us about the genesis of your operations. How has the journey been so far? A.V. The journey from being the supply chain division of an IT distribution company to an end – to – end supply chain solutions provider has been a long one where we have built on our capabilities. We have gained from our experience in the industry and by engaging outside talent as well, which has helped us to get the best practises in place. We believe that human capital is our biggest asset. ProConnect is the erstwhile supply chain division of Redington, formed in 1996 to manage the warehouses and distribution. Redington initially distributed IT products and then forayed into non-IT products, which gave the supply chain division vast experience in handling warehousing coupled

62 CargoConnect - FEBRUARY 2017

Headquartered in Chennai, ProConnect Supply Chain Solution provides end to end supply chain solutions across the country with a growing network of over 170 warehouses of 4 Mn Sq.ft., handling 60,000 SKUs and more than 150,000 tons of stock per annum. ProConnect has also strengthened its presence in east through its subsidiary “Rajprotim Supply Chain Solutions Ltd”. Over the years, ProConnect Supply Chain Solutions has emerged as a major player in the warehousing and supply chain domain and has earned many accolades to its name such as “Best 3PL Company of the Year – Hi-Tech”,“Customer Intimacy & Service Excellence Company of the Year” and “Best Mission Critical Service Company of the year”. In an exclusive interview with Tariq Ahmed, the Vice Presidents of ProConnect, T Manivannan and A Venkataraman talks about what keeps them going, their key areas of operations and much more. Here are the excerpts:

with transportation and project management for a wide variety of products. In 2008, the supply chain department forayed into the 3PL industry and started serving its first outside client in the telecom industry for which we handled warehousing services. From then on, there has been no looking back in our journey and the biggest milestone in this journey has been becoming ProConnect in 2012. For ProConnect, our journey has just begun and we have many miles to go.

T.A. Can you please elaborate about your warehouse management services and storage solutions? T.M. The warehousing services that we offer are more like an ala carte menu where our solutions are tailored to our customers’ requirements. The services that we offer range

A Venkataraman Vice President

from conventional block storage warehouse operations to state-of the art advanced distributions centres bolstered by our best- of breed warehouse management systems. Our system is able to seamlessly integrate with the customer’s ERP and offer clients a real time view into their supply chain. This enables them to be more agile and adaptable to the end customers’ demands and external disruptions. Our automated centres are equipped with very narrow aisle storage racks and vertical reach trucks allow us to efficiently be able to handle high value and fast moving goods. This combined with our handheld terminals in our RF environment gives our warehouse a technological edge. We are also able to offer temperature controlled storage as per customer requirements and also yard management which we offer for certain clients in the telecom field.

Yes, while we are providing the hi-tech storage solutions, we are also offering the conventional mezzanine storage, multi tier shelving, block storages etc to cater certain requirements. For certain FMCG clients, we do offer some special storage solutions like aerosol room, drugs storage etc.

T.A. What sort of security measures have you adopted in your warehouses in order to maintain optimum security of the cargo? A .V. O ur procedures of secur it y a re comparable to what is usually followed in best practices across the industry. This would include screening of staff and personnel before they enter the warehouse and also when they are leaving not only through manual frisking but also through hand held metal detectors and walk through detectors. This includes intrusion alarms and night vision cameras paired with motion sensors and round the clock security to guard against pilferages. We also have enabled IP cameras with motion detectors in all our warehouses which give us the capability to monitor the warehouses both locally and centrally. Our compliance with the ISO 9001: 2008 QMS gives us the ability to track,trace and document our process. This results in better control over our procedures of security. But, what would really set us apart is our Warehouse management system. This has the ability to track the whereabouts of any stock within the warehouse that enables us to consistently guard against inventory shrinkage and ensure that we maintain very negligible variance across our warehouses and over hundreds of thousands of stock. We also have strong room for select high value and precisous stocks.

T.A. It’s been t w o months since demonetization has swept the nation clean. How are the SCM service providers like you recovering from the losses incurred as a repercussion of the drive? T.M. The illiterate of the 21st century would be those who do not unlearn their old ways and relearn. In a growing country such as India, it is imperative that we remain adaptable to such changes in this regulatory environment. Most of the losses have been indirect. Initially the withdrawals of higher denomination notes had led to lower efficiency in TAT and trade was restricted in many quarters. In the initial period there was a shortage for the daily disbursement of cash to temporary employees and also for daily

cash to our fleet. This led to a drop in the fleet utilisation. Over time,and as the crunch eased out, we moved towards a more cashless model with the use of Petro cards and toll cards and, thus, we have been able to get back on our feet. Currently, there is still a squeeze in the associated services but that too would drop over time with more cashless moves.

T.A. Now that GST has been passed, how do you plan to make the most of it in order to provide even better services and logistics solutions to your customers? What is your take on centralized warehousing? A.V. GST in many ways will be the biggest financial reforms since independence and will also be the biggest game changer in the Logistics space as well. India’s logistics spend is around 14 per cent of the GDP and of this 55 per cent of the cost is due to inventory costs. This used to be the trend in US around the

India’s Logistics spend is around 14 per cent of the GDP and of this 55 per cent of the cost is due to Inventory costs. 1970’s and with GST they have evolved to a much leaner logistics spend. This gives a lot of scope for us to improve on this and with only six to eight per cent of the logistics business being handled by the organised 3PL players we will have a lot of opportunities coming our way and we will approach it with the best of warehousing solutions through our technology driven Automated Distribution Centres (ADC) across strategic locations in India and work towards the Warehouse consolidation trend. Transportation will be the next biggest driver post GST and the trend post GST will be consolidation of warehouse space calling for better transport network. The current average distance covered per day is around 400 kilometres for a truck and in the GST regime with the need for transportation increasing and with the Infra improving the average

distance covered per day is expected to increase to around 600 to 800 kilometres per day and the utilisation of vehicles with more than 25 tons carrying capacity will also grow resulting a in a better transport efficiency and better costing. We, with our PAN India presence and through our transportation capabilities will provide delightful customer experience to our clientele. Strategic positioning of warehouses for any network has been the biggest decision any business takes and all these days, this was driven more by statutory requirements than logistical requirements. With GST, the need for warehouse consolidation will take shape and will be driven primarily by factors such as market reach, cost of operation, geographical reach and centralised warehousing will be the key towards such decisions. ProConnect pioneers in such studies and has been helping its customers in positioning their warehouses with a scientific approach. We are GST ready from statutory point of view to information technology to supply chain.

T.A . What are your future plans for expanding your arms in the logistics sector? T.M. Mission Critical Services is another key component of our offerings. Many customer requirements today are veering towards urgent deliveries, small FSLs near their site, technical screening and value added services. This, therefore, requires one to develop an end to end solution based offering which includes imports/exports as well. With the advent of GST we would be looking towards servicing our customers through larger warehouses and also by looking to our strategic partnerships with service providers for the best in class TAT. As mentioned earlier, being an organised player in the 3PL industry, our intent is to understand our client’s needs and move in the direction that suits them in terms of warehouse operations and locations. In this period, most companies would look to move forward to an asset light model based on business considerations. Also, the inventory turns would drastically drop and there would be a lower chance of stocks expiry. To ensure that we are in line with the higher transactions we are looking towards significantly automating our warehouses and enabling technology to be more efficient in the larger warehouses that we see in the postGST era. We are closely working towards digitalisation in our entire supply chain operations and thus, we stand out as a clear Integrated Logitics Player – ILP.

FEBRUARY 2017 - CargoConnect 63

Interview

Objectives rightly met The 23rd Biennial Convention of Federation of Freight Forwarders’ Association in India, which was held at Kochi from January 19 to January 21, was a huge success that was attended by freight forwarders and leaders of the industry. The convention was also thronged by overseas delegates. In a post event interaction with Gaurav Dubey, Samir J Shah, Chairman, FFFAI shares the main highlights of the event. Here are the excerpts:

overflowing. This carries great significance for the logistics industry in our country. FFFAI is sincerely endeavouring the task of wooing women to logistics business for the greater interest of the country. Another objective of the convention was to hold it in southern part of India, which was long overdue. There was tremendous enthusiasm among the FFFAI members and significant number of delegates from Cochin and other South Indian states participated in this convention, which would definitely strengthen the strength and future activities of FFFAI in this region.

The Kochi convention of Freight Forwarders’ Associations in India (FFFAI) was based primarily on the services of Customs brokers. Do you think the objectives of the convention were met? The objective of the 23rd Biennial Convention of FFFAI was to establish the growing importance of Indian Customs Brokers and freight forwarders in respect of their contribution to the manufacturing and export/import industry of the country. In line with the theme of the convention: “Indian Customs Broker- Trusted Single Entity Logistician-Capable and Dynamic”, apart from inaugural session, we had eight business sessions which were very well addressed by eminent speakers possessing thorough domain knowledge. There were intelligent and fruitful interactions by full and active participations from the delegates. Interestingly, we had a full session on “Assuring Gender Equalisation” addressed by women in logistics professionals. Chaired by Dr Malini Shankar, DG Shipping, the session witnessed huge participation and overwhelming responses from both male and female delegates with the convention hall

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What were the main takeaways of the FFFAI convention? How will it be beneficial for the freight forwarders of the country? Not only quantity, we have also seen a qualitative change in respect of participation and level of discussions held. In depth discussions especially on future of Customs Clearance business in India, GST, technology, digitisation, cashless transactions, skill development, trade facilitation, opportunities in costal shipping, logistics trends and opportunities in the international markets and women’s participation in logistics business were the major takeaways of the convention. The delegates also had very good opportunities to interact with their counterparts who were present from Europe, UAE, CIS Countries, Singapore, Malaysia and Sri Lanka. We are optimistic that the delegates were profoundly benefited through their interactions and B2B meetings to expand their horizon.

What were the primary problems which had been discussed during the three days convention? As highlighted in the theme, the 23rd Biennial Convention was focused on inevitable and crucial role of Customs brokers and freight

forwarders in India. Discussions on issues and problems to resolve the same are the ongoing process at local/regional/national levels. We have cautiously formulated the Convention Programme to make it more academic, business oriented and pragmatic for coping up with future challenges. However, the delegates interacted with the concerned government officials, facilitators, custodians and service providers, etc. for exchanging ideas to find amicable solutions to some issues related to customs, connectivity, capacity building, etc.

How the Kochi convention of FFFAI was different from the previous convention which was organized in Mumbai? Every Convention of FFFAI has different appeal and value additions. And, the 23rd Convention in Cochin too brought in some innovative ideas that executed very successfully. For the first time in its convention history, FFFAI invited a large number of overseas delegates. In the very carefully designed and effective B2B meetings, there were a significant amount of business interactions that took place in this convention. As mentioned earlier, for the first time (perhaps first time in logistics industry associations’ history), there was a full business session on women in logistics with the chairperson and all panelists were women official/entrepreneurs. Add to this, for the first time, FFFAI hosted a large number of media houses to cover the event. Significantly, FIATA actively participated in the 23rd Biennial Convention to promote its future World Congresses, especially to be held in Malaysia in 2017 and in India in 2018. We are thankful to the solidarity and reliance expressed by FIATA towards FFFAI and Indian freight forward community at large. We strongly feel that it would open a new vista for the Customs broking, Freight Forwarding community in India and logistics industry in the country would reach a new high.

Interview

Measures of Sophistication For B2B Inter-City Freight

Awarded as the “Best Online Truck/Marketplace of the Year” in 2015, FreightBazaar is India’s first integrated platform that makes inter-city transportation process more cost-effective and reliable. Bhaven Shah, Co-founder, FreightBazaar.com in an exclusive interview with Sana Husain offers insights into some of the very interesting possibilities to improve fuel efficiency, introduce greener technologies and about embedding smart IOT sensors in the trucking operations. Contribution of an experienced transportation logistics veteran and visionary leader’s experience to FreightBazaar

Making inter-city transportation a positive and happy experience Having worked in India and abroad, across many sectors and companies, I have always believed in the power of technology to create new value-added solutions. I also believed that India as a country held tremendous potential for entrepreneurship which could unleash a largescale positive impact on the society. A few years ago, when I started looking at the Indian freight transportation industry, I realised that in spite of being such a large sector with 50bn+ USD spend, aspects such as professional service and pro-active communication were largely absent. Furthermore, my own experiences dealing with transport companies left me frustrated due to lack of transparency and in some cases lack of professional ethics in the transport sector. So, when Ganesh Rewanwar, who is my partner in FreightBazaar and to whom I was introduced in 2012, told me about his idea of building a connected freight platform, I decided to take up these challenges as an opportunity to bring a new working model that could provide more reliability, transparency and efficiency into the whole process of managing B2B inter-city freight.

We are building a team that has a combination of youthful creativity and domain experience that is required to succeed in this sector. Hanumanta Rao has almost three decades of experience that is very relevant to what we are doing. In his previous capacity as National Head of TCI-Freight, he successfully looked after the inter-city freight business, growing to around 2,000 trips per day. His excellent track record of managing the large-scale operations at TCI-Freight and mentoring young teams will have a huge impact in terms of how we set up processes, manage risk and improve reliability for our customers while establishing new benchmark for service quality and delivery.

First-of-its-kind app in the Indian e-commerce industry Our goal is to bring in efficiency at multiple levels of the freight operations and also improve the experience of the participants involved in the freight transportation. This means developing tools for truck owners, drivers, shippers and channel partners. The mobile app tool for truck owners to submit their bids real-time is one such example. In addition, we have an app for drivers who can reach FreightBazaar from anywhere on the road and publish truck availability on FreightBazaar platform or upload delivery documents without requiring internet or a smartphone.

Tackling sub-optimisation of trucking capacity, especially on the back haul Getting timely return load and reducing ‘empty’ or ‘dead’ miles are some of the biggest challenges faced by any truck owner. Average truck utilisation for Indian trucks is 65 per

cent or less. A trucker on an average spends anywhere from two days to four weeks to find a return load on the long haul route. Many times, they would drive more than 100 kms in search of return load. FreightBazaar has developed many tools that help truck owner as well as truck driver find the return load faster. For instance, a truck owner can search for the load in the vicinity of the truck location at any time and start bidding. Plus, the platform pro-actively sends out alerts on matching load. In addition, truck suppliers can submit truck availability on the FreightBazaar platform and any shipper can ‘book’ their truck through the Truck Board that is accessible to shippers across India. Similarly, drivers can utilise especially designed IVR or customer care facilities to publish truck availability or search return loads through FreightBazaar on real-time basis.

On truck aggregation market introducing disruptive models and value creation The industry as a whole has around 50 lakh trucks. Accordingly to some estimates, there are almost 30 lakh freight trucking transactions taking place every day. However, truck ownership is heavily fragmented with 74 per cent of truck owners owning less than five trucks. In addition, due to unorganised nature of the industry, there are a lot of information and communication gaps. We believe that there is a potential to bring at least 17 to 19 per cent efficiency into the truck hiring process that will translate into tremendous level of gain for this $50bn industry; which is at an inflection point as internet and smartphone adoption is increasing. In addition to that, the companies are considering professional service and proactive communication of a higher value.

FEBRUARY 2017 - CargoConnect 65

Shippers Speak

We work constantly on our supply chain for ensuring timely delivery: Aditya Verma How important is logistics for the overall scheme of your business? Integrity, passion for excellence and adaptability are the core values of Lava International. We always strive to bring the latest android smartphones for our customers. Reliability is at the center of Lava operations and our commitment towards it stems from our core values. Since product life cycle of mobile handsets is comparatively shorter, we strive to give best order fulfillment experience to our customers. To make it happen, we ensure the best in class transit time supported by our supply chain processes and system. Therefore, logistics and supply chain function is extremely important for Lava.

Lava International Limited has chiseled its place as one of the leading Indian multi-national companies in the mobile handset industry by delivering best quality smartphones to the customers. Recently, the companyâ&#x20AC;&#x2122;s supply chain was awarded as Best High-tech Supply Chain by Kamikazi and also won the Excellence Award in Supply Chain and Logistics by CII. Aditya Verma, Vice President and Global SCM Head, Lava International Limited, in a candid discussion, shares his experience of the efficient handling of Lavaâ&#x20AC;&#x2122;s supply chain with Gaurav Dubey

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How do you ensure smooth coordination between suppliers, transporters and other departments in your supply chain? Due to the dynamic nature of the mobile handset industry where the priorities change very fast, the business may not depend on single source either for supplies or for logistics services. Therefore, it becomes extremely challenging to work with varied partners (suppliers and logistics partners such as freight forwarders, CHA, warehouses, primary and secondary transporters) while constantly trying to manage and review priorities and status. Over the years, we have successfully designed and managed system driven linkages with our partners. We have web based portals that have real time linkages with our ERP, material suppliers and logistics partners. The business managers and partners can see their area of business with real time updates and even can exchange or update information with each other. This helps us to ensure that our partners have clarity in communications about day to day work and the business priorities of Lava. Our systems are designed in such a way that even the non-supply chain departments of Lava who need to interact with the supply chain department and partners can directly retrieve the information either as a report or auto-mailer from system or by logging on to the system. This has not only enabled us to provide information to partners and other departments but also to monitor transit time performance and competitive costing of partners.

Are there any unique or innovative strategies that you have adopted for the better supply of your products? As described earlier, system linkage with partners is one of the key strategies that we have implemented. Being in high value product market, we constantly face issue of pilferage. There are 20 over touch points in complete supply chain before it reaches customer making it very difficult to find out where theft took place without proper monitoring. A security seal has been innovated by Lava International which either changes colour or can be clearly visible when somebody opens the box. With this, we have successfully diminished the pilferage to very low proportion (reduced to 1/10th of what we had couple

of years ago). This unique method also gives us immediate inputs to figure out loopholes in the supply chain. Lava recognises and respects the contribution of its employees to make the company successful. So, another step which we took is around our employees. One could easily feel the pressure at the work place when we chase the deadlines in the Supply Chain Management. We feel, it is necessary to measure ‘mood’ of our employees and to manage any potential issues. We have invented the simple but very effective way of gauging mood of employees where an employee can anonymously share his or her feedback. This method helps us to figure out what excites people and what is creating the issue. It also enables us to identify the motivators at work. Result of this was almost nil attrition and a very motivated SCM team.

What percentage of your logistics work is outsourced? What functions are performed by your logistics partners and what are controlled internally? All of our finish goods operations are outsourced. Only the mother warehouse for spares is being managed internally. All import, export, warehousing and transportation facilities are outsourced using a transactional cost model. This model is very efficient and cost effective. Our partners are aligned with us in expectations.

Tell us about the most common problem faced by your company during its supply chain process. What steps do you take to overcome these? I would say primarily, it was lack of transparency and management of different priorities for a product at different part of supply chain. However, we have managed to resolve this and with enhanced system linkages and web-portals with prioritisation in ERP.

How do you manage your supply chain during peak times such as festivals and promotional sales? We have couple of known peaks and promotions across the industry and best part about the ‘Known’ peaks is that one can plan for it. Just an example, since we are highly dependent on China for mobile phone parts, and they are closed for two weeks twice in year. That is known time, so booking more

space for air or shifting to ocean shipment generally helps. Festival periods in India are somewhat more challenging to manage because delivery becomes difficult during periods as Durga Puja or Onam where major areas would be closed for trucks. We have industrious partners who not only work in odd hours to deliver but also take alternate modes even like e-rickshaw to deliver, when trucks can’t enter in some specific areas. At the end of the day, planning helps a lot. Our warehousing partners manage most of our warehouses at multi-user facility with a possibility to extend the space and manpower for the unexpected peaks.

Integrity and our passion for excellence helps us to bring latest android smartphones for our customers How implementation of Goods and Service Tax (GST) will affect companies? GST is potentially the game changer for the Indian logistics industry. It is expected to have 20-30 per cent savings in total logistics cost for the companies. There would be savings in warehousing cost and primary transportation while slight increases are expected in secondary transportation cost to customer because distance from warehouse to customer would increase as companies start reducing warehouses. Inventory would be more productive once we start reducing warehouses and would have more turns.There would be lot more pressure to meet customer expectations with increased distance where, I assume, the express companies would play a key role. I believe things would be clearer once we get exact GST rates. If there are differences in GST for given commodity in two different states, then companies may not be able to redesign the network efficiently.

How in-house logistics impacts profitability of a company? In-house logistics in a system helps only when the production volume is extremely high or there are multiple companies running in the group. For rest of the companies, outsourcing helps in reducing cost and providing flexibility. In-house logistics requires huge investment in infrastructure, manpower training and there is no flexibility in scale of operations. Whereas, working with 3PL, one can manage flexibility at short notice and investment in infrastructure or systems or people can be easily distributed in multiple customers by 3PL. Mathematically speaking, working in-house is inversely proportional to profitability.

How do you handle hiccups in supply chain during the season time? The only way to handle hiccups is to be ready at all times to face them. Have an excellent pre-alert system where hiccups can be predicted or identified at early stage instead of getting to know them too late. Having a proactive team that ensures monitoring of milestones, and is empowered enough to take calls to provide best customer service is the way to handle such unplanned events.

Do you think implementation of modern technology could help in expediting movement of goods? Yes, the implementation of modern technology expedites the movement of goods and integrating it with partners provides huge value to supply chain. Machine learning is helping taking right decisions and IOT is supporting to meet the deadlines. Logistics industry has seen tremendous amount of automation over last few years and that’s the future. I look forward to see delivery via drones in some form soon.

How good logistic strategy provides an edge over competitors? Products are getting commoditised, differential strategy is now the key for any marketing or supply chain function. As long as supply chain is agile and we are able to provide same experience to customer without additional cost throughout the year would be the differentiating factor. If we are able to connect to our customers without manual intervention and provide that real time information - this would definitely have an edge over.

FEBRUARY 2017 - CargoConnect 67

guest column

Airport Infrastructure: Need of the Hour for Indian Civil Aviation Market Indian airports on the brink of saturation: A second wave of airport development is the need of the hour By Satyendra Kumar

he Indian civil aviation market is one of the fastestgrowing in the world and is poised to become third-largest by 2020. During FY2016, sufficient capacity and competent airfares — primarily on account of lower prices of aviation turbine fuel — translated in high demand. Large traffic volumes coupled with high degree of Passenger Load Factors (PLF) — average PLF of 82.9 per cent for all Indian carriers during FY2016 — helped many Indian carriers to make profits; In fact, a few of them saw their balance sheets in the green after several years of losses. However, large volume of traffic has strained the airports, cargo handling, ground handling, and fixed based operators. India quickly needs to nip this issue in the bud to ensure the momentum of growth is sustained. At the same time, it will be crucial to develop required aviation infrastructure to cater to projected traffic in the years to come. Due to this surge in passenger and cargo traffic, the need to upgrade and develop airport infrastructure across the country became

imperative. The Government of India privatised the airport sector under the Public Private Partnership (PPP) model in 2005 and subsequently, greenfield airports at Bengaluru and Hyderabad and upgrade/development of brownfield airports at Delhi and Mumbai were assigned to selected PPP players under the BOOT. The Delhi and Mumbai airports were developed by consortiums led by GMR and GVK group respectively. The Bengaluru and Hyderabad airports were developed by consortiums led by Siemens and GMR group. The Government of India also decided to upgrade 35 non-metro airports, along with air traffic services, through the Airports Authority of India. These measures resulted in the creation of state-of-theart airport infrastructure over 2005–15, which in turn facilitated sector growth as well as enhanced passenger experience at the airports. Adoption of latest technologies such as Airport collaborative Decision Making Systems, CUTE, and CUSS made the processes faster and efficient. Installation of ILS category III at many airport runways, supplemented by better air space management, also resulted in achieving higher amount of aircraft movement during a peak hour. Due to immense efforts put in to develop/ upgrade airport and supporting infrastructure and the adoption of best practices to improve procedures of passenger processing, India could sustain a growth of 11.8 per cent during FY2006–16.

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In FY2016, Indian airports handled 224 million passengers with an airport capacity of nearly 250 million passengers per annum. Many Indian airports have reached their threshold point. The current situation is not very different from 2005 when Indian airports handled 73 million passengers per annum with an airport capacity of nearly 48 million per annum and most terminals were overcrowded and one could stand in queues for a long time to get through the check in or security clearance.

The efforts put in to develop airport infrastructure during the last decade helped India to amicably handle the situation, but as airport infrastructure cannot be developed in a short period of time, a second wave of airport development is the need of the hour. Metro airports collectively handled 67 per cent of total passenger traffic in FY2016. Most of these airports have reached their saturation level. During peak hours, airport terminals at Bengaluru, Delhi, Hyderabad and Mumbai are so congested that long queues at airline check-in and security hold areas are a given. Although, thanks to better airside and air space man-

agement, these airports have been successful in efficiently turnaround aircraft, air space congestions at many of them could be a near reality. The efforts put in to develop airport infrastructure during the last decade helped India to amicably handle the situation, but as airport infrastructure cannot be developed in a short period of time, a second wave of airport development is the need of the hour. In addition to congestion at the terminals, many airports are going to face congestion on their kerbside as well as city side. India has come a long way when it comes to the airport development and the lessons and experiences of the last decade’s development can be used to proactively avoid the impending capacity crunch and overcrowding of airport terminals. Those airports that have reached their threshold and or about to get saturated should be expanded using a modular approach. At a few airports, better use of space within the terminal and adoption of best practices to process passengers faster could be a short-term solution to overcome the current situation. Furthermore, development of second airports in Delhi and Mumbai should be put on a fast track. Likewise, capacity expansion at Bengaluru and Hyderabad airport should be expedited. Also, the low-cost airport development model can be adopted at regional levels to enhance air connectivity. (Satyendra Kumar is an aviation expert and is endowed with years of experience in this field)

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India plans new community system to improve air cargo efficiency The Indian Government will develop an air cargo community system through a public private partnership to try and reduce the cost and improve the efficiency of processing airfreight shipments. A report by an Indian Ministry of Civil Aviation committee said that it backed having a single window system for the air cargo community to interface with Indian Customs systems to facilitate the “seamless movement of goods and information”. Dr Renu Singh Parmar, Senior Advisor, Ministry of Civil Aviation, who headed up the committee, said, “Each air cargo shipment on an average carries around 30 types of documents and well over 100 copies, thus resulting in significant documentation overheads, increased dwell times and supply chain opaqueness. “To facilitate the ease of doing business, it is recognised that an electronic platform be put in place to digitise key stakeholder interactions. “This electronic platform can allow the reusability of data, thereby eliminating

duplicate data entry, reducing unnecessary paperwork by giving authorised access to data to the relevant supply chain stakeholder and bringing in supply chain visibility thereby reducing inventory and other transaction costs related to air cargo movement.” The move links in with the country’s Make in India campaign that aims to develop the manufacturing. The report said that India is

the fastest growing economy in the world but transactions costs are also some of the highest. At the moment airports and cargo agents have developed their own cargo community systems for stakeholders with varying capabilities to facilitate information exchange between parties in the air cargo supply chain. However, the current systems lack “efficiency, transparency and consistency”, the report said. The ministry will now appoint a consultant to prepare a detailed document outlining the system, a public-private special purpose vehicle will be formed to develop the system, an operator will be selected for rolling-out and managing the system and finally pilot projects will be developed at certain locations before national roll out. In the latest edition of Air Cargo News, the Indian air cargo community outlines how it believes the country’s airfreight industry should be improved. The need for India-based cargo airlines and for airports to improve cargo facilities were two of the major areas for improvement that were mentioned.

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Tremendous growth potential for domestic air cargo: Raju

CONCOR, Nippon partner for freight

There is tremendous potential for domestic air cargo growth but “somehow the jigsaw puzzle” was never pieced together, Union Minister Ashok Gajapathi Raju said as he rued that currently cargo is only a minuscule part of Indian aviation sector. Currently, Blue Dart and QuikJet are the only two domestic players operating cargo carriers. Naresh Goyal-owned Jet Airways had announced its plans to set up a cargo airline in 2015 and had even got Government’s in-principle approval for leasing of a freighter from its strategic investment partner Etihad. However, the airline later shelved the plans, citing market conditions. The Civil Aviation Minister said there is a need to motivate entities for air cargo operations. “In India, God has blessed with all types of climates, name the climate, name the produce the potential is tremendous. We are in the infancy (with regard to air cargo),” Raju told PTI in an interview. Even as the domestic passenger growth has been over 20 per cent for many months, cargo segment is lagging behind. The national civil aviation policy has also given thrust to boosting air cargo business, especially against the backdrop of rising e-commerce activities and exports. Among others, the government has set up the Air Cargo Logistics Promotion Board (ACLPB) to chart out ways to reduce costs, improve efficiency and ensure inter-ministerial coordination.

India entered into collaboration with Japan for providing scheduled freight rail services between Delhi and Bengaluru. Japanese Ministry of Land, Infrastructure, Transport and Tourism has picked logistics firm Nippon Express to collaborate with Indian Railways and Container Corporation of India for providing rail services that will transport finished cars as well as general cargo. The first train service departed from Delhi for Bengaluru on January 20 and returned on January 24. The transit time for the service is less than 70 hours on each side. “The project is aimed at improving rail freight services and hope this project is expanded throughout the country and not only on the DelhiBengaluru sector,” Japanese Ambassador to India Kenji Hiramatsu said. Indian Railways Executive Director (Traffic Transportation) A.K. Behera said the train service would lead to additional freight volumes and increased frequency on the route as only one time-tabled freight train is running on the Delhi-Bengaluru route currently.

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Minister urges Arunachal Govt to explore cargo possibilities

Indian govt calls for singlewindow cargo communities

Civil Aviation Minister Ashok Gajapathi Raju asked Arunachal Pradesh government to explore possibilities of bringing in more cargo flights as the state has immense potential in horticulture crops, floriculture and medicinal plants. Addressing the Digi Dhan Mela at Indira Gandhi Park here, the Union Minister also expressed optimism that the state government would settle the issue of finding sites for the Green Field Airport in the state capital. “We have gone around a ding-dong battle for selection of the site for the proposed green field airport in the state capital,” Raju said in a lighter vein. He said a central team recently surveyed both the proposed airport sites at Karsingsa and Hollongi and his ministry is waiting for the report. Raju said the detailed report and its submissions would be then forwarded to the state government for a final call and hoped that work on the airport would begin soon. “Please exploit the forward looking policies of the state as well as central government for your own benefits,” he said.

A report released by the Ministry of Civil Aviation Government of India in late 2016 recommended that, “an electronic platform be put in place to digitise key stakeholder interactions,” in order to increase efficiency of processing shipments and to cut costs. In other words, the proposal system, termed the Air Cargo Community System (ACS), called for a single-window model funded and operated through a public-private partnership (PPP). The report found that India’s current system lacks, “efficiency, transparency and consistency across the supply chain,” it suffers from complex and duplicate processes, and lacks uniformity. The report didn’t exactly lay out a roadmap, but it instead focused on the broad dysfunction and need to move forward, suggesting that “a reputed consultant with requisite experience of Indian/global air cargo industry may be hired to prepare a detailed project report.” The committee also proposed extensive parameters for the new system, such as the requirement that it support industry standard messaging like IATA CARIMP, UN EDIFACT, WCO and ICEGATE. The ACS will be owned by a ‘special purpose vehicle’ formed with a 51 per cent stake in the government.

Coming up: Port projects worth `12 lakh crore Port-led development projects worth `12 lakh crore will be awarded in the coming years, shipping and road transport minister Nitin Gadkari said. Gadkari said projects worth `1 lakh crore under Sagarmala programme are already in various stages of implementation. His ministry plans to undertake construction of four new major ports, 200 small and minor ports and more than 2,000 water ports under the programme. To undertake the ambitious Sagarmala programme, the shipping ministry has set up Sagarmala Development Company (SDC). The company will identify port-led development projects and provide equity support for Special Purpose Vehicles (SPVs) set up by ports, states and central ministries. The company will help in structuring activities, bidding out projects for private sector participation and identifying suitable risk management measures for strategic projects across multiple states. SDC would act as the nodal agency for coordination and monitoring of all the currently identified projects under Sagarmala as well as other projects emerging from the master plans or other sources.

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Better services can cut transport and logistics costs: CII study

‘New bill first step towards corporatisation of major ports’

Transport and logistics costs for the trade can be reduced by as much as 3847 per cent if the “indirect and hidden” costs of trade that accrue from delays and unreliable transportation services were curtailed, said a CII study. The study was based on four sectors – pharmaceuticals, textiles and garments, electronics and auto components. Regulatory documentation related to exports and imports, terminal handling and inland transportation and export (from ICDs to ports) emerged as the top three challenges, based on the response of 66 companies with CII membership. Government officials, while, admitting the challenges, said it was important for the private sector to take steps that will “help government address the issue of non-compliance”. “Any regulation is designed keeping in mind whether trade generally is compliant or non-compliant,” said L Satya Srinivas, Joint Secretary - Customs. Today, while government is designing rules with an understanding that more than 90 per cent of trade is generally compliant, it needs help from the private sector in ensuring compliance. Calling for “all compliant” trade to come forward, Srinivas said the government was planning a mechanism which will allow users to have pre arrival clearance, which will lower costs. He hoped that trade will adopt the direct port delivery procedure, which enables lower processing time at ports. Meanwhile, Julian Michael Bevis, Senior Director, Maersk Group, said that he supported the direct port delivery procedure. Rajeev Kumar, Secretary, Shipping Ministry, cited the example of a company in the trucking sector that has improved its efficiency by devising a strategy that helps improve the quality of life of its drivers.

The Major Port Authorities Bill, which seeks to provide significant operational autonomy to the major ports, will allow the 12 state-run entities to work like a corporate with full flexibility, says a research report. Terming the proposed law as a significantly positive step for the state-run ports, domestic rating agency Icra in a report said, “The Union Shipping Ministry aims to enable the port authorities to function like a corporate entity and provide autonomy and flexibility to operate, besides bringing in a professional approach in their governance.” K Ravichandran, Senior Vice-President at Icra, said the move will give autonomy to ports in raising loans sans government approvals, which is a potential positive as in the past some major ports have struggled to implement expansion plans because of lack of funds. Approval by the Cabinet for the Bill is credit positive for the 12 major ports, Ravichandran said. “The Bill seeks to provide significant operational autonomy to the major ports and should ensure quick decision- making, attract investments as well as leverage the land assets,” he added. Some reports said growth in cargo at the major ports is higher this fiscal compared to private sector ones.

Adani Ports to develop 3rd phase of Mundra Port for `6,000 crore Adani Ports and SEZ Ltd will invest `6,000 crore for the development of third phase of Mundra Port. The upcoming capacity expansion of Mundra Port, touted as one of the top multipurpose ports in the country in terms of traffic held, would lead to employment generation for 600 people, sources said. A token MoU to this effect was signed in the presence of Gujarat Deputy Chief Minister Nitin Patel at the Vibrant Gujarat Global Summit. Essar Ports too plans to develop port facilities along the Gujarat coast at an investment of about `10,600 crore, a move that is expected to result in employment generation opportunities for 1,000 people. A slew of MoUs signed here today also include one by West Cost Liquid Terminal—an SPV of Shapoorji Paloonji Group—which intends to invest `1,200 crore for development of LPG and Liquid Storage Terminal

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at the greenfield port location of Chhara (District Gir Somnath). This project, said state officials, will be an important contributor in increasing LPG reach in the Northern, Western and Central parts of the country, for domestic cooking fuel segment by enabling the LPG imports. In the roads and building sector, the National Highways Authority of India (NHAI) intends to invest `13,000 crore to create Vadodara-Talasari six-lane expressway. The move is expected to improve the connectivity between Ahmedabad and Mumbai. In the areas of water supply, Classic Network has outlined plans to invest `1,000 crore for development of a water supply project entailing employment for 1500 people. In addition, Solar Sewage Basic Infrastructure is planning to invest `5,000 crore for undertaking sea water desalination project on BOOT basis, a project that would provide employment to nearly 600 people in the state. The Vibrant Gujarat summit has been a hub of business activities over the last three days, with captains of the industry announcing massive investments into the state. At the high profile inauguration of the event by the Prime Minister on January 10, global as well as Indian business leader announced plans to invest in areas such ports, automotive, IT, renewable energy, water, cement, amongst others.

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AAI mulls partially privatising Ahmedabad, Jaipur airports

IATA and UNCTAD enters into collaboration

State-run AAI plans to partially privatise two of its key airports -- Ahmedabad and Jaipur -- by this fiscal for which proposals have already been invited from the interested parties. Under the plan, which also involves relocation of workforce and equipment, the terminal operations at the two airports would be handed over to private players, Airports Authority of India Chairman Guruprasad Mohaptara said. Significantly, AAI had in the past also proposed to handover these two airports to private operators but had to shelve the plan due to manpower and revenue sharing issues. “We, essentially, are trying to handover terminal management of Ahmedabad and Jaipur airport to a private operator. There we are expecting to relocate all our manpower and existing equipment,” Mohapatra told reporters. The AAI had invited Request for Proposal (RFP) from bidders for operation and maintenance of “select areas” of the Jaipur and Ahmedabad airports late last year. The bids are to be opened on March 8.

IATA and the United Nations Conference on Trade and Development (UNCTAD) announced that IATA’s CargoXML messaging standard has now been fully integrated into ASYCUDAWorld, the UNCTAD automated customs management system used by 90 countries worldwide for their customs procedures. The integration of Cargo-XML in ASYCUDAWorld standardises the electronic communications between airlines and customs authorities using the program. The new data standard reduces message duplication and simplifies communication across the supply chain facilitating trade growth, improving cargo security, modernising customs operations and fostering participation in global commerce through advance electronic data submission for air cargo shipments. Cargo-XML makes it easier for airlines, freight forwarders and shippers to ensure that the information being provided to the customs authorities is technically correct and in line with the standards of industry bodies such as the World Customs Organisation (WCO) and regulators. It also facilitates custom risk assessments for air cargo shipments and improves compliance with security regulations.

Cathay Pacific and Lufthansa now under one roof

Logistics stocks trade higher on clarity over GST rollout

The relocation of Cathay Pacific Cargo’s freight handling into the Lufthansa Cargo Center (LCC) in Frankfurt is a core element of the Joint Business Agreement (JBA) that was announced in May 2016 between Cathay Pacific Cargo and Lufthansa Cargo. The merging of freight handling for imports and exports was concluded on 17 January 2017 and customers of both airlines will benefit. As part of the cooperation agreement, both airlines are closely working together on network planning and sales as well as IT and service expansion. Both partners planned to transport the first joint shipments initially from Hong Kong to Europe. The ability to also book eastbound shipments from Europe to Hong Kong will then follow in 2018. Simon Large, Director Cargo at Cathay Pacific, comments, “Cathay Pacific Cargo’s move into the Lufthansa Cargo Center is another important step in furthering our collaboration. In addition to providing more direct connections and greater flexibility, we can now offer our customers in Frankfurt the same handling standards that will lead to more efficiency and time savings.”

Logistics stocks started trading higher after the government rolled out date for the longawaited Goods and Services Tax (GST) by three months to July 1. Logistics majors such as Snowman Logistics, Shreyas Shipping & Logistics, Patel Integrated Logistics, Allcargo Logistics and Aegis Logistics were trading higher by 4.79 per cent, 3.70 per cent, 2 per cent, 1.57 per cent and 1.73 per cent respectively. VRL Logistics, Gati and Tiger Logistics were up by 1.75 per cent, 2.69 per cent and 0.67 per cent, respectively, around the same time. Deloitte Haskins & Sells LLP Senior Director (Indirect Tax) M S Mani told PTI that GST roll out from July 1 instead of April 1 is welcome as it ends the anxiety of industry to have a firm roll out date in place. Finance Minister Arun Jaitley said the draft of Integrated GST or IGST, the tax which will be levied by the Centre on inter-state movement of goods and services, as well as SGST and CGST will be finalised in the next meeting of the GST Council on February 18.

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â&#x20AC;&#x2DC;AirSewa Portalâ&#x20AC;&#x2122; launched for a digital travel experience Civil Aviation Minister Ashok Gajpathi Raju launched the AirSewa portal and mobile app at Hotel Ashok, New Delhi on November 25, 2016 as an initiative to offer convenient and hassle-free air travel experience to the passengers. Passengers will be allowed to access the services through an interactive web portal as well as through a mobile app for Android and iOS. Minister of state for aviation, Jayant Sinha, said that flight delays, refunds, long queues and lack of proper facilities at airports and complaints of lost baggage were the most common problems that air travelers faced. He stressed upon the need to respond to these problems in a systematic, rather than an ad hoc manner. Sinha said AirSewa was an attempt to provide such a systematic approach to redressing passenger grievances. There are basically five functions of the AirSewa portal, as listed here below: 1. Grievance Redressal Portal The AirSewa Portal will enable passengers to register their grievances through the mobile application or the web portal. The users will have the facility to upload voice or video along with an elaborate description of their issues.

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They will be given a unique reference number for each of their reported grievances, which would also be communicated through an email as well as an SMS. The users can track the status and response to these grievances through the mobile application, as well as the web application based on the reference number provided. Once the grievance is addressed, the user has an option to provide his feedback and rate the overall experience and satisfaction. Nodal officers have been selected for all stakeholder agencies who will address the grievance in a time bound manner. 2. Back Office Operations for Grievance Handling Each grievance shared will be directed to the responsible nodal agency for resolution based on the grievance category chosen by the complainant. The dashboard shall be divided into three categories, consisting of, grievances pending within time line, grievances pending beyond time line and closed grievances. Each grievance shall have a resolution time line defined for initial response, as well as final resolution. Each communication made by the nodal officer will be sent through an alert through email and SMS.

3. Live Flight Status/Schedule Information Air passengers will have an option to check the flight status and schedule between airports. Flights can be searched on the basis of flight number or for all flights to a particular airport. Users will have an option to check flight status, as well flight schedule between any of the airports. The flight status and other information can be searched airport wise also. Users will have an option to filter results based on the time slots of the flights, airlines and source/destination airports. 4. Airport Information Airport information will display basic weather information about an airport as well as connecting flight details from the airport. The information will also include basic details and contact information regarding airport services consisting of transport/parking, rest and relax, Wi-Fi and wheelchair services, etc. 5. FAQs FAQs are categorised and each category provides an array of questions and answers. There are FAQs related to passenger, baggage, security, special needs and license. The FAQs are intended to make the travelling experience hassle-free and enjoyable for the passengers.

profile

Ethiopian Airlines India Africa Market

he experts had suggested that market will see 10 per cent growth rate in the year 2015 but reality turned out to be entirely different from the views of market experts. Trade had been inversely impacted by the weak global demand and continuous downfall in exports. Even government’s policy decisions failed to provide expected fillip to the industry. The major growth rate has been witnessed in Indian markets in the financial year 2016 in respect of combined traffic handled at all Indian airports. New infrastructures have been built on all major airports to ease the congestion and also to serve the ever increasing demand of the industry. The industry registered the modest growth despite of gloomy global scenario in 2016. Aggressive marketing strategies and foraying into global markets helped India to register the growth. Central government also helped the industry by announcing better policies and making necessary amendments in the existing policy.

Trade of India and Africa Presently, Africa has been enjoying the positive trade balance with the Indian subcontinent. As per the African Development Bank, India’s imports from Africa touched $18.8 billion in 2009 while exports from India to Africa were merely $13.2 billion in the same year. Africa primarily exports raw materials including oil and minerals whereas, India exports manufactured and finished goods including transport equipments, industrial machinery and pharmaceuticals. In the Sub-Saharan Africa, Nigeria, South Africa, Kenya and Tanzania are the most important destinations for Indian products.

Air cargo to African continent from the northern part of India particularly from Delhi witnessed a huge increase. Ethiopian Airlines Freighter service has been playing a major role in the export of goods. Ethiopian Airlines which holds the honour of being Africa’s largest airline group had a great time in 2016 as the airlines registered tremendous growth and profit in the year. The airlines expanded its network and fleet as well and also did significant investment in the area of customer services. The airlines also delivered outstanding performance and registered growth in North India in the last two years. Freighters of Ethiopian Airlines have opened new route for the market of Delhi. Presently, the airline has been operating with weekly two freighters along with double daily flight 737 aircrafts from Delhi. The occupancy of 777 aircrafts is 105 tons per freighter which help us to get maximum cargo with ODC from Delhi to Africa. Ethiopian Airlines cargo has registered 150 per cent increase in the year 2015 as compared to the year 2014 while the increased growth rate of 75 per cent has been registered in the year 2016 as compared to the year 2015. In the year 2017, the Ethiopian Airlines has been expecting huge growth rate in cargo upliftment from North India to Africa and the airlines is all set to keep its best foot forward in delivering the best services to its customers. The upgradation of passenger flights from Delhi and replacing current aircrafts with wide body pax flights is also in the plan.

Major Diversification on the Core Fleet Ethiopian has increased its fleet by 8 aircraft in 2016 and has closed the year

with 82 airplanes in service. For the first time in its history, Ethiopian has diversified to include Airbus aircraft, with Africa’s first A350. With an average fleet age of just five years, Ethiopian has one of the youngest and most modern fleet in the world. The airlines has made heavy investment in B787 Dream Liner and A350 which are considered as the two most technologically advanced fleet of the present time. With high performance, less carbon emission, advanced cabin features, and superior customer comfort, these airplanes are game changers in today’s civil aviation industry.

Awards received by Ethiopian Airlines in recent years 1. Cargo Airline of the Year in Africa, Air Cargo News (2016) 2. Air Cargo Brand of the Decade of Africa, STAT (2015) 3. The Rising Star Carrier of the Year Award (2015) 4. The Best African Airlines of the Year for four consecutive years (20132016) 5. The Best Airlines Staff in Africa for the Year 2016

New Cargo Terminal The major development in Ethiopian Airlines is that they are upgrading the infrastructure at Addis Ababa Bole International Airport for maintenance, cargo and flight simulators as the Star Alliance member continues to grow. A new cargo terminal, which is 82 per cent complete, is expected to open around April 2017. The new terminal will have an annual storage of 1.2 million tons and a capacity to handle eight 747-8 freighters at a time. The entire cargo terminal facility will be of the size of five football fields.

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DP World Chennai achieves another breakthrough Global trade enabler DP World operated Chennai Container Terminal has achieved another breakthrough with the recently upgraded infrastructure. The terminal hosted CMA CGM MOZART with a draft of 14.8 metres. The newly deepened depth at the terminal has led to the port achieving notable milestones. The first vessel to have been berthed at the newly dredged draft was M V CMA CGM Rossini, as a part of the weekly service ‘NEMO’. Following this, the container vessel CMA CGM Bellini with a draft of 14.6 metres berthed at the terminal. The berthing of these vessels at the terminal is a testament to the facilities available at DP World Chennai, as also to the efforts and commitment by the Port authority in improving the marine infrastructure at Chennai Port. Commenting on the development, K. K. Krishnadas, Chief Executive Officer, DP World Chennai said, “At DP World, we seek to provide value in everything we do for customers, business partners and shareholders. We have been working closely with the port trust to strengthen the existing infrastructure at the port. The newly dredged draft has successfully attracted three large vessels at the port. We hope to continue this success while delivering world class service to our clients.”

RCPL awarded ‘most promising Logistics Service Provider’ RCPL, one of the leading multi modal logistics solutions provider companies of India has won CII SCALE ‘Promising Logistics Service Provider’ Award under Express/Courier category. The company was honoured in the Third edition of CII event which was recently organised at Hotel Le Meridien, Delhi. Executives of the company on the occasion thanked their prestigious customers for investing their trust and long term association with RCPL. Dedication and perseverance of the ‘Team RCPL’ was also acknowledged by the recipients of award. RCPL has established itself as an industry stalwart in multi modal express distribution services. The company has 62 self owned branches and serves across 3500 PIN codes of India. Over the time company has developed equal distinctive competence and expertise in all three modes viz air, train and surface express.

Richa Industries Received “Outstanding company in Pre Engineered Building” award Richa Industries Limited won the award for an “Outstanding company in Pre-Engineered Building” during 6th EPC World award for their exceptional contribution in the infrastructure and construction sector with exemplary works and projects delivered. The 6th EPC World Awards was organised by EPC World media group to recognise and honour companies and individuals who broadly covering the entire infrastructure, EPC and construction industry on the basis of their qualitative and quantitative performance. The winner was decided by organising committee and jury experts. Dr Sandeep Gupta, Managing Director, Richa Industries Limited said, “We are glad to get this honour. It is a significant achievement for us. It exhibits our capability and experience of delivering diverse applications of pre engineered buildings. Our focus will remain to take up more challenging projects in future which will take the company to newer heights.”

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Richa Industries Limited is a leading construction and engineering company in India operational in pre-engineered building (PEB), structural steel, turnkey and textile sectors. Since 1993, Richa has carved a strong image by living up to its commitment of providing innovative, finest quality, cost effective and faster completion of project solutions to its clients. An ISO 9001:2015 certified company, Richa Industries is listed in Bombay Stock Exchange (BSE). Richa is the first Indian PEB company to get the internationally recognised OHSAS 18001:2007 Certification by IRQS. Rapidly growing, Richa has accomplished more than 600 projects in a record time on an average of delivering one building in every five days. Richa has set up its Corporate cum registered office in Faridabad, Haryana and has its fully operational state-of-the-art PEB manufacturing plant in Kashipur in Uttarakhand and Textile manufacturing plant in Kawnra (Faridabad) in Haryana.

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Safexpress and Safeducate win top honors at CII SCALE Awards 2016 Safexpress, Knowledge Leader and Market Leader of supply chain and logistics industry in India, has been honoured with Overall Excellence in Supply Chain and Logistics Award by CII SCALE Awards 2016. The award is for the firm’s performance in the field of Road Transportation, 3PL and Warehousing for the last two decades. For its massive contribution in the field of skillng, Safeducate, a specialist in supply chain and logistics training, has been honored with Best Training and Skill Development Company Award by CII

SCALE Awards 2016. Speaking at the award ceremony, Rubal Jain said, “I would like to express my heartfelt gratitude to our customers, partners and employees who have all provided their invaluable support to Brand Safexpress over the last two decades. It is only due to their contribution that we have created industry leadership for our brand.” Rubal Jain concluded by saying, “Supply chain and logistics industry is the backbone of the Indian economy. India’s supply chain and logistics industry is poised for an accelerated growth.”

Holisol inaugurated Multi User Facility at Mundka, Delhi

Maersk Line exports Kinnows from Delhi - NCR

Holisol Logistics has shifted the warehousing operations in the newly built state of art fulfilment centre at Mundka, Delhi on December 31, 2016. The facility will be fully operational effective February 1, 2016 for the customers. The new facility is a multi-user fulfilment centre and will be equipped with modern PEB Structure, epoxy flooring and storage racks with elevation of 24 ft. height optimising the storage space. The facility has been fitted out with the advance safety and security features. Presently, Holisol has a network of 19 fulfilment centres across India offering premier fulfilment, warehousing, inventory management, return management and value added activities for multi-channel retail. “Holisol will continue to invest in best-in-class technology and infrastructure to create better value for its customers,” as stated by Naveen Rawat, Director – Business Development.

Maersk Line has processed its first-ever shipment of Kinnows from Sonepat in Haryana to Novorossiysk in Russia. This opens up a niche cargo category of shipping non-frozen goods (fruits) using reefers and ex Inland Acceptance Points. At present, exporters have been moving this type of commodity directly to the ports. Through Maersk Line’s reefer services, the transportation time between the point of origin and the port will be reduced considerably, facilitating a one stop solution closer to the place of origin of cargo. A big boon to the community dealing with this sensitive cargo. “This is a brand new commodity category, which we have shipped. This is a first of its kind niche shipment of highly sensitive non-frozen goods via reefers. This is a testament to our tenacity to push the limits, leveraging on our expertise of enabling trade, creating a global market place and contributing to the Indian economy.” Franck Dedenis, Managing Director, Maersk Line (India, Sri Lanka and Bangladesh) said. Crosslink Shipping Pvt. Ltd trusted Maersk Line’s expertise to achieve this shipment, opening up new business opportunities in the sector. The milestone achievement will certainly enable faster trade, present new market opportunities and add value to the existing supply chain industry in the years to come.

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Ethiopian Airlines and Namaste India Aviation team enjoy get together in Mussoorie Executives and staff members of Ethiopian Airlines and Namaste India Aviation recently had a gala time in the get together which was organised in Mussoorie. The get together witnessed the launch of a special issue of the CargoConnect magazine â&#x20AC;&#x2DC;India Air Cargo HandBookâ&#x20AC;&#x2122; published by Surecom Media. Namaste India Aviation hosted the event in a luxurious hotel of Mussoorie and the evening was graced by Tadesse Tilahun, Regional Director of Ethiopian Airlines, Indian Sub-continent, Mahlet Kebede, Sales Manager, Delhi and Managing Director of Namaste India Aviation, Arvind Rathi. The executives of both the companies spent quality time together in the serene environment of Mussoorie and exchanged their view and thoughts of business in the event.

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Ministry inugurated exhibition display of Sagarmala

Jayem Logistics works towards upliftment of the underprivileged

Shri Mansukh Mandaviya, Minister of State, Shipping, RoadTransport, Highways, inaugurated the state-of-the-art exhibition display of Sagarmala, Ministry of Shipping at Vibrant Gujarat Global Investors Summit, 2017. The central focus of the 8th edition of the Global Summit organised by Government of Gujarat is “Sustainable Economic and Social Development”. Gujarat has been at the forefront of the maritime development in India. Under the Sagarmala Programme, More than 40 projects with estimated cost of approximately INR 85,000 crore have been identified across the four pillars of port modernisation and new port development, port connectivity enhancement, port led industrial development and coastal community development.

Jayem Logistics and JJ Soccer Academy inaugurated “Jeevika” - a study centre to basically facilitate the academic career of underprivileged children. The center intends to enhance the academic knowledge and overall performance of students who can’t afford private tuitions, while the co-existing centre of excellence under Jeevika for football enthusiasts will garnish their skills under the guidance of experienced national and state level trainers. To add to that, they’ve also initiated the Centre of excellence for women to impart basic training about knitting, sewing, handicrafts, etc. to accordingly facilitate women’s entrepreneurial journey. The Centre of excellence for football students was inaugurated by Raman Kaul – GM - Corporate Planning (Jayem Logistics), Vijay Kumar - National Football referee and Sethu Raman – AIFF Player and Gunasekhar - Secretary for JJ Soccer Academy.

DTDC opens up new gateways in Bangladesh

DTDC Express Limited, India’s leading logistics solutions provider along with its strategic partner DPD Group, has further strengthened its presence globally by launching its operations in Bangladesh in collaboration with Galaxy Express. With this collaboration, DTDC will introduce international standards of delivery service in the region. According to a recent study, Bangladesh will record 72 per cent growth a year in e-commerce transactions in the coming days. To meet the growing demand of the country’s ecommerce trade, DTDC will also look at bringing its e-commerce expertise such as e-portal, e-parcel, e-fulfiment and cross border e-commerce business to Bangladesh.

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Senior executives of DTDC and DPD, including Subhashish Chakraborty, CMD of DTDC, Pranab Shah, Director at DTDC and Suresh Bansal, Director and Head of International Business at DTDC, were present at the official launching ceremony recently. Speaking on the occasion Subhasish Chakraborty, DTDC said, “Over the years, we’ve invested significantly to bolster our network and services around the globe. Our collaboration with Galaxy Express is the most recent in a series of global network addition, and a strategic step to expand our presence in Indian subcontinent. Speaking on the occasion Ahmed Yusuf Walid, Managing Director - Galaxy Express Ltd said, “International trade via imports and exports are the lifeline to develop the economy of Bangladesh which is registering a continuous healthy growth. We, at Galaxy Express, are proud to associate with DTDC to facilitate trade for local businesses via DTDC’s international network that connects to over 10,000 locations across the globe.” DTDC owns the largest parcel delivery network in India and has a direct presence in 20 countries and with its strategic partnership with DPD Group, it has expanded its business network in over 220 countries. DPD Group today is one of Europe’s leading parcel delivery services delivering more than 3.6 million parcels every day in 230 countries. DPD Group, owned by GEOPOST, a subsidiary of La Poste, France, is an international network bringing together renowned brands like DPD, Chronopost, SEUR and Interlink Express.

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upcoming events Supply Chain Logistics Summit & Excellence Awards 2017 on February 27, 2017 at Hotel Shangri Laâ&#x20AC;&#x2122;s Eros, New Delhi organised by Indian Chamber of Commerce

11th Annual World Cargo Symposium on March 14-16, 2017 at Abu Dhabi National Exhibition Center, Abu Dhabi, United Arab Emirates organised by IATA

Economic Times Global Logistics Show on April 17-19, 2017 at the Bombay Exhibition Centre in Mumbai organised by Infinity Expo Media Company

ChemLogistics India on April 25-26, 2017 at the Bombay Exhibition Centre in organised by Mack Brooks Exhibitions Ltd and Koelnmesse YA Tradefair Pvt Ltd

India Material Handling & Logistics Show on July 27-29, 2017 at Pragati Maidan organised by Reed Manch Exhibitions

Maritime Nation India 2017 on September 14-16, 2017 at International Convention Centre at Navi Mumbai organised by Maritime World Services

INMEX SMM India 2017 on October 3-5, 2017 at Bombay Exhibition Centre, Mumbai organised by Informa Exhibitions

appoinments

Dewakar Goel appointed as director of Indian Aviation Academy Prof (Dr) Dewakar Goel, Executive Director, Airports Authority of India has taken over as Director of Indian Aviation Academy on 20th December, 2016. Indian Aviation Academy is a joint venture of Airports Authority of India (AAI), Director General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security (BCAS) under Ministry of Civil Aviation, Government of India. It is the premier training and research institute of the country having affiliation with international bodies like International Civil Aviation Organization (ICAO), Canada, Airports Council International (ACI), International Air Transport Association (IATA), Federal Aviation Administration (FAA), etc. Prof (Dr) Dewakar Goel is a Science and Law Graduate with Masters in Business Administration. He acquired Post Graduate Diploma in specialised field of Labour Laws from Indian Institute, Training and Development from ISTD and Personnel Management and Industrial Relations.

Yashpal Sharma is the new Managing Director of Skyways Group Yashpal Sharma has been appointed as the new Managing Director of Skyways Group. He started his career in July 1995 with Skyways, and over the years has proven to be a dynamic leader and an accomplished strategic executor. He has been working closely with the organisation across their offices and verticals to serve some of the biggest and complex customer requirements over those two decades. Skyways Group was formed by S L Sharma in 1983 and has grown into one of the top logistics company in India serving customer needs in air freight, ocean freight, door to door services, exhibition logistics, warehousing and courier verticals.

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PEOPLE CONNECT What motivated you to be a part of the logistics industry and how has been your experience so far? Well, logistics industry, so to say, remains the backbone of our day to day life and opportunities of economic growth towards increased urbanisation and industrialisation and would remain to play a crucial part in our emerging trends of living standards. My experience so far has been enduring in this industry with remaining possibilities to feel and cherish.

How has the industry changed from the time you stepped in? What major transformations have you observed in the industry in terms of technology, manpower, practices, government regulation, etc.?

Staying true to the industryâ&#x20AC;Ś KION India designs, manufactures, distributes ser vices and supports palletised material handling equipment for the Indian market and has emerged as a major player in this domain. With its comprehensive range of equipment, ranging from 1.5T to 16T Diesel Forklift, 1.5T to 3.5T electric forklift, a range of warehousing equipment and a strong service network with over 20 business centres and 80 customer touch points across India, KION India looks to sustainably cater the needs of an ever modernising Indian industry. With an experience of more than 25 years, Johnson MRV is now the CSO of KION India Pvt Ltd and is considered a stalwart in the industry. In an interview with Tariq Ahmed, he shares his experience in the industry and much more.

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I have been associated with this industry for more than 25 years now and it has definitely seen substantial changes since then. The industry challenges associated with transportation, port sector, storage infrastructure, tax structures and technology adoption have been reduced marginally due to numerous initiatives by the government. But still a lot more is needed to be done for smooth sailing, in order to derive required cost benefits.

Apart from work, what are your other interests? Apart from work, I spend time listening to music, reading books of inspiration and playing indoor games with my children.

Where do you see the graph of the logistics industry moving in the coming years? India has become the prime destination for logistics service providers all over the world. The demand for logistics services in India has been largely driven by the growth of the economy. The growth is projected at seven to nine per cent in next few years, with the Compounded Annual Growth Rate (CAGR) expected to grow at a rate of seven to eight per cent. This growth is expected to gain greater momentum due to exponential growth of the Indian economy. India is also experiencing a big retail boom as the buying capacity of the middle and upper middle segment of the population have scaled new heights. Many large MNCs from the retail industry are planning to set up operation in India and large local retailers are also planning to expand their operations.

What specific beliefs or values do you live by? How do you define success? Basically, I am a strong believer of the following three aspects in my life, viz. fairness in dealing with others, dedication and detailing provides confidence to handle difficult tasks, communicate adequately with others for transformation of thoughts into actions. Success is a function of smart ideas and smart actions groomed in an ecosystem which supports it.

What message would you give to the aspirants who want to make a mark in the logistics industry? I would like to assert that logistics industry is an interesting industry to work with. Also, there is a huge scope of scaling and growth under the current environment of economic strength and positive outlook.