CargoConnect March 2017

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VOL VIII ISSUE IV March 2017 `20

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Harbinger of HopeBudget 2017

Entertainment Slayed Right With Logist ics

Crucial Changes Awaited

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Contents

Volume VIII • Issue IV • march 2017

Editor and Publisher Smiti Suri Principal Correspondent Ritika Arora Bhola Feature Writer Tariq Ahmed Nicin Varghese Gaurav Dubey Sheena Sachdeva Deepashree Banerjee

20 COVER STORY: Handling the cure right SPECIAL FEATURE

INTERVIEW Prof (Dr) Dewakar Goel, Director, Indian Aviation Academy ........................................................66 V Kalyana Rama, CMD, CONCOR ................68

Harbinger of Hope- Budget 2017........8

FEATURE

Asst Manager Marketing Asad Mohammad Marketing Executive Mehuli Choudhury Administration Vipin Marwah Poonam Gupta

Jean Christophe Machet, Global CEO, FM Logistics ...................................................72

Sr Designer & Visualiser Shaique Ahmad

Ajay Sahai, Director General and CEO, Federation of Indian Export Organisation ........74

Designer & Visualiser Mayank Bhatnagar

Vijay Kumar, Chief Operating Officer, Express Industry Council of India .................................77 Raghav Himatsingka, Co-founder, Truck Ola ..78

NEWS ..................................82-86 shippers speak ....................80 GUEST COLUMN .......................81 report ....................................87 profile ....................................89 EVENTS ................................90-95 UPCOMING EVENTS .................95 PEOPLE CONNECT ...................96

Crucial Changes Awaited ..............52

Manager Marketing Niti Chauhan

PC Sharma, CEO and Whole Time Director, TCIEXPRESS ..................................................70

Puneet Prakash, Founder and Director, City Link .........................................................76

Entertainment Slayed Right With Logistics .................................42

Director Marketing Ajeet Kumar

TOTAL PAGES: 98 (inclusive of cover)

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

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

Editor–Smiti Suri

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Upfront Industry experts hold the view that trucking industry will generate a million jobs per year in near future.

Nitin Gadkari

Minister for Road Transport and Highways

Arun Jaitley

Union Minister of Finance

“Government is working on boosting infrastructure, particularly ports, roads and waterways, to significantly reduce logistics cost that is ‘very high’ in the country.”

Pusapati Ashok Gajapati Raju Union Minister for Civil Aviation

Visakhapatnam as a modern growing industrial city needs a new international airport and therefore the Centre has taken up the project at Bhogapuram in Vizianagaram district.

“For the transportation sector as a whole, including rail, roads, shipping, the Finance Ministry has proposed INR 2,41,387 crore in 2017-18. This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities.”

“Delhi-Kathmandu &

Prime Minister Narendra Modi and Afghan President Ashraf Ghani agreed to operationalise an amount of $1 billion for bilateral cooperation especially in capacity building, skill development, infrastructure building and connectivity linkages, including through a possible air corridor between India and Afghanistan to overcome obstacles to promotion of bilateral trade.

6

CargoConnect - march 2017

Kolkata-Kathmandu must be built soon to increase Nepal’s connectivity with India. I will give priority to build such networks soon,”

said Railway Minister Suresh Prabhu while delivering a keynote speech at the Nepal Infrastructure Summit 2017.

SPECIAL feature

Harbinger of Hope-

budget 2017

With the agenda of “Energise, Transform and Clean India�, Budget 2017 has been an optimistic commencement with an equal emphasis on all sectors. Sheena Sachdeva brings you exclusive opinions from the industry and its experts.

8

CargoConnect - march 2017

SPECIAL feature

L

ast year’s Economic Survey talked about “sweet spot” for India’s economic rising with a combination of strong political mandate and favourable external environment.

It also cautioned against the unrealistic expectations from “larger than life” reforms due to scattered nature of power in country and absence of compelling driver i.e. crisis.

It argued therefore in favour of a “persistent, creative and encompassing incrementalism” as the guide for prospective action and the benchmark for retrospective assessment.

It should be noted that any industry, irrespective of how nascent or established it is, requires comprehensive infrastructure and strong policies in order to attain growth. For that to happen, the government needs to step up and introduce measures and initiatives that can benefit the industry in the long run.

Ensuring ease of doing business in India can be a good start towards improving overall infrastructure in the country.

India is currently ranked 130th out of 189 countries in terms of ease of doing business.

Be it getting electricity, enforcing contracts, or simplified border and documentary compliance procedures, the country has accomplished a great deal. However, it still has a long way to go in terms of simplifying trade practices and improving domestic manufacturing capabilities.

To ensure ease of doing business in India, the government can take inspiration from trade practices in china – currently ranked 78th in the ease of doing business is ranking.

Being two of the fastest growing economies in the world, Both India and China have gained global prominence owing to their rising economy.

India’s growth in GDP has been for about 7.9 per cent in the 2015-16 and it is likely to decelerate to 7.1 per cent in 201617 due to industrial slow down. The Indian economy has continued to consolidate the gains achieved in restoring macroeconomic stability. Samir Shah, President of FFFAI, pointed out that FFFAI in its Pre-Budget Memorandum urged the Finance Ministry for addressing micro issues related to hassles in Customs Clearance. “We are optimistic that the Finance Minister’s commitments on Ease of Doing Business would resolve those

in the days to come,” he maintained.

An Outlook This year’s Budget has certainly been historic in the sense that the presentation has been pre-pounded by about a month. Earlier, as both Union and Railway Budget were presented together.. Even logistics sector along with other sectors with the wave of recovery grabbed its share in the progressive outlook.

Further, the agenda for the year 2017-2018 is to “Transform, Energise and Clean India.”

Notwithstanding demonetization, the economy stands at the cusp of noteworthy changes with a move towards GST and a unified tax regime along with a thrust on greater cash accountability and digitization across payment channels. As is the case with any big change, it comes with short term adjustment costs for longer term gains.

However, these gains are not given and can only be realised if there is continuous push towards achieving stated goals.

Adarsh Hegde, Joint Managing Director, Allcargo Logistics Limited giving his opinion on the Budget said, “The Union Budget 2017 with an agenda to transform, energize and sanitise India is reasonably balanced for an inclusive growth of the Indian economy. A couple of initiatives announced in the Budget presented on February 1, 2017 bring some cheer to the sector. The bold target of 2500 crore digital transactions for 2017-18 will transform the way India transacts.”

The boom i ng e-com me rce sector offered strong growth in the warehousing segment as well. At the beginning of 2016, it was supposed that despite of economic uncertainties, the Indian logistics sector would grow above six per cent in 2016.

Moving ahead, according to a report published by Frost & Sullivan, the industry is theorized to grow at a CAGR of 8.6 per cent between 2015 -2020, factoring in the 9.7 per cent growth during 2010 -2015. The key growth drivers conjuring growth rates are widening of infrastructure in investment associated with ports, airports and other logistic development plans, domestic demand growth and increasing trade.

Key transformations There has been a bold and decisive measure to curb tax evasion and parallel economy.

Agenda for 2017-8 is “Transform, Energize

and Clean India.” Ten distinct themes to foster this broad agenda: Farmers-committed to double the income in five years; Rural population: pr ov id i n g e mployabi l it y a nd ba sic infrastructure; Youth: energizing them through education, skills and jobs; The poor and underprivileged: strengthening the systems of social, security, healthcare and affordable housing; Infrastructure: for efficiency, productivity and quality of life; financial sector: growth and stability by stronger institutions; Digital Economy: for speed, accountability and transparency ; Public Service: effective governance and efficient service delivery through people’s participation; Prudent Fiscal management: to ensure optimal deployment of resource and preserve fiscal stability; tax administration: honouring the honest.

Infrastructure The Un ion Budget 2017-18 has been announced amidst a lot of expectations especially in wake of the uncertainty created by demonetization move of the government.

The Budget carries forward the vision of the government to assure that the fruits of development reach all segments of the society. It is a Budget that focuses on growth and development, while keeping the focus on strengthening the governance fabric of the nation. The Minister of Road Transport and Highways and Shipping, Nitin Gadkari has welcomed the thrust accorded by the Union Budget 2017-18, to multi modal transport planning and synergizing investments in railways, roads, waterways and civil aviation.

Terming the budget as revolutionary, Gadkari said that development of multimodal transport hubs would help ease traffic congestion to a large extent and also bring down pollution.

The Budget 2017-18 has made a provision of `2,41,381 crores for the transport sector as a whole. This includes rail, roads and shipping.

It is expected that an effective multi modal logistics and transport sector will make the economy more competitive.

The Budget allocation for highways has gone up from `57,976 crores in BE 201617 to `64,900 crores in 2017-18. 2,000 kms of coastal connectivity roads have been identified for construction and development.

This will facilitate better connectivity with

march 2017 - CargoConnect

9

SPECIAL feature “The Union Budget 2017 with an agenda to transform, energize and sanitize India is reasonably balanced for an inclusive growth of the Indian economy”.

“We are optimistic that the Finance Minister’s commitments on Ease of Doing Business would resolve those in the days to come” Samir J Shah President of FFFAI ports and remote villages.

For the Shipping Ministry the allocation has gone up from `1531 crores in BE 201617 to `1773 Crores. `600 crores have been allocated for Sagarmala programme. Pace of construction of PMGSY roads accelerated to 133 km roads per day in 2016-2017 against an average of 73 KM during 2011-2014.

Rajeev Singh, Director G enera l, Indian Chamber of Commerce gave his expert opinions saying, “The introduction of Multi Modal transportation along with synergizing investments in transportation is considered to be revolutionary for the industry. This is because increased investments in transportation along with the use of enhanced technology will lead to fast and efficient transfer of materials and

10 CargoConnect - march 2017

Adarsh Hegde Joint Managing Director, Allcargo Logistics Limited goods. On the other hand since multi modal transport would include more than a single mode of transport, in case of damage, the loss will be shared, thereby reducing the burden on any single mode (It will only be accountable for its own stage in line).” Even giving his opinions SC Ralhan said, “In a nation where traffic is severe and majority of freight is carried by roads there is dire need to upgrade physical infrastructure.

The GOI is also undertaking initiatives to boost Ease of Doing Business (EODB) which will likely attract more investments in the sector. However, fast tracking of project approvals, license approvals, invoking ease in securing land rights, transparency of information, more involvement of the private sector and increased PPPs are areas that

need to be looked at with more prudence to fortify the transportation industry.” As this Budget is a combined one, the Centre can now synergise investments in rail, roads, rivers and civil aviation. This sector will see a major rise in allocation from `3.4 lakh crore to `3.9 crore (BE) where Transport (including rail, roads and shipping) accounts for a bulk of the expenditure at `2.4 lakh crore. The boost given to infrastructure sector and especially to transportation will have a multiplier effect and bring about inclusive growth by connecting rural areas.

However, the challenges with regard to lagging behind in the transportation sector lies on issues related to capacity building and enhancement, infrastructure funding, investments, etc. thereby further bringing it to the level of global standards.”

The thrust accorded by the Union Budget 2017-18, to multi-modal transport planning and synergizing investments in railways, roads, waterways and civil aviation is indeed a welcome step. The development of multi-modal transport hubs would help ease traffic congestion to a large extent.

The Budget 2017-18 has made a provision of Rs 2,41,381 crores for the transport sector as a whole, which includes rail, roads and shipping. M-SIPS and EDFs are expected to take forward India on its way to achieve the goal of being the manufacturing hub.

They provide the necessary impetus to the domestic manufacturing in the electronics sector and lowers dependence on imports.

These funds can cater to the entire value chain of manufacturing, designing, modeling, equipment testing, packaging and distribution and is thus supportive towards the domestic supply chain and logistics industry.

Abhishek Chakraborty, Executive Director, DTDC Express Limited also

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SPECIAL feature “The boost given to infrastructure sector and specially to transportation will have a multiplier effect and bring about inclusive growth by connecting rural areas.”

“Since multi modal transport would include more than a single mode of transport, in case of damage, the loss will be shared, thereby reducing the burden on any single mode” Rajeev Singh

SC Ralhan

Director General, Indian Chamber of Commerce ascertained, “We welcome the budget as it is optimistic and puts forth a realistic roadmap which focuses on sustainable economic growth. The big advantages are investment of INR 3.96 lakh crore in the Infrastructure sector and 2.41 lakh crore for transportation modes (including road, railways and shipping) which would help in reducing the logistics costs and increase trade’’.

President, FIEO

national market.”

Expansion of e-NAMS will lessen book keeping and reporting systems thereby making monitoring and regulation of traders and commission agents easy.

Transparency and reducing manpower will remove manipulation in the process of auction and tenders.

Agriculture

TIES (Trade Facilitation for Export Scheme)

Agricultural sector remains a critical sector for Indian economy. The Budget takes a

A new scheme will be launched in 2017-18 to create infrastructure for exports, a move

ports, testing labs and certification centres.

“This is a welcome move. The scheme will help in modernising infrastructure in states for exporters,” Ajay Sahai, DG and CEO, Federation of Indian Export Organisations (FIEO) said. Commerce and Industry Minister Nirmala Sitharaman had last month informed about TIES and stated that it would aim at funding export infrastructure in states. Announcement about TIES assumes significance as the “Assistance to States for Development of Export Infrastructure and Allied Activities (ASIDE) Scheme” was

CSO estimates GDP to grow at 7.1% in 2016-17 (not accounting for the effect of demonetisation) Growth in GDP (% year on year)

12%

Annual growth in economic sectors

15% 10%

6%

further step to promote productivity and production. Also, it is of utmost importance to cushion the sector from seasonal effects and steps taken in the budget will help.

Rajeev Singh added, “e-NAM (National Agricultural Market), launched by Ministry of Agriculture and Farmers’ Welfare, Govt of India, has provided a common trading platform for traders, buyers, exporters and processors. It has helped traders with secondary trading from one Agricultural Produce Marketing Committee (APMC) to another anywhere in India at ease, thus allowing local traders to tap a larger

12 CargoConnect - march 2017

2011-12

2015-16

2007-08

2003-04

1999-00

1995-96

1991-92

1987-88

1983-84

1979-80

1975-76

1971-72

1967-68

1963-64

1959-60

1955-56

1951-52

2015-16

2010-11

-5% -6%

2005-06

0%

2000-01

0%

1995-96

5%

-10% Agriculture

aimed at reducing transaction costs for traders. “A new and restructured central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 201718,” Finance Minister Arun Jaitley said in his Budget speech. Indian exporters face huge challenges in terms of infrastructure, p a r t ic u l a r ly i n s t at e s . I n a d e q u at e infrastructure pushes their transactions costs, impacting competitiveness of Indian goods in the global markets. Exporters body FIEO said the scheme will help create modern infrastructure like last mile connectivity to

Manufacturing

Services

shifted to states on the recommendations of the 14th Finance Commission. ASIDE provides for an outlay for development of export infrastructure in states. After this shift, states came back last year and urged the centre to take care of creating infrastructure for exports, Sitharaman had said. She had stated that all the pending or incomplete projects will have to be undertaken by states.

Recording positive growth for the fourth month in a row, India’s exports rose by 5.72 per cent to USD 23.9 billion in December on better performance by petroleum, engineering and pharmaceuticals segments.

SPECIAL feature “TIES scheme will help create modern infrastructure like last mile connectivity to ports, testing labs and certification centres”

“The big advantages are investment of INR 3.96 lakh crore in the Infrastructure sector and 2.41 lakh crore for transportation modes which would help in reducing the logistics costs and increase trade.”

Abhishek Chakraborty

Ajay Saha

Executive Director, DTDC Express Limited

DG and CEO, Federation of Indian Export Organisations

IIP-based Growth Rates of Broad Sectors/Use-based Classification (in per cent) Weight 2013-14 2014-15

General

2014-15

2015-16

Q1

Q2

Q3

Apr.Dec.

Q1

Q2

Q3

Apr.Dec.

100.00

-0.1

2.8

4.5

1.3

2.0

2.6

3.3

4.8

1.5

3.1

Mining

14.16

-0.6

1.5

3.0

0.5

2.1

1.8

0.4

3.1

3.3

2.3

Manufacturing

75.53

-0.8

2.3

3.9

0.4

1.1

1.8

3.7

4.7

0.9

3.1

Electricity

10.32

6.1

8.4 11.3

9.4

9.4

10.0

2.3

6.8

4.4

4.5

8.7

7.0

8.3

8.0

4.7

4.4

1.3

3.4

6.4 13.6

-0.5

3.2

5.1

2.0 13.4

-10.0

1.7

3.1

1.6

0.8

1.8

1.6

2.2

1.9

1.9

2.5

2.7

6.8

4.0

Sectoral

Use Based Basic goods

45.68

2.1

8.83

-3.6

Intermediate goods

15.69

3.1

Consumer goods

29.81

-2.8

-3.4 -3.2

-5.4

-6.4

-4.9

8.46

-12.2

-12.6 -9.5

-15.5

-20.9

-15.2

3.7 11.9

23.4

12.4

21.35

4.8

2.3

3.2

2.3

1.7 -3.0

-1.6

-1.0

Capital goods

Consumer durables Consumer nondurables

7.0 1.7

2.8

1.4

Source: CSO

Cargo Traffic at Ports (million tonnes) Category

Major ports

201314

2014-15 (P)

555.49 581.33 (1.8) (4.7) Non-major ports 416.96 471.19 (7.5) (13.0) All ports 972.45 1052.52 (4.1) (8.2) Source: Ministry of Shipping

April September 2014-15 2015-16 (P) (P) 287.74 (3.8) 228.14 (11.8) 515.88 (7.2)

299.58 (4.1) 225.92 (-1.0) 525.50 (1.1)

Ease of Doing Business The Union Budget 2017-18 has exempted direct and indirect investors in category I (sovereign funds) and category II (broad-based funds) FPIs from the purview of indirect transfer tax provisions. This is expected to deal with the multiple layers of taxation and retroactive application faced by the FPIs. Singh opined “This will enhance operational flexibility and ease of access to Indian capital markets that should boost foreign capital inflow thereby positively affecting the GOI’s programmes

14 CargoConnect - march 2017

like Make in India, Skill India, Digital India, Smart Cities, as well as the JAM trinity (Jan Dhan Yojana for financial inclusion, Aadhaar for Direct Benefit Transfer and use of mobile technology for the delivery of last-mile services). Enhanced funding in the domestic manufacture, financial inclusion and allied programmes will likely spur import substitution thereby being a boon to the trading industry.” 90 per cent of FDI is already under automatic route, leading to hassle-free and faster foreign inflows. For ease of doing business, Samay Kohli, CEO and Co-founder, GreyOrange ascertained “Reduced taxation will enhance revenues for MSMEs thereby attracting more investments in the sector and mushrooming of startups in the same. With increased MSMEs, there would be increased activities like purchase from open or spot market, manufacturing, processing and assembling of subcomponents within the plant, and delivery to large enterprises using hired transportation, which

is the purview of supply chain networking.

This would boost value of the end product and in-turn ensures regular purchase orders going ahead. Thus, more logistics and supply chain companies will be linked with MSMEs thereby extracting mutual benefit from one another. Thus lowering tax rate in MSMEs is expected to facilitate the upcoming companies in both logistics and supply chain.”

Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME) infomed further, “Though apparently there is no exclusive benefit that lowering of corporate tax (from 30 to 25 per cent) will accrue to logistics companies. Yet, keeping in view that a large number of entities engaged in logistics business are small proprietorship / partnership firms, it does offer an incentive for these firms to embrace corporate structure.. Businesses will have to attain economy of scale. Firms have inherent limitations: they are not perpetual (most fold with death of prop/ partners) and attract unlimited liability. Being a company helps raising funds, building long term legal contracts and attracting human resources.

Logistics MSMEs should take advantage of the new regime and be ready for GST.” Also, as measure to add to “Ease of doing business” the threshold of mandatory tax compliance raised to `2 crores and therefore sought to benefit tax compliant MSMEs/ reducing auditing – compliance costs while achieving larger objective of inclusive growth and development. This is bound to have a positive impact on MSMEs in the logistics and SCM sector.

The GOI is also undertaking initiatives to boost Ease of Doing Business (EODB) which will likely attract more investments in the sector. However, fast tracking of project

SPECIAL feature “More logistics and supply chain companies will be linked with MSMEs thereby extracting mutual benefit from one another” Samay Kohli

CEO and Co-founder, GreyOrange

“Logistics MSMEs should take advantage of the new regime and be ready for GST” Anil Bhardwaj

Secretary General, Federation of Indian Micro and Small and Medium Enterprises (FISME)

Source: World Economic Outlook (WEO), January, 2016 update.

approvals, license approvals, invoking ease in securing land rights, transparency of information, more involvement of the private sector and increased PPPs are areas that need to be looked at with more prudence to fortify the transportation industry.

Push to GST Implementation of GST will be of great significance for economic growth. The domestic manufactur ing industr y is burdened by the cascading effect of taxes on costs. Implementation of GST will address this issue and remove the cascading effect of taxes on cost of manufacturing of goods and services thereby allowing for seamless credit throughout the value chain. As a result, the cost of indigenous goods will come down thus furthering the ‘Make in India’ initiative.

Sectors which are likely to be benefitted the most from GST include those that have a significant value chain commencing from primary inputs to final consumption stretched out across multiple states like

16 CargoConnect - march 2017

pharma, FMCG, automobiles, engineering goods, consumer durables etc. It will also eliminate double taxation for services like licensing of intellectual properties viz. patents and copyrights, and for software, e-commerce etc.

GST would also aid ease of doing business through the amalgamation of the existing taxes in one tax regime thereby reducing the cost of tax compliance and overall transaction cost. In fact a transparent and stable tax system will attract both local and foreign investment and generate employment.

Thus GST has been considered to be crucial for economic growth.

The Finance Minister has reaffirmed the commitment to implement GST and highlighted the progress like the finalization of the GST Council’s recommendations on most of the issues including rate structure, threshold for levy, compensation to states, examination of draft model GST law, draft integrated GST (IGST) law, GST compensation law and the administrative

mechanism for GST, etc. Adding to that, consultations with the trade and industry on GST is also scheduled to begin from April 2017 onwards.

D r S a nj ay G upt a , P r ofe s s or of Transport Planning and Head, Urban Planning Department, School of Planning and Architecture added, “However, the taxation policies of different categories of vehicles once GST rolls out would be critical.

Further, with the introduction of GST the companies are likely to consolidate their warehouses thereby needing policies which could guide setting up of base infrastructure for strategic transport and warehousing hubs in India in addition to cold chain infrastructure in order to propel growth in the logistics sector. Further industry , as a result of GST implementation ,expects extension of abatement of various transport services as available in current service tax regime to ensure that costs for end users do not increase and thereby easing out the adverse impacts on the cost competitiveness of logistics industry.”

Railways The increased allocation of funds for railways along with a focus on improving service capabilities and offering endto-end commodity plans is expected to enhance competitiveness of railways visà-vis roads and other modes of transport.

The government needs to speed up the formation of Rail Tariff Authority, which will be responsible for fixing tariffs taking into consideration costs, quality of service, social obligations and competition from other modes of transport.

Since we still have gaps in Door-to door logistics - lack of warehousing, I do not see any remarkable shift towards rail immediately.

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SPECIAL feature “There has to be a clear vision and goal set as to what should be the desired modal share of goods and passenger traffic for each sector of transport”

“As a result of GST implementation ,expects extension of abatement of various transport services as available in current service tax regime to ensure that costs for end users do not increase” Dr Sanjay Gupta

Professor of Transport and Urban Planning Department, School of Planning and Architecture The details of the scheme and how it would be different from allocations for infra projects would determine their effectiveness, although it goes completely to the credit of FIEO to sensitise the Government of India for exportcentric infrastructure.

Singh said, “Railways have always been the most important source of transportation for freight. But high freight rates in the recent past have popularized other modes of transport, particularly road, for the logistics

companies. Thus a rationalization of the freight tariffs for railways will help revive the trust of logistics companies and allow for increased transport through railways and save on the costs.”

Boost to Digital Economy Digitization has been given much focus in the Union Budget 2017-18, which is definitely pro-people. All moves for boosting cashless transactions will make payment procedure much easy for consumers as well as merchants. These along with more penetration through the launch of India Post Payments Bank (IPPB) that will usher in

18 CargoConnect - march 2017

Ashish Verma

President, Transportation Research Group of India

state of the art internet and mobile banking platforms, digital wallets and use innovative and emerging technologies is expected to provide basic financial services to masses, even rural areas and underserved and are thus pro-people.

A s h i s h Ve r m a , P r e s i d e n t o f Transportation Resea rch Group of India adds, “In my personal opinion and understanding, demonetization is clearly to bring more transparency and accountabi l it y a nd reduce opportunities a nd p ossibi l it ie s of cor r uption. In ever y big move there will be short term pains. But, the long term impacts of demonetization are certainly going to be positive and pro-people.

As our Hon’ble Prime Minister said in one of his speeches that he wish to take India to a developed countr y status w ith in one generation itself. To achieve this goal, which every Indian citizen also desires, such hard decisions and moves to clean and upgrade the system are very much required.”

Challenges Some of the areas which the budget did not adequately address include providing reliefs for electric vehicle industry, vehicle scrapping policy including incentives for scrapping the polluting and unsafe old vehicles, R&D for automotive industry including EV and hybrid vehicles, excise relief to small buses (10—13 seater), private sector participation policies role in country’s railway station

modernization besides railways sector.

Verma further opined, “One problem has been the lack of integration. Further, there has to be a clear vision and goal set as to what should be the desired modal share of goods and passenger traffic for each sector of transport (Rail, Road, Water, Air).

Accordingly, the budget allocation should be prioritized and allocated. Off course, the deep rooted problems of corruption, noninclusive growth continue to hamper the effectiveness of investment made in past in transport sector.”

Envision the Future India has been a robust economy, dealing with various shocks whether be it demonetization, economic and financial deficit or uncertainty among people. As informed by IMF, India is one of the fastest growing economies in 2017.

After a long process of GST (Goods and Service Tax) Amendment Bill, this year it is expected to get launched latest by July, 2017. GST has been a long anticipated bill because it will lead to huge transformation across different sectors of the country. In the repercussions of demonetization during last November, the budget was focused on dealing with problems that people had to face. With Logistics sector playing its own part in the economy, the allocation of budget this year shall bring some substantial change in the service sector.

Further, there has to be a clear vision and goal set as to what should be the desired modal share of goods and passenger traffic for each sector of transport (rail, road, water, air). Accordingly, the budget allocation should be prioritized and al located.

Of course, the deep rooted problems of corruption, non-inclusive growth continue to hamper the effectiveness of investment made in past in transport sector.

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Handling the cure right 20 CargoConnect - march 2017

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The pharmaceutical industry is largely dependent on the cold chain processes as the activities are highly time-sensitive and pharmaceutical products entail temperature-controlled storage and well-timed distribution. The Indian pharmaceutical industry is currently experiencing a multifold growth in terms of demand and supply. It is estimated that export of pharmaceutical products from India is likely to reach about $20 billion by 2020. And to cater to this burgeoning growth, logistics players in this vertical are buckling up to maintain a timely and temperature-sensitive supply chain while fighting with the prevalent challenges. Tariq Ahmed talks to industry experts in an attempt to understand the real scenario of pharmaceutical logistics in the country.

march 2017 - CargoConnect 21

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O inside Where does it stand?

ne of the biggest cha l lenges that the Ind ia n pha r maceutica l industry is facing today is the appropriate h a nd l i ng, storage a nd timely distribution of the t e mp e r at u r e-s e n s it ive pharmaceutical products to different countries at a competitive operational cost.

Logistics is regarded as a crucial part of the pharmaceutical industry since the activities are highly time sensitive. Additionally,

Where does it stand?

In comparison with pioneering sectors such as FMCG, retail and electronics, the pharma industry is somewhat behind when it comes to logistics developments like distribution network optimisation and Sales & Operations Planning (S&OP).

However, change is inevitable, since various developments currently underway in the pharmaceutical industry are making the logistics situation increasingly complex.

The most important of these developments are outlined below.

THE PROBLEM

Assimilating it first Impediments obscure Transportation infrastructure: a key element Dire need of Efficient Cool Chains Efforts for a riskfree supply chain Tackling Counterfeiting with Technology Regulations and more regulations So, we conclude...

22 CargoConnect - march 2017

Global Pharma industry is booming-the market for temperature management services is estimated at US$8.36 billion in 2014 and projected to rise to US$10.28 billion by 2018.

However, air cargo share of global pharma product transport has declined ( and 11% in 2013)

17%

11% 2013

2000

WHY?

THE CONSEQUENCE Products are rendered worthless and harmful for patients primarily due to temperature deviations.

In fact, over 50% of all temperature excursions occur while products are in the hands of airlines and airports.

A lack of compliance, standardization, accountability and transparency across the air transport supply chain.

Annual product losses range between US$2.5-12.5 billion.

Unacceptably high in a US$300 billion a year a market.

THE SOLUTION

A concerned effort to improve the level of competency as well as operational and technical preparedness.

The IATA Centre of Excellence for Independent Validators (CEIV) advocates globally accepted standards and regulations, establishes validation checklist developed alongside the industry, develops training content, certifies operators and locations and manages database of certified instructors and validators.

Sources: Pharmaceutical Commerce

phar ma products need temperaturecontrolled storage and distribution to maintain the quality. The pharmaceutical supply chain is quite intricate and highly responsible to ensure that the right drug reaches the right place at the right time and in the right condition to fight against diseases and epidemics. This is a very susceptible kind of supply chain wherein there is no room for error, as it directly impacts the health and safety of millions of people every day.

• Reduction in logistics costs • Late stage customisation • Power struggle over who manages logistics in the pharma supply chain • Tighter regulations in the form of Good Manufacturing Practice (GMP) and Good Distribution Practice (GDP) In a world of pharma, in which the need for logistics reform is so blatantly evident, it will still take some time before the awareness of logistics costs has trickled down to the other

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Infrastructure & Advantages Storage of 7000 pallets, 15 identical chambers of 432 pallets 1) Storage of 7000 pallet,15 identical chambers of 432each.

Temperature range of +25 degrees C to -25 degrees C Pallets each 24X7 operational range of +25°c to -25°c 2) Temperature VAS facility of processing, repacking, labeling & sorting.

3) 24x7 Operational Hours Customs bonded area.

4) VAS Facility of Processing, Repacking, Labeling & Operational reach trucks, forklifts & hand pallet movers.

Sorting IT infrastructure with WMS, FIFO, control & Barcoding systems.

5) Customs Inflatable dockBonded shelters Area with dock levelers.

6) Operated reach & hand pallet movers 100% power back up trucks,forklifts with multi generators.

Fire fighting & fire prevention systems.

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8) Dock Shelters with Dock Levelers.

ISO 22000:2005 & HACCP certified.

9) 100% Power back-up with multi generators Refer Vans to support distribution.

10) Fire- fighting & fire prevention systems 11) LED eco-friendly lighting 12) ISO 22000:2005 HACCP Certified 13) Reafer Vans & Support Secondary Distribution

Services

Temperature Control Handling Area

Custom Bonded Area

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Freezer\Chiller Chamber

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Hactl was the first handler in Hong Kong to achieve GDP, after considerable investment in new equipment and streamlined processes. Actually, we have vastly over-specified our operations to achieve GDP. So, obtaining CEIV, which we are now working towards, as part of a Hong Kong International Airport community initiative, will present no challenge.

Mark Whitehead, Hactl Chief Executive

types of medicines. The logistic scenario in the country has changed drastically, over the years. Logistics management is an area of research that has been getting increasing attention from academicians and practitioners over the last two decades since it may lead to reduced operational costs, improved delivery performance and increased customer satisfaction levels, thereby making an organisation more competitive in terms of cost, quality, delivery

products. Dosages are formulated and packed into various configurations. Products usually flow through company warehouses, wholesale distributors, retail pharmacies, medical institutions and finally to the consumers.

In the pharmaceutical industry, the efficient supply chain management is not just a case of guaranteeing that a patient’s supply of medicine is made available on time when needed, it is a case of ensuring that the

Any failings within the pharmaceutical supply chain can seriously compromise the quality of the product and hence patient safety. and flexibility. The importance of logistics is increasing also due to globalisation as more and more multi-national companies (MNC) are sourcing, manufacturing and distributing on a global scale, making their supply chains very complex to manage.

Assimilating it first The pharmaceutical supply chain like in other industries starts with the sourcing of active and inactive ingredients for approved

24 CargoConnect - march 2017

entire supply chain and distribution network is focused on supplying a quality product that complies at every point with regulatory requirements and is fit for use when it reaches the patient. Any failings within the pharmaceutical supply chain can seriously compromise the quality of the product and hence patient safety. In this perspective, supply chain extends beyond taking goods from point A to point B. It raises few questions which need to be scrutinized such

as where the supply chain starts and ends, where control must be focused to guarantee quality all the way from ingredients to the final medicine. The more global and complex the supply chain network, the more difficult it is to ensure that goods follow approved procedure, are managed by approved and trained manpower, and that records are properly maintained and quality is assured at every point.

Impediments obscure Currently, pharma logistics industry faces certain challenges such as inadequate infrastructure, lack of dedicated storage facilities for pharma products, lack of proper road connectivity and delayed regulatory approvals which needs to be tackled in order to explore more growth opportunities in this industry. Andreas Pauker, Lufthansa Cargo Spokesperson agrees to this by saying, “Pharmaceutical shipments are extremely ch a l leng i ng a nd dem a nd m a x i mum reliability from airlines. Whilst there is a noticeable development in the transport infrastructure in the country, the pace of the development is at time slower than expected.

Poor road conditions, heavy traffic and congestion on the entry points to a specific city lead to delays and longer than normal journey times.” He adds to it by saying, “Yet on the positive side, the type of vehicles used for transporting the temperature sensitive pharmaceuticals are modern and state-ofthe-art. The trucks are equipped with GPS monitoring devices and 24/7 connectivity with the drivers. The trucks are equipped with independent air-conditioning systems and are fitted with temperature data-loggers to monitor temperature deviations if any should occur.”

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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 to meticulous quality assurance standards.

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

Ramesh Mamidala, CEO, Celebi Delhi Cargo Terminal, too feels that a lot still needs to be done to overcome the challenges that this industry is currently facing. He puts forth his point by saying, “Most of the major airports in the country are doing well in developing dedicated pharma processing facilities. We as Celebi Delhi Cargo Terminal have gone a long way in creating a stateof-the-art Pharma Logistics Centre with 200 MT per day processing capacity. Our facility is also GDP certified, which certifies that we follow the most stringent norms while handling pharmaceutical products.

Need of the hour is to develop similar world class facilities across all the airports in the country which is still lacking. Secondly, for a critical product like pharma which deals with human life, there is a need of increased awareness about the criticality of the product amongst all stakeholders. It is very much important, as despite having suitable infrastructure, the supply chain is vulnerable to excursion due to negligence of few stakeholders. Thirdly, regulatory approvals need to be much faster, for which regulatory authorities are rigorously working

26 CargoConnect - march 2017

The pharmaceutical supply chain is quite intricate and highly responsible to ensure that the right drug reaches the right place at the right time and in the right condition to fight against diseases and epidemics. which will surely bring a significant change in processing times.”

Transportation infrastructure: a key element The key element in logistics is transportation infrastructure which connects the separate activities in a supply chain. By means of modern, well equipped and cost effective transport infrastructure, goods can be timely delivered at right place maintaining

the efficiency, service quality and company’s competitiveness. As pha r maceutica l products are highly sensitive in nature, its transport infrastructure needs to meet the global quality standards. If the pharma products are not transported in the specified temperature range, also if they are not stored in the required temperature controlled facility, they may get damaged. Facilities at the airport are better suited to handle pharma products. However, the challenge lies before the product reaches the terminal wherein still there is a lack of awareness about the proper transport facilities that should be used to carry pharma shipments.

The whole industry needs to take the onus of handling pharma shipments with care and responsibility.

Accord i ng to Sum it Sha r ma , Co Founder, GoBolt, “Transport is a central ingredient in the time and spatial economic utility of products and services. Multimodal transport, which combines the advantages of each mode, can be a particularly efficient and effective approach. Logistics is a process of planning, implementing, and controlling the efficient flow of products, information, and funds to conform to the client’s requirements.

Transport is a core component of logistics, moving goods between different points in the supply chain.”

Vinod Anand, Managing Director, Akanksha Global Logistics Pvt Ltd too believes in the importance of proper transport in frastr uct ure. Accord ing to him, “The lack of modern transport infrastructure in the country has definitely created bottlenecks for the growth of the logistics industry to a large extent. Specially, transportation of industrial and agricultural produce from rural and semi urban areas

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Regulatory approvals have always been one of the major challenges faced by the pharma logistics companies. With strict scrutiny, quality of pharma product needs to be maintained by the pharma companies as well as stringent norms have been laid down for transportation of the pharma products.

Ramesh Mamidala, CEO, Celebi Delhi Cargo Terminal

Key Features of the Pharma Logistics Centre at Celebi Delhi Cargo Terminal: Different Temperature Controlled Chambers as below: Pharma Exports

Area (In Sq. Mts.)

Current Capacity

Temp. Range

Chamber – 1

215

15 Pallets LD or MD & Loose Cargo

+15°C to +25°C

Chamber – 2

115

12 Pallets LD or MD & Loose Cargo

+2°C to +8°C

Chamber – 3

57

Loose Cargo

+2°C to +8°C

Chamber – 4

38

Loose Cargo

-4°C to -20°C

have been a problem for the producers.

Dependence on public transportation including railways has been a reason for stagnant growth of the industry. However, it is hoped that after the completion of the Golden Quadrilateral, the growth of logistics industry will gain a big momentum and will benefit all the stakeholders.

28 CargoConnect - march 2017

“A lternative econom ica l modes of transportation by air and water will have to be explored as per locally available resources.

Establishment of industrial hubs en route Golden Quadrilateral highways network will give a big boost especially to the pharma industry where timely delivery is essential due to various factors.”

Talking on the same lines, Henrik Ambak, Emirates Senior Vice President, Cargo Operations Worldwide explained about the newly introduced Emirates SkyPharma- a new purpose-built facility dedicated exclusively to the timely and secure transport of temperature sensitive pha r maceutica l sh ipments at Duba i International Airport (DXB). He said, “It is part of the new 11,000 square metre extension of Emirates SkyCentral terminal at Dubai International Airport and offers 4,000 square metres of space dedicated to pharmaceutical cargo. The SkyPharma facility features two temperature controlled zones (2-8 degree Celsius and 15-25 degree Celsius), 88 temperature controlled (2-8 degree Celsius and 15-25 degree Celsius) individual positions in the automated ULD (aircraft pallet) handling system as well as 5 temperature controlled acceptance and delivery truck docks in the dedicated handling facility.”

The new Emirates SkyPharma facility at Dubai International airport works in conjunction with Emirates SkyCentral

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At Frankfurt Airport, some companies have additionally obtained IATA’s Pharma CEIV certification. The IATA CEIV certification is a very comprehensive standard combining regulations by the WHO and local standards, like the EU-GDP. Dirk Schusdziara, Senior Vice President Cargo, Frankfurt Airport

American and Asian European Distribution Centres located in the Netherlands. Schiphol benefits from close proximity to the Ports of Rotterdam and Amsterdam and an unparalleled European road feeder and distribution network.”

Dire need of Efficient Cool Chains

DWC, the carrier’s freighter hub at Dubai World Central which offers 4,600 square metres of dedicated area for pharmaceutical cargo. Both facilities complement the range of innovative products and solutions offered

by Emirates SkyCargo of which Emirates SkyPharma serves the pharma market.

Keki Patel, Cargo Manager - India and Nepal, Emirates SkyCargo too feels that Emirates SkyPharma is a major step in securing the supply chain for pharmaceutical products. He applauds it by saying, “In total, this is the largest facility anywhere in the world that has been certified for Good Distribution Practices. In addition to our state of the art facilities at our hub, we have a modern fleet of over 245 wide body aircrafts and a global network of over 150 destinations across 82 countries in six continents. It provides an unparalleled reach into markets across the world for our pharma customers.”

Putting forth his view on transport infrastructure, Jonas van Stekelenburg, Head of Cargo, Schiphol Cargo said, “Sch iphol offers 525 sq mt of cargo warehouses, of which 40 per cent have direct airside access. This includes facilities

30 CargoConnect - march 2017

for perishables and pharma/life science cargo in multiple controlled-temperature zones, featuring refrigerated/deep-freezer and heated storage/handling facilities. Over 150 logistics service providers are situated in the airport region, with over 50 per cent of all

India’s complex cold chain market is still maturing. With multiple players, inadequate road systems and remote customers, the market is highly fragmented.

There is also a severe shortage of temperature-controlled vehicles, cold storage facilities, located in a handful of states making them inaccessible to some users.

Ensuring an uninterrupted cool chain is definitely the most important issue for logistics companies handling pharma. It is important to preserve temperature-sensitive products like drugs, insulin, vaccines, etc. at a precise temperature. Therefore, cold chains are built so that the products do not get stale or get destroyed. Aircrafts, sea ports and railways have their cold chain warehouses where the products are stored efficiently.

Even we have refrigerated trucks that are used to transport goods from one place to another. However, according to the officials at the cold chain houses, maintaining the right temperature 24×7 is a challenge. The Pharma Logistics Centre at Celebi Delhi Cargo Terminal is spread over an area of 1200 Sq. Mt. and is capable of handling healthcare products that are temperature sensitive. It includes different temperature controlled storage zones to meet the needs of different temperature requirements. With this facility, Celebi Delhi Cargo Terminal is capable of processing healthcare shipments to match global storage and processing standards.

• Temperature Controlled Examination Zone (+15°C to +25°C) • Unitisation in Temperature Controlled zone • Humidity control to prevent moisture damage • X-Ray Machines & Weighing Machines

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We are trying to solve the problem of supply chain through technology. The retailers are using technology for better inventory management which helps them in managing their working capital.

Also, technology helps eliminate the chances of fake medicines in the system.

Dharmil Sheth, Co-Founder, PharmEasy

• Temperat ure Mon itor i ng System with real time alert for temperature excursions • Roller Bed & Ball Deck Rollers • Cool Dolly: Refrigerated dolly on wheels which can carry one complete aircraft pallet/container both to and from aircraft to maintain integrity of the cool chain on ramp/tarmac.

The SkyPharma facility offered by Emirates features two temperature controlled zones (2-8 degree Celsius and 15-25

32 CargoConnect - march 2017

degree Celsius), 88 temperature controlled (2-8 degree Celsius and 15-25 degree Celsius) individual positions in the automated ULD (aircraft pallet) handling system as well as 5 temperature controlled acceptance and delivery truck docks in the dedicated handling facility. Emirates SkyCargo offers the following products to its customers in the Pharmaceutical industry- SkyPharma Standard, SkyPharma Advanced and SkyPharma Premium. Further the Emirates SkyPharma portfolio consists of a number of

augmented temperature protection offerings such as the Cool Dolly, the White Container and White Cover Advanced, all of which are designed to prevent temperature fluctuations or spikes from occurring during any part of the transportation process.

Dirk Schusdziara, Senior Vice President Cargo, Frankfurt Airport, too stressed upon the requirement of effective cold chain facilities for better effectiveness. He said, “At Frankfurt Airport, we provide some excellent, tailor-made services and facilities. With more than 7,000 sq mt of first line temperature-controlled (-24 to +24° Celsius) CEIV- and GDP-certified handling space, we are already Europe’s largest pharma hub.

Due to the huge demand in that sector, several parties are expanding their facilities. At the end of 2017, Frankfurt Airport will have even more than 10,000 sq mt of temperaturecontrolled areas that guarantee the fast and reliable handling of these sensitive products.”

India’s complex cold chain market is still maturing. With multiple players, inadequate road systems and remote customers, the market is highly fragmented. There is also a severe shortage of temperature-controlled vehicles, cold storage facilities, few which are located in a handful of states making them inaccessible to some users. However, this disparity indicates a huge opportunity for those involved in the cold chain process.

The focus has been increased on cold chain infrastructure in India which is evident from the rise of Dedicated Cold Storage facilities on and off airport. However, the transit infrastructure is still a point of concern and there has been a lack of adequacy both city side and air side. Reefer trucks are typically not sold off the shelf as in case of other vehicles. Very limited OEMs supply

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India is an important market for the manufacture and export of pharmaceutical products. Emirates SkyCargo works closely with our partners and customers in the Indian market to ensure timely and secure transport of their products to various destinations across our global network of over 150 destinations through our state of the art Emirates SkyPharma hub in Dubai.

Henrik Ambak- Emirates Senior Vice President, Cargo Operations Worldwide

fully built refrigerated vehicles. Moreover, there is definitely an additional cost attached to it and shippers need to be more responsible towards usage of the same. Similarly, extension of cool chain till aircraft is another area which needs to be looked into.

Our government has already identified the prerequisites to promote the sector and the above mentioned measures are a good indicator of the same. From the past few years, the Indian cold chain industry has witnessed some positive changes. Private sector participation has increased in the cold chain industry to cater to the increasing demand for cold chain logistics.

Efforts for a risk-free supply chain Over the last decade, many companies

34 CargoConnect - march 2017

faced extreme supply chain challenges that stretched their capabilities to the breaking point. Both the preponderance of natural disasters and huge economic swings caused

Leading firms use supply chain event management technology to send alerts to key personnel when action needs to be taken by someone, somewhere in the global supply chain to address potential delays.

extreme challenges across the supply chain.

These challenges have not diminished.

This paper covers a wide range of risks in the global supply chain and offers practical advice regarding risk mitigation strategies and tactics. This advice is grounded in research.

For any company that is in the business of providing a variety of products and services to customers, it is of crucial importance to the health of that business to implement a logistics strategy that will help keep service levels at their highest at all times, no matter what changes might be happening in other areas of the business organization. Effective Supply Chain Risk Management (SCRM) is essential to a successful business. It is also a competence and capability many enterprises have yet to develop. In some areas, both problems and practices are well defined. In others, problems are defined, but practices are developing. In still other areas, both the definition of the problems and the practices needed to address them are developing. In sum, SCRM is an evolving field.

The best strategy used to mitigate supply chain risk is to choose financially strong, competent world-class suppliers. That is easier said than done. Firms tell us that it takes approximately two years to develop and fully certify a global supplier. The second-ranked strategy used to mitigate supply chain risk focuses on compressing global shipping time and cycle time variation.

Leading firms apply lean principles and Six Sigma techniques to this effort. They map the value-stream of the end-to-end global shipping process and look for ways to reduce or eliminate waste and delays at every step.

The third-ranked strategy used to mitigate supply chain risk involves the use of visibility

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The lack of modern transport infrastructure in the country has definitely created bottlenecks for the growth of the logistics industry to a large extent. Specially, transportation of industrial and agricultural produce from rural and semi urban areas have been a problem for the producers.

Vinod Anand, Managing Director, Akanksha Global Logistics Pvt Ltd

tools to closely track global shipments and take action when necessary. Leading firms use supply chain event management technology to send alerts to key personnel when action needs to be taken by someone, somewhere in the global supply chain to address potential delays.

Talking about the efforts that goes into ensuring a risk free supply chain, Mohammed Al Musafir, Senior Vice President – Commercial Cargo, Oman Air said, “We take great care and pride in knowing that we have an active role in delivering life-saving medicine in 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 temperaturesensitive 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 to meticulous quality assurance standards.”

Tackling Counterfeiting with Technology The need for sophisticated anti-counterfeit technology is ever-growing as the practises of counterfeiters become increasingly advanced.

Overt visible markers on a drug’s packaging

36 CargoConnect - march 2017

The WHO believes 60% of the counterfeited drugs reported are antibiotics, hormones, analgesics, steroids, and antihistamines. Of those reported, the counterfeits can be broken into these six categories, as follows:

have been commonly used to identify the genuine from the fake, but the holograms and distinguishing markers applied to the blister foil, film or paper substrates of the packaging are mimicked and imitated to a high level of accuracy. To the untrained eye, the genuine and fake examples can look identical.

Technology as a countermeasure must necessarily improve, especially in reaction to what is a multifarious problem. There is the manufacturing concern, to ensure brand protection and reinforce intellectual proper t y r ig hts for ph a r maceut ica l companies, and the health concern, with the potential for counterfeit drugs to lead to mortality. A counterfeit medicine’s content is often substandard, containing fewer or no active ingredients or incorrect measures, and it can contain contaminants or inappropriate excipients. The result of this is the possibility of treatment failure or death. The technological needs resulting

from these two problems and the increasing sophistication of the illicit manufacturers has been the impetus for new innovations or the combination of technologies. The overt markers are now often married with covert ones such as UV print or anti-tamper tape and solutions. These covert technologies are either barely visible or hidden entirely and can be of particular help in ensuring that genuine packaging is not reused with illicit content. While this strategy is certainly a deterrent, these overt and covert markers can be easily simulated, and to be effective require a knowledge and user education that is difficult to filter to the community and patient level, particularly in the developing world.

In recent years, the benchmark technology has shifted towards forensic techniques and systems that can carry unique authenticated information along the distribution line, right up to the point of dispensation to the patient.

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cover story

Pharma logistic is a full service reverse distributor of overstocked, expired and in-dated pharmaceutical products. In comparison with pioneering sectors such as FMCG, retail and electronics, the pharma industry is somewhat behind when it comes to logistics developments like Distribution Network Optimization and Sales and Operations Planning (S&OP).

Sumit Sharma, Co-founder, GoBolt

Source: www.phrma.org

Barcodes, 2D data matrix codes, tags and Radio Frequency Identification (RFID) can allow instantaneous remote authentication, making it much harder for counterfeit products to enter the supply chain. These systems rely on a scan-and-send system, meaning that, unlike the packaging markers, there is no interpretation of information by the user; the remote device does all the work.

The technology is relatively young and often expensive, and the reliability of some of its systems is still questionable, but it offers a significant opportunity to truncate the spread of counterfeit products if government agencies and pharmaceutical manufacturers adopt variations of these strategies.

For anti-counterfeit technology to be at its most effective there is a need for various

38 CargoConnect - march 2017

systems working in tandem, either on the same product, i.e. the combination of overt and covert markers or, indeed, remote authentication technology, or on different products. The combination of technologies adds heightened security to the individual product, and the use of various systems in a region can help to make the counterfeiters’ lives harder, as investing in fraudulent methods that can only be applied in a limited number of settings lessens the scope of their activity.

Being optimistic about technology eradicating counterfeiting of ph a r m ac e ut ic a l s , D h a r m i l S h e t h , Co-Founder, PharmEasy said, “A good chunk of the retail pharmacy segment is not computerized and do not have a track of the

medicines being sold or procured. The batch numbers and expiry dates of the inventory present in their stores is not tracked. This creates a huge loophole in the ecosystem and it through this loophole that fake medicines enter the system. In order to avoid this, we ensure that the retailers we have partnered with use state of the art POS through which the products sold can be tracked – this minimizes the chances of fake medicines entering the system.”

Regulations and more regulations Regulatory approvals have always been one of the major challenges faced by the pharma logistics companies. With strict scrutiny, quality of pharma product needs to be

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cover story

Emirates SkyCargo has two state-of-the-art SkyPharma cargo facilities in Dubai. We recently launched our purpose-built state of the art Emirates SkyPharma facility at Dubai International Airport. It is exclusively dedicated to the timely and secure transport of pharmaceuticals.

Keki Patel, Cargo Manager - India and Nepal, Emirates SkyCargo

Today’s regulatory professionals must understand not only the regulatory guidance for each geographical market in the world, but also the hot button issues that affect the review of new drug applications in these regions.

40 CargoConnect - march 2017

maintained by the pharma companies as well as stringent norms have been laid down for transportation of the pharma products. Any non-adherence to the same may lead to the objection in transporting that the particular drug. Though it is good for a sensitive product such as pharma, however sometimes presence of multiple checks by multiple regulatory bodies slows down the processing times. Though our government along with regulatory bodies are working very positively towards Single Window Clearance for Pharma products which can be a game changer for the Indian pharma industry. The implementation of SWIFT (Single Window Interface for Facilitation of Trade) will enhance efficiencies and will enable to reduce dwell time and ease of doing business.

Regulatory intelligence (RI), which made its first appearance about 15 years ago at the large biopharmaceutical companies, is a relatively new arm of global regulatory affairs. Global regulatory drug development is more complex than ever before because of the globalization of the life sciences industry. Today’s regulatory professionals must understand not only the regulatory guidance for each geographical market in the world, but also the hot button issues that affect the review of new drug applications in these regions. That’s because those issues also may influence the FDA’s evaluation of the compounds.

The global pharmaceutical industr y and the movement of pharmaceutical goods are increasingly driven by regional- and global regulations. Regulations are important in order to ensure that the quality and integrity of pharma products during transport are maintained. For example: a medicinal product that is designed to be transported within a certain temperature range cannot be exposed to higher or lower temperatures. Such exposure can render the product useless and it can cause serious harm to patients using the medication.

The most important regulation currently governing the transport of medicinal products is the Good Distribution Practice (GDP) guidelines outlined by the European Commission. It is designed to ensure that the quality and integrity of pharmaceutical products are maintained during transportation from origin to destination.

On similar lines, Mark Whitehead, Chief Executive, Hactl said, “The first widely-demanded standard was WHO GDP (good distribution practice). But, the increasing number of sectors of the manufacturing community that are now seeking from their supply chain partners is what is felt by some to be the more comprehensive IATA CEIV standard. Hactl was the first handler in Hong Kong to achieve GDP, after considerable investment in new equipment and streamlined processes. Actually, we have vastly over-specified our operations to achieve GDP. So, obtaining CEIV,

cover story

Pharmaceutical shipments are extremely challenging and demand maximum reliability from airlines. Whilst there is a noticeable development in the transport infrastructure in the country, the pace of the development is at time slower than expected.

Andreas Pauker, Lufthansa Cargo Spokesperson

which we are now working towards, as part of a Hong Kong International Airport community initiative, will present no challenge.”

Also, there are certain certifications given by international associations like IATA and ICAO. Certifications are very important in this area as we are dealing with very sensitive products. Nevertheless, the introduction of new regulations requests the companies to invest time and money in order to apply to the new standards. But to obtain special certifications has also advantages.

IATA CEIV independently validates the quality of pharma transportation and therefore effectively proves our world class performance to the pharmaceutical industry. Being the biggest pharma hub in Europe and offering a wide and unique range of services in this field, an international validation definitely helps us to underline our position.

So, we conclude...

The most important regulation currently governing the transport of medicinal products is the Good Distribution Practice (GDP) guidelines outlined by the European Commission.

Bunching of orders towards the end of the month is another challenge for pharma logistics in India. Similar to retail and FMCG, around 50 per cent of monthly pharma distribution volumes tend to come in towards the end of the month. The high concentration of month end deliveries increases the chances of returns from wholesalers (which need to be reimbursed at 100 per cent, including products passed expiry by up to six months).

Now, the million dollar question is how the pharma companies deal with service providers on this. In the pharma industry, you need to select your 3PL, be it C&F or transport service providers considering the volume of month end only. The month end volumes are the real volumes for logistics.

You might find some slack time in the month beginning but that needs to be utilised in putting up the right processes in place like cycle counting, GHP audits, process audits etc. Once this is done, you can easily deal with the skew in sales towards month end. This should be managed through a scientific demand planning process; consumption based stock replenishment process as well as a robust S&OP (Sales & Operations Process), with a leadership commitment to the same. Hence this month end skew is a management choice – rather than a supply chain issue. LSP can at best help in reducing the COPQ (Cost of Poor Quality) of month end skew through some routing optimisation – but the issue here is not with LSP. The silver lining is that to reap the benefits of the mushrooming industry, the logistics players need to take double dose of right kind of technology to overcome the challenges and to maintain healthy relations with the pharma companies. After all, it’s a matter of life and death!

march 2017 - CargoConnect 41

feature

Entertainment Slayed Right With L o gist ics Kelly Clarkson’s first album sold four million copies. Her second exploded with 12 million. The third moved an anemic two million.

Then four songs for her fourth album were stolen pre-release, and circulated by a hacker who penetrated her co-writer’s Web site.

For a musician that may be show business, but for a supply chain professional, it’s a business wrought with peril. In entertainment, every title is treated like a new product; sales history often does little to inform projections. To top it all, the risk of piracy is everpresent, diluting potential sales.

Sana Husain deals with the experts to figure out the intricacies present in the backstage that fundamentally support the entertainment industry.

42 CargoConnect - march 2017

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feature Snapshots of Entertainment Logistics After a strong summer showing in France, the pressure was on Northern Ireland to continue improving through World Cup qualifying; no longer would an occasional decent result obscure eventual failure. In Azerbaijan, they met a side in good form, their last three games yielding wins over San Marino and Norway, along with a point in Prague against the Czech Republic. But in Belfast they were barely given a look-in, dominated in midfield and brutalised from set pieces by a side intimately acquainted with its method.

Confidence beats pressure every time.

Being passionate about football, and over the last decade having globally supported some of the best teams such as the English Premier League 2015 champions, Leicester City, as well as some of the world’s biggest football clubs and tournaments such as Manchester United, FC Bayern Munich and Copa América, DHL Express, the world’s leading international services provider, and the ‘Official Logistics Partner’ of the Hero Indian Super League’s (ISL) facilitates in bringing the Indian audiences closer to the game and nurture emerging young talent to compete at a global platform.

“The brand campaign - We know, great is in the detail - has been shaped around DHL’s ability to achieve success through its devotion to detail. As an official logistics partner to several prestigious events across the globe, we know that it is the little details that come together to bring the moment alive.

Be it in art, music, sport or business - the attention to detail is critical to success,” says RS Subramanian, SVP and Country Manager, India, DHL Express. “ISL was a success last year, so extending this year’s campaign to reach an even larger audience was given. This year, the campaign’s mainstay is the four-part TVC that engages football fans by creating that ‘wow’ factor and surprises them with details about the sport that they might not yet know about.”

Connected with one of the heavily betted events, the first breakbulk handler in Hong Kong to achieve the IGOM standards, Hactl, has again handled 64 of the world’s most valuable horses, competing at the Longines Masters of Hong Kong, unloading the horses in their air stalls, and transferring them through its dedicated animal handling centre and loading them onto waiting horseboxes using special low-angle ramps to avoid injury. When

44 CargoConnect - march 2017

By necessity, the supply chain built around the entertainment industry is designed to accommodate zero delays.

the horses were due to return to Liege via Dubai a week later, Hactl reversed the process.

In logistics support to the entertainment industry, whether the product is a movie, music, video game, or computer software, the issues facing the entertainment supply chain are common: short production windows, hard-to- forecast sales, high street-value products, and the looming specter of digital distribution promising to change it all, Mark Whitehead, Hactl Chief Executive sharing his perspective, says, “Changes in the music industry, resulting in less physical distribution, have already made their mark on airfreight. But, our industry’s history has always been opening up supply chains and satisfying frontline demand for timesensitive new launch product lines – only to see later, large-volume re-stocking revert to cheaper and slower alternatives. As one commodity market matures, and moves towards surface freight, another invariably takes its place as an airfreight user. The only certainty about airfreight is uncertainty – and that in itself is a fundamental driver of the industry. This spells opportunities as much as threats.”

MAKING ENTERTAINMENT SELL LIKE HOT CAKES To raise the curtain on some of the top issues challenging the entertainment supply chain is crucial to every LSP. • ZERO-DAY MANUFACTURING The entertainment supply chain is all about the last minute. The pressure to work on a movie, software title, game, or music release until it’s just right means artists and developers push right up to the release deadline—and often past it. It is not uncommon for a new title to simultaneously undergo manufacturing and fulfillment to meet street dates. By necessity, the manufacturing and supply chain built around entertainment products is designed to accommodate delays.

By necessity, the supply chain built around the entertainment industry is designed to accommodate zero delays.

Ronnie Soon, Events and Sports Logistics Manager, GAC Events Asia explains, “Planning can commence about six months or earlier before the actual event. Usually, each live show is preceded by a full day of travel, and is followed by another day’s travel to

Indian Aviation Academy National Institute of Aviation Management & Research Society

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Indian Aviation Academy is a premier training institute in the field of Aviation Management. It works towards developing the skills of a large pool of manpower of AAI, BCAS, DGCA and other aviation sector agencies through technological advancement and consequent refinement of operating standards and procedures in all spheres of Aviations Management and Training.

Over the years, Academy has received generous support from international agencies in the field of Civil Aviation, such as; International Civil Aviation Organization (ICAO), Montreal, Canada, International Air Transport Association (IATA), European Union, Aeroports de Paris, Federal Aviation Administration (FAA), USA, ACI (Airport Counsel International).

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feature Ronnie Soon, Events & Sports Logistics Manager, GAC Events Asia

In scale and requirements, but for each, there are three fundamental elements: forensic planning, a wide network of skilled professionals, and a backup plan for every possible situation – however absurd or unlikely it may seem.”

the next venue (though for countries where customs regulations and requirements can be complicated or challenging, travel time may be extended to two days), so there’s rarely any room for delays. Once the itinerary has been established, venues booked and tickets up for sale, there’s no turning back.

That’s when the GAC Events Asia team can begin to look at the finer details. Many tour operators will want to move every piece of sound equipment, lighting rigs, the stage and props, instruments, costumes – everything down to the gaffer tape and screwdrivers.

This can mean anything from 10 to 100 tonnes of cargo that have to be dismantled, packed, transported, unloaded and reconstructed within 48 hours or much less.”

Being able to control the supply chain is very important to ensuring that all cargoes are handled expertly by trained professionals. We work closely with our colleagues on the GAC frontline, providing additional training on the specific requirements of events logistics.

Thus, we combine the local knowledge and operational expertise of our representatives in local offices, ports or airports with the GAC Events Asia team’s experience of supporting live events worldwide. The same is true in arranging customs clearance and ensuring

46 CargoConnect - march 2017

that everything is fully compliant with local regulatory requirements for each leg of the tour, including any countries the cargo may need to pass through in transit. This is an absolutely fundamental element of the planning stage, as any compliance failures, missing documentation or discrepancies in cargo declarations can lead to equipment being seized, additional costs incurred and

The entertainment supply chain is all about the last minute. The pressure to work on a movie, software title, game, or music release until it’s just right means artists and developers push right up to the release deadline—and often past it. lengthy delays, as well as a huge amount of stress too! For this reason, we visit every country during the planning stage to study the infrastructure, plan transport routes and meet with relevant customs officials to ensure that there we have a clear picture of exactly what is required,” shares Ronnie.

• FORMAT CHANGES Format changes are a fact of life in the

entertainment industry. The latest example: Sony’s Blu-ray, which won the current DVD format war in January 2008.

“Replicators now have to invest in Blu-ray manufacturing lines,” says Alison Casey, head of global content at Futuresource Consulting, a UK-based research firm tracking the video, music, and games supply chain. “And they must make this investment at a time when the market for home video has flattened, and consumers are less likely to upgrade their technology.”

Each time the industry adopts a new format, the supply chain must accurately forecast the pace of consumer acceptance and produce accordingly.

• FUEL COSTS Fluctuating fuel costs impact entertainment software in two ways: how products are made and how they move.

Most products include three different types of plastic, as well as cardboard. “The cost and availability of polycarbonate (the strong plastic used to manufacture CDs and DVDs) has always been an issue,” says Schoener. “High gas prices track closely to polycarbonate prices.”

It’s difficult to pass raw material increases on to the consumer, he says, resulting in tighter margins and industry consolidation.

On the transportation side, shippers are cutting back on expedited shipping and consolidating carriers to contain costs.

For example, Koch Entertainment Group, an independent music distributor in Port Washington, N.Y., leveraged its high volumes to consolidate carriers, cut the use of nextday air from 20 percent to four percent of orders, and shifted more international shipments from air freight to ocean. Koch says its customers will trade longer delivery times for lower costs.

• TIGHT DELIVERY WINDOWS A key part of marketing for a new entertainment title involves stirring up anticipation for its release. Distributors work

feature Mark Whitehead, Hactl chief executive

As one commodity market matures, and moves towards surface freight, another invariably takes its place as an airfreight user. The only certainty about airfreight is uncertainty – and that in itself is a fundamental driver of the industry.”

closely with carriers to stage shipments to meet narrow delivery windows.

Talking about the supply chain interruption, Ronnie elaborates, “When we were working on a tour for a celebrated boy band, 10,000 kg of cargo was due to be flown in from London to Singapore for a show that evening, but the shipment was offloaded by the carrier and arrived in Singapore just three hours before the show was due to begin. By calling in a large support team of GAC representatives at the last minute, we were able to clear the cargo, deliver to the venues and set everything up within one hour. It was not ideal, but it showed that success in delivering events logistics lies in being able to roll with the punches and pull out all the stops when needed. Being a part of the global shipping, logistics and marine services provider GAC is our strength and unique selling proposition. It gives us access to a comprehensive network of services, expertise and infrastructure worldwide that we can draw upon for each event or tour that we handle.”

“We constantly fine-tune the matrix; if FedEx or UPS improves their delivery time, we have to adjust the system,” shipping later to avoid delivery too early. The need to rush goods to meet street dates “puts a lot of stress on logistics infrastructure,” says Jeff Strobel, senior account manager at Duplium Corporation, a Carrollton, Texas-based replicator and distributor. “Sometimes it’s not humanly possible to meet a deadline. When that happens, manufacturing gets the blame.”

• GOING GREEN Inefficiencies in entertainment distribution have driven up costs. For example, one distribution company could be shipping two half-empty cartons to the same retailer, each containing DVDs from different studios.

“In a sector that is controlled by vendormanaged inventory, and expects daily stock replenishment, this distribution approach is

48 CargoConnect - march 2017

highly inefficient,” says Casey.

To drive out such inefficiencies Walmart, which represents more than one-third of the U.S. home video market, is focusing heavily on sustainability and ecological issues. Other companies are bringing together different categories of entertainment product.

“Until recently, there have been separate supply chains for different entertainment products,” says Casey. “No content company today plays in the music, video, and games space, except Sony.”

On the packaging side, efforts are underway to use less plastic, slimmer packages, more post-consumer paper, and stacked—rather than separately packaged—discs within a jewel case. It’s a balancing act, however, because materials and transportation savings can be lost to increased production time and cost.

• CHANGING TASTES/CHANGING DISTRIBUTION Billboard magazine’s Top 100 list is celebrating its 50th anniversary. But its

Each time the industry adopts a new format, the supply chain must accurately forecast the pace of consumer acceptance and produce accordingly. cachet has been diluted by a diversification of musical tastes; Billboard now maintains dozens of charts across a wide range of musical genres—from Hot Adult R&B to Latin Tropical.

The impact on distribution includes

proliferating SKUs and smaller order volumes for any one title. Also driving smaller orders is increased demand for direct-to-store and direct-to-consumer delivery.

These changes require companies distributing product to retool their operations to handle everything from pallet-sized orders for big warehouse deliveries to each-pick and parcel shipping.

“The entertainment supply chain now handles many more SKUs, in much smaller production runs,” says Strobel. “That drives up the cost of goods and shrinks margins.”

“We must adjust and build new facilities and processes to handle electronic components and large, bulk products,” explains JVC’s Vangrov. “This includes managing the supply and transportation of gaming devices from Asia; as well as the storage, materials handling, assembly, and distribution of large box products.”

• SECURITY Those who missed the animated movie Flushed Away when it was released in theaters on Nov. 3, 2006, could catch it online about six weeks later, thanks to Salvador Nunez Jr., who allegedly pilfered a screener copy of the DVD from his sister, an Academy of Motion Pictures Arts & Sciences member who received the DVD as part of the Oscar voting process.

Nunez was caught thanks to watermark technology, which embeds data within content such as digital movies to connect them with a particular recipient. The replicator used the technology to read the code within the content after it was posted on the Internet and provided to the FBI with the recipient’s name and address.

Such techniques are among an evolving arsenal of tactics designed to help protect intellectual property in a world where one in three of all music discs purchased worldwide is illegal, and one of every three business software installations use pirated content.

feature Events vary in scale and requirements, but for each, there are three fundamental elements: forensic planning, a wide network of skilled professionals, and a backup plan for every possible situation – however absurd or unlikely it may seem.

The Content Delivery and Storage Association (CDSA), a Princeton, N.J. trade association and standard-setting body, certifies and audits mastering and replicating operators who comply with security standards governing everything from access control, personnel policies, chain of custody, and over-run destruction practices to ensuring that customers have legal authority to duplicate the product.

“Companies need to mitigate the gap between what they are doing and what should be done,” says Timothy Gorman, director, worldwide anti-piracy and compliance programs for the CDSA. “They must accept a certain amount of risk.”

Fear of such breaches and other types of piracy, as well as lax, and often unenforced, intellectual property laws in low-cost countries, have affected replicator selection.

CHANGE IS PREDICTABLE Every entertainment release strives to be a dynamo, not a dud. Excitement over the possibility of creating the next big thing bleeds into the entertainment supply chain, which must be tuned to accommodate both dynamos and duds with equal energy.

Format issues, time pressures, security practices, and cost concerns will continue to challenge supply chain executives to keep entertainment content moving. It’s a tough act to follow.

On the biggest challenge faced in handling the logistics for the entertainment industry,

50 CargoConnect - march 2017

Ronnie says, “GAC Events Asia specialises in providing a complete portfolio of services for event organisers and promoters including international air and sea freight, customs clearance, packing, onsite supervision and set up, as well as contingency planning and preparedness. Events vary in scale and requirements, but for each, there are three fundamental elements: forensic planning, a wide network of skilled professionals, and a backup plan for every possible situation – however absurd or unlikely it may seem.

“Over the past few years, we have delivered live tours for some of the world’s biggest performers as well as events for a host of international entertainment and trade events. And to deliver large-scale events for artists whose reputations rely on their ability to deliver a spectacular live show, our motto is “expect the unexpected”. This is also one of the major challenges that we face. We can have months of preparation before the event, but things can still go wrong. We need to be vigilant and be ready to spring into action, regardless of how well we plan.”

THE SPOTLIGHT MANAGEMENT As the multi-billion dollar entertainment industry continues to evolve, 3PL providers must adapt to manage consumer demands and market changes. The need for regional encoding, format-specific release dates and changes in consumption formats are just a few reasons why 3PL providers must stay agile.

Regional locks Entertainment product manufacturers use regional locks to prevent people who aren’t within a specific region from using the product. Regional locks also help retailers spread release dates over a period of time, or to prevent access to content because of region-specific regulations (i.e. censorship laws). Video game consoles like Sony’s PlayStation and PlayStation 2 are examples of devices with regional locks.

Similarly, DVDs are often made with regional coding so a movie that’s released tin a DVD in Canada can’t be watched in the U.K. before its local release date. Regional locks are also a great way to restrict distributors from releasing products to the grey market.

The grey market is made of distribution channels that, while legal, are unauthorised by a manufacturer for product distribution.

With regional locks, distributors can control product release parameters, including content, date and price per region.

Format-specific release dates A digital entertainment trends researcher at Forbes recently revealed that five of the seven Academy Award best-picture nominees have been, or are going to be, released in a digital format before going to DVD or BluRay. Today, many major motion pictures are following this trend to keep up with changes in consumer habits. This new trend has an impact on when, how, and how often a 3PL provider distributes movies.

Changing consumption habits Manufacturers and distributors of videos, books, video games and music must deal with ever-changing consumer behaviours.

As technology evolves, it affects the way people interact with entertainment products and the pace at which products evolve.

As entertainment products continue to break sales records, 3PL providers have the challenge of also remaining flexible and adaptable, to maintain a competitive edge.

To put this into perspective, in 2013 Grand Theft Auto V became the fastest-selling game, earning $1 billion in only three days! And, a study by the Bureau of Economic Analysis cited that in 1929 Americans purchased roughly 100 million individual songs in total.

More than 80 years later, Americans bought as many as 7.5 million songs as CDs and downloads – another sure sign of changing technology and the evolving desires of music lovers.

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Perfect Express Movers (P) Ltd

Air Freight Forwarders & Consolidaters HEAD OFFICE 2 E & U, DCM Building, 16, Bharakhamba Road, Connaught Place, New Delhi-110001 T: + 91.11.47343502-16 F: +91.11.47343501 E: info@perfectexpress.in W: www.perfectexpress.in

OUR BRANCHES: MUMBAI, CHENNAI, BENGALURU, HYDERABAD, KOLKATA, AHMEDABAD

feature

Crucial Changes Awaited

Domestic air cargo feels the pulse

52 CargoConnect - MARCH march2017 2017

FEATURE

India has the fastest growing domestic aviation market in the world, ahead of China and the US. Also, India is building new airports and expanding existing ones to meet the growing demand. However, there are significant challenges to be overcome. The draft National Civil Aviation Policy (NCAP), released in October 2015, has presented many interesting proposals to promote growth in the aviation sector.

Nicin Varghese, with the help of a few stalwarts of the industry, tries to understand the pulse of the air cargo industry.

march 2017 - CargoConnect 53

feature

A

ir cargo plays a key role in the financial development of a nation. It encompasses a wide variety of service providers such as forwarders, ground handling servicers, domestic cargo service providers, custom house agents etc. The Indian domestic cargo market has grown rapidly over the past decade, parallel with the development of the Indian economy.

According to one of the reports by Frost & Sullivan, at its present compounded annual growth rate of 5.5 per cent, cargo demand in India is expected to boost the airfreight market to 2.8 million tonnes by 2018. Also, with various government initiatives in place, such as the review of the Foreign Direct Investment (FDI) policies, emphasis on public-private partnerships to improve airport infrastructure, export tax rebates, etc., India has all the ingredients to become one of the world’s leading Air Cargo Hubs.

On a similar note, Giam Ming Toh, COO, Vistara said that the Indian air cargo market is poised to be one of the fastest growing domestic air cargo markets in the world.

“The domestic market has a higher annual growth rate of approximately 27-30 per cent when compared to the international air cargo (export and import) market which is growing at an average pace of approximately eight to ten per cent. The resurgence of the economy, the ‘Make in India’ initiative of the government, improved infrastructure and the emergence of successful e-commerce companies are some of the factors that have contributed to this growth. However, in the coming years, there should be a bigger focus on building capacity, infrastructure and

54 CargoConnect - march 2017

policy changes to sustain this high rate of growth,” he said.

What Does the Industry Need?

Manpreet Singh Dahri,

Manager Cargo Sales, Namaste India Aviation Pvt Ltd

“Developing infrastructure along with addressing the needs of the air cargo industry has been the top priority for the aviation ministry. The implementation plan should be mainly in the areas of process simplification, reducing dwell-time, green measures and hi-tech advancement into e-systems for bringing in efficiencies in the air cargo activity.”

India has all the ingredients to become one of the world’s leading air cargo hubs.

Although in recent times the sector has witnessed increased investment, evolving regulatory policies, mega infrastructure projects and several other initiatives, there is still a need to significantly accelerate the pace of such developments. The key areas to be developed are infrastructure, security and e commerce. Infrastructure is the enabler which will act as a driver for growth in air cargo. The development in infrastructure, planning and distribution can prevent many bottlenecks faced by the air cargo industry, especially domestic air cargo. Cargo theft and other security issues are another major concern of the industry which affects the overall growth of the industry. E-commerce has become a major factor in changing the shape of global air logistics industry.

1. Reducing Dwell Time Manpreet Singh Dahri , Manager Cargo Sales, Namaste India Aviation Pvt Ltd points out an important change that should be focused. He says, “The future will depend upon the demand, infrastructure and supply. Developing infrastructure along with addressing the needs of the air cargo industry has been the top priority for the aviation ministry. The implementation plan should be mainly in the areas of process simplification, reducing dwell-time, green measures and hi-tech advancement into e-systems for bringing in efficiencies in the air cargo activity. The logistics industry has always been confronted with multitude of problems on account of inordinate dwell times, damaged or missing cargo, long processing times and queues at the cargo terminals, etc.

This has led to huge transaction cost and operating expense for the industry players.

Therefore, the main focus initially is to reduce dwell time.”

The existing dwell-time at Indian airports for cargo does not compare well with world standards. The government is planning to reduce the dwell-time to three days from the current 57 days . The move will improve efficiency of the airports in the country and will also boost the air cargo

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feature industry, which is expected to experience a high rate of growth over the next few years. At present, the dwell-time at various airports varies. While on an average it takes 129.66 hours or 5.4 days for a cargo package to be cleared at Chennai airport, in Delhi it takes about 160 hours or about 6.6 days to get final customs clearance and leave the airport. There are, however, some cargo consignments particularly those belonging to the IT and auto industry that are cleared within a day of arrival.

“The principal challenge is to keep the dwell time of cargo shipments as short as possible,” Manoj Singh, Senior Vice President and Head- Cargo, Mumbai International Airport Ltd identifies one of the most important challenges faced by the air cargo industry. He continued to say, “At present, enhanced ease of doing business with air cargo security procedures is the need of the hour. This can be addressed through the assimilation of efficient processes and the latest technology. Air cargo security measures in both critical and noncritical operational activities are being reviewed by the Ministry of Civil Aviation with a view of improving the dwell time without compromising on the security standards to be maintained. Digitisation of security processes, viz. e-CSD, cutting down on multiple checks and the establishment of a faster and more innovative approach will help in reducing the dwell time of shipments during the security processes.”

2. Need for Better Infrastructure The India air cargo industry, domestic or international, needs high class infrastructure considering the increase in cargo traffic and global participation. Cargo Terminal Operators, whether AAI or private entities should augment investment in advanced technology and equipment if they want to compete globally. Also, latest technologies like Elevated Transfer Vehicle (ETV), Radio Frequency Identification Devices (RFID), Automatic Storage and Retrieval System (ASRS), X-ray machines for cargo screening etc. are required to be deployed at cargo terminals. Further, temperature sensitive cargo like perishables, pharmaceuticals and dangerous goods etc., which are transported mainly via air need special handling facilities. Therefore, investments

56 CargoConnect - march 2017

Manoj Singh,

Senior Vice President and Head- Cargo, Mumbai International Airport Ltd

“At present, enhanced ease of doing business with air cargo security procedures is the need of the hour. This can be addressed through the assimilation of efficient processes and the latest technology” should be made in this area also.

Regarding the same, SGK Kishore, CEO, GMR Hyderabad International Airport Ltd said, “Creation of value added infrastructure is rapidly becoming a necessity

to face the changes in regulatory environment especially the export regulations for different countries such as for handling perishables, etc. Airport operators need to augment their infrastructure to make them an ideal enabler for exporters.

Hyderabad Airport has always been taking steps to enable its stakeholders and over the years introduced new services such as Road Feeder Service (RFS) and Air Freight Station (AFS), Envirotainer base, augmentation of cold storage facilities, etc. and is in process of consulting with its stakeholders on establishment of a dedicated perishable terminal.”

Singh seems confident and optimistic about the infrastructure facilities available at Mumbai International Airport.

Mumbai International Airport Private Limited (MIAL) has been actively creating infrastructure and developing IT and security standards at the Mumbai Air Cargo Terminal since its inception. Most recently, MIAL has commissioned India’s largest state-of-the-art Domestic Common User Terminal in July 2016. The new Export Heavy and Bonded Cargo Terminal has also been completed and is set for commissioning this year. In addition to these new facilities, MIAL has successfully commissioned various projects in the past like the Export Unitization Zone (2014), India’s largest Import Cold Zone (2013) and the Export Perishable Cargo Terminal (2011). The automation and augmentation of the pharmaceutical and agro-handling capacities are planned for the coming year. In order to meet compliance measures in terms of se-

“Continually Innovative”

feature curity at the Mumbai Air Cargo Terminal, MIAL employs a wide network of CCTV surveillance, and has in place a highly effective security system with strict access control, ensuring complete adherence to all Bureau of Civil Aviation Security of India (BCAS) requirements.

3. Regional Connectivity Most of the cargo at present is moving towards metros - Delhi, Bengaluru, Mumbai, Kolkata and Hyderabad. When it goes down to tier two and tier three cities, reach of the air cargo will become much better. The major growth of e-commerce is not only in metro cities but also in tier two and tier

SGK Kishore,

CEO, GMR Hyderabad International Airport Ltd

“Creation of value added

ports in 20 years, mainly to connect tier-II and tier-III cities. The development of new airports in smaller cities and towns is part of the government’s efforts to encourage air travel in the country. In the Union Budget 2014-15, Finance Minister Arun Jaitely had said that the proposed new airports will be developed in smaller cities and towns and the Airport Authority of India (AAI) will build the airports through public private partnership (PPP) process. The locations for the new airports include cities in various states including Kadapa, Tirupati, Vijayawada and Warangal in Andhra Pradesh; Along, Daparizo, Pasighat and Tezu in Arunachal Pradesh; Jorhat, Rupsi

infrastructure is rapidly becoming a necessity to face the changes in regulatory environment especially the export regulations for different countries such as for handling perishables, etc. Airport operators need to augment their infrastructure to make them an ideal enabler for exporters” three cities as well. It will be much better if there is connectivity via airports and infrastructure to handle the cargo in these places. Regional connectivity will boost the transportation of cargo, especially of perishable products.

Regarding the same, Hemant Bhatia, President, Tulsidas Khimji Pvt Ltd said, “At present, the airports in tier II and tier III cities do not have the physical capability to meet the requirements of the air cargo industry. As a result, goods which are manufactured in the hinterland have to be transported to the bigger airports even for domestic carriage, which increases the over-

58 CargoConnect - march 2017

all cost structure.

The New Civil Aviation Policy is likely to result in the development and upgradation of airports in tier-II and tier-III cities.

This will provide the required platform for the movement of domestic cargo directly from these cities, thereby boosting the growth of air cargo to and from these cities.”

But, as a positive sign, The Union Government has so far identified 50 locations for developing new airports in smaller cities and towns across the country. It may be noted the Indian government has outlined plans to develop 200 low-cost air-

and Silchar in Assam; Gaya and Raxaul in Bihar; Bilaspur and Raigarh in Chattisgarh; and Daman and Diu in Daman and Diu. The government has also proposed to develop a i r por ts i n Bhawa naga r, Jamnagar, Kandla and Keshod in Gujarat; Hisar and Karnal in Haryana; Kishtwar in Jammu and Kashmir; Deoghar and Jamshedpur in Jharkhand; Belgaum and Hubli in Karnataka; Gwalior, Jabalpur and Rewa in Madhya Pradesh; and Akola, Amravati, Jalgaon, Kolhapur and Solapur in Maharashtra. What is not clear is how quickly these ambitious projects will be completed.

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feature 4. Need for Efficient Air Cargo Supply Chain Though the industry claims great growth potential, it is possible only with efficient logistics which contributes the most to the growth of the domestic air cargo industry.

Safe and timely cargo transportation is what the industry basically seeks.

There are many people involved in air cargo supply chain management like airlines crew, ground handling agents, air cargo terminal operators, forwarders, domestic cargo transport service providers and custom house agents. Besides, a variety of goods are transported via air such as perishables, pharmaceutical products, apparels, highend electronics, luxury products, dangerous goods, chemicals, heavy equipment, FMCG, to name a few. Despite all the progress, the industry is still facing several challenges like lack of well-organised and efficient implementation and execution of plans and policies, skilled manpower, increasing service tax and cargo handling charges at the terminals, etc.

5. Skilled Manpower: A Necessity The domestic air cargo industry lacks skilled and trained manpower, opine experts. Also, there is a lack of willingness on the part of stakeholders to invest in human resources for carrying out efficient business operations - mainly cargo handling and transportation. In addition, congestion at cargo terminals especially during peak hours is also a major problem. Congestion can be avoided if LSPs and agencies train their personnel to carry out operations efficiently without chaos during peak hours.

60 CargoConnect - march 2017

Hemant Bhatia,

President, Tulsidas Khimji Pvt Ltd

The New Civil Aviation Policy is likely to result

There is the need to invest in human resources, as the future growth of the air cargo industry is crucially dependent on the availability of skilled manpower.

The smooth functionality of the air cargo industry is dependent on the safe and timely delivery of the cargo. In this context, the first challenge is to build a team of cargo handling personnel with technical knowledge, expertise in handling, operating and maintaining equipment as well as proficiency in soft skills and customer services.

The second challenge lies in work force.

Therefore, we must look to incorporate innovative and creative employee engagement initiatives that evolve and meet with the expectations of the new generation employees.

in the development and

E-commerce and Domestic Cargo: The Bond Seems Strong

upgradation of airports

The Indian E-retail space has witnessed a phenomenal growth in the recent years, led by a growing internet user base and financial sponsors. With India at the cusp of digital revolution, online retail is set to achieve even greater heights in the coming years. Due to the nature of e-commerce where customers often demand to receive their online purchases in the shortest possible time, it presents huge opportunities for the logistics industry, particularly the air cargo sector, because air freight is usually the preferred shipping option.

The e-Air Waybill (e-AWB) and electronic customs procedures which facilitates elimination of paper based documentation, promoted by IATA is a major move in connecting e-commerce with air cargo. Electronic AWB is the first step towards creating a

in tier-II and tier-III cities. This will provide the required platform for the movement of domestic cargo directly from these cities, thereby boosting the growth of air cargo to and from these cities.�

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feature

fully paperless environment. The implementation of harmonized electronic customs procedures by countries worldwide is key to creating network of routes where air cargo industry participants can benefit from an end-to-end paperless process.

Observing the impact of e-commerce in domestic air cargo Kishore says, “The biggest driver of domestic air cargo growth has been investor-fuelled growth of ecommerce. Over the last few years there has been a big boom in online shopping of designer fashions and accessories, high-end electronics and parts, which make up a substantial percentage of domestic air cargo.

However, this segment of domestic air cargo movement is plateauing with e-commerce companies focusing on cost optimisation and converting to road movement. Air cargo industry needs to play from its strengths of providing fast, safe and secure logistics to its customers and add on the value added services wherever possible to provide a differentiated service to retain its client base against stiff competition from other modes of transport.”

Express cargo is integral to many facets of modern life and the distinction between express and general air cargo continues to

62 CargoConnect - march 2017

blur. There is an urgent need for robust infrastructure and policy support to drive efficiency to keep up with the growing need of express cargo. In this context, the development of dedicated express cargo zones and the adoption of modern technology within the air freight terminal can lead to increased delivery capacity and shorter delivery windows. Ministry of Civil Aviation aims to develop cargo villages near airports, which will enable the industry to have efficient transfers with faster processing.

Besides, NCAP highlighted that airport operators will be encouraged to provide space for at least ten years lease to express cargo freighters who may then develop dedicated infrastructure to improve their operational efficiency.

Regarding the same, Manpreet said, “With the burgeoning e-commerce sector, the air express cargo industry is turning out to be a pivotal segment for enhancing exports, especially in the SME segment.

The domestic air cargo industry is already farsighted and it exhibits signs of huge opportunity here and it is only going to be bigger in the coming years.”

A Final Touch

Sunil Arora,

Director, Delta Freight

“It is true that domestic air cargo is riding the cargo business in India.

This market, which is mainly driven by e-commerce at present, would grow rapidly in the days to come.”

The domestic air cargo industry is expected to grow at six to eight per cent over the next five years on account of expected growth in domestic economy and most importantly increasing penetration of e-commerce. In value terms, gems and jewelry, pharmaceutical products, organic chemicals, and apparel and clothing accessories account for over half of the air cargo exports from the country. The demand for these commodities is highly sensitive to the global economic growth, thereby leading to huge fluctuations in air cargo movement.

As a conclusion note, Sunil Arora, Director, Delta Freight said, “It is true that domestic air cargo is riding the cargo business in India. This market, which is mainly driven by e-commerce at present, would grow rapidly in the days to come. However, there is a trend of domestic cargo shifting towards surface mode. As regard to international air cargo market, we are quite confident that it would see a spurt as soon as the world economy crawls back to normalcy, maybe by early 2017.”

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Interview

New roles for better goals

66 CargoConnect - march 2017

A brief history: Prof (Dr) Dewakar Goel has been a pioneer in the aviation industry for decades now. He is the Executive Director (HR), Airports Authority of India, who has been appointed recently as Director of Indian Aviation Academy which is an apex institute for imparting training in Aviation fields such as Airport Management, Airport Operations, Aviation Security, Aviation Engineering, etc. A Science and Law Graduate, MBA with PhD in Management. Dr Dewakar Goel acquired INDIA-ICAO Fellowship in the year 2010.

As a trainer, he specialised in instructional techniques from IATA, Geneva, Switzerland.

He is also having a unique designation as Human Performance Technologist.

As HR Consultant with ICAO Montreal, he has been the keynote Speaker and Chairperson for National and International conferences in India and abroad. Dr Goel is author of over 12 books and also an eminent faculty for reputed institutes like LBS National Academy of Administration, Mussoorie, Indian Institute of Public Administration, Delhi, IITs, IIMs, etc. People have high expectations from the new Director who is bestowed with so many industry recognitions and other accolades. In an interaction with Tariq Ahmed, he shares his vision for the academy and much more.

Here are the excerpts:

“The institute was started way back in 1986 by the erstwhile International Airports Authority of India. It started small with training programmes being held in a four-roomed institute. This beginning paved the way for where it stands today. It was earlier known as Institute of Airport Management. Airports were not the lion’s share back then as there were only a handful of Airports back then. Some years later, it was visualized that the institute be named as Institute of Aviation Management, so that we can expand our activities and take it to the other stakeholders of the Indian Aviation Industry.

Matters progressed and we were housed in this building, which was commissioned in 1986.

It was named National Institute of Aviation Management and Research. So, we developed some standardized training packages under the aegis of International Civil Aviation Organisation (ICAO). Also, we had affiliations from IATA. We also had faculty exchange programmes. We also organized large number of international conferences here in Delhi. And this institute started to gain recognition across the country, among the professionals who were undertaking programmes in airside management as well as terminal management.”

Courses available: “We have short term courses, long terms courses, refresher courses and we are inviting the best of the faculty for fellowship programmes. Plus, we also have certain commitments towards the ministry. We are currently providing training in the following key areas: Airports and Aviation Management, Aviation Safety and Regulations Management, Aviation Security, Engineering and Planning, HR and Finance, as well as other aviation related matters.”

Aims and Objectives: “After joining this institute as the new Director, my basic objective is to make it self-sufficient on all fronts… To market its courses, to see that training is provided to AAI professionals as well as professionals from other PSUs, other private sector units, airlines, other stakeholders in the aviation industry, etc. This is encouraged so that this academy can earn revenue. The second objective is to have the best of the faculty here.

The institute is made of faculty and students.

So, here the students are hardcore professionals in the field of Aviation. We strive to earn reputation and recognition as one of the best aviation training institute, not just in India but

globally. I plan to develop certain new ideas. I want to emphasize on innovation. I want a team of officers having significant experience in their respective domains. Already we have a multifaceted team comprising of airport directors, engineers, PhD holders, etc. and most of our faculty are trained from ICAO, ACI and IATA that includes ICAO qualified course developers and instructors. Our long-term objectives include inculcating education in certain virgin areas. Our objectives also include developing our faculty internally so as to provide holistic training to the aviation professionals. We are also conducting India-ICAO Developing Countries Fellowship Programme in different fields of aviation management.”

Giving aviation its due weightage: “Aviation is still not considered as one of the core subjects in management education. Aviation is not getting its due as a management subject. It’s good to see some universities introducing MBA in Aviation Management. But still it’s not getting the right scope for growth in our country. So we want to work closely with different bodies like All India Management Association (AIMA), NHRD, ISTD and other reputed organizations so that aviation sector gets its long overdue weightage just like other sectors like finance, marketing and HR. We want to be able to ‘market’ aviation by creating awareness about it.”

Catering to the Cargo-side as well: “We are going for a ICAO fellowship programme for Cargo Management. We are in talks with ACAAI and similar other bodies as well to support us in Cargo Management programmes.

We also want to revive the Dangerous goods Regulation (DGR) courses. IATA is supporting us in this initiative and also DGCA is willing to extend full support to us. Every other stakeholder such as GVK, GMR, etc. is associating with us to make this initiative a success.

“Further, our plan is to conceptualise awards in the field of aviation sector such as ‘best pilot of the world’, ‘best air hostess of the world’, ‘best air traffic controller of the world’, etc.

“We are looking forward for support of airlines and other associated agencies for crystallizing our concept into reality. Our efforts are to market our courses internationally. I am confident to achieve the targets which will give a new image to the academy at international level, especially when we are shifting to our new sprawling campus at Vasant Kunj, Delhi.

I am very fortunate to have the cooperation of AAI, BCAS and DGCA in all our endeavours.”

march 2017 - CargoConnect 67

Interview

Logistics is the new Sunrise Industry’: V Kalyana Rama

With an aim to develop 100 CFSs/ICDs by 2020, Container Corporation of India has recently set up a `400 crore logistics park at Vizag to facilitate the surge of container trade in India. This project also provides infrastructure and facilities for hinterland industrial units to base their warehousing.

V Kalyana Rama, CMD, CONCOR, in an exclusive interview with Tariq Ahmed, talks about further plans and what he envisages for the company and the industry as a whole.

Having worked in BHEL, BHPV before joining Indian Railways and managing various challenging assignments in your career with Indian Railways and CONCOR, how do you feel being the new CMD? Have the responsibilities increased significantly?

Being the CMD itself is a very challenging task. I started my career after my engineering as a PSU management trainee, and then as an engineer and then I moved on to become a bureaucrat as these services are about managing people. In CONCOR, I already have an experience of 15 years. I have been with

68 CargoConnect - march 2017

this company from scratch, and was involved in the process of developing the business. At Vishakhapatnam, we started building the first terminal. And in 14 years time, its growth has led to the development of a second terminal.

A Multi-Modal Logistics Park (MMLP) of 100 acres has been started in Vishakhapatnam. I feel really happy to be a part of this. It gave me a good insight about how things can shape up and that experience is vital for me today when I am in this position as the CMD of CONCOR. It is about these experiences that give me the confidence to take decisions and design roadmaps for growth.

CONCOR has constructed a Multi Modal Logistics Park with 100 acres recently and started trial runs for train services. What is this project aimed at?

What expectations do you have from the east coast?

Today, if you look at the container throughput in India, 65 per cent of container throughput happens through the west coast. It is because the manufacturing industry is geographically located and connected more to the west coast as compared to the east coast. East coast is more of a virgin territory as far as container related growth is concerned.

I would like to refer to the recent study done

by Ernst & Young, for the Shipping Ministry.

They have stressed upon the logistics cost. Per kilometer logistics cost is more in China than in India. But if we look at the overall logistics cost, it’s more in India than in China, as in China, industries are mostly located towards the shore. Now the east coast is such that the industries can be located towards the shore.

So, the east coast now has the potential to come up and compete with the west coast.

In addition to that, the EXIM trade is growing stronger with the nearby countries of Far East, Middle East and SA ARC countries, which again predicts tremendous growth opportunities for the east coast. So, we are striving to be a part of this growth and are putting our best foot forward for its development. We always move ahead of the demand. In this context, MMLP Vishakhapatnam is one such project where demand has already outpaced our existing facility and hence we had to start a new facility. We have also added rail connectivity recently. Now it’s a full fledged facility. Our policy towards development of MMLP is a phase wise development. In Vishakhapatnam, Phase-I is complete. And now, keeping in mind the demand, we will move ahead into developing Phase-II and Phase-III.

In the last 27 years, CONCOR has developed vast network of terminals spread wide across the country at cargo generation and consumption centres. How do you plan to take this extensively rich legacy ahead, to make it the “Maharatna”?

Maharatna is definitely our dream. There are various factors that add up. We are working hard to achieve it at the earliest. Having said that, we are at 66 locations today and are in the planning stage to develop 12 new locations.

Our aim is to touch 100 locations by 2020.

They might be our own terminals as well as tie-ups. Today, we have 66 terminals owned by CONCOR and we are in tie-ups with private developers for 3 location. So, we are at 69 locations at present stage. We are also entering into tie-ups with other private operators.

We recently added the 70th terminal to the list at Hazira. Also, we are present at all the gateway ports, like Paradeep which has just come into the ‘container map’. We have also started operations in Krishnapattam Port. So, it is in our mandate to be present wherever there is handling of containers involved. In addition, certain other factors might drive our

goals. GST will be rolled out in no time. It will give immense opportunities to the railways logistics sector. We are concentrating more on railways logistics. If you look at our turnover rate, railway has contributed more than 90 per cent of it. We are looking at GST with greater interest as it will provide many opportunities, particularly to the warehousing sector. Today, we have a combined warehousing capacity of 3.75 M sq ft distributed among different facilities. All the MMLP projects will be having good warehousing complexes. So, we have certain plans lined up. We are also eyeing to include 3PL as one of the core services.

With all these plans, we are definitely looking at a bright future for this company.

The end logistics would anyway require surface transport for last mile.

Road movement is crucial for shorter distances, from the places where cargo is aggregated. And the longer distances should be covered by rail.

How do you see the recent collaboration between CONCOR, Indian Railways and Nippon Express? What is this collaboration aimed at?

Nippon Express wanted to enter the Indian market and venture into the logistics segment.

They are collaborating with Indian Railways and CONCOR for providing rail services that will transport finished cars as well as general cargo. The initial train services have already started between Delhi-Bangalore. Let’s see how it expands and how it progresses.

Would you like to talk about the environmental benefits of a greater modal shift from road to rail that recognises the scope for rail and the wider freight industries to collaborate and explore innovative new models?

There is no doubt about the fact that railway is an environmental friendly mode of transport, as there are various scientific data available that states that emission rates are one-sixth as compared to that by road

transport. Also, railway is more economical.

The only impediment is that railways require a larger parcel size unlike surface transport.

Idealistically, we need to go for a mode that comprises of both railways and surface movement. The end logistics would anyway require surface transport for last mile. Road movement is crucial for shorter distances, from the places where cargo is aggregated.

And the longer distances should be covered by rail. Somehow, this is getting skewed in India.

The multimodal shift should happen as it will lower the overall logistics cost and there shall be no dearth of business. With the DFCs coming in, there might also be RoRo which might also add to the shift from road to rail. So, this is a stepwise evolution. With the increased demand for more goods to be transported from one place to another, this modal shift is inevitable.

The demand for project logistics in India is experiencing rising demand.

What are the driving factors behind this? Do you plan to tap on this lucrative opportunity?

We are already into project logistics, and are currently engaged in certain megaprojects. There are certain cargoes that require specialized transport. We are presently not touching that vertical, as it is a very niche segment. But yes, we are an integral part of several projects across the country and the inputs that are imported into India are transported by us to their respective destinations.

How have you envisioned the “Outlook 2017 for Rail Freight Transport sector” so far?

The expectation is that GDP will grow better than 2016. And other programs launched by the government are also going to impact the economy in a huge way. The FDI investment in the country is definitely going up, even though it’s not been highlighted in the mainstream media in the recent months.

This is a clear indicator that the interest of the world towards India is increasing. And this ultimately means there is an increase in requirement of logistics in India. There was a time when software companies were experiencing a boom and the IT industry was referred to as the ‘Sunrise Industry’.

Today, the logistics industry can be termed as the Sunrise Industry, as it has immense potential to bring in sustainable changes to the economy.

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Interview

TCI XPS have been hived off to become TCIEXPRESS LIMITED, an independent company.

PC Sharma, CEO and Whole Time Director, TCIEXPRESS, in a candid conversation with Nicin Varghese speaks about how they remain to be a power player in the express cargo industry and their journey so far.

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Please tell us about your ‘Hub and Spoke’ operations? Also, tell us how does it help you to ensure a faster and cost-effective shipping of goods?

Hub and Spoke model is an important and integral part of any express logistics company.

We are working with the help of 24 hubs in India. These hubs are connected with 500 branches of our company and this helps us to make sure that all shipments are reaching their destination on time. The positions of these hubs are created very strategically to provide enough access throughout the country. Our one hub normally caters to two to three states. This is how it helps us.

Being a power player in express cargo industry, what is your view about the burgeoning e-commerce business?

And, how is it going to affect the cargo industry?

In terms of e-commerce, we are exclusively focussing on creating and expanding our capabilities. The e-commerce business has three important parts. The first one is business to consumer (B2C), where the customer gets direct delivery and is very known to the public. There are two more parts, one is from vendor to warehouse or vendor to fulfillment centre and the other one is warehouse to warehouse or from one fulfillment centre to another fulfillment centre. We are preparing ourselves and have already started B2C deliveries from almost 50 locations.

We have plans to expand further, according to the needs of our customers. In terms of warehouse to warehouse, we have been doing it since long time. We would love to and try our level best to continue as a major player in the e-commerce industry.

Please tell us about your tamper proof lock system. How far does it help you to eliminate theft and deter the wrong people from interfering with the goods?

We believe in setting the process errorless and that is how we get error free results. So, our systems are designed in such a way that whether the movement is from customer to our branches or from our branches to our hub centers or from one hub centre to another hub centre, the onetime lock system is a compulsory part of our process.

We have been doing this since the starting of our company. It helps us to ensure that enroute theft is nil as the driver will not be allowed to open the cargo. Even at the check

posts, we ask for verification letter once they open the onetime lock system. This has proved really helpful in decreasing the thefts and assuring the cargo is reaching the destination on time.

Incorporated in 1958, as a “One Man, One Truck, One Office” company, TCIEXPRESS is a pioneer in the sphere of cargo transportation in India. What were the major challenges you faced till date and how did you overcome it?

As known, TCIEXPRESS was initially a ‘One Man, One Truck, One Office’ company.

I have joined this company in 1982 and since then, the major challenge I observed is the unorganised sector. Even after all these years, it hasn’t changed. But, now customers are understanding the importance of the organised sector, which I consider as

The motto of our company is to follow our customer.

Majority of our services were arised from the demands of our customers.

We are always open to our customer’s demands. a positive change. Our major tool against the unorganised sector is our value added services.

For example, majority of our customers are getting Management Information System (MIS) everyday.

Through MIS, the customers can know where their shipments have reached and when they are expected to be delivered. When the customer gets these information, they will feel that we are adding value to them. So, over the years, their queries are coming down.

They do not even have to follow up since we are following their shipments on their behalf.

The motto of our company is to follow our customer. Majority of our services were arised from the demands of our customers.

For example, the air cargo services of TCIEXPRESS was started according to the demand of one of our customers for next day delivery. Then, one of our customers asked us to deliver the shipment and collect money on their behalf. So we started Cash-On Delivery (COD) facility. Then they demanded for

visibility and we provided that with GPS system. We have also developed Outside Delivery Area (ODA) services. Similarly, we are always open to our customer’s demands.

Please tell us about your priority express service? How does the money back guarantee policy help you to bring good business from this service?

Priority Express is also another value added service of TCIEXPRESS, which emerged according to the demands of our customers.

When the customer asked about the credibility of the our express services, we put an option of this money back policy. If we fail to deliver the consignments on the promised date, we pay the money back to the customer. When a customer knows his money is safe, it gives him more credibility, comfort and confidence to invest money.

We are proud to say that since we have started this service, I don’t remember any incidents where we had to refund the customers money. Our entire process is designed in such a way that we always ensure to deliver the goods on time and never had to pay the money back.

According to you, what could be the mega trends in the express cargo industry for the next one year?

I hope that the industry is becoming mature and the major change that could happen is a shift in goods movement from manufacturer to consumer/wholesaler/ trader directly. This is a direct effect of GST. We also foresee a fruitful year for the organised players in the industry since the governance and compliance will play a larger part in the business. They will get major share of the market and we expect our business to grow much faster than before.

Please comment on the present day scenario of Indian transport/ trucking industry. Where do you see the graph moving in the coming years?

Trucking industry is evolving in multidimensions. The long haul trucks are becoming bigger and because of GST, it is expected that the check posts and interstate borders to be removed. Once it is removed, the trucking industry will get a great relief as it decreases the time lag and ensures better and faster delivery of goods.

We can increase the number of trips and it will add to the productivity of the whole industry.

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Interview

Readying the market for a makeover...

Presently operating in Asia, Eastern Europe, Central Europe and Latin America with 23,500 staff members, FM Logistic last year acquired Spear Logistics to set its footprint into the Indian markets and plans further investments here. In a recent visit to India, Jean Christophe Machet, Global CEO, FM Logistic, in an exclusive interview with Tariq Ahmed, talks about how they plan to bring in new technologies and expertise to India and how they plan to make the most out of their recent acquisition and the favourable government policies. Here are the excerpts: In a recent move to expand your business operations in India as well as Asia, FM Logistics has acquired Pune-based Spear Logistics. How do you believe such mergers and acquisitions help in forging strong bilateral ties between economies?

India is very different from Europe, and is a ‘continent’ in itself, with its own specificities and its own cultures. We need to be Indian in India.

So, when we have decided to enter India, doing an acquisition was the best process for us and Spear Logistics was the obvious choice. There were a couple of reasons for it, like: • a company recognised on the market for its quality and professionalism • a strong and skilled team • a national footprint • a prestigious clientele (Samsung, Crompton, Atlas Copco, Indus Tower, Godrej, Honeywell, etc.)

We have also decided to let a significant autonomy to the Indian management team and to Gautam Dembla, the Managing Director, transferring them good practices in term of processes or technologies in step by step manner.

We really believe that this model is the best one if we want to develop ourselves quickly, combining the strengths of a global company and of a national company to create winning synergies. Also, in some domains, like information systems (WMS and TMS) and working process digitalisation, we think we can transfer expertise and tools from India to Europe.

FM Logistic has always been open to initiatives and trends. Pertaining to that, you pioneered the concept of shared transport and logistics resources (Click&Truck). Do you think this idea can be conceptualised in India?

Yes. India is already advanced in the field of digitization of the transport activity, with companies like BlackBuck, Truckola, etc. FM has decided to invest in a start-up, Click&Truck, helping transport companies and customers to optimise the empty space in the trucks.

We really believe that digital tools can bring added-value and better efficiency in the way transport in managed. Not only by simply using market places, but also as a way of optimisation of the transport: better utilisation of trucks, better tracking, better visibility, less manual administrative tasks. In China, we are deploying a geofencing app, available for iOS and Android, used by our transport suppliers, which allow our customers to track their order in real time.

Since you acquired a company which has unparalleled expertise in the contract logistics segment, is this the segment that FM Logistics is going to focus its operations on?

In terms of segment, our focus is to offer a global solution: warehousing + distribution + added value services, for all channels (B2B and B2C). In addition, we are going to develop and strengthen our transport as an organiser and bring added value by selecting the best transport providers per region and per transport typology.

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Of course, those solutions are aimed to continue developing the current key sector of Spear Logistics, capitalising their solid expertise in value-added creation for industries. We also aim to complete this solid portfolio with consumer goods, cosmetics and health sectors.

We are working on a post-GST logistics network in order to provide them high quality multicustomers and multi-activities warehouses close to the biggest consumption areas in India.

Our target is of 15 per cent minimum growth per year. We are on a good track. We have just signed a new contract with one of the biggest tractor manufacturers of India, for the management of an after-sales warehouse in Punjab which will start in April 2017.

The entry of large scale players in consumer durables has changed the industry landscape. Do big consumer durables players have their own logistics support or do they depend on 3PLs? Each company has its own strategy. We really believe that the core business of such players is product development, manufacturing, marketing and sales. As a logistics specialist, we can offer our customers efficient and flexible solutions, in a moving environment. With a growing market in India and with the GST coming up, who knows where the DCs will have to be located in the next two to three years. It is always risky for industrial companies to invest in their own logistics network. As a logistics provider, with more than 75 sites in India, we can be more agile and offer more flexible solutions.

The world is moving towards Iot. Its applications are diverse and its opportunities are endless. So, how have you implemented IoT in order to better streamline your products and services?

For the time being, Logistics still relies on barcodes because it’s simple, cheap and widely used. However, we are making research on future technologies: we have some IoT pilots planned, in order to facilitate the real-time tracking of reach-trucks inside the warehouse, or to facilitate the tracking of trolleys or different logistics supports between DCs, suppliers and stores.

Few years ago, we did a pilot based on RFID technology. This technology is not yet widely used, as it requires equipping all warehouses, factories and stores of the whole supply-chain.

GST, which is expected to be a game changer, will finally be rolled out in the next few months. It’s going to reduce the overall logistics costs marginally as

companies will no longer require having warehouses in different parts of the country. Now, considering the fact that India is a ‘Geographical Mammoth’, do you believe the concept of centralised warehousing can become a reality in India?

Yes, but we have to keep in mind that evolutions will be made step-by-step. Most of our customers are already working on reducing the number of their warehouses. In a first step, most of them will come from 30-40 DCs to 10-20 DCs. In a second step, in 3-5 years, when road infrastructure will improve, we can go down to 5-10 DCs to cover the whole country.

Consolidation of DCs can bring cost saving by reducing the stock inventory and optimising the warehousing surface. It can also avoid many shortages of products, as of course your products are never stored where you need them! At the same time, industrial companies and retailers need to be able to serve their customers in a decent deadline, without increasing the distribution cost. So, the redesign of the supply chain is complex, and we can support our clients in their analysis.

We are getting ready for the post-GST supply chain by setting-up multi-customers warehouses as we see them as the best tool to bring agility and flexibility to our customers, in a moving environment. Specially, if they are well located and close to the biggest consumption areas in India. That’s why we will start by a first one in Mumbai / Bhiwandi, then Delhi.

Our future Mumbai MCF: • New building under construction • 252 000 square feet • Start: July 2017 • We have already signed with our first customer for this site, with a company selling personal care and skin care products.

A report on The Economic Times last year read, “France’s FM Logistic plans to invest EUR 50 million in India over the next four years, becoming the latest global company to invest in the country’s logistics space.” What kind of investment opportunities do you see in India? Are the government’s proactive policies to increase FDI inflow (e.g.

100% FDI) a huge push for companies like FM Logistic to venture into India?

Yes, the current policy of India, favoring FDI was important in our decision to invest. The GST and the will of India to improve the infrastructures are also very important for us and we will keep investing in India within the next few years.

The main investments planned by FM / Spear in India within the next years will be: • creation of multi-client sites close to the main Indian cities, starting by Mumbai and Delhi • investments in equipments of densification of storage (racking systems, reach-trucks, etc.)

• development of a new version of our WMS, based on the state-of-art technologies.

• investments in innovation and technology (for example digitalization of our IT for transport, usage of packing machines to realize the promotional lots of our customers, etc.), investment in training of our teams, of our managers : we have created our internal school named “Spear Academy”.

We already have 160 graduate employees through a training program dedicated to the middle-management positions.

• Human resources will be the key of our development in India.

What are the key points for India in the Ambition 2022 Global Vision statement? How do you believe will different factors favour your operations in India?

India is an important country for our corporate strategy. That’s why we decided to invest in a local company: in order to create synergies. We mix our expertise in designing supply chain organisation and process and Spear’s team extensive local knowledge. We are getting ready for this evolution by offering a global supplychain service to our customers, helping them to optimise their distribution model in India, and by setting-up multi-customer facilities close to the biggest cities The natural growth of the economy, the GST and the professionalisation of the logistics industry are favorable factors for a company like us. As a family owned company, we have a long-term vision for the country, aiming to become the supply chain reference in India, through great customer relations, innovation and operational excellence.

Please tell us about your future plans about expanding yours arms in the logistics sector globally?

Our first priority is to be the reliable partner to our clients in the countries where we are already present by offering them a global service. Then we will be broadening our international footprint: we have ongoing projects for a new country in Europe and a new one in Asia. In parallel, we are investing a lot in order to bring efficiency to our customers and to our operations through innovation and new technologies and especially in human resources in order to prepare the talents of tomorrow.

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Interview

Professionalism will propel change in Indian logistics Logistics plays an integral part of India’s EXIM industry. FIEO, an ISO 9001: 2008 certified organisation, the management of which comprises of Chairmen of all Export Promotion Councils, Export Development Authorities/Commodity Boards and representatives of government recognised status holders, is the apex export promotion organisation in the country with direct membership of about 25,000 exporters from all over the country. Ajay Sahai, Director General and CEO, Federation of Indian Export Organisations (FIEO), in an interview with Sheena Sachdeva, gives an insight on how logistics plays a pivotal role in the EXIM trade industry.

With great knowledge and immense experience in export and trade industry, how do you see the evolution of the industry holistically?

The evolution of Indian EXIM trade has been relatively slow initially but with new entrepreneurs coming to the field backed by IT we have a sea change now. Professionalism has entered into the Indian logistics industry and we are seeing that customers are asking for value for money and with that efficiency has been put into the system. But still the professional players in the logistics sector have not entered yet.

Logistics in itself is highly disorganised. Most of the logistics support is given by smaller firms and neither have they had the professionalism nor they have the scale that is required for a successful logistics into the country.

That is the reason that India’s logistics cost is highest in the world.

For the electronics sector, a study has been conducted which shows that for small electronics product which high value low volume the logistics cost is around 14 per cent of the export value which is against the benchmark of five to six per cent. In fact, Boston Consulting Group has done a study which shows that Indian companies are the most competitive so far as cost within the country or factory is concerned next only to China. But we become uncompetitive as Indian logistics sector is adding to a huge cost to them. Thus, it requires a lot of action is required by both private and government sector. Government is conscious of the fact. The country’s logistics ranking has improved from 52nd position to 35th. But we should improve to bring our ranking in the first 20 and government is making serious efforts for that. Both Niti Aayog, Ministry of Shipping and Commerce are working hard to reduce the dwell time.

They have made proposals that they should have standard operating times both for the CFS and ICDs. Also, an expeditious evacuation system for the ports where both import and export can be seamless.

The Ministry has introduced two schemes, Direct Port Delivery and Direct Port Entry. In Direct Port Delivery the customer can take the container directly from the port which saves a cost of around `10,000 for the customer. Similarly, on the export side you can directly bring the container to the port without waiting at CFS for exports. As these are new schemes there is not much coverage.

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For DPT the coverage is around four to six per cent. But Ministry of Shipping is quite sure that once it is fully implemented it will increase to 40 per cent. Once these are fully implemented we shall be able to fully address our transaction cost. Ministry of Finance has introduced a new concept about a single trade port for export and import. They have already worked on the import side. A pilot run has already started at the export side. They want to integrate all the agencies into this platform which will include Wildlife Authority, Drug Controllers, Food Safety Authorities of India and others and once that happens we will surely reduce our transaction time and cost. We have to look for an integrated system where all agencies can be included at one platform. The paradox is that India has

the charges that have been levied are far more than the services being rendered.

There is 100 per cent FDI in the trade sector. Is it good or bad for the economy?

Surely, FDI is good for the economy. The question is why our manufactures are not entering into global value chain. The reason behind is that we hardly have large players facilitating our whole logistics industry.

Logistics unfortunately in India is just confined with Transportation sector. But logistics is much beyond that. When we talk about logistics we are talking about warehousing, integration into the global value chain and value added logistics also.

Firstly, with the opening of FDI, the foreign multinational have also come into India

The Ministry has introduced two schemes, Direct Port Delivery and Direct Port Entry, for the improvement of EXIM industry. implemented the same system in the rest of the world but couldn’t do on its own part. But I am sure, the new government is very keen to push all these reforms and soon we will see the similar system working in india as well.

As in the recent Budget we have seen Trade Facilitation for Exports Scheme (TIES) has been introduced. How will it affect the trade industry in terms of export?

India has already rectified the trade Facilitation Agreement even WTO has already rectified.

The main takeaway from the scheme is that the main stakeholders of the company should be consulted before any change is implemented.

If Government wants to bring any change government is duty bound to bring that change with the consultation of the stakeholders.

The industry will be given a leap time for the switch over. For example, if there is any change levied in the system it is given a leap time of 7 to 15 days. But sometimes when the consignment has moved from the factory by the time it reaches the port the government policy has been changed which makes the whole export process haywire. The same thing will happen in Trade Facilitation Agreement. Also, the fee and the charges of all the agencies have to be rationalised. We have seen in some of the cases

and I am sure that their share in the market is increasing because they are bringing professionalism along with them in the industry. Secondly, they are also bringing a demand for professionals on the Indian side. Now a lot management institutes are now offering a course in Logistics as well so that you have professionals who manage the system. In my view, the opening of FDI is a very good step as it will bring professionalism and people will be better equipped to handle the logistics sector.

According to you, what role does logistics playing in terms of exports in India?

Logistics plays a pivotal role in India. But I will not blame only the logistics player for the its cost built our systems are also important. For example, a truck moves from Delhi to JNPT have to stop at numerous borders because we have a federal structure where taxes have to be paid in every state. But once GST sets into that issue shall be addressed. Also, along with GST the placing of warehouses will be done strategically. Right now, any state which provides some concession for logistics, we see that logistics warehousing is done in that state only. It may not be the place for logistics companies but they are moving into that state

due to logistics concession provided in the place. However, in GST these concessions will be done away. These decisions will be based on sound fundamental. Once these decisions are made on fundamentals then the warehousing will step towards facilitating EXIM Cargo.

This step will surely benefit our country.

A lot of budget is alloc ated to infrastructure every year. But, we still lack in various things. How do you analyse this in the context of development of the country?

Infrastructure plays a key role both for exports or manufacture. Unfortunately, there hasn’t been much focus on this. But in this budget, we see that around 4 lakh crore budget has been allocated to infrastructure which is around 25 per cent plus from the last budget government is focusing on development of smart cities, building of freight and industrial corridors.

Now we are even talking about coastal zones also. So all these put together will help India in the infrastructure which is crucial not only for the export but also for manufacturing.

Hereafter, I am sure once these infrastructures are put into place; there might not be necessity for few schemes which provide an offset to high infrastructure cost. While infrastructure will provide a long term solution, a lot of saving will happen on the infrastructure part.

How are Free Trade Agreements (FTAs) considered to be the fastest way for improving trade? How do they support the logistics industry?

Free Trade Agreement basically helps in better market access for both import and export as you get a preferential tariff compared to other competitors. But India’s utilisation of FTA is one of the lowest in Asia. In fact, an Asia’s Research Institute has filed report that around five per cent for all FTA and 3.46 per cent for India, Malaysia and SICA and highest for 20 per cent for India, Japan and SIBA. The prime reason for that is low awareness in industry about FTAs. But Ministry of Commerce is putting a priority and lot of stakeholder consultation has happened where a brief about FTAs have been informed to the industry professionals. We require a better sensitisation on FTA. Also, we need look at the compliance cost.

At times some exporters might not agree with FTA due to compliance cost as it might be very high. The need of the hour is we require more participation with our partner countries.

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Interview

City Link will touch 12 cities by 2020: Puneet Prakash The subsidiary company of Jayem Logistics, City Link has made the city road transportation as smooth as it was never before. Presently, the company has been providing its services in four cities of the country and targeting to touch 12 cities by 2020. Puneet Prakash, Founder and Director, City Link, in an exclusive interview with Gaurav Dubey, talks about the vision and strategies which provide the company an extra mile over its competitors.

Apart from offering its core services in Bangalore, what are the other cities in the country that have come under your service network?

City Link has been providing its services to enterprise customers in Bangalore, Hyderabad, Chennai and Hubli. The company is planning to offer its complete range of services in these four cities by the end of 2017-18. The vision of the company is to touch 12 cities by 2020.

What are the services provided by City Link that gives it an edge over its competitors?

City Link endeavours to service all kinds of trucking requirements, being sought within a city by a large enterprise, SME or an individual.

To this effect, we have created specific products focused on planned demand and on demand requirements of our diverse customer set. The objective is to complete the entire transaction on our defined marketplace platform.

What are the problems the company has to face on the field in seamless movement of goods?

Our ‘Driver’ partners play a vital role in ensuring seamless movements of goods. The two main challenges which we are encountering are the slow adoption to technology and a progression from a transaction mindset to a service mindset. Although, we have invested a lot in these areas still sustained efforts are needed to move forward.

A whopping amount of INR 2.41 lakh crore has been allocated for the transportation sector in the financial budget of year 2017-2018. According to you, how this will help in development of the city-trucking business?

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Being a “within city” trucking business, the extent of that is highly derived. The government’s budgetary push needs to drive the big wheels of our economy down to a city or town level for us to reap the benefits. However, at a macro level, we see a better transport infrastructure (road, train, air), linking the points of trading, manufacturing and consumption much faster, leading to higher yields for our vehicles.

Alongside, with the setting in of GST, we foresee a rising demand for vehicles to connect stocking points to markets.

Unlike its competitors, City Link is anticipating the growth of 30-40 per cent despite the serious jolt delivered to the tr ucking busine s s by the demonetisation. How can the company be so optimistic for growth of the business?

Demonetisation was just a temporary phenomenon. Yes, we did lose out a bit during its peak in November and December. The situation has now settled down and now the economy is on a steady growth path and we could expect to clock at least a 30-40 per cent growth in this financial year. Alongside, we have integrated various modes of payment on our platform and encourage our customers to go digital. wCity Link isn’t affected because of its initial online payment setup. To beat demonetisation, one must deal with monthly recharges at toll booths.

That’ll automatically reduce delays and losses.

In demonetisation lies the essence of growth, as today’s generation hates cash and not really call a truck to pay a meagre amount for every order placed. Thus, it’ll help, inspire and enhance the revenue figure for all tech-savvy as well as online consumer demand aggregation firms.

The vantage point presented by City Link is promotion of digital literacy.

Interview

Express industry is the nexus towards change Express Industry is the key driving force in modern times as pioneer of change. Vijay Kumar, Chief Operating Officer of Express Industry Council of India, in conversation with Sheena Sachdeva, outlines the upcoming trends in Express logistics along with anticipated trends in the sector.

E-Commerce, as we see it today, would not have been a possibility if there were no door to door service providers. We believe that this segment would continue to grow exponentially.

Whether that growth will be through air movement or ground movement will depend on the infrastructure that would be provided by the eco-system including space at airports, development of roads, rail initiatives, etc.

“GST will be one of the ‘vectors’ transforming the country’s logistics sector”, said Jayant Sinha, Minister of State for Finance. Will it have any significant impact on the Express Logistics industry?

W ith tremendous exper ience in Express Industry, how has been your journey till here?

The express industry has always been innovative.

Even before the advent of the world wide web, the international express companies and their partners in India used to have their own intra net both for communications as well as for track and trace of shipments. Technology in fact was, and still is, a key driver for the growth of the industry.

Internationally express operators are the largest aircraft operators, having fleet larger than traditional airlines. Express companies were the pioneers who introduced cash on delivery (COD) which today drive the ecommerce growth. Way back in the 1990s, when cash on delivery was first offered by express companies, it was a service offering for the direct marketers like “as you see on TV” kind. And COD became a unique offering pioneered in India. So in that sense it is gratifying that the Indian express companies are ahead of their times and are category creators.

As you have been a witness to small enterprises like Flipkart, Snapdeal or Myntra turning into big E-Commerce giants, how do you see the graph for Express Logistics Industry moving?

Rightly put, GST will definitely help transform our logistics sector. The obvious inefficiencies currently in the system like long waiting time at state and city borders for our ground vehicles, the multiplicity of warehouses etc would get rationalised. We also feel there would be certainty on taxation laws and procedures which should help grow the e-commerce industry and consequently the express industry.

But we also see some headwinds especially for international transshipment movements if the government does not zero rate taxation of international shipment movements.

The country due to Express Industry has been through a metamorphosis in these few years. What challenges do you still face?

Infrastructure continues to be a major challenge.

There needs to be substantial capacity building at reasonable costs for express operators at several Indian airports. If you take international examples like the FedEx hub in Memphis or the UPS Worldport you will see that wherever there are good express industry infrastructure in place, it has led to substantial job creation, manufacturing growth as well as development of the entire ecosystem. India needs to move in that direction. There have been positive changes on regulatory environment including Customs.

Can you give a comparative analysis between the Global Express Industry and the Express Logistics in India?

It is estimated that global air express industry constitutes about 17 per cent of the total air cargo market. The global express industry also moves substantial shipments on ground. The global express industry is estimated at around USD250. The Indian market is estimated to be around `24,000 crores. So that gives a sense of potential for growth of the express delivery services in India.

In the Union Budget 2017, a lot of emphasis is given on ease of doing business in India. How can Express Logistics support the upcoming MSMEs? If you see the customer profile of an express company you would notice that MSMEs are substantial. Large companies can afford to have their own logistics and supply chain departments.

However, the MSMEs rely almost entirely on express companies for their distribution needs.

For instance, on international cross border movements the express companies take care end to end including support of complex customs and other regulatory requirements both within India and outside.

As a labour intensive industry, the express industry has been a gateway to numerous job opportunities. How do you see its impact on the economy?

Express Delivery Services are without any doubt among the largest employment generating sectors. You need people to pick up and deliver your shipments, process shipments in the hubs and branches, handle aircrafts; meet and educate exporters, importers and manufacturers on how express could help their businesses; and handle customer queries; you need people with high engineering skills to take care of the technology deployed and then the support administrative and finance staff.

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Interview

“GST to Optimise Supply, Demand, Create Efficiencies, Reduce Transportation Cost” “We expect a massive technology driven revolution in the trucking industry within the next few years,” says Raghav Himatsingka, Co-founder, Truckola, adding the only challenge is to get the traditionally tech-averse transport industry to finally adopt it. In an interview with Ritika Arora Bhola, he extensively talks about the genesis of their cargo operations in India, challenges faced by the Indian transport industry, cargo safety and security, need to train drivers, initiatives taken by the government and private authorities, role of technology and present scenario of Indian transport industry… including Indian and international automobile manufacturers (Tata Motors, Ashok Leyland, Mercedes, Man, Volvo, etc.), new-age tech driven transportation companies like Truckola and the government itself. We expect technology to completely reinvent the industry in the next three to four years making the ecosystem more efficient and profitable for all.

What are the challenges that Indian transport industry is currently facing?

Please tell us about the genesis of your cargo operations in India. What kind of cargo is transported across India?

Anything that is ever consumed needs to be transported. Whether it’s bricks to make a building, machinery to build a factory, finished cars from factories to the dealers, or fish/fruits/vegetables to be sold at local markets. As such, cargo transportation is as old as human civilisation. In ancient times, it was primarily done on animal back and carts which later evolved to engine powered machines like railways and trucks. Truck transportation in India is over 100 years old, and my family was fortunate enough to be one of the first truck transportation companies in India having transitioned from transporting cargo on horse carriages.

What would you like to comment on the present scenario of Indian trucking industry. Where do you see the graph moving in the coming years?

The Indian trucking industry is on an upswing. There is suddenly a massive interest in the industry from all stakeholders,

78 CargoConnect - march 2017

Poor road conditions, lack of trained drivers, lack of policies and set of rules etc are some of the problems stated by the experts. Challenges include: lack of quality lifestyle for drivers, casual approach to on-road accidents, growth in infrastructure development lagging the growth in demand by at least a decade, archaic laws dating more than 50 years, increasing corruption amongst government officials on the road, and, most importantly, lack of technology adoption to create efficiency in the value chain.

Do you hire trained and skilled drivers?

We are an aggregator of fleet and don’t own the vehicles ourselves. As such, the responsibility of hiring drivers is with the fleet owners and not with us.

Please throw light on the initiatives taken by the government and private authorities to solve the problems.

By automobile manufacturers: Greater driver comfort and safety with air-conditioned cabins, full sized beds in trucks, power steering, airbags, abs braking systems, powerful electronic engines, on-road maintenance, etc.

By transport companies: increased adoption of technology to measure and reward drivers based on performance.

By government: Speedy investments in new road developments, dedicated freight corridor

for railways to reduce pressures on road, efforts to push transportation, GST that will improve quality of life for drivers by restricting their long distance travels.

How do you ensure cargo safety and security?

We verify each driver and vehicle owner that works with us and also track the vehicles enroute. We also have regular trainings for drivers and fleet operators. While we can’t 100 per cent guarantee cargo safety and security, we take significant measures to reduce the risks.

Technology has brought revolution literally. Do you think Indian trucking industry is well- equipped with advanced technology for trucks? Are we using it?

I think the penetration of technology adoption is still quite low in the transportation industry.

However, in today’s highly competitive environment, people are more and more eager to try anything that can give them a slight edge. We believe that technology can create a significant advantage for those who use it properly and we expect a massive technology driven revolution in the trucking industry within the next few years. There is a lot of assistive technology that already exists - the only challenge is to get the traditionally tech averse transport industry to finally adopt it.

GST can be a game changer. Do you agree?

Yes, we do expect GST to fundamentally change the way transportation industry operates in India. We envision a lot of regional hubs coming up, which will consolidate traffic to few prominent routes. This will help optimise supply and demand creating efficiencies and reducing the overall transportation cost of the economy.

India’s most comprehensive handbooks on Warehousing and Air Cargo, packed with information, data, trends, projections, views and articles by senior industry professionals, alongwith columns by leading research companies in an easy to read, hardbound and aesthetically designed format.

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Shippers Speak

Fast and effective communication is a key to success in Supply Chain How important is logistics for the overall scheme of your business?

Meeting customer demand and providing superior service is one of the most important values for Akzo Nobel. Consumers are now demanding better service and this mandate has created ripple effects on the supply chain, creating a need for logistics organisation to provide fast, accurate and quality service.

Logistics plays a huge role in satisfying customer requirement in today’s dynamic world. The company puts a great emphasis on strengthening logistics capabilities to create differentiator in market place.

Akzo Nobel India is a company which focuses on innovating new products to stay ahead from its competitors. The company has a perfect blend of values and dedication towards its employees. It manufactures and markets a wide range of coatings and specialty chemicals.

Saurabh Gupta, Head, Logistics, Planning and Customer Service, in an interview with Gaurav Dubey, shares insights of the supply chain of this giant chemical manufacturing company.

80 CargoConnect - march 2017

How smooth coordination takes place between suppliers, transporters and other departments of the supply chain?

Effective and faster communication of information and transfer of data play an important role in success of any supply chain.

We have implemented ERPs like SAP with different modules which optimise operations, material flow and finances. This ensures error free, transparent and common demand requirements across the chain and eliminates any chance of bull-whip effect.

process, system and governance mechanism. And this is where Akzo Nobel has focused greatly through its global expertise and knowhow.

What percentage of your logistics work is outsourced? What functions are performed by your logistics partners and what are controlled internally?

Logistics operations are completely outsourced to third party service providers. These are monitored and controlled centrally through “Service Level Agreements” (SLAs) clearly defined in contractual arrangements.

Tell us about the most common problem faced by your company during its supply chain process. What steps do you take to overcome these?

Matching demand and supply off the seasonal category like paints, is the most common challenge we face. This is mitigated through deployment of robust S&OP process across functions organisation right from concept stage to final product delivery. The process has matured through time and IT tools like SAP and other suitable technological advancements.

Are there any unique or innovative strategies that you have adopted for the better supply of your products?

Who are your Logistic Ser vice Providers (LSP) and what qualities you seek in them before choosing their services?

Organisations must constantly look to shorten the lead-time-to market (LTTM). In today’s time when every penny counts, the cost incurred in delivering products to customers is under huge stress. Recently, we have worked on Network Optimisation and focused on servicing the products faster. Also, our digital approach in ‘Last Mile Delivery’ (LMD) has significantly improved customer satisfaction.

There are many Logistics Service Providers (LSP) engaged with us who provide service ranging from warehousing, CFA operations, transportation, etc. We primarily look for five qualities – reliability, responsiveness, assurance, tangibles (e.g. physical facility, equipment and tools) and empathy. We constantly engage and support them in continual improvement journey.

How do you manage back-end supply?

How do you handle hiccups in supply chain during the season time?

I believe, every function and unit has its unique role to administer in supply chain whether it is planning, procurement, manufacturing or logistics.

It would not be right for me to specify any single department which plays back-end role. Every department plays front-end role to its customer who is positioned next in the chain. All are interdependent and should be well-knit through

Getting the right products to the right place at the right time is never more critical or more expected than in the season months. We work with our LSPs to improve their capacities so that they are geared up to service high volume in record time. They beef-up their resources like manpower, carriers, space, etc. to support the increased demand.

guest column

Employers Welcome Positive Influx In 2017

By Mohit Bharti

I

ndia has enjoyed a good year and we expect the country to continue with its positive growth, largely unaffected by the global economic slowdown going into 2017.

This positivity is mostly due to the continued influx of foreign direct investment under the government’s “Make In India” campaign.

Most employers have shared the same sentiment. Eighty per cent of the respondents in the Michael Page 2017 Salary and Employment Outlook survey are optimistic about the economy with hiring activity growth ranging from steady to strong over the next 12 months — numbers higher than the Asian average.

Specifically, 60 per cent of over 300 companies we surveyed said they will be adding new headcount to their businesses. The growing Indian economy has resulted in an intense market competition as employers race to secure top talent. That is why attracting and retaining talent are key areas of focus for employers and the supply chain and logistics industry is no different. Here are the key trends that will dominate India’s supply chain industry going into 2017: E-Commerce Over the last two years, e-commerce has driven the popularity of third-party logistics (3PL) and last-mile delivery

vendors. Such vendors provide heavy capital- and labour-intensive services such as transportation, warehousing, inventory management, freight forwarding, cross-docking and packaging.

Within the e-commerce space especially, it becomes increasingly cost-efficient for online players to use a 3PL vendor to provide end-to-end delivery solutions for everythingranging between food, electronics, beauty products, branded apparel and footwear – at cheaper rates. India’s online and mobile shopping boom continues with a recent study estimating B2C transaction value topping US$100 billion by 2020, while B2B value is expected to hit US$700 billion.

In recent months, we have seen this sector stabilise and investors starting to exercise caution, by choosing to invest in sustainable businesses instead of volatile start-ups. Still, the industry continues to currently attract top Indian talent, based overseas. We also expect to see further consolidation around four to five prominent e-commerce players.

Operational efficiency Companies are constantly facing pressure to manage their bottom lines across the business.

Sourcing and procurement activities can be streamlined across different regions with better integration.

This, in turn, gives companies increased negotiating power and better economies of scale to drive operational efficiency.

Many companies are also looking at developing strategic relationships with key vendors to drive through the concept of supplier-driven innovation.

Apart from the service

industry, where the concept of procurement/sourcing Centres of Excellence (COEs) has been fairly popular, traditional product-based companies also setting up similar COEs to leverage global relationships, driving operational efficiency.

Developing strategic relationships is also key, as vendors are increasingly an extension of the company’s logistics arm, and they directly contribute to the brand’s image. Any service delivery issue or error could harm the company’s reputation. With the Indian government approving pro-foreign direct investment (FDI) policies, demand for professionals with global logistics experience (including import/export, customs clearance and trade compliance) will also increase.

Emergence of “Lean Supply Chain” concept The concept of a “Lean Supply Chain” has gained popularity in recent years. It’s no longer just about customer management or economies of scale, but also how agile a company’s supply chain can be and its ability to adapt to internal and external factors. To develop a lean supply chain, companies are looking at adapting technological improvements across the entire organisation. But, the success of a lean supply chain is heavily dependent on the ability of its human capital to make quick decisions. Primitive reporting structures might no longer work, and this has led to an emergence of matrix structures within supply chain set-ups. Candidates with experience of working in such an environment, especially with exposure to global stakeholders,

are heavily in demand.

Talented strategists rather than pure play executionoriented staff are being courted for their ability to lead key initiatives and projects leading to operational efficiency. Logistics and distribution professionals with experience in handling imports, customs clearance and 3PL vendors are also prized.

We have also witnessed an increased demand for candidates with deep experience in planning functions (demand and supply, sales and operation planning) across different levels. In particular, we see heavy demand in the Business to Consumer space (consumer products, retail and e-commerce). This intense battle for talent results in average salary jumps of around 18 per cent in both Delhi and Mumbai.

So, what does this all mean for the industry in 2017?

With domestic consumption in India rising along with India’s growing middle class, more players are now fighting for market share and increased competition for the fast-moving consumer goods sector. The intense battle for talent is most evident in the supply chain, manufacturing and logistics sector, especially for seniorlevel plant managers. To attract and retain such talent, clear progression paths and internal learning and development programmes are no longer just a nice-to-have but a musthave. Companies are also going beyond gender when addressing workplace diversity. Gradually, more employers are looking to foster an environment, where employees, regardless of race, age and abilities, can succeed at the highest levels.

(The author is the Director at Michael Page India)

march 2017 - CargoConnect 81

news

‘Chardhaam’ highway project to be completed before 2018: Gadkari The INR 12,000 crore ‘Chardham’ highway project in Uttarakhand will be completed by the end of 2018, irrespective of which party comes to power in the state, Union minister Nitin Gadkari has assured.

He said, “This (Chardham project) is a promise made to the people of Uttarakhand.

Prime Minister Narendra Modi has initiated the process. It will be completed before the end of 2018.” Asked whether the promise will be kept if BJP fails to form the government in the state, he said, “Yes. This has nothing to do with politics.”

Just a week before the imposition of the model code of conduct in view of the assembly polls in Uttarakhand, Modi had laid the foundation stone for all-weather highway project, Chardham Mahamarg Vikas Pariyojna or the Chardham highway development project, aimed at improving connectivity between pilgrimage centres of Kedarnath, Badrinath, Gangotri and Yamunotri.

L&T to build iron ore berth at Paradip port

Larsen & Toubro (L&T) has won orders worth INR 1,286 crore across various segments and, among them, one prestigious order is to build an iron ore at Paradip, Odisha.

The scope of work includes 30m deep sheet pile driving, wagon tippler construction using coffer dam technology and ground improvement for stacker reclaimer. Of `1,286 crore worth of orders, Heavy Civil Infrastructure Business (HCIB) has won an order worth INR 1,071 crore which pertains the underground metro space and has been secured from MetroLink Express for Gandhinagar and Ahmedabad (MEGA) Company Limited for the design and construction of underground stations and associated tunnels for Package 2 in East-West corridor of the Ahmedabad metro project.

Air India Express starts Delhi-Dhaka flight

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Air India Express launched its services from the national capital to Dhaka. The airline, the budget arm of the national carrier Air India, will provide the service four times a week on Mondays, Tuesdays, Thursdays and Saturdays. On the Dhaka-Delhi sector, the flight will be on Tuesdays, Wednesdays, Fridays and Sundays.

The carrier has a code share with Air India on this route. Besides, it plans to provide code share connections on Air India flights from the UK and the US to Dhaka and vice versa via Delhi, according to a press release. Air India Express Chief Executive Officer (CEO) K Shyam Sundar said the airline will offer competitive and affordable fares on both sectors.

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Pangaon ICT receives first cargo vessel The first container ship, MV Nou Kollan-1, arrived from Kolkata at Pangaon Inland Container Terminal in Keraniganj. The vessel berthed at the terminal under the Coastal Shipping Agreement between Bangladesh and India. The deal, signed during the visit of Indian Prime Minister Narendra Modi to Bangladesh in 2015, allows direct movement of ships at sea between the two countries.

It has helped improving the connectivity between the two neighbours by reducing shipping time from 30-40 days to 4-10 days. Commerce Minister Tofail Ahmed, Shipping Minister Shajahan Khan, State Minister for Power, Energy and Mineral Resources Nasrul Hamid and Shipping Secretary Ashoke Madhab Roy witnessed the inauguration of unloading 65 containers from the ship. Tofail said buyers from home and abroad would be benefited from the operation of the Pangaon container terminal.

UK and India to ease flight restrictions The UK and India on February 9 agreed a deal to ease restrictions on the number of scheduled flights between the two countries. The move came on the back of what are described as “successful talks” in India this week, where UK aviation minister Lord Ahmad has been visiting. India’s cabinet minister of civil aviation, Pusapati Ashok Gajapathi Raju, also signed the agreement. Limits on flights from key Indian cities including Chennai and Kolkata have been scrapped, the UK’s Department for Transport (DFT) confirmed, allowing for a greater range of flights for passengers while also providing a boost to trade between the two countries. “Building new links with important trading partners is a key part of the government’s plans for a Global Britain, opening up new export markets and creating jobs and economic growth,” a statement from the DFT confirmed. “India is a rapidly expanding and important market for aviation and the agreement signed today will allow airlines to develop new services and routes,” the statement added. According to Ahmad: “India is one of our closest allies and key trading partners and this new agreement will only serve to strengthen this crucial relationship. “We are unlocking new trade and tourism opportunities which will boost our economies, create new jobs and open up new business links. This is great news for both the UK and India and is yet another sign that we are open for business and ready to build and strengthen our trade links.”

news

Three modern ports to be constructed in North TN

Nagpur to get first Logistics Park of the country

According to Official sources, 3 Modern Ports of which two of them for captive use of the industry are coming up in Northern Tamil Nadu (TN) which will spur industrial growth in the region besides providing steady flow of coal to the thermal plants. The Puduchery Port is being revived with assistance from Chennai Port to handle container traffic in a limited way.

Final touches are being given to setting up of a modern Trestle Jetty at Silambiamangalam about fifty kilometers South of Cuddalore to exclusively cater to the requirement of Cement major Ramco Industries.

The port will import coal for their cement plant and export cement to Eastern parts of the Country through this jetty.

A road to a length of 1.5 kilometers will be constructed on the sea and at the end of it will be the Trestle Jetty which will handle ships upto 75,000 dwt capacity requiring a draft of 16 meters. The jetty will cater to the requirements of the Ramco’s cement plant at Ariyalur.

The first Logistics Park to be set up by the Road Ministry and National Highway Authority of India (NHAI) as part of the Union Budget announcement a few days ago will come up at the home constituency of the Union Transport Minister Nitin Gadkari.

Centre is drawing up a proposal to set up Warehousing zones on the outskirts of major cities through public private partnership while the NHAI has been entrusted with the task of setting up Logistics Parks announced by Finance Minister Arun Jaitley in the last budget. By setting up these parks the attempt is to bring down the Logistics costs by at least 50 per cent so that Indian goods become more competitive in global markets.

An effective Multi Modal Logistics and Transport sector will make our economy more competitive. In his budget speech the Finance Minister outlined the objective of setting up of these parks.

A specific program for development of Multi Modal Logistics Parks together with transport facilities will be drawn up and implemented.

In fact the haulage capacity of Indian trucks is only one third of those in China and one fifth of those in the United States.

The proposed parks will attempt to enhance the average capacity of Indian trucks which is currently 12 metric tonnes. Bypass roads will be developed so that these huge trucks need not have to enter cities.

According to official estimates India spends fifteen per cent of the GDP on Logistics and Transportation while in developed countries the percentage is hardly eight, which India strives to bring it down to make its exports much more competitive in the global markets.

Guard-less movement of cargo trains in the offing Guard service in freight trains may be a thing of the past once the Dedicated Freight Corridor (DFC) becomes operational with end wagons to be fitted with sensors.

End to Train Telemetry (EoTT) is a device which makes it possible to monitor in the driver’s cab of the loco the brake pipe pressure in the last vehicle of the train.

Doing away with deployment of guards in each freight train, the corridor will equip the rear end of a wagon with this modern electronic system at an estimated cost of INR 5 lakh. According to Dedicated Freight Corridor Corporation (DFCC), Managing Director, Adesh Sharma, the driver will monitor the train movement through EoTT device and there will be no need of guards.

Chabahar port expected to open in a month Afghanistan Consul General Mohammad Aman Amin recently said that the strategic Port of Chabahar in Iran which is being developed to build a transport-and-trade corridor through Afghanistan giving India an access to global markets is expected to be opened in a month’s time. Amin said that “The port is likely to open in a month’s time and it will provide impetus to the trade between India and Afghanistan.”

The construction of this port assumes significance as it will allow bypassing the route through Pakistan for accessing markets in Europe and Central Asia and also save on time and cost of doing business. India in May 2016 signed the historic deal with Iran and Afghanistan.

march 2017 - CargoConnect 85

news

Singapore airline to start fourth flight from Ahmadabad With travellers from Gujarat showing a preference for weekend visits to Singapore for holiday and shopping - Singapore Airlines has tapped the opportunity by launching an additional flight from Ahmedabad. On Thursday the flagship carrier of the island city-state announced the launch of its fourth weekly flight from Ahmedabad to Singapore, starting from March 26. The company said that all flights will be operated by Airbus A330-300 wide-body aircraft. David Lim, General Manager India – Singapore Airlines said, “Travel to and from Ahmedabad has steadily increased over the years.

Singapore Airlines is pleased to offer an additional frequency to meet the growing market demand. The new service will provide travellers a much sought after weekend departure window to travel to Singapore and to onward destinations.”

Rail freight customers may get fixed rate contracts Transporting goods by train may soon get cheaper as the railways ministry is looking to launch special freight schemes with attractive long-term contracts for its customers as well as discounts on incremental freight loading. Several other usage charges will be waived for key customers as part of the plan, officials said. “All costumers transporting through railways will get a price predictability that the logistics cost won’t go up for the next three years. In the last two years our freight for different sectors has gone up by over 20 per cent. So, this will help customers save on the logistics cost,” said a senior ministry official, who did not wish to be identified. As per the plan, railways will offer three-year contracts to its customers with fixed freight rates during the period, along with discounts of up to 15% for incremental loading.

CONCOR to come up with multimodal logistics parks near ports

Post-Hanjin: Limited Shift to Air Cargo The logistical chaos caused by Hanjin’s bankruptcy helped boost airfreight rates, but there is limited statistical evidence of cargo switching modes.

A recent analysis from Drewry looked at the impact of Hanjin’s demise on the airfreight market, which according to some sources benefited as some nervous shippers were said to have shifted cargoes to the air. IATA (International Air Transport Association) has reported that international airfreight traffic grew by 3.8 percent in 2016. IATA noted that the speed of growth picked up in the second-half of the year and previously speculated that some of the acceleration could have been caused by a temporary mode shift following the collapse of Hanjin, and also from companies, so used to weak market conditions, becoming complacent and getting caught by an unforeseen demand rebound, leading to a last-minute reliance on airfreight.

86 CargoConnect - march 2017

The Container Corporation of India (Concor) is mainly focusing on building multi-modal logistics parks (MMLP) in the vicinity of ports and in the hinterland to bring down logistics costs and to promote containerization, said Chairman, V. Kalyanarama.

“The Visakhapatnam MMLP built on 100 acres is ready for operation, with warehouses and other facilities, including a railway line,” said the chairman.

We have spent INR 450 crore on building the MMLP. Further, we are taking up such parks at Kakinada and Krishnapatnam ports also. We have acquired the land and will begin the work shortly, he said.

Kalyanarama said containerisation was happening in the country, but not at the desired pace, and the east coast, especially Andhra Pradesh, would play a key role in the future. He added that “Even now container trade is largely concentrated on the west coast, but it is moving to the east now.”

report

Towards A Unified India:

A CBRE Report on how warehousing occupiers are approaching the GST The GST will make doing business in India tax neutral, irrespective of location. For a warehousing operator, investment decisions will no longer be dictated by the comparative tax advantages of various states, thereby enabling them to make decisions based on supply chain dynamics. To better understand the impact of the GST on the warehousing sector in India, CBRE Research conducted a survey of leading warehousing space occupiers to gauge their views on the new taxation regime; understand their strategies in the post GST era; and ascertain the impact of the GST on their overall business and operating costs. Survey respondents included leading corporates in sectors such as third party logistics (3PLs), e-commerce, engineering and manufacturing, fast moving consumer durables and non-durables, pharmaceuticals and retail. Approximately 63 per cent of respondents were domestic corporates, while the remainders were headquartered abroad.

The exponential growth of the e-commerce sector and strong demand from 3PL companies has resulted in large space take-ups by these players across cities. The survey found that approximately 58 per cent of respondents had a warehousing space portfolio of more than 500,000 sq. ft., spread across various states in India. Approximately 42 per cent of 3PL operators covered in the survey had a portfolio of more than 1 million sq. ft. across the country.

The trend of built-to-suit warehousing is still at a nascent stage in India. Most companies prefer to lease modern warehousing space to save costs and minimize exposure to regulatory issues. Utilising a 3PL player to manage non-core operations is the second most preferred mode of operation. The expertise and resources of a 3PL operator can help companies improve their flexibility and efficiency. Most 3PL services in India are currently provided by domestic companies.

3PL companies’ share of overall warehousing space take-up has increased from an average of 15 per cent during 2012 and 2013 to an average of 28 per cent during 2015 and 2016.

T he G S T an d Warehou sing – Decoding the Impact The general consensus around the new taxation

MOST LIKELY STRATEGY FOR WAREHOUSING PORTFOLIOS POST-GST IMPLEMENTATION AND PREFERRED FORMAT OF OPERATIONS Consolidation Expansion Remain the same Not Sure Both expansion and consolidation Downsizing Expansion, relocation and consolidation Both downsizing and consolidation Relocation 0%

1%

5%

3%

10%

15%

20%

PRE GS T 5% 1% 6%

25%

30%

35%

4%

28%

52% POST GST 5%

5% 3%

11% 5%

8%

30% 33% Mother Hub for a region, supplemented by spokes

Mother warehouse in the city/state with urban fulfillment centres

Multiple warehousing facilities in one state/city

Only one warehousing facility in one state/city

Both Multiple warehousing facilities in one state/city and Mother Hub for a region, supplemented by spokes

Mix of all

Both Multiple warehousing facilities in one state/city and Only one warehousing facility in one state/city

Both Mother Hub for a region, supplemented by spokes and Only one warehousing facility in one state/city

Source: CBRE Research, Q1 2017.

regime and its impact on the warehousing sector in India is largely positive. Close to 63 per cent of respondents indicated that the GST will be beneficial for their overall business.

Approximately 45 per cent said that their cost of warehousing operations is likely to decline once the GST comes into play, while around

25 per cent were cautious and felt that it is too early to assess the actual impact. However, the majority of respondents said that they are already prepared for the introduction of the GST and would be able to align their business to the new regulations. The survey found that approximately 65 per cent of respondents believe that they will need a minimum of 3 to 12 months to align their existing business strategies with the new tax structure.

Implementation of the GST is likely to help reduce operating costs. Close to 42 per cent of respondents endorsed this view, while 23 per cent felt it was too early to estimate the impact. Around 19 per cent were of the opinion that operating costs are likely to remain the same. In order to simplify the transition process, the government has proposed that companies already registered to pay VAT, Central excise, or Service Tax will not have to apply for registration under the GST. First time tax payers will have to complete a single application online for registration under the GST. Given the government’s plan to roll out the GST by 1st July 2017, companies may have limited time to prepare for setting up the necessary IT infrastructure and compliance systems. 3PL companies were the most optimistic, with approximately 74 per cent of such respondents believing they could make the necessary changes within a year. In contrast, FMCG companies, especially F&B retailers who are likely to be impacted the most, have indicated they will require more than a year to adapt.

Close to 52 per cent of survey respondents currently have multiple warehousing facilities in one state/city. Around 28 per cent of respondents said this is the most effective way to operate given the multiple local taxes involved. Close to 38 per cent of companies surveyed also feel that this is the most suitable mode of operation based on their current business model. However, in the post-GST scenario, the concept of a mother warehousing hub for a region supplemented by spokes is expected to become more popular.

Around 11 per cent of companies surveyed said they would prefer to adopt the hub and spoke approach in the post-GST regime, compared to only 6 per cent now.

march 2017 - CargoConnect 87

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They have been delivering cost-effective warehouses, built to suit warehouses, quality infrastructure, safety, green plantation. Our professional has built MILLION sq.mtr.

Warehouses and 100 per cent leased to Vodafone, Castrol and Wagh Bakri Tea.

Vivek Rai is managing Indian distribution operation, managing the general administration, finance and accounts management. Vivek Rai is a expert in retail management and best in business analytics.

• 24 feet clear height PEB structure.

Quick to grow, Slow to Change Automotive growth is throwing up some new and unusual challenges for logistics in India, as well as highlighting familiar problems. New challenges include a sharp increase in sales going to rural areas, and Auto Makers are making commitments to many more aftersales service points.

Challenges Do the auto and allied industries in India have sufficient number of logistics providers to handle the evolving volume? Automobile manufacturers need dedicated Logistics Service Providers (LSPs) having specially designed transport vehicles (car carriers) and storage facilities (Warehouse and car yards).

Maintaining this type of infrastructure to fulfill the needs of a limited number of target users is challenging, hence there are limited number of participants in the ‘automobile logistics services’, especially in the warehousing and Car storage services.

RAI Infrastructure and Logistics is owned

by Well Experienced Logistics Professionals who has experience in Development of Modern Logistics and Industrial Facilities as well as more than 3 decades of experience in Hardcore Logistics Management in various fields.

Project Management Alok Rai (Managing Director) The visionary and most successful businessman in Import, manufacturing and distribution of luxury brand leather products. He is running Company Milano Impex Pvt Ltd since more than 15 years and supplying the products to major Indian market and export in to major country.

Asutosh Gajjar (Project Leader) He has more than 25 years hardcore logistics operational experience working with Indian and Foreign MNC companies and 10 years experience in Development of Modern Logistics Parks at Mumbai.

Expert in Logistics management on most professional way, many award winner in Logistics from MNC.

Vision: To Create Benchmark for Automotive Storage in India Gujarat being fastest growing state in the world and with the fabulous set-up of car manufacturing facilities by various Carmakers, the Gujarat will be the largest Car manufacturing hub in the country.

RAI Infrastructure and Logistics has an ability to develop the modern Logistics and Industrial Infrastructure and excellent logistics operational skill. The company wishes to develop and operate the integrated warehouse spaces with most modern facilities.

Area Overview: Spread over more than 102 Sq km, Mandal Bechraji Special Investment Region (MBSIR) is a New Automotive Industries Hub (Suzuki, Honda 2 Wheeler, Honda 4 Wheeler, Toyota about 90km from Ahmedabad and 85 km from Gandhinagar near Bechraji town.

Envisaged by the government of Gujarat, MBSIR is one of its kind industrial hubs and will comprise automobile, manufacturing and auxiliary industries. The SIR is strategically located, well connected with trade gateways and falls in the influence zone of proposed Delhi – Mumbai Industrial Corridor project (DMIC), a joint initiative by the Government of India and Japan. The dedicated freight corridor (DFC) passes through six different states. Distribution of its length in these states is mentioned below.Delhi NCR–1.5%, Haryana–10%, Uttar Pradesh–1.5%, Rajasthan–39%, Gujarat–38%, Maharashtra–10%

• Bubble insulation to reduce outside temperatures.

• Ramp for forklift movement.

• Office block with vitrified tiles with fans and LED lights.

• Fully functional pantry with vitrified tiles, granite platform, dining tables, chairs, RO water filter with storage water cooler.

• High quality restrooms • LED lights with 150 to 200 LUX for warehouse.

• Surrounding LED street lights.

• Safety gates with platform and stairs.

• 18 meter RCC roads.

• Central garden and tree plantations.

• 24 hr. complex security.

• Dust free complex housekeeping.

Project Implementation Process.

Legal Process: • • • •

Land Survey by Govt. Surveyor.

NA Approval from Jilla Collector.

Plan Passing by Nagar Niyojan.

63 AA Process to buy land on Company Name.

Construction Process: • Land Topographic Survey and Soil Test.

• Optimum and Efficient Space Utilization of Plot Area.

• Building and Infra Structure Design by Best Architect and Structural Consultant.

• Pre Engineered Building Structure from Renown Company.

• Automated Turbo Vent and Insulated Building Structure to reduce heat.

• Maximum Green Plantation, LED Lights with in Complex.

• Separate Vehicle Parking and assured security, CCTV Surveillance.

• Strategic Location close to Auto Manufacturing Hub.

Company Plan is to develop one million sq ft of automotive space facility in the next five years and two lakh sq ft by 2017.

Expected Customer: Auto Ancillaries, Auto Assembly Units, 3PL Companies

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FFFAI organises 23rd biennial convention in Kochi The Federation of Freight Forwarders’ Association in India (FFFAI) organised its 23rd biennial convention at Kochi from January 19 to January 21. The convention was a huge success and witnessed participation of all the top freight forwarders, customs brokers and top notch businessmen of Indian as well as international logistics fraternity.

The theme of the convention was ‘Indian Customs Broker – Trusted Single Entity Logistician Capable and Dynamic.’ Eight business sessions were organised in the convention which was well addressed by eminent speakers possessing through domain knowledge of their respective fields. Apart from the regular business sessions, the convention also witnessed a special session based on the theme ‘Assuring gender equalisation’ addressed by women logistics professionals. Organisation of the session is a testimony of FFFAI’s sincere efforts for promoting women in the logistics business. In-depth, discussions were also carried out on the issues related to future of customs clearance business in India, GST, technology, digitisation, cashless transactions, skill development, trade facilitation, opportunities in coastal shipping, logistics trends and availability of business opportunities in the international market.

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AAI organised workshop at Amritsar Airport

National Maritime Conclave 2017 held at Phd House, New Delhi

A Vigilance Workshop was organised at Amritsar Airport by Corporate Vigilance Department, Airports Authority of India on the topic “Vigilance as a Management Tool” from January 31, 2017 to February 1, 2017. Around 56 Executives and Non-Executives from Amritsar, Ludhiana, Jammu and Pathankot Airports participated in the workshop. Besides general issues, the workshop also covered varied aspects of vigilance and disciplinary matters.

Among the eminent speakers, MP Juneja, IEM, AAI, Ex CTE, CVC and Ex Addl Member, Railway Board spoke on “Common Irregularities in Public Procurement Process”.

Roads, Ports and Other Infrastructure Committee of PHD Chamber of Commerce and Industry organised the “National Maritime Conclave 2017” on January 24, 2017 at PHD House, New Delhi which was attended by more than 90 delegates and 13 speakers from the industry, government and other stakeholders during the full day event. Gopal Jiwarajka, President, PHD Chamber in his welcome address mentioned that waterways development should be one of the top priorities of the government because it makes an economic sense. Ashish Mohan Wig, Chairman, Roads, Ports and Other Infrastructure Committee, PHD Chamber said that the Indian port sector is poised to mark great progress in the years to come.

AISATS launched India’s first on-airport perishable cargo handling centre

Air India SATS Airport Services Pvt. Ltd. (AISATS), India’s premier airport services company, launches “AISATS COOLPORT”, India’s first integrated on-airport perishable cargo handling centre, at Kempegowda International Airport, Bengaluru (KIAB). The 11,000 sq. meter state of the art facility built at a total project cost of INR 48 crores, was inaugurated by RV Deshpande, Minister for Large and Medium Industries and Infrastructure Development, Government of Karnataka.

In the past few years, Indian air cargo industry has seen tremendous

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demand for handling of perishable cargo products. The launch of AISATS COOLPORT will meet the extensive handling requirements of perishable cargo products such as pharmaceuticals, fruits, vegetables, flowers, meat and sea food, through its future ready infrastructure with capability to handle 40,000 tons per annum, customized cold storage solutions comprising of 17 dedicated cold rooms with temperature ranging from -25 to 250C, Refrigerated Queue Lanes with a temperature range of 2 to 80 degrees C for unitized shipments and end-to-end cold chain solutions including refrigerated trucking service, indigenously developed cool trolley and thermal blanket, as well as temperature controlled container handling. Speaking on the momentous occasion, Mike Chew, CEO, AISATS said, “As India aims to become the world’s third largest aviation market by 2020, we believe that the cargo industry will play a crucial role in achieving this objective. India has aptly demonstrated the potential to maintain an upward growth trajectory year on year, despite a global slowdown. However, there is an immediate need to develop adequate infrastructure to boost the growth of the air cargo industry.

We at AISATS developed the COOLPORT, with invaluable support from the Government of India’s ASIDE scheme. The COOLPORT addresses the need for specialised infrastructure amenities catering to cold-chain processes, operations and logistics and we at AISATS partner the vision of turning the Kempegowda International Airport into a preferred air cargo hub in Southern India.”

events

Agility India opens Life Sciences Center in Hyderabad Agility, a leading global logistics provider, has opened the first temperature-controlled life sciences storage and handling facility in the Hyderabad Airport Zone. Agility’s 6,000 square-foot Life Sciences Excellence Center (LSEC) at Rajiv Gandhi International Airport is strategically placed to serve pharma manufacturers in Hyderabad, Goa, Pune, Vishakhapatnam and Bangalore.

The centre will provide conditioning, preparation and storage of pharmaceutical goods and operate as a control tower for Agility life sciences customers in India. Detlev Janik, CEO of Agility South Asia, said, “Life sciences is one of the cornerstones of the Indian economy with exports expected to grow an astonishing 60 per cent in 2017. This new center will help fast-growing Indian life sciences companies meet the rising global demand for their products.”

Saudia Cargo host Flower and Perishables Air Shippers Forum

The center will operate as the primary warehouse for solutions from va-Q-tec, an advanced passive packaging company specialising in high-end, secured cold chain products. va-Q-tec’s containers and boxes keep the required temperature for five days or longer without any external energy supply. The LSEC will house va-Q-tec’s inventory, perform quality checks, conditioning and preparation of containers, and box packaging for va-Q-tec’s products before the release of packaging for customers.

“Our partnership with Agility is a further example of how va-Q-tec develops and provides transportation systems with accompanying services for life sciences logistics. The cooperation will further strengthen va-Q-tec’s footprint in India, one of the fastest growing pharma exporters,” said va-Q-tec CEO Dr Joachim Kuhn.

Lufthansa Cargo in dialogue with customers More than 160 logistics industry representatives accepted Lufthansa Cargo’s invitation to exchange experiences in Frankfurt over two days. After a challenging 2016, Peter Gerber, CEO and Chairman of the Executive Board, is also hopeful and optimistic about the new year and the sector: “We are on the right track for the future. Lufthansa Cargo is one of the key players in the air cargo industry and will remain so.” With this in mind, investment will be made in the Frankfurt hub and the other pillars of the cargo evolution strategy will be advanced. Examples of these include the new product structure with the recently launched td.Basic and myAirCargo products, both of which can only be booked online, and cooperation with other airlines.

Air Cargo Africa 2017 kicked off in Johannesburg on February 21. 2017 with its second shippers’ forum for Flower and Perishables hosted by Saudia Cargo. The panelists were Conrad Archer country MD of Panalpina Airflo Kenya, Jane Ngige CEO of Kenya Flower Council, Sian Roses Group, David Beecham Senior Manager cargo products of Qatar Airways Cargo, Dirk Hanekom CEO of Agri All Africa, Stanley Winterbach MD Agri All Africa Nigeria and moderated by Joseph Notter VP Operations of Saudia Cargo.

The forum was attended by over 90 delegates from the shippers and forwarders community where the focus was on flowers, fruits and vegetables – key export commodities from the African continent, the transportation of which demands specific expertise.

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Saudia Cargo renews Human Organ Transportation Agreement with the Center Within the framework of its support to the humanitarian and social works, Saudia Cargo has renewed the agreement of human organ transportation with the Saudi Center for Organ Transplantation. Dr Faisal Shaheen, the Center’s Director General and Nabil Khojah, Chief Executive Officer, Saudia Cargo have signed the agreement. The renewal of the agreement complements the cooperation established by the two parties since January 2014. Khojah has ensured dedicating all logistics available for dealing with the human organ transportation according to the international terms to the services of the noble humanitarian objectives. Khojah has stated that Saudia Cargo seeks to enhance the role of its social responsibility through different activities and the company prides itself on being a supporter to the activities of the Saudi Center for Organ Transplantation for free since 2014.

FreightBazaar and DFAG sign MOU to spread awareness

Frankfurt Airport Receives “Excellence Award” in Air Cargo

FreightBazaar, India’s largest online and integrated platform to connect truck users and truck suppliers, facilitating hassle-free truck hiring process and Domain and Functional Advisory Group (DFAG), a New Delhi based Non-Profit organization that is a key facilitator for highway design and feasibility studies, have signed a Memorandum of Understanding (MOU) to not only work together in the areas of transport emissions and trucking safety but also to involve more stakeholders who can contribute in various ways to the cause of emission reduction and trucking safety. Both FreightBazaar and DFAG recognize the potential for synergies as both have common goals of promoting efficiency and safety through areas such as reducing empty miles, driver training, optimum loading of trucks, reducing emissions and bringing innovative dimensions to the transportation industry.

Speaking on the occasion, Bhaven Shah, Co-founder, FreighBazaar.com says, “FreightBazaar freight platform is designed and developed to make the long haul trucking operations more efficient which helps truckers reduce the empty miles. By using technology based innovations, pushing for standardization across the long haul trucking sector and by creating awareness about safety issues, FreightBazaar intends to impact the entire freight eco-system in a positive way”.

Frankfurt Airport (FRA) has been recognised as “highly acclaimed” in the best international airport category of the “STAT Trade Times International Award for Excellence in Air Cargo”. The award was presented to Fraport by the renowned “STAT Trade Times International” magazine on the occasion of the “Air Cargo Africa” international trade fair, which was held in Johannesburg (South Africa). Frankfurt Airport had already been recognized as the best international freight airport at the “Air Cargo India” trade fair last year. Anke Giesen, Fraport AG’s executive board member and COO said at the awards ceremony: “We are continually working to offer our customers ever more efficient processes and new solutions. The award is yet another confirmation of the high quality that characterizes Frankfurt Airport as an airfreight location. At the same time, this honor motivates us to further strengthen our position as Europe’s leading freight airport.”

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APM Terminals Pipavav welcomes the Hoegh Tracer APM Terminals Pipavav welcomed the Hoegh Tracer, one of the world’s largest pure car and truck Carrier (PCTC), and the largest to ever call an Indian port. At 14 decks high, the Hoegh Tracer has a capacity of 8,500 vehicles, and loaded 1,700 cars at Pipavav for export delivery on the Hoegh Middle East, India and Africa (MIAF) Service. “This achievement showcases Pipavav’s infrastructure capability and efficiency in handling large car carriers in this important growing market,” said APM Terminals Pipavav Managing Director Keld Pedersen. APM Terminals Pipavav, in partnership with NYK Auto Logistics (India), opened a dedicated common user integrated RoRo terminal in August of 2015, with a capacity of 250,000 vehicles annually. The port is equipped to accommodate 4,500 to 5,000 cars and a Pre-Delivery Inspection (PDI) facility. There is also a mobilization yard for 150 cars, with a capacity to accommodate approximately 500 cars on the Quay.

DTDC Express wins Best Corporate Film award DTDC Express Limited, India’s leading express parcel service provider was awarded “Best Corporate Film encompassing Vision, History, Values & Spirit of Excellence” by the International Management Film Festival (IMFF). The award function was hosted

by World HRD Congress in association with Times Ascent recently in Mumbai.

This accolade was presented in recognition of DTDC’s latest film ‘Going Beyond the Parcel’ featuring brand ambassador, Sourav Ganguly. Speaking on this grand occasion, Abhishek Chakraborty, Executive Director, DTDC Express Limited said, “We are delighted to win this prestigious award and my heartiest congratulations to the entire team for the innumerable hours they have put in to making this film a grand success. Aligned with the company’s vision, the film takes forward the brand’s core mantra of ‘Delivering Value’. We will continue to deliver expedient services to our esteemed customers by providing innovation in our service offerings.”

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upcoming events 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

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PEOPLE CONNECT

An accidental journey Starting with a career as a Professor in Loyola College, Chennai, S Xavier Britto, Chairman and the founder of Indev Group of Companies, is an M Com, BL, MBA and an ACS and is also the founder of the St. Britto’s Group of Schools and Esthell Continental Hotels and Resorts. He is a distinguished, dynamic and august personality with multi-faceted talents and credentials. In a one-on-one interaction with Tariq Ahmed, he shares his experience in the logistics industry.

What motivated you to be a part of the logistics industry? How has been your experience so far?

I would say it was somewhat accidental for me to join this industry. (laughs‌) I had started my career as a professor. My parents had always wished for me to be an IAS officer. My family was never into business. But, I have always wanted to do something of my own. That propelled me to start this company in 1984, with five or six people and a mere investment of `20,000. This is why I always live by my motto of creating everything from absolutely nothing.

How has the industry changed from the time you stepped in?

Also, what major transformations have you observed in the industry in terms of technology, manpower, practices and government regulations?

There has been a lot of transformations si nce then. I have seen the most conventional and medieval period as well as the current period of supersonic growth.

We did not have computers back then. We were required to keep physical records of everything, from A to Z. Cellphones were not common. So everything was going slow. Containerisation itself started

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in 1982. Custom procedures were slow and cumbersome. Introduction of single window interface for these procedures have evidently taken the industry forward.

Even lead time has significantly reduced.

So, from my experience, I can say that we are way ahead of what had happened few years back. All thanks to technology and the attitude of our people who believe in adopting changes along with the changing world. Liberalisation, which started in 1992, has picked up really well.

What are the specific beliefs or values that you live and work by?

And how do you define success?

There are a certain set of values that I live by. One of them is that, when you are growing, you have to ensure that your people are growing as well. If they are prudent and effective, you need to ensure their growth. I have always applied it in real life and as a resultant of this, the growth rate of our company has been high.

Secondly, I strongly believe in uplifting the society and in giving the people a better life and a secured future. I have started schools where more than 3000 students are studying at a nominal cost. I have always encouraged equality amongst everyone. All of these is necessary to lead a happy and peaceful life. Because, at the end of the day, money is not everything in

life. Human beings are very important.

Apart from work, what are your other interests?

I am an ardent sports enthusiast. I enjoy playing cricket and am actively associated with Premier Futsal, which is a multinational Futsal league. I am also a big-time film enthusiast and have produced many movies in South. I have close connections with people from the film fraternity and that definitely provides a huge push. Apart from that, I like to travel, read and give speeches at conferences wherein I try to give away my experiences, gained over the period of time.

Do you have any message for those who aspire to work in the logistics industry?

This is a very fast growing industry. The most important thing is perseverance. You need to stay longer in order to understand this industry because there is a lot of scope and is also one of the most highly paying industry, even more than the IT industry.

There are a lot of areas to concentrate upon. So, you need to understand your key strength and decide whether you want to go into warehousing or CFS or other core areas. This industry is a very challenging and interesting because you need to be on your toes all the time.