CARGOCONNECT May 2017

PAGES 96 inclusive of cover

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VOL VIII ISSUE VI MAY 2017 `20

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Ports speed up operations with DPD

Logistics taking exhibitions to a whole new level

THE Manufacturing Industry Calls for Effective Supply Chain

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Contents

Volume VIII • Issue VI • may 2017

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

18 COVER STORY

Is India GST-Ready? Decoding Industry Perceptions focus

INTERVIEW Kruti Jobanputra, Director, JWC Logistics Park Pvt Ltd ...................................................63 John Joseph, Chief Commissioner of Customs, Mumbai Zone II, JNCH .............................64 Ports speed up operations with DPD ............................................8

SPECIAL FEATURE

Administration Vipin Marwah Accounts and Administration Poonam Gupta

Ameet Sareen, GSM, Product and Business Development, Air Canada Cargo .........................68

Designer & Visualiser Mayank Bhatnagar

Nandan Yalgi, Managing Director, Boxco Logistics India Pvt Ltd .....................................74

NEWS ..................................79-87 shippers speak ....................76 GUEST COLUMN .......................78 EVENTS ................................88-93

The Manufacturing Industry Calls for Effective Supply Chain ....................52

Marketing Executive Mehuli Choudhury

Sr Designer & Visualiser Shaique Ahmad

Aditya Vardhan Agarwal, President, Indian Chamber of Commerce ..................................72

feature

Manager Marketing Niti Chauhan

Marcel de Nooijer, Executive Vice President, AIR FRANCE KLM MARTINAIR Cargo ...................66

Vikram Paul, Regional MD – South Asia and Board Member, Cargo Partner .......................70

Logistics taking exhibitions to a whole new level ..........................................42

Director Marketing Ajeet Kumar

PEOPLE CONNECT Ravindra Sethi, Founder and Director, RE Rogers India Pvt Ltd ...........................94

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 “It is not just the longest tunnel of South Asia but a great leap by Kashmir towards development” Prime Minister, Narendra Modi after inaugurating Chenani-Nashri tunnel in Jammu and Kashmir

“The ministry is working on Enterprise Resource Programme – software which shall benefit railways immensely”

The freight traffic, which essentially serves the revenue of Indian Railways, recorded the highest ever annual loading of 1107.1 Million Tonnes (MTs) in 2016-17, surpassing the previous best of 1104.2 MTs in 2015-16, an official release said.

Minister of Railways, Suresh Prabhu, while inaugurating the conference on ‘Digitisation of Railway Supply Chain’

Shipping, Road Transport and Highways Minister

Nitin Gadkari

“In respect of development of port infrastructure, 49 projects have been awarded with a capacity of 103.52 MTPA against a target of 102 MTPA with an investment of INR 8,341.12 crore during the last fiscal” Shippers and freight forwarders were increasingly dissatisfied with container lines through 2016, according to a survey

by Drewry Shipping Consultants and the European Shippers’ Council.

6

CargoConnect - may 2017

We begin a new era of clean transportation fuel that will benefit 1.25 billion citizens of our country by substantially reducing pollution levels everywhere Union Petroleum Minister

Dharmendra Pradhan

during the formal launch of the BS-IV grade transportation fuel in Bhubaneswar.

FOCUS

Ports speed up operations with

DPD

8

CargoConnect - may 2017

FOCUS

he Direct Port Delivery (DPD) is a major initiative of the Central Government under programmes like Make in India and Ease of Doing Business and a very important drive for reduction of dwell time and transaction cost. In Direct Port Delivery system, the imported containers are directly delivered to the pre-approved clients instead of waiting at container freight stations for clearance. Last year, the scheme was floated where government had asked all the ports to utilise the scheme to the fullest in order to save the cost and dwell time.

CFS is a Container Freight Station, notified by Customs as Customs Bonded area where stuffing and destuffing of EXIM containers take place under the direct supervision of Customs, in which port terminals are not involved. As per the existing practice, cargo is cleared at CFS by the Importer/CHA after completion of Customs. Initially, JNPT started with only one CFS. With the annual increase in cargo and opening of many CFSs, commissioning of two more terminals under its umbrella i.e. NSICT and GTI, the dwelling period of import-laden containers delivered to local CFSs was in the range of six to seven days in early 2000.

Subsequent to streamlining of yard, equipment and delivery procedures including en-block movement of import-laden containers to nominated CFSs by the shipping lines, port terminals of JNPT including PPP partners namely NSICT and GTI, the dwell period was brought down to one and a half day as against six to seven days existing earlier. In the year 2007, through Accredited Client Programmer (ACP), the Risk Management System (RMS) was implemented in major ports which envisages assured facilitation to the clients meeting specified criteria in terms of duty, volume of imports and clean compliance record. The proposed arrangement enabled importers with ACP status to receive Direct Port Delivery (DPD) of their containerised imports without routing them through CFSs. To facilitate DPD, keeping in view various constraints like yard, additional equipment, manpower and unfruitful/multiple shifting, a benchmark of 50 TEUs per voyage to be imported by the agency was fixed as the eligibility criteria for availing DPD facility. However, over a period of time, with improvements in the operating system, in order to reduce the transaction cost per container, JNPT liberalised the minimum volume of containers to be imported by ACP clients to 300 TEUs on an average per month covering all three terminals of JN Port to extend the benefit of DPD facility to more number of ACP clients.

T

Last year, during the month of December, PMO had asked Ministry of Shipping to increase the direct delivery of consignments from 25 per cent to 40 per cent by December, 2016.

Recently, the ministry also informed that DPD (Direct Port Delivery) is one of the primary ways to decongest ports of the country.

Sheena Sachdeva brings an exclusive piece highlighting the process of Customs at ports and conditions after implementation of Direct Port Delivery.

DPD: Bringing a Change Presently 10 – 14 agencies are availing DPD facility at JNPCT which are fulfilling the criteria of importing not less than 300 TEUs on an average per month covering all three terminals as a benchmark. As understood, CBEC (Central Board of Excise & Customs) has issued accreditation to 357 ACP clients so far. There is a general impression that import laden containers are dwelling in the Port Terminals for a long period. This is not the case. While the laden import boxes bound to local CFSs are delivered within one to one and a half day on an average after landing as against a free period of three days from Port Terminals, the laden containers are delivered from CFSs to end users after an average dwelling period of nine to ten days subsequent to completion of requisite formalities involving agencies like Shipping Lines, CHAs, Customs, Consignees & CFS Operators (excluding Port Terminals). It is pertinent to note that as on

may 2017 - CargoConnect

9

FOCUS

Kruti Jobanputra, Director, JWC Logistics Park Pvt Ltd

DPD has been introduced few years a g o. B ut i n 2 017, Mu mbai C ustoms under the guidance of Chief Commissioner Dr John Joseph really brought-in a drastic change. The maximum benefit of DPD is not only to importers but also to the end user/ common man.”

10 CargoConnect - may 2017

today, the import-laden containers are delivered to end users directly from Port Terminals in case of agencies availing DPD facility with a dwell period is only one and a half day on an average.

Now, under ease of doing business, in line with the directives of the Ministry of Shipping, Anil Diggikar, Chairman, JNPT has informed that a decision has been taken to dispense with minimum volume criteria and extend DPD facility to all ACP clients from JNPCT with immediate effect, irrespective of their import volume on trial basis for a period of 6 months. Continuance beyond 6 months will be subject to operational convenience. With this, a long pending demand of the trade bodies will be met. Under this facility, the import-laden containers will be delivered to the consignees (in this case ACP clients) directly while reducing the burden of logistics cost.

John Joseph, Chief Commissioner of Customs , JNCH, as the main person leading the initiative, said, “DPD is a game changer.

After practising DPD,now the difference between the JNCH dwell time and the Mumbai air cargo dwell time is seven to nine hours. This is unthinkable and now we are not competing with other ports as we are ahead with 30 hours.

It leads to huge savings in lead time and in cash saving a minimum of `10,000 to maximum of `40,000.

After initial resistance to change, companies are adapting rapidly and now importers are sending us testimonies and letters of thanks.

Shipping lines and CFS are a bit unhappy and they have gone against the Customs to court but didn’t receive any substantial support.

They try to plant contrary news in the media to sabotage the initiative but importers are asking

for the scheme. The importers are very happy as they get out of the clutches of shipping lines and CFSs by way of nomination charges and other similar charges. But some shipping lines and CFS have changed their business model acceding to the request of the customs and are doing excellent business. These CFS have trifurcated as CFS portion, normal warehouse portion and customs warehouse portion and are doing wonderful business.”

As per existing norms, DPD container has to be picked up by the ACP clients within 72 hours of its landing. Otherwise, the same will be moved to JNP-CFS (presently operated by Speedy Multi-models Ltd) after 72 hours to avoid piling-up of containers, if any, leading to multiple shifting/congestion. To facilitate the same, the port is making adequate arrangements in terms of yard and equipment for extending DPD to maximum ACP clients. Further adding to this, Kamal Jain, CEO, APM Terminals Mumbai said, “Direct Port Delivery (DPD) is one of several productivity-boosting initiatives that are under way at major ports as the Government of India intends to improve its ranking in the World Bank’s Ease of Doing Business survey, and cut logistics costs. DPD protocol can result in substantial savings of time and money for importers by reducing container dwell times after vessel discharge. In the past, import containers were sent to Container Freight Stations (CFS) within one to one and a half day after being off-loaded at the port. The cargo was then delivered to the end user after an average dwell time of 9-10 days, depending upon the completion of import procedures and clearances with shipping lines, custom

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FOCUS house agents, Customs, consignees and CFS Operators (excluding port operators). Now, importers can bypass these multiple handoffs by using DPD, allowing import containers to be delivered to the end user directly from the port with an average dwell time of only one and a half days.”

Process for Import of Goods John Joseph, Chief Commissioner of Customs, JNCH

DPD is a game changer. After practising DPD, now the difference bet ween the JNCH dwell time and the Mumbai air cargo dwell time is seven to nine hours. It leads to huge savings in lead time and in cash saving a minimum of `10,000 to maximum of `40,000.”

12 CargoConnect - may 2017

The vessels reach the outer angle and depending upon the availability of berthing place in the terminal, they are brought to the terminal for discharge of cargo. The Customs officer boards the vessel once the Boarding Officer certifies that everything is fine and an entry inwards is given, so that the ship can start discharging the cargo. Once the entry inwards is issued the ship starts discharging the cargo into the wharf CFS wise which gets evacuated by the respective CFSs. These CFS are situated in and around 60 kms of JNPT port. There the customs examination gets done and further, on payment of duty, registration of goods, presenting the goods for examination, these containers gets out of charged by the Customs. The importers pay the shipping line and takes the delivery order and takes the goods out of the CFS. John Joseph informed, “When I took over the charge as Chief Commissioner of Customs, in the month of August, it was seen that the time for discharging the cargo itself is delayed by four hours as the entry inwards is being obtained by the vessels within an average time of four hours after the vessel is berthed in the wharf. Now, entry inwards is given simultaneously as soon

as vessel reaches the wharf saving four hours time. The importers used to file Bills of Entry, i.e. the document to be filed by the importer for clearance of the goods to the Customs normally within the average time of three to four days of the entry inwards being given to the vessel i.e. three to four days are clearly lost by everybody by this late filing. By constant monitoring and persuasion the importers and the custom brokers now file 90-95 per cent of the Bills of Entry at Nhava Sheva even before the vessel arrives in the wharf and discharge the goods. This effectively saved four days and help the Customs to start assessment process even before the vessel touches the shores of Nhava Sheva. The Customs procedure generally warrants that all cargo is to be examined to satisfy whether it tallies with the declarations made in the B/E. Due to the practical reasons of huge time and manpower required for this, Customs have already evolved a system called Risk Based Assessment (RMS) which is based on various parameters that help the Customs to assess the risk for each consignment and allows certain amount of goods to be cleared from the Customs area without physical examination. This RMS facilitation was at the level of 60 per cent in August and it has been increased to 70-75 per cent currently as it just cannot be increased beyond this currently as lot of goods require complete examination by FSSAI, Plant Quarantine, Animal Quarantine, Drug Controller etc. Despite this, the Officers and CFSs were coordinated so that whenever examination is to be done, those goods get examined within a day, and the importer is in a position to pay duty and take the goods out of his charge. To mitigate the problem of delay in getting delivery orders from the shipping lines which have their office at a distance of around 60 kms on an average from the port area, the system of electronic delivery orders were implemented reducing the time and cost for the importing community. Now the majority of the time is being taken by the importer in arranging the finance to pay the duty. For eg, if you look at the dwell time of 15-03-2017, the time taken by the importer for payment of duty after assessments i.e. when the Customs inform the trade as to the amount of duty to be paid to the time taken by importer for making the duty payment is 104 hrs which is 85 per cent of the total dwell time of 133 hrs. We are trying to educate the importers to plan their finances beforehand as this also reduces the dwell time which can still be reduced further by one to two days breaking

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FOCUS the dwell time of Singapore record easily making us the best in the world. But even in the current scenario, 85 per cent of the cargo gets cleared in one day i.e. 90 per cent of the imports gets cleared in two days time and it is the remaining ten per cent which pulls down the entire average figure to four to six days because of issues of compliance and cashflow issues of the importers.”

Companies Responding to DPD Kamal Jain CEO, APM Terminals Mumbai

Direct Port Delivery ( D P D) i s o n e o f several productivityboosting initiatives that are under way at major ports as the government of India intends to improve its ranking in the World Bank’s Ease of Doing Business survey, and cut logistics costs.”

As the scheme unfolds, it is meant to receive various reactions from the industry across various sections. While asking the experts, the reactions are quite optimistic as through Direct Port Delivery initiative it reduces the most important aspect affecting the whole logistics process that is cost and dwell time.

Adding to this Pramod Sant, Head of Import & Export, Siemens opined “DPD is a welcome step for all industry. After DPD is extended to more than 700 plus companies, it is benefiting various companies. Now even medium and small companies can take benefit of direct delivery from port. Companies can take direct delivery of even single container also. Companies who can plan better can even change mode of transport from air to sea . Best part is Chief Commissioner Dr John Joseph and his team along with Neeraj Bansal from JNPT are driving DPD from front and available to guide and resolve any issue of trade.”

As JNPT has led the whole initiative along with Ministry of Shipping, they are conducting various seminars and workshops for the importers and companies to spread awareness

about the direct port delivery initiative. Kruti Jobanputra, Director of JWC Logistics Park Pvt Ltd, informed “DPD has been introduced few years ago. But in 2017, Mumbai Customs under the guidance of Chief Commissioner Dr John Joseph really brought-in a drastic change. The maximum benefit of DPD is not only to importers but also to the end user/ common man. By implementing DPD on regular importers, their cost of logistics will come down and in turn the end product cost will also reduce. Also, since the delivery is taken directly from the port, the dwell time is minimised.

Apart from India, all other countries give DPD deliveries to all their importers which leads to cost saving and also minimum dwell time.”

John Joseph from JNCH is the person who led the endeavour in the industry to make the initiative bring some substantial change in the industry. Jain from APM Terminals said, “As mentioned earlier, DPD can result in substantial savings of time and money for importers by reducing container dwell times after vessel discharge. Earlier, this facility was used by only a few groups that imported more than 300 TEUs per month. To enable greater efficiencies in the overall transportation and logistics supply chain, the Indian Central Board of Excise and Customs, merged the ‘Accredited Client Program’ with the recently introduced ‘Authorised Economic Operator’ programme.

This resulted into extension of the DPD service to small and medium-scale importers as well, which account for a significant portion of India’s world-leading 2016 GDP growth among major economies of 7.6 per cent.

Importers and Exporters’ Reaction Importers are the ones who were facing the dwell time of around nine to ten days along with huge cost attached to it. As one of the head from Imports and Exports department, Pramod Sant said, “DPD is a program of national importance which is welcomed by all stakeholders. When any new scheme is implemented there are bound to be initial problems. However, the good part is that Customs has involved all stakeholders and listened to their concerns and tried to find a way forward which will make DPD successful.

Customs along with JNPT have conducted large number of outreach programmes along with trade partners, institutions to listen to stakeholders and provide them solution. JNPT port has been designed based on the CFS model and to make a port handle direct delivery is not

14 CargoConnect - may 2017

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FOCUS

Pramod Sant Head of Import and Export, Siemens

DPD is a program of national importance which is welcomed by all stakeholders. When any new scheme is implemented, there are bound to be initial problems. However, the good part is customs has involved all stakeholders and listened to their concerns and trying to find a way forward which will make DPD successful”.

16 CargoConnect - may 2017

an easy task. Some of the CFS have successfully remodelled their business model to suit DPD. They are able to give value added solutions to importers.

Large number of importers who were initially sceptical about success, have now found that they can save `10,000 or more per shipment by using DPD facility. Increase in DPD volume which is now almost touching 30 per cent shows that DPD is successful.”

Adding to this, getting an idea also from the terminals, Jain added, “Companies eligible for the DPD program have been accredited

by Customs and have registered with the container terminals at the port. Those with significant volumes have organised their agents and transporters effectively to ensure seamless movement of their containers under the expedited procedures. Those with limited volumes have teamed up with existing CFSs who are now involved as logistics partners to the importers, helping them process their containers and store the same in non-bonded warehouses.”

Looking Forward Jawaharlal Nehru Port Trust (JNPT) which is India’s first Container Port built on the concept of operating Container Freight Stations (CFS) beyond terminal premises has extended its Direct Port Delivery (DPD) facility to all its Accredited Client Programme (ACP) clients with immediate effect, irrespective of their trade volume. Around 143 ACP clients will immediately benefit from extension of DPD facility. Presently 10 - 14 agencies which are fulfilling the criteria of importing more than 300 TEUs on an average per month are availing DPD

facility at Jawaharlal Nehru Port Container Terminal. The extension of DPD will enhance container movement at port, thereby increasing cargo volume.

Commenting on the development, Anil Diggakar, Chairman, JNPT said, “This decision is in line with directives of the Ministry of Shipping, related to policy towards Ease of Doing Business. With this, a long pending demand of the trade bodies shall be fulfilled.

This facility shall benefit importers / CHA immensely as the import-laden containers will be delivered to the consignees (in this case ACP clients) directly, thereby reducing logistics cost by one third.” Adding further he said, “Extending DPD facility will ensure cost reduction to accredited CBEC importers / CHA, benefiting from declining gestation period of clearing cargo from total 10-11 days to three days”.

As per existing norms, DPD container has to be picked up by the ACP clients within 72 hours of its landing. Otherwise, the same will be moved to JNP-CFS presently operated by Speedy Multi-Modes Ltd after 72 hours to avoid piling-up of containers, leading to multiple shifting or congestion. To facilitate the same, the port is making adequate arrangements in terms of yard and equipment for extending DPD to maximum ACP clients.

Going back in history, DPD was implemented few years back but due to eligibility criteria only few importers were able to take benefit of this scheme. From its inception in 2016, DPD was extended to large number of importers.

Extending DPD facility to large number of importer, is further in line with India’s focus on “Ease of Doing Business” and ratification of Trade Facilitation Agreement (TFA)by WTO. India has committed to expediting, movement and clearance of goods including in transit goods. DPD is major steps which will help importers to reduce time and cost. Today we compare our ports with Singapore, HongKong, Antwerp, Hamburg etc. in order to make JNPT one of best ports. Such drastic steps were required and importers are happy that Customs and JNPT has taken this step. DPD will increase predictability and after the process is stabilised, reliability of clearance will drastically increase.

Today, companies keep higher inventory due to uncertainty in clearance period. With DPD, one can plan in a much better way and reduce inventory and can implement JIT (Just In Time) system to streamline codes.

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cover story

18 CargoConnect - may 2017

cover story

Is India GST-Ready?

Decoding Industry Perceptions The Goods and Services Tax (GST), which has been hailed as historic, revolutionary and as India’s biggest tax reform, is set to be rolled out from July. While former Prime Minister and eminent economist, Dr Manmohan Singh recently stated that the new indirect tax regime could be a game changer, former Finance Minister P Chidambaram called the July 1 deadline as impractical and stated that rushing to roll out the GST could be ‘detrimental’. It may be noted that Dr Manmohan Singh had also added a word of caution about ‘difficulties in its implementation’. While India Inc. has largely welcomed the GST passage, there are mixed views from different segments. “GST is a game changer and it should be implemented at the earliest,” said N Venkataraman, Senior Advocate, Supreme Court. For the logistics industry, the implementation of the GST will open new forays for the organised sector as well as help to align the unorganised players. The unification of various taxes involved in the transportation of goods and services will result in increased efficiency of business as a whole and will facilitate borderless movement of goods.

Deepashree Banerjee, with inputs from the experts, dissects the opportunities coming up with GST for the warehousing and supply chain fraternity in India.

may 2017 - CargoConnect 19

cover story

inside Industry forecast for the post-GST scenario Companies to benefit post GST Logistics Sector: The real beneficiary Changes that GST will usher in

W

hile India is still i n the process of finalising the blueprint of its most important tax reform, more than 160 nations have already adopted a unified indirect tax structure. In Asia, countries such as Indonesia, Thailand, Singapore and the Philippines adopted a Goods and Services Tax (GST) during the 1980s and 1990s, creating an effective tax system with a comparatively lower cost of administration and collection.

Demonetisation was the topic of discussion across the length and breadth of India. While many supported this bold move, there were others who criticised it. Many people felt it was a landmark decision that would have enormous benefits in the long run, while some argued it was a decision that only caused inconvenience to the people, especially the poor.

Due to the multiple tax rates at the state and city level, goods often spend a substantial amount of time in transit. This increases the

various states, thereby enabling them to make decisions based on supply chain efficiencies.

Anshuman Magazine, Chairman, India and South East Asia, CBRE said, “This is a significant moment in our country’s economic history. With the passage of India’s biggest tax reform in decades, we will become a unified market, with one tax for all goods and services.

Once implemented, GST will significantly ease the ambiguity around our taxation system, promote ease of doing business, encourage more Foreign Direct Investment and stimulate overall growth of the economy.”

To gauge the impact that GST will have on India’s warehousing industry, CBRE conducted a survey among the leading warehousing space occupiers in the country. 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 corporate, while the rest were headquartered abroad.

The survey threw up some interesting

overall cost of transport and makes the system inefficient. The removal of various federal tax barriers and creation of a common market will improve supply chain efficiency and attract more FDI. Stipulations in the proposed law are expected to result in better tax conformity, while removing the cascading effects of the current tax regime. For logistics companies, once the GST is implemented, documentation wil l reduce, resulting in an improved turnaround time and client outreach. 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

results. More than 63 per cent of the respondents felt that the implementation of the GST would be positive for their overall business operations in India. The hope is that operating costs will decrease in the post-GST era which will enable them to consolidate their smaller facilities into larger ones and expand their footprint around major consumption centres.

Revenues from the online model for logistics companies The ride gets better for logistics Warehousing gains, valuation hurdles Containerization – in full throttle Transit time reduction Tax structure implications Conclusion 20 CargoConnect - may 2017

Industry Forecast for the PostGST Scenario Ajit Venkataraman, MD, APM Terminals India Pvt Ltd says they are hopeful that the end-consumer and the logistics industry as a whole, inclusive of transport, warehousing and

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12) ISO&22000:2005 HACCP Carting stuffing dine in coveredCertified area.

13) Reafer Vans & Support SecondaryForwarders.

Distribution Ideal location for Exporters/CHA's/Freight Prompt carting of cargo.

Wi-Fi enabled CFS.

Entrance

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Area

15-23, National Highway 4B, Panvel-JNPT Highway Village Padeghar, Panvel-410206, Maharashtra +91 22 66280700-98 +91 22 66280781 jwrcfs@jwllogic.com raaj@jwllogic.com hema@jwllogic.com mgrops@jwllogic.com

Covered Warehousing Facility

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The location and scale of operations will be very important.

New efficiencies likely to be brought in by GST, for example, would help generate higher truck utilisation and demand for high tonnage trucks, as cargo flows increase.

Ajit Venkataraman, MD, APM Terminals India Pvt Ltd

KEY CONSTITUENTS

Transportation holds 60% share of the logistics industry, and the rest is contributed by warehousing, freight forwarding, value added logistics.

Freight forwading Warehousing

10

25

5

Value added logistic

Road, rail, water and air

60

Air

1 Road

35

Water

5

Segmentation based on revenue (in%)

Rail

19

Source: Care Ratings

freight forwarding, will be able to benefit from significant positive effects of the tax change. “The location and scale of operations will be very important. New efficiencies likely to be brought in by GST, for example, would help generate higher truck utilisation and demand for high tonnage trucks, as cargo flows increase. This may lead to consolidation of smaller warehouses replaced by facilities with higher capacity and increased automation. All in all, we expect that GST will make the whole supply chain more robust, efficient

22 CargoConnect - may 2017

and cost effective,” he said.

Dr R Ar unacha lam, Chief Executive Officer, ProConnect Supply Chain Solutions Limited believes that all these days logistics decisions was driven more by stat utor y requ i re me nts t h a n logistical requirements. With GST, the need for warehouse consolidation will take shape and will be driven primarily by factors such as market reach, cost of operation, geographical reach etc. to name a few and centralised warehousing will be the key towards such decisions.

“ProConnect conducts studies and has the best of multi client facilities, and will add value to our customer requirements and we see the days to come to be bright and clear,” he says.

With GST, India will be a one single market encouraging to do business seamlessly and the best part will be the system allowing businesses to avail Service Tax credit irrespective of the type of businesses making it easier and cost effective to do business. Service Tax credit will be available to all types of industries unlike the current Service Tax regime encouraging companies to outsource activities that they previously did on their own as Service Tax adds up to cost currently. This new model will enable us to pass on the Service Tax credit to our customers making our services much more economical and opening newer avenues for business.

According to K Chandrasekar, CEO, Jayem Warehousing Pvt

Ltd, GST holds exciting time for all the stakeholders including logistics operators. India becomes one big market and there will be fewer and larger warehouses. LSPs are currently maintaining multiple warehouses across states to avoid CST (Central Sales Tax) levy and state entry taxes. Most of these warehouses are operating below their capacity and thus adding to their operational inefficiencies.

However, once GST sees the light of the day, most of the current challenges of this industry will be a story of the past as India will become one single market wherein goods can move freely inter-state without any levy. “This will further bring warehouse consolidation across the country and we can witness mega logistic hubs and high investments in infrastructure wherein 100 per cent FDI is allowed.

Cash flow of the logistics sector will increase,” says Chandrasekar.

Saloni Roy, Senior Director, Deloitte Ha sk i ns Sel l s L L P thinks that the current indirect ta x str uct ure in Ind ia is not only complex but riddled with complexities and inefficiencies.

One of the main drawbacks of the current structure is the cascading effect of taxes.

Further, the Indian logistics industry is largely fragmented and still in the ‘developing’ phase. “It is essentially a high cost industry due to the many challenges and issues such as poor physica l

cover story

Once implemented, GST will significantly ease the ambiguity around our taxation system, promote ease of doing business, encourage more Foreign Direct Investment and stimulate overall growth of the economy.

Anshuman Magazine, Chairman, India and South East Asia, CBRE

infrastructure, a complex multi-layered tax structure, diverse trade barriers in the form of check-post clearances leading to delays and inefficiencies, cumbersome and lengthy customs clearance processes and the restrictions relating to availment of input tax credits. However, to make GST a real success, the government must provide for simpler compliance procedures with regard to registrations, filing of returns. While it is expected that legislations would be uniform pan India, however, an assessee providing services pan India would be required to take separate registrations in each state, file multiple returns every month in respect of each registration, match returns for availability of input tax credits etc.,” she says.

This would entail significant increase in compliance at a state-wise level with maintenance of separate accounts and records for every business premise, making the promise of GST paving the way for ease in doing business largely futile. Further, at present, there is no clarity as to exemptions and abatements and valuation issues for the levy of GST. RS Subramanian, Senior Vice President and Country Manager, DHL Express India

24 CargoConnect - may 2017

With GST, India will be a one single market encouraging to do business seamlessly and the best part will be the system allowing businesses to avail Service Tax credit. views GST as a tool that will enable the government to relook at their supply chain system and maximize efficiencies.

As a trade facilitator, DHL Express is putting its best efforts to stay ahead and be GST ready. “We are taking proactive steps to ensure that we are able to fully comply with the new regulations while maintaining efficiency, speed and convenience to our

customers in the post-GST scenario. We have been discussing the way forward for almost a year and have actually begun working towards being GST ready over the past 6 months. Some of our global systems and processes need to be reworked in order to be GST compliant. Our IT teams are working on this to help us make the transition,” says Subramanian.

Huned Gandhi, Managing Director, Air and Sea Logistics, Dachser India Pvt Ltd too believes that the Goods and Services Tax is certainly a landmark reform. “We can expect reduced transportation cycle times, enhanced supply chain decisions and consolidation of warehouses that will help the logistics industry to reach its potential in terms of service, growth and cost efficiencies,” says Gandhi. “Market distribution will be much faster and easier due to simplified taxation and phasing out of border checks which currently lead to loss of operational efficiency in the transport chain,” he hopes.

Companies to Benefit Post-GST Chandrasekar adds that GST will be levied on transportation of goods and full credit will be available on interstate transactions.

In addition, we will be able to avail 100 per cent credit on all our Capital/Infra spends which is not available currently.

Roy thinks at the outset, there is no concept of state service tax. Service tax is a central levy applicable at a uniform rate pan India. GST, on the other hand, shall be levied by both Centre and States.

However, the goods and services are likely to be taxed at a uniform rate all across India, breaking state barriers and borders. “Warehousing decisions will henceforth be driven by considerations

cover story Once GST sees the light of the day, most of the current challenges of this industry will be a story of the past as India will become one single market wherein goods can move freely interstate without any levy.

K Chandrasekar, CEO, Jayem Warehousing Pvt Ltd

Supply chain network

Channel margins and service contracts need to be relooked at due to reduced costs for channel partners

End to end network need to be redesigned based on pure supply chain principles

Inventory levels need to be Inventory management optimized to deduce cash lock

Channel management

up caused by higher tax rate

Key impact areas S&OP process need to be synced to the new network design and inventory plan

Sales and Operations Planning (S&OP)

Sourcing strategies and Strategic sourcing/ contracts need to be relooked for Procurement cost optimization opportunities Logistics and warehousing In-house Vs Outsourced service model need

to be re-evaluated for cost advantages 3PL will become competitive against LSPs

Source: KPMG

like location of major customer / market and optimisation of goods movement.

Compliances are expected to significantly increase for service providers, including logistics companies. Also, there could be issues pertaining to valuation of services provided by logistic companies that will need redressal,� she opines.

According to Vaibhav Rathi, Managing Director, Satvik Logistics Pvt Ltd, business environment in the logistics sector will see a change five years down the line. There will be a massive requirement of economies of scale in every section of the industry. Be it warehousing, transport or 3PL, in the short

26 CargoConnect - may 2017

term there will be minor consolidations of warehousing.

The logistics costs caused by the taxation structure will come down marginally once GST comes into force. Today, logistics companies are not able to use the payment made towards the tax department as input credit many a times, which under GST regime will be possible. “While we still await the GST rates for logistics services, a unified and efficient tax system is expected to bring greater cost effectiveness. The GST will also avoid multiple taxes being levied on the logistics services which lead to further cost reduction

for the end users. Decreasing the lay times of trucks at state check points will also provide cost savings and increase efficiency for our customers,� opines Gandhi.

According to Gandhi, the GST will entail a new set of compliance requirements for which all companies will have to adapt their present ERP systems. There will be a one time cost for the modifications as well as investments in training but this is supposed to be eased out in the medium term and provide greater benefits with a more efficient taxation system. Overall, switching from the state service tax to the GST will reduce the complexities.

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Room no. C.E. – 05, First Floor, Import 2 Building, International Cargo Terminal, IGI Airport, New Delhi – 110037 Phone: +91 11 2560 1310 | Fax : +91 11 2560 1320

cover story

With GST, the need for warehouse consolidation will take shape and will be driven primarily by factors such as market reach, cost of operation, geographical reach to name a few and centralised warehousing will be the key towards such decisions.

Dr R Arunachalam, CEO, ProConnect Supply Chain Solutions Limited

Logistics Sector: The Real Beneficiary Chandrasekar believes that all logistics players, irrespective of their size stand to gain. “GST will bring in scale to logistics companies as there will be lots of savings and avoidance of dwell time at check-posts etc. This will lead to greater economies of scales for transport operators and lead to more companies outsourcing their logistics operations. GST will dissolve the existing indirect tax structure, i.e., multiple

taxes, split between Central and State Governments leading to reduction of about 20 per cent of current logistics cost,” he says.

Though, its complete impact can only be understood after the announcement of the final GST Law and Rules.

28 CargoConnect - may 2017

The benefits are long sighted and the shift may not happen immediately upon GST implementation. It will take time for the smaller SME kind of players to make the switch to the organised sector so as to have the benefits that this part of the industry offers in terms of better services and technology on demand.

Roy agrees that all logistics service providers are expected to benefit from the introduction of GST. “However, bigger players are expected to benefit more due to the opportunity for consolidation of multiple warehouses located pan India into a few large, centralised warehouses, thus leading to the availability of economies of scale,” she said.

Fur t her, successf u l GST implementation is technology d r iven wh ich cou ld be a challenge for the smaller players. Also, the customer base would prefer to deal with a company that is registered under the GST regime, as against an unregistered service provider.

P S S Prasad, President, Apollo LogiSolutions opines that the present Government is putting a lot of emphasis on the development of infrastructure which eventually will help the performance of the logistics sector to a larger extent. “The introduction of GST is expected to act as the secondary factor which will build upon the primary foundation of a good infrastructure and the faster adoption of technology in the sector. GST will ensure that the nascent 3PL further embeds itself in the logistics space.

The implementation of GST would increase

productivity and raise efficiency levels in the logistics sector and the economy as a whole.

According to various industry estimates, freight times are expected to reduce by 30-40 per cent and logistics costs by 2030 per cent. GST will impose a single tax on manufacture, sale and consumption of goods and services throughout India. As a result, we can expect logistic sector to reap larger benefits from GST implementation,” he further adds.

With the creation of a unified market,

The GST will entail a new set of compliance requirements for which all companies will have to adapt their present ERP systems. businesses will now be able to readjust their logistics network to achieve efficiencies instead of focusing on minimising taxes, be l ieves Subra ma n ia n. Decisions i n restructuring will now be made to reduce fulfillment times, lower costs etc.

Subramanian says, “Operational efficiency is expected, but would depend on states agreeing to do away with check-posts and through harmonisation of documentation required on road for transport of goods.”

Logistics costs coming down for customers

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Our special closed container trucks to import/export goods at major ports.

A fleet of 240 trucks, with a network of 1250 trucks outsourced from various other transport concern across the country.

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M 23, 3rd Floor, Menzies Avia�on Bobba Cargo Terminal, Bangalore Interna�onal Airport Limited, Devanahlly, Bangalore-560 300.

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We have been discussing the way forward for almost a year and have actually begun working towards being GST ready over the past 6 months. Some of our global systems and processes need to be reworked in order to be GST compliant.

RS Subramanian, Senior Vice President and Country Manager, DHL Express India

would be a function of implementation of genuinely seamless border crossings which would lead to the development of hub and spoke models and create economies of scale in transportation and warehousing. This reduction in costs would be gradual, as companies observe actual operational difference due to GST on the ground to redesign their operations.

“A 20-30 per cent increase in speed can be expected if hindrances are eliminated; however, the changes and restructuring would be gradual, as companies observe actual operational impact due to GST. Large and small players both will have a chance to grow,” he further says.

Nandan Yalgi, Managing Director, Boxco Logistics India Pvt Ltd, J M Baxi Group says the logistics companies in India has evolved over the years from being a 1PL first-party logistics company to now 4PL covering

all services from transportation, warehousing to consulting, optimising of costs with seamless state-of- the art supply chain network. “Post GST, it will facilitate easier interstate movement by road and would encourage more digital processes. Hub and Spoke Model will come into play across segments like warehousing, CFSs, ICDs, cold-chains etc. It will bring in more efficient operations with less wastage, fast truck turnaround times and more savings. Overall, it will lead to greater economies of scale for transport operators and will see forward integration in terms of outsourcing services to 3PL and 4PL Operators. It will be a game changer and would accelerate growth in the transportation industry,” Yalgi adds.

Changes that GST will Usher In

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As a first step, we have sensitised entire business eco-system, right from employees through vendors and customers, shares Chandrasekar. “While doing the Registration in all the states, we are simultaneously working on making our IT system GST ready. In order to ensure smooth transition to GST, we are working on identifying alternate business strategies including revisiting pricing strategies. We will also start exploring different supply chain models with our clients once the draft GST Law and Rules are announced,” he added.

As far as the changes GST will usher in are concerned, he proudly says that his company is fully prepared for the post GST era. “We have a strategic warehouse positioning plan post GST and have started work towards its implementation,” he shared.

Roy thinks that while most organised companies have been in the process of preparing themselves for the transition, there is still considerable ambiguity surrounding the new regime. “Many smaller businesses have still not been enrolled under GST due to lack of clarity regarding the registration procedures. Further, the major challenge is assessment of the impact on the supply chain, pricing policies, accounting and IT systems and making necessary adjustments in order to be GST compliant. There is apprehension regarding the additional compliance requirements under the new regime. While the country may not be fully prepared for the introduction of GST, it is certainly being seen as a welcome change over the current indirect tax structure,” she explains. This is mainly due to the advantages that GST proposes to offer over the current system, mainly by way of replacement of a complex, multi layered

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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

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It is essentially a high cost industry due to the many challenges and issues such as poor physical infrastructure, a complex multilayered tax structure, diverse trade barriers, cumbersome and lengthy customs clearance processes and the restrictions relating to availment of input tax credits.

Saloni Roy, Senior Director, Deloitte Haskins Sells LLP

tax structure with a single, unified system backed by a fully automated, technology driven and simplified model.

Rathi believes that GST will be a journey and the country is ready for it. “The state tax department will have a tussle with the centre with respect to the tax collection. And the entrepreneur will get be in the grind,” informs Rathi.

with the new regulations while maintaining efficiency, speed and convenience to their customers in the post-GST scenario.

The GST is now set to become a reality.

“While the government has successfully resolved the political deadlock, India Inc. faces several challenges like adapting the new tax structures in their ERP systems. All this has to be done in a short time before it can get

Prasad echoes this opinion and says, “Although the implementation process of GST will be time consuming as there will be new rules, policies and various ministries have to work together at the same point but we are prepared to deal with the situation.”

As a trade facilitator, DHL Express is putting its best efforts to stay ahead and be GST ready. They are taking proactive steps to ensure that they are able to fully comply

ready for implementing the new tax. The GST has the potential to accelerate growth in the logistics industry,” Gandhi explains.

32 CargoConnect - may 2017

Revenues from the Online Model for Logistics Companies RS Subramanian feels that digital is the way to go and with the increase in online services offered by logistics companies, this sector will definitely see growth in the coming

years. “With DHL Express’ On Demand Delivery offering, we’ve enhanced the digital and last-mile capabilities of the DHL Express network to meet consumers’ wants,” he says.

This will provide cross-border e-tailers, who may otherwise lack the local infrastructure and visibility, with new opportunities to create a positive online shopping experience for their customers.

R Arunachalam expresses that with GST around the corner much business would be interested in concentrating on their core activities and willing to outsource logistics related activities including transportation, which in all probability will be a big opportunity for their company and they look forward to it. They also have a strong foray into FMCG sector through their subsidiary Rajprotim Supply Chain Solutions Ltd and their Mission Critical division offering spare parts management solutions are other key growth areas that will take them to 5070 per cent CAGR in the next 3-4 years if not more.

Approximately 45 per cent respondents of a particular survey 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.

Among the respondents, location currently is the most important factor for

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We can expect reduced transportation cycle times, enhanced supply chain decisions and consolidation of warehouses that will help the logistics industry to reach its potential in terms of service, growth and cost efficiencies.

Huned Gandhi, Managing Director, Air and Sea Logistics, Dachser India Pvt Ltd

consideration when leasing warehousing space. This is followed by the real estate cost of leasing space in a particular state or city. While currently location decisions may also be influenced by tax-incidence; after the implementation of the GST, most warehousing occupiers are expected to take decisions purely on the basis of reach to market, quality and size requirements.

According to the survey, the most likely strategy for warehousing portfolios in the post GST era is that of consolidation followed by expansion. Close to 28 per cent of respondents said they would consolidate, while 23 per cent stated that they would further expand their operations across the country.

Close to 52 per cent of survey respondents currently have multiple warehousing facilities in one state or city. When questioned, 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.

While understanding respondents’ p r e fe r e n c e a c r o s s v a r io u s s t a t e s , approximately 38 per cent of respondents said they will continue to expand their footprint across states such as Tamil Nadu, Karnataka, Haryana and Maharashtra.

Approximately 27 per cent will consolidate their operations, while 26 per cent are likely to retain their existing footprint; however, approximately 8 per cent would downsize existing footprint in states such as West

Bengal, Uttar Pradesh and Andhra Pradesh.

Once the GST comes into play, the focus of players is likely to be on supply chain efficiencies which will result in consolidation of warehouses. This will result in increased demand for larger, better quality warehouses thereby providing an ideal platform for the emergence of large scale nationwide players.

This growth in demand will spur supply of quality warehousing, which is likely to lead to emergence of new warehousing hubs as well as expansion of the existing hubs.

The Chief Operating Officer of Allcargo Logistics Ltd, Prakash Tulsiani is bullish on the implementation of the Goods and Services Tax (GST) regime. He hopes the tax will bring in a new paradigm for the logistics company to operate.

The Ride Get s Better for Logistics Finally, after a debate that went on for over

The implementation of GST would increase productivity and raise efficiency levels in the logistics sector and the economy as a whole.

34 CargoConnect - may 2017

“Continually Innovative”

cover story

Business environment in the logistics sector will see a change five years down the line. There will be a massive requirement of economies of scale in every section of the industry. Be it warehousing, transport or 3PL, in the short term there will be minor consolidations of warehousing.

Vaibhav Rathi, Managing Director, Satvik Logistics Pvt Ltd

half a decade, the Goods and Services Tax (GST) Bill has been passed. This indirect tax Bill, which is expected to result in a uniform tax across goods and services, except petroleum, alcohol, tobacco and selected products, will change the way industries, logistics and supply chains operate.

The Central Government’s ‘Make in India’ campaign along with investments in transportation networks (road, rail, coastal and inland waterways) is expected to give further impetus to GST. In the long run, the creation of a multi-modal transport regulatory authority by the Centre should complement GST. Besides optimising the production and distribution of goods and services, the GST Bill will also help speed up cargo movement.

A 2015 joint report by the Transport Corporation of India and the Indian Institute of Management – Calcutta (TCI-IIM-C) shows that the stoppage expense (average expense incurred due to the stops along the way such as check-posts and customs) per tonne-km has increased from INR 0.16 per tonne-km to INR 0.28, a 75 per cent increase between 2011-12 and 2014-15.

The levy of duties by State authorities at check points is one of the main reasons for this rise in cost. This will come down once the Bill comes into force and should further increase the speed of cargo movement.

36 CargoConnect - may 2017

Over the past one year, the movement in stock prices of logistics players has been mixed. Transport Corporation of India and Allcargo Logistics has gone up by 9 and 13 per cent, respectively, while the prices of GATI and VRL Logistics were beaten down by 19 and 16 per cent, respectively.

Similarly, the price to earnings ratio (trailing 12-month earnings) of major stocks such as Allcargo Logistics (16 times), GATI

Once the GST comes into play, the focus of players is likely to be on supply chain efficiencies which will result in consolidation of warehouses.

(31 times), VRL Logistics (28 times) and Transport Corporation of India (16 times) is lower than their three-year average. This indicates that the positive impact of GST may not have been completely priced in yet.

Warehousing Gains, Valuation Hurdles Currently, goods incur 2 per cent central sales tax (CST) when they are manufactured in one state and sold in another. To avoid this, industries transfer the manufactured goods to warehouses in the state from where the sale of goods takes place. This helps them

avoid CST while simultaneously availing the input credit that can be obtained through value-added tax. But this makes them incur extra storage costs.

With a fixed GST rate that is expected to vary anywhere between 18 and 22 per cent, coupled with virtual melting of state boundaries, the numerous smaller warehouses in many locations are expected to be consolidated into bigger ones.

Manufacturing companies that own many small warehouses and third-party logistics providers such as Transport Corporation of India, VRL Logistics, and GATI, among others, are likely to move towards this huband-spoke service delivery model wherein distribution takes place from a large centralised warehouse to surrounding States.

The economies of scale achieved through this consolidation will reduce variable costs, enable automation and improve operational efficiency. Connectivity of these warehouses to consumption centres will improve with the development of multi-modal transportation systems.

The Transport Corporation of India is already in the process of building GSTready warehouses across four locations (Nagpur – 1.65 lakh sq ft, Hyderabad – one lakh sq ft, Chennai – 45,000 sq ft and NCR – 2.5 lakh sq ft) in India.

GST should also favour VRL Logistics, a major player in parcel service and warehousing solutions, which intends to scale up operations in its existing transshipment hubs and increase focus on north, central and eastern regions. Similarly, GATI, a major logistics player, with more than five million sq ft warehouse capacity is also likely to improve its efficiency. The company is gaining strong traction with its parcel and

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Post GST, it will facilitate easier interstate movement by road and would encourage more digital processes. Hub and Spoke Model will come into play across segments like warehousing, CFSs, ICDs, and cold-chains etc.

Nandan Yalgi, Managing Director, Boxco Logistics India Pvt Ltd, J M Baxi Group

e-commerce business. The recent quarter ending June 2017 saw GATI’s parcel and e-commerce revenue grow 49 per cent and 28 per cent respectively.

However, valuing goods and services for the calculation of GST can be a challenge.

A case in point is the difficulty in arriving at the gasoline cost, which forms a major fraction of total cost incurred by freight operators but is exempt from GST.

and the share of trade through containerised transportation also set to increase, GST will add more impetus. With larger storage hubs, truck operators will transport higher volumes (full truck loads) thus optimising operations. Organised big players should be able to take advantage of these changes.

AllCargo Logistics, a diversified player

Containerisation – In Full Throttle Major domestic freight players like AllCargo Logistics, Navkar Corporation and Container Corporation of India are expected to have a positive impact from GST implementation.

Over the last three years, twenty-foot equivalent container volumes for AllCargo Logistics and Navkar Corporation grew by 17 and 12 per cent respectively. But, in the case of Container Corporation of India (CONCOR), a Navratna company, which has more than 60 CFS/ICDs accounting for more than 70 per cent of Indian Railways’ container traffic, port congestion and haulage charges were a dampener for container volume growth. These companies, operating their own container freight stations (CFS) and inland container depots (ICD), offer a wide range of services, including customs clearance and handling and storage of containers (both export and import). CFS is located near ports while ICDs are located in the hinterlands. ICDs help in decongesting traffic away from the ports.

Total container volume throughput in India during 2015-16 stands at 11.6 million twenty-foot equivalent units (TEU), an 8 per cent increase compared to the year earlier. With containerised transportation expected to double over the next five years

38 CargoConnect - may 2017

containerised logistics, has warehouses spread over an area of five lakh sq ft. Its strong rail connectivity to ICDs, logistics parks and proximity to industrial clusters places it in an advantageous position.

CONCOR should strengthen its industry leadership position over the next three years.

Over the next couple of years, CONCOR plans to set up around 20 multi-modal logistics parks across India and operate private freight terminals.

Transit Time Reduction

The economies of scale achieved through consolidation will reduce variable costs, enable automation and improve operational efficiency. offering storage, and custom clearance services for cargo at major Indian ports, is one amongst the top five CFS operators at JNPT, Chennai and Mundra ports. Its presence in coastal shipping and a land bank of more than 200 acres should also aid its expansion plans.

Navk a r Cor porat ion , a le ad e r i n

Trucks in India currently travel an average of about 280 kms per day in comparison to those in the US which travel 800 kms per day.

The report on revenue neutral rate headed

by India’s Chief Economic Advisor Arvind Subramanian indicates that implementation of GST can add an additional 164 km truck distance per day, which is close to 60 per cent increase from the present day scenario.

The argument is reinforced by the TCI-IIM-C report which shows that though the average fuel mileage has improved over the last few years, the nation incurs a cost of close to $6.6 billion annually due to transportation delays.

After GST implementation, reduced border checks and paper work is expected to cut transportation cost by 20-30 per cent. The increased savings should aid in improvement in operating margins for logistics players.

We can expect transportation to take place at full truck load with GST rollout. This favourable factor, along with the low net debt to equity ratio of around 0.5, should assist its plans for heavy investment in fixed assets creation across 28 States and four Union Territories. The reduction in transport time will also help Indian

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GST will ensure that the nascent 3PL further embeds itself in the logistics space. The implementation of GST would increase productivity and raise efficiency levels in the logistics sector and the economy as a whole.

P S S Prasad, President, Apollo LogiSolutions

container companies. Further, the Centre’s heavy investments in dedicated freight corridors will also help in faster movement of goods transporters.

The increased speed of transportation will be a boon to the cold supply chain industry.

Snowman Logistics, the largest company in this segment with a current market cap of more than `1,000 crore, stands to gain. The company had a year-on-year revenue growth of around 18 per cent in 2015-16. Besides, CONCOR and Gati Kausar, a division of GATI operating in the cold chain industry segment, have plans to increase investment in this space.

Tax Structure Implications Currently, majority of business-to-business (B2B) suppliers make use of third-party logistics providers. Post-GST, the expected increase in service tax to 18 per cent from the current 14.5 per cent, is likely to reshape the procurement practices between suppliers, third-party logistics players and downstream manufacturers.

In the B2B segment, the downstream manufacturer could expect the supplier to bear some of this cost escalation. Some of the larger manufacturers could consider

40 CargoConnect - may 2017

Implementation of GST can add an additional 164 kms truck distance per day, which is close to 60 per cent increase from the present day scenario. investing in a captive transportation fleet.

This will decrease the cost incurred in paying the intermediate third-party logistics player.

The revenue and margins for companies such as TCI, which operates in the B2B space, may hence come under pressure. But businesses may still depend on third-party logistics providers for the supply of essential spare parts that are needed at short notice. In the case of the business-to-consumer (B2C) segment, demand fluctuations and dispersed customer base will dissuade manufacturers

from incurring high fixed investments.

Here, we can expect third-party players to continue offering their services.

Conclusion As far as the expert opinions are concerned, a streamlined logistics processes and better bottom lines will lead to consolidation of the sector. Further, newer players will enter the arena and investors will find it lucrative to invest in the sector knowing that returns are guaranteed in a much more predictable business dynamics. Also, existing players are fully expected to scale up the business environment that will follow GST implementation in the logistics sector in India.

Adapting to GST, which means ensuring compliance and an automatic share of post-GST benefits, will itself require extensive changes. However, winning companies should look beyond merely adapting. According to experts, programme management, efficient strategic planning, operations, IT systems, and the organisation (which will need to be re-aligned across three key aspects—structure, people and decisions) are the five focus areas that the companies should act proactively.

Finally, making swift, effective decisions related to logistics optimisation will be critical to coming out on top. This may require a complete revamp of the existing supply chain-related decision matrix. The exact shape of GST remains unclear. But the scale and crucial nature of the actions required to be prepared mean that companies cannot afford to wait on the sidelines.

So yes, Corporate India is clearly waiting for GST implementation starting from July 1st. Let’s wait and watch as we are a few months away from D-Day!

SPECIAL feature

Logistics taking exhibitions to a whole new level Trade fairs and exhibitions are a marketing tool that plays a pivotal role in the image development of a brand. In the growing times, our country has been welcoming various foreign investors and companies which enter the economy via exhibitions and fairs. Thus, digging deep into exhibition logistics, Sheena Sachdeva brings forth an exclusive research piece and trends happening in this niche industry.

42 CargoConnect - may 2017

SPECIAL feature

a

ny new brand entering Indian market crosses through the big trade fairs and exhibitions to present their world class products and brands. Hence, the team working for the event at the backend might not appear in front but plays a major role in the whole representation of the event.

At the eleventh hour, when all the people at exhibitions need a proper freight forwarder or service provider to carry the goods to exhibition place, then LSPs specialised in exhibition logistics provide the best hand to make the show a success.

As exhibition itself is a huge business that provides a place to exhibit their work of art to the world, an exhibition logistics provider is the key company that provides the best

punctuality is even more essential than for the usual freight forwarding. Like other companies that work on trade fairs, exhibition freight forwarders must be able to cope with high pressure due to deadlines. In addition to perfectly mastering the trade and the processing of the daily business, fantasy and improvisation skills are necessary too.

Europe-wide and worldwide logistics requires creative entrepreneurship that can adjust quickly to new places and environments. It’s an exhibition freight forwarder’s job to handle national and international truck, air and sea routes or import and customs regulations, too. They often expand their business with additional branches and offices at exposed fair locations. Adding to this Shirish Kulkarni, MD, Orient Marine Line Pvt Ltd said, “We draw schedules based on various factors

together buyers and sellers from around the world, through a portfolio of exhibitions, content led conferences and seminars. UBM India hosts over 25 large scale exhibitions and 40 conferences across the country every year; thereby enabling trade across multiple industry verticals.”

Planning and Management Trade fair service providers are essential for a smooth and successful fair presentation.

Whether they supply work platforms for the assembly and disassembly of exhibition elements, caterers and logistics specialists, booth constructors or even tent builders - trade show suppliers make a significant contribution to the exhibition success. Trade fairs are an essential marketing tool. More than ever, a trade show has a multi-functional character today and is far more than just a simple exhibition of goods and services. Trade fairs are a meeting place for the exchange of

“The Indian economy, in spite of being the fourth largest in the world, does not have the necessary support infrastructure for large exhibitions with very few large venues of international standards.”

possible machinery and network that makes it feasible to get it done within time-sensitive phase. Adding to this, it holds true with not just exhibitions but every trade now. The experience of the product, of getting to the product/service and eventually the aftertaste all from the experience which is not clearly going to be augmented by the digital experience as well. As we embrace technology, in all likelihood, managing the experience component is indeed going to cause the next wave of evolution in the business.

For successful trade fair logistics,

44 CargoConnect - may 2017

and activities to ensure all activities being performed at stipulated time frame. A team is formed with a leader to monitor activities and ensure time bound results. We have to begin our preparations at least 12 weeks prior to event date.”

Further, UBM India, one of the leading exhibition organizers, takes care of the details to the exhibitors needs provide the best shows across the country. Yogesh Mudras, MD, UBM India opined, “UBM India is a leading exhibition organizer that, provides the industry with platforms that bring

experiences and support a company’s image.

As a place for networking and presenting the brand to the world, a fair or an exhibition plays a pivotal role.

Shirish from UBM added, “A significant amount of pre-event planning, teamwork and execution goes behind each of them for more than a year before, which includes exhibition venue booking, floor booking and onboarding the best manufacturers, wholesalers, distributors & retailers in the sector on a global and local level.

The exhibition has to comprise proper accessibility, attractive get-up and immaculate facilities for participants for them to effectively showcase their wares.

A significant part of the forum is proper

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SPECIAL feature Challenges and Hurdles “We make sure that meticulously advanced planning is done. Hereafter, we bang on the top agencies with top airlines which make sure the cargo is sent and received within the deadline with 100 per cent dependability”.

Ravindra Sethi, Founder and Director, RE Rogers India Pvt Ltd positioning, creating a buzz and branding of the event, to attract multitudes of buyers and professionals from the sector.

As the exhibitions are as much about information sharing, as they are about the actual business, a lot of effort goes into the planning of the agenda and congregating relevant associations, governmental agencies, thought leaders, dignitaries and industry leaders to the event. With so many professionals gathered under one roof, the days of the expo are especially energetic and fast paced and needs to progress as a well-oiled machinery.”

As each fair or an expo has its own specialty or forte, minute details have to be taken care by the organisers. So, for an Auto Expo, the automobiles from all over the world should present their models at the expo.RE Rogers, one of the leading player in the industry provides the best possible facility to the organisers all across the globe.

Ravindra Sethi, Founder and Director, RE Rogers India Pvt Ltd informs, “To cope up to the needs of the exhibitors and organizers, management is done well in advance as if the show is tomorrow. We make sure that we get all the required things on board well before the deadline. Whether it is by sea or by air, we make sure that we get the goods before time.

Sometimes, we even send the freight through very unusual routes. Basically, we make sure that meticulously advanced planning is done.

Hereafter, we bang on the top agencies with top airlines which make sure the cargo is sent and received within the deadline with 100 per cent dependability. Unless, there is a natural cause for example there is a storm in New York or some natural calamity in the shipping lines.

Also, at the end of the day it is proportional to price. These days, clients are more and more price conscious. Few clients also specify the airlines as they work with them on regular basis. But in this case also we make sure the work is done within the deadline along with

46 CargoConnect - may 2017

proper services”.

The transportation of the goods from different cities and countries that too through different modes of transport makes it an actual tough job to handle.The moment several vendors get involved in an unorganised, nonregulated segment like packing and moving, chaos is bound to happen. Hence, owning all resources, having own staff at seaports and airports, own fleet of vehicles, self-owned warehousing facilities and self owned custom house licence is what gives a company complete control over the service.

As each exhibition and its own diverse requirements, challenges are meant to be faced by organisers. Shirish said, “Each exhibition throws different challenge.

Different exhibitions are on different subject and we have to understand challenges of every subject separately.

Our services are designed to meet the challenges such as heavy machinery movement, sensitive equipment movement and delicate exhibits movement. Services for these different types of subjects are to be designed separately. Preparations are to be made accordingly. Also based on requirements of individual exhibitor we have to design service pattern for each exhibitor separately.

There are challenges in documentation for different locations. Continuous contact with exhibitors for this reason is very important.”

UBM India handles several verticals, including signature ones like pharma, nuclear energy, travel and tourism, security

“Trade fair service providers are essential for a smooth and successful fair presentation. Whether they supply work platforms for the assembly and disassembly of exhibition elements, caterers and logistics specialists, booth constructors or even tent builders - trade show suppliers make a significant contribution to the exhibition success”.

Logistics for any exhibition involves movement of exhibits from one point to exhibition stand of the exhibitor. This one point can be point of origin of the goods, point of arrival in India for International exhibitors, point of arrival at exhibition site.

According to requirements of each exhibitor who defines this point services are outlined and provided. It involves various agencies like Customs, shipping lines, airlines, transporter etc. Proper planning and coordination with all these agencies is very crucial for the end result.

and surveillance, and gems and jewellery.

While the requirements and verticals are different, the objective is the same - to provide a professional eco-system to exhibitors and visitors to connect, networking, share knowledge and associate with business experts and key delegates in a bid to enter into potential, strategic tie-ups. The associations and partnerships provide a wide view and understanding policies, innovation, and technology to name a few. All these efforts are ultimately geared towards helping the

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SPECIAL feature “International exhibitions around the world are successful only because exhibits are delivered in time for display.

With exhibitions and events being used more and more extensively as marketing tools, the importance of exhibition logistics has also increased”.

Shirish Kulkarni, MD, Orient Marine Line Pvt Ltd economy of India flourish across all industries.

The key challenges that the exhibitions industry faces are quite a few. To begin with, the industry as of now is unrecognised by the government and therefore, bound to be

Only a few exhibition organisers are able to provide these features to their clients.

Citing some examples about the process of management and challenges, Sethi through his tremendous experience tells us, “For instance,

clearance from Nhava Sheva to ICD Delhi through the road transport and after getting clearance from ICD to the exhibition counter at Pragati Maidan and the reverse process.

This entails local transportation at the point of origin, Customs brokerage at the point of origin, multi-modal transportation globally, transportation either by rail or by road along with sight handling and mechanised equipment with forklifts, cranes, local trucks etc. for installation. This process also includes the complex paperwork at every level and vice versa.”

As time sensitiveness is one of the most important issue, there is no show if exhibits do not reach show and are not installed in time for the show. Hence, this is very important

“To cope up with the needs of the exhibitors and organisers, management is done well in advance as if the show is tomorrow”.

unorganised apart from a few key players.

Besides, India does not have the necessary support infrastructure for large exhibitions with very few large venues of international standards. Venue creation holds the key to future growth, to scale up the exhibitions and provide value to the exhibitors.

Onsite, the biggest differentiator is seamless crowd management, the quality of content led conferences, and the power of technology to create optimal business for the exhibitiors and visitors, such as business match-making and security and surveillance.

48 CargoConnect - may 2017

there is an exhibition in Pragati Maidan and there is an exhibitor who is coming from Germany. So, through our international partners and network, we pick up his exhibits from his warehouse, bring to the airport (whichever it is) and then when it comes to Delhi, bring to the site. The most crucial is the site handling, installation through forklifts.

So, the same exhibitor has a big machine lying in Singapore which will come by sea. So this machine of the same exhibitor will be brought from Singapore to Nhava Sheva depending on the time frame and then after getting a

factor for success of any exhibition or event that exhibits arrive in time and are displayed in time. In this context exhibition organisers also recognise experience of service providers and capacity and capability of the service provider to overcome any last minute hurdles to ensure time bound result.

Yogesh further adds, “UBM India handles several verticals, including signature ones like pharma, nuclear energy, travel and tourism, security and surveillance and gems and jewellery. While the requirements and verticals are different, the objective is the same - to provide a professional ecosystem to exhibitors and visitors to connect, networking, share knowledge and associate with business experts and key delegates in a bid to enter into potential, strategic tie-ups.

The associations and partnerships provide a wide view and understanding policies, innovation and technology to name a few. All these efforts are ultimately geared towards helping the economy of India flourish across all industries.

SPECIAL feature “A significant amount of pre-event planning, teamwork and execution goes behind each of them for more than a year before, which includes exhibition venue booking, floor booking and onboarding the best manufacturers, wholesalers, distributors & retailers in the sector on a global and local level”.

Yogesh Mudras, MD, UBM India

Technology as a Game Changer Technology today serves as an absolute communication and audit enabling tool for every step of the workflow. Companies do not imagine any sort of work without

involving technology assistance in one form or the other. Technology has enabled planning and execution in a methodical manner. It allows monitoring more effectively. Control over operations is increased with use of technology. Ravindra further adds, “We abide by EDI systems and updated with all the technology aspects whether it is Delhi, Bombay, Banglore. We have our own IATA, we send our people for training courses even in custom clearance we

50 CargoConnect - may 2017

send people for training. Training is the best form to keep yourself updated. Ours is very irregular and erratic sort of warehousing which is seasonal. Wherein during season, warehouses become full and during off

season it deteriorates with odd shaped boxes. It is proper personnel management and good equipment to be used. As we go by the need, wherein planning has to be done one hour before.”

Upcoming Trends It is growing and as markets get mature it will continue to grow further. Even governments have clearly recognised the need to put players and leaders together from time to time.

People decide to work together on the basis of a connection and there is no better way than putting them under one roof and make the experience ‘connection friendly’. As for logistics, we continue to become more and more data driven and focus is rightly moving to intuitive solutions to solve the participants and principals problems rather than chaos handling. Shirish informs, “International exhibitions around the world are successful only because exhibits are delivered in time for display. With exhibitions and events being used more and more extensively as marketing tools, importance of exhibition logistics has also increased. There are trends

to create networking amongst specialised exhibition logistic forwarders to offer tailor made single window service to the clients. No short cuts can be used in exhibition logistics as no exhibitor can afford to take the risk of non delivery and therefore specialised exhibition logistic service providers are trusted upon.

With increasing number of exhibitions around the world at new destinations, scope for exhibition logistics is still expanding and will be in demand.”

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feature

The

Manufacturing Industry Calls for Effective Supply Chain

52 CargoConnect - may 2017

FEATURE

India’s manufacturing sector has the capacity to touch US$ 1 trillion by 2025. There is potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90 million domestic jobs by 2025. But, the industry lacks effective supply chain models to ensure an uninterrupted and hassle free movement of its goods. Nicin Varghese discusses some key issues existing in the manufacturing supply chain industry.

M

anufacturing can be defined as an activity which, utilises a variety of capabilities, adds value to a material, thereby making possible different uses of that material. Each step in the manufacturing process adds value. The first manufacturers were probably artisans who worked by themselves to design and create products. They served as both supplier and manufacturer, gathering and managing the resources, and applying various processes to add value to the materials. Over time, manufacturing progressed to a series of specialists, each of whom supplied or added specific amounts and types of value. The benefits of this division of labour were that (1) More resources could be brought to bear on the task of adding value (2) Specialisation tended to reduce costs and increase the efficiency, consistency, and quality of each operation.

With the help of Make in India drive, India is on the path of becoming the hub for hi-tech manufacturing as global giants such as GE, Siemens, HTC, Toshiba, and Boeing have either set up or are in process of setting up manufacturing plants in India, attracted by India's market of more than a billion consumers and increasing purchasing power. In September 2016, Foreign Direct Investment (FDI) in electronic manufacturing has reached an all-time high of `123,000 crore (US$ 18.36 billion) in 2016, from `11,000 crore (US$ 1.65 billion) in 2014; on the back of enabling policies of the government and its Make in India initiative.

India has become one of the most attractive destinations for investments in the manufacturing sector.

In today’s world, the long term survival of any business entity is dictated by the efficient supply and delivery process that entity has implemented. To succeed in a dynamic demand and supply environment, Indian

may 2017 - CargoConnect 53

feature Sujoy Guha, CEO and MD, CriticaLog India Private Limited

With GST expected to be implemented by July 2017, a lot of distribution bottleneck with respect to state-wise VAT documentation, stoppage time at state borders are expected to go away. This should result in a seamless distribution of cargo across the country.�

several studies mostly by consulting companies such as BCG, McKinsey, KPMG and several others, in the context of the 12th planning commission, on current problems facing the manufacturing supply chain industry. Their analysis points to the well known factors such as inadequate government policies, inefficient resources such as labour and power, high interest rates, lack of infrastructure and low technology depth. Most of the action is in the hands of central and state governments and issues facing these governments are complex and wicked requiring collaborative efforts from the governments, civil society and the industry.

How Does It Work? companies need to ensure that proper coordination is in place between their suppliers and their customers until the last of the supply chain demands are satisfied without delay. This necessitates the need for tracking the inventory on hand augmented by a solid order and supply chain management.

This is very crucial to cost control, availability to supply on demand, maintain market control and eventual profitability.

To meet this critical need to handle the demand and supply effectively, supply chain management is an important component.

Companies are investing crores of rupees in supply chain management product and applications with supply chain management, a business can estimate future demand for its products, enabling planners to accurately estimate future needs for supply and extends to execution with the planning of their plants, transportation and logistics.

With much of competition from global players in the market, companies in supply chain business face multiple challenges.

Materials and production cost must be minimised without sacrificing quality or timeliness. Inventory levels must be optimised to keep the balance sheet healthy, order gets

54 CargoConnect - may 2017

shift within hour, and when that is not feasible, customers must be notified promptly of delays. In any supply chain, there is one last entity on which the entire process depends on “the customer� all manufacturers, suppliers, distributors and retailers will only be successful if they collaborate with each other in satisfying the customer demand. If one

With supply chain management, a business can estimate future de mand for its p r oducts , enabling planners to accurately estimate future needs for supply and extends to execution with the planning of their plants, transportation and logistics. supply chain fails to meet the demand, there will be a chain reaction that will eventually affect the end customer supply resulting in customer dropping their business as well.

India's manufacturing industry also faces multiple supply chain challenges. One of the key steps manufacturers can take to grow their business is to know about their supply chain inside and out. In India, there were

Supply chain process inside a manufacturing company starts from receiving a customer purchase order, subsequently requisite raw material in desired quantity is arranged as per the production plan of manufacturing, after which it is packed and dispatched.

1). Customer Purchase Order Input in ERP System: Once the sales department gets the customer purchase order, they verify if prices, payment terms, specification of the product are as per the prior agreement with the customer. If everything seems fine, then these details are entered in ERP system, which further becomes an input to production planning department as what is to be made and in what quantity. Based on this input, production planning department does the raw material planning.

Entering customer purchase order in ERP is a very critical process; since any wrong input at this stage will lead to erroneous information to production planning department, as a result erroneous raw material planning will happen resulting in procurement of raw material, which is actually not required, and due to this, inventory will start piling up, which is actually not required.

At the same time, due to wrong input

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Uniform taxation (GST) and improvement in infrastructure will definitely help in lowering overall supply chain costs, where companies will have fewer warehouse, resulting in inventory reduction and more efficient transportation.�

With the help of Make in India drive, India is on the path of becoming the hub for hi-tech manufacturing as global giants such as GE, Siemens, HTC, Toshiba, and Boeing have either set up or are in process of setting up manufacturing plants in India, attracted by India’s market of more than a billion consumers and increasing purchasing power. in this process, right material will not be procured. Hence, manufacturing will not be able to produce the finished product as a result dispatches will not happen which will further worsen the relationship with customer.

2). MRP: Material Requirement Planning is done based on the Customer Purchase Order entered by sales department in ERP system. In this process, Bill of Material of the products for which planning is to be done is exploded to identify which raw material is required.Net quantity of raw material to be procured is calculated after considering raw material (stock in hand + raw material quantity on order).

3). Release of Purchase Requisitions: Based on calculation during MRP, purchase requisitions are released by production planning department containing the details of part number, quantity to be procured and the dates at which a particular raw material is required in factory. The purchase requisitions released are for further action for procurement department.

4). Release of Purchase Orders on Vendors: Based on the purchase requisitions released,

56 CargoConnect - may 2017

procurement department sends RFQ (Request For Quotation) to the relevant vendors. The responses of RFQ are compiled, negotiated with vendors are done and best offers are identified. Subsequently, purchase orders are placed on vendors.

5). Raw Material Received in Factory: Though this process seems to be mundane, but it’s an important process. It is at this point that the raw material is inspected for quality and observed whether it is meeting the desired specifications. If this process is not followed strictly, then inferior quality raw material will get in factory which will hamper the quality of finished product. Also, a unique storage location is assigned to raw material, which enables easy identification and retrieval of raw material.

6). Manufacturing: Important thing is to manufacture the product as per the specifications but also important is to manufacture the product at the time when it is required. Hence, manufacturing needs a close coordination with production planning department to make sure that the product manufacturing date meets the date as per

production plan.

7)Dispatch: After the goods are manufactured, they are inspected, packed and dispatched. During dispatch it should be ensured that invoicing of finished product is happening as per the taxes and duties as agreed with customers. Also, it is ensured that all relevant document e.g. - Road permit accompanies the shipment.

Though the above processes are fairly simple to understand and follow but there are lot many operational issues which arise during executing these processes. These issues will vary from organisation to organisation.

Problems and Risks Still Remain 1. Disruption of Supply Chain SC disruption poses technical or behavioural problems for manufacturers. Technical problems include equipment malfunctions, system failures and financial distress. While labour strike and human fraud are behavioural problems. In addition, disruption may occur from other uncontrollable events such as natural disasters and terrorism. Since there are strong connections among components

feature of the SC itself, the effect of a SC disruption will have differing levels of impact on each element of the SC. If the interruption cannot be addressed immediately, it will lead to some malfunctions of manufacturing activities.

2. Integrity of Information As e-commerce increasingly becomes a crucial tool for information sharing and SC integration is a major problem for any organisations is the risk that information becomes, inaccurate, incomplete and unsynchronised. Incomplete and unsynchronised information can arise from the different data formats operating under different information systems within the SC. In information sharing SC networks, when corrupt or false information generated from one part of the SC is passed along the SC all entities will be affected both internally and externally.

3. Lack of Proper Planning Forecasting and adapting to changes in

In today’s world, the long-term survival of any business entity is dictated by the efficient supply and delivery process that entity has implemented. To succeed in a dynamic demand and supply environment, Indian companies need to ensure that proper coordination is in place between their suppliers and their customers until the last of the supply chain demands are satisfied without delay. demand and supply is applicable to the entire SC affecting upstream, manufacturing and downstream processes and arises from factors within and external to the organisation. Manufacturing firms are often departmentalised into ‘functional silos’ resulting in a lack of collaboration, information flows and accountability among internal functions which in turn distorts effective decision making. The result is material and product shortages, excessive on hand inventories, lack of labour utilisation and on-time delivery issues.

Will GST Bring Some Change?

In India, logistics is bogged down by higher costs and a complicated tax structure. The underlying reason for the same is that every

58 CargoConnect - may 2017

state levies taxes on goods moving across their borders at different rates. This leads to a situation wherein freight is taxed many times over. But, the proposed roll out of GST will be the mother of all reforms. Sujoy Guha, CEO and MD, CriticaLog India Private Limited, believes GST will bring maximum benefits to the supply chain industry. He said, "With GST expected to be implemented by July 2017, a lot of distribution bottleneck with respect to statewise VAT documentation, stoppage time at state boarders are expected to go away. This should result in seamless distribution of cargo across the country. Best supply chains are not just fast and cost effective but, they are also flexible and adaptive. Till date, our tax structure has stopped business from creating supply chains that are cost effective, fast and flexible. With GST, the opportunity arises to rework supply chain that can derive maximum benefits. With such changes, companies can hope to reduce 1.5 per cent to 2.5 per cent of their logistics costs through three basic structural changes: • Optimising warehouses across the country.

• Deployment of bigger and better trucks.

• Lead to greater economies of scale – as more companies will outsource their logistics operations Akshay Sharma, Director, Schedulers also agrees with Guha, where he said, "Uniform taxation (GST) and improvement in infrastructure will definitely help in lowering overall supply chain costs, where companies will have fewer warehouse, resulting in inventory reduction and more efficient transportation. GST, if implemented

correctly, will have an rippling effect right from extraction of natural resources to the final disposal. It will result not only in the reduction of costs but also will benefit in preservation of nature, as disruptions will be fewer."

Changes Awaited According to Guha, there will be three major changes that are expected to happen in the manufacturing supply chain industry during the coming years. They are: a. There will be a reduction in costs. b. Optimising storage requirements across the country. Currently, most of the large manufacturers are required to maintain warehouses in every state. GST will eliminate such requirements. c. In an adaptive supply chain, where the storage locations have been optimised, the manufacturers need to balance their stock against committed customer service.

This will require minute analysis of stock consumption trend to avoid stock-out and at the same time make critical stock available at required locations quickly.

"In order to maintain a balance, CriticaLog, operates multiple small Strategic Stocking Locations (SSL) for multiple manufacturers – co-exiting with the operative hubs, so as to ensure critical stocks are always available at the right place at the right time," he said.

In this era of competition, the large Indian manufacturer are exercising not only to exercise control on cost but also to use all the components of supply chain management including logistics, warehousing as a means of differentiation in both domestic and international market.

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Interview

Customised Logistics Solutions under One Roof JWC family has been part of the logistics revolution in India. The group has various key businesses which includes Cold Storages, Logistics Parks, Container Freight Stations and many others. Carrying forward the legacy of this giant company is Kruti Jobanputra, the Director of JWC Logistics Park Pvt Ltd and its group companies. In an exclusive interview with Sheena Sachdeva, Ms Kruti describes about her life as a young entrepreneur, along with how JWC is reviving the logistics industry holistically. Here are the excerpts: At a young age, you have been handling various roles. How has been your journey till here?

How will the scheme of DPD affect the upcoming companies?

Direct Port Delivery will improve the overall performance of the port and thereby help in increasing the volume at the JNPT ports.

Logistics companies like ours will have more scope in providing customised logistics solutions to the final importer nearer to the port.

I love what I am doing. After starting from the grass root level and working in various departments, my experience has been very exciting, challenging and motivating. Under the guidance of my father and now support from my brother, I have been able to achieve many milestones and I am always looking forward for plenty more to come.

As you have been heading the JWC and JWL Logistics for quite some time now, what have been your company’s key strategies that give you an edge over your competitors?

The Direct Port Delivery (DPD) is a major initiative of the Centre (and Customs).

How do you think can this scheme will benefit the logistics cost and dwell time?

DPD has been introduced a few years ago. But in 2017, Mumbai Customs under the guidance of Chief Commissioner Dr John Joseph really brought-in a drastic change.

The maximum benefit of DPD is not only to importers but also to the end users. By implementing DPD on regular importers, their cost of logistics will come down in turn the end product cost will also reduce. Also since the delivery is taken directly from the port the dwell time is minimised.

Apart from India, all other countries give DPD deliveries to all their importers which leads to cost saving and also minimum dwell time.

What further steps should be taken, according to you, in order to reduce the overall logistics cost?

Certain steps could be taken to minimise the logistics cost in this country. Some of them are mentioned here: (a) The key for reducing logistics cost is by improving the infrastructure in our country. The bottleneck that gets created due to poor infrastructure leads to increase in logistics cost.

(b)The government should bring in a change in the old set of rule and regulations that were drafted in the year 1965. With changing times, the rules and regulations should also be changed for the faster development of our country.

As your organisation JWC Logistics parks resides near the JNPT port, how does the distance between an industrial park and sea port affects the financial health of a logistics park? What are the key challenges do you face?

JNPT Port is located in the main island of Mumbai. Logistically it is very centrally located as it has direct access to all National Highways leading to India’s industrial belts (i.e. to Goa, Pune, Mumbai, Nasik, Gujarat, Nagpur, Aurangabad etc.)

Advantage of JWC Logistics Park’s location is also the same and to add to it, JWC Logistics is located 20kms away from the port and closer to the industrial park and National Highways, which makes it easier for transporters to move the cargo faster.

JWC Logistics, as a group, has a huge land bank, which is a big advantage as we are able to create business verticals and more customised facilities “under one roof”.

Today, we cater to different industries like the Food and Beverages, Perishable, Pharmaceutical, Automobile, Garment and Accessories, Agriculture products, Chemicals, Electronics, E-commerce etc.

Our group has always believed in customising the product for all customers instead of forcing them to use a ready-made service. This helps us to create our mark in the industry and which is our best USP.

What has been your driving force till yet to yield results irrespective of challenges you face?

My biggest driving force is my father, Lalit Jobanputra, who has an experience of more than two decades in the logistics industry and has seen the Indian logistics industry transform over the years. With his guidance and his vision, we have been able to create many benchmarks in the industry and has achieved many milestones. When we talk about challenges, my father always tells us, “Keep moving, keep working, keep pushing, keep hoping. The victory is on the other side.”

may 2017 - CargoConnect 63

Interview

95 per cent of India’s trading by volume and 70 per cent by value is done through maritime transport. How do you see the role of Ports in the economy?

Anticipating the Future of Indian Ports Jawaharlal Nehru Port is India’s largest and is the biggest Custom House in the country in terms of containers handling, documents filing and revenue generation. John Joseph, Chief Commissioner of Customs, Mumbai Zone II, Jawaharlal Nehru Port Trust (JNPT), gives an insight about the activity at the port along with challenges faced while in conversation with Sheena Sachdeva.

64 CargoConnect - may may2017 2017

Ports are the backbone of world trade and they are going to play a major role as far as our country is also concerned. Water offers the cheapest mode of transport and hence the relevance of port need not be over-emphasised. Since in India trade volumes are going to be up for both import and export the relevance of ports are to go up in future. There is an inherent need for huge investments in port infrastructure either by the Government or by private parties.

As Nhava Sheva is one of the important terminals across the country, what challenges do you face?

Nhava Sheva caters to 55 to 60 per cent of the boxes (container traffic) of the entire land country. Though much of it is transhipped to various Inland Container Depots in the hinterland, still a sizeable number of boxes are cleared at Nhava Sheva and as far as the customs revenue is concerned, 25 per cent of the national revenue of customs is collected at Nhava Sheva.

This poses a huge challenge for the customs officials who are already facing acute manpower shortage of almost 52 per cent. At Nhava Sheva, we are trying to improve the turnaround time

by Direct Port Delivery (DPD) which effectively cuts down cost for the importers, decreases time of cross border clearance formalities, decreases

the logistics cost, improves efficiency and help in ease of doing business. Currently JNPT is operating on a Container Freight Station model wherein the boxes (containers) from the terminals goes to CFSs located in and around Nhava Sheva and the Customs examination and clearance do take place in these CFSs which increases the time and the cost. In the DPD scenario the containers are discharged from the port terminal itself reducing the time and cost of the importers, but not all stakeholders are in a position to accept this reality and the shipping lines have been charging exorbitant rates from clients who are using the DPD. With constant persuasions they have now agreed to forego their exorbitant charges and the terminals have also agreed to forego the shifting charges provided the DPD clients use the CFS stacking for stacking their container in terminals so that no additional expenditure or time is incurred by the terminal for creating a new stack. There was a problem of congestion in the port which has been created by one of the terminals shutting down a few of the gates and not having enough handling equipments for handling of the cargo. Hence, clear cut direction was given to the terminals to keep the gates open and to provide additional handling equipments effectively eliminating the congestion. This aspect is also constantly monitored on a continuous basis.

Since the customs has to get the clearance from other Partner Government Agencies (PGAs) like FSSAI, Plant Quarantine, Animal Quarantine, Drug Controller etc. All imports of goods related to these agencies lead to delay as these compulsory compliance requirements were taking huge amount of time. This has been effectively addressed by introducing ‘Single Window Interface System (SWIFT) where the importer has to submit all his papers at the customs and after the intervention by the Risk Management System, the relevant Bills of Entry will be send to the respective PGAs for their verification and examination.

Further, at Nhava Sheva Port, 4 terminals are operating. Three of them are private and fourth one is Government controlled. Another terminal is coming up which will effectively double the capacity of the port. This will start functioning by year end.

Last year’s (2016-17) study by the World Bank has shown that the dwell time is f or 9-12 days and now with the constant monitoring, interaction with various stakeholders about the importance of their actions, customs has been able to reduce the dwell time from 9-12

days to 4-5 days which is hardly one day above 3.5 days of Singapore Port which is currently the best in the world. One can proudly state that during 3rd week of March Nhava Sheva have achieved the dwell time of 124 hrs hardly nine hours more than the dwell time of Mumbai Air Cargo. So actually the port is competing not with the other ports of the country but with the air cargo of the country. This has been possible only with the help of every stakeholder chipping in with their contribution.

As you head “Customs Clearance Fa c i l i ta t i o n C o m m i t te e ” , w h a t problems do you face while leading the role?

Nhava Sheva is the biggest Customs port in the country collecting almost 25 per cent of the national revenue from Customs. As head of the Customs Clearance Facilitation Committee, I need to take into account the concerns of all the stakeholders , solve their issues so that the importer gets his goods in least time and the least cost. CCFC brings every stakeholder together and helps in thrashing out the entire stakeholder issues

As per world bank study the members who have implemented the provisions of TFA have reduced their trade Cost by 14.3 per cent time for import reduced by a day and half from current average. with the primary objective of making it easier for the goods to complete the cross border transactions at the shortest possible time with the least expenditure. Nhava Sheva can be considered as a laboratory for Indian Customs as it is the biggest port in the country. The various stakeholders who are members of the CCFC are the terminal operators, steamer agents, Partner Government Agencies like Food Safety & Standards Authority of India, Plant Quarantine, Animal Quarantine, Drug Controller , CFSs and logistic partners like CONCOR to name a few. CCFC helps in improving the lack of co-ordination between the various stakeholders and helps in focussing everybody’s attention at the issue.

The ultimate reason for constitution of CCFC was to improve the Ease of doing business by reducing the dwell time i.e. the time taken for the goods after discharge from the vessel to the time they are released to the importer.

How will WTO’s Trade Facilitation Agreement further enhance the trade industry?

World Trade Organisations Trade Facilitation agreement will definitely enhance the ease of doing business as far as trade and industry are concerned, it will help in reduction in the time consumed for cross border transaction by improving the speed of the logistics chain. It will decrease the dwell time and improve cash flows for importers. The TFA has been ratified by India and more than 2/3rd of the WTO members have accepted, the agreement.

As per world bank study, the members who have implemented the provisions of TFA have reduced their trade cost by 14.3 per cent time for import reduced by a day and half from current average. Time for export reduced by two days, this will be a boost to global trade by 1 billion dollar.

The Direct Port Delivery (DPD) is a major initiative of the centre. How do you think can this scheme benefit the logistic cost and dwell time?

DPD is a game changer. The scheme will reduce dwell time drastically. Now the difference between the JNCH (Jawaharlal Nehru Custom House) dwell time and the Mumbai Air Cargo dwell time is 7 to 9 hours. This is unthinkable now we are not competing with other ports but with air cargo hardly 30 hours behind SINGAPORE the best in the world. It leads to huge savings in lead time and in cash saving a minimum of `10000 to maximum of `40000.

How are the companies in EXIM trade and logistics adapting to the scheme?

After initial resistance to change, companies are adapting rapidly. Importers are now sending us testimonies and letters thanking us. Shipping lines and CFS are a bit unhappy and have gone against the customs to court but to no avail. They try to plant contrary news in the media to sabotage the initiative but importers are asking for the scheme. On the other hand, the importers are very happy as they get out of the clutches of shipping lines and CFSs by way of nomination charges and similar charges. But some shipping lines and CFS have changed their business model acceding to the request of the customs and are doing excellent business. These CFS have trifurcated as CFS portion normal warehouse portion and customs warehouse portion. Now they are doing wonderful business.

may 2017 - CargoConnect 65

Interview

We want to do it both online and offline Marcel de Nooijer, the newly appointed Executive Vice President of AIR FRANCE KLM MARTINAIR Cargo has been with KLM since 1995, serving as EVP of KLM Cargo since 2013. He previously held various commercial and operational posts, including that of Managing Director at Martinair Holland. “I aim to improve the quality of our service, gain access to new cargo markets and proceed with the digitalisation of key processes,” he said in a statement. Amsterdam has long been a popular destination and trans-shipment center for fresh flowers, as the home to the world’s top fresh-cut flower auction house, Royal FloraHolland at Aalsmeer, which is just 10 kilometers from Amsterdam Schiphol. Last year, stakeholders in the flower business at Schiphol, including AF-KLM Cargo, launched the Holland Flower Alliance to strengthen and reinforce the “preferred flower hub” position.Flower production remains highly concentrated, with only a few countries producing meaningful numbers of flowers for export. Ecuador’s Pichincha region and Kenya’s Lake Naivasha region are widely known as the top flower-producing regions, with flower exports from Ecuador and Kenya totaling US$360 million and US$600 million, respectively, in 2016.Deepashree Banerjee finds out more.

66 CargoConnect - MAY may2017 2017

“We see good potential in the Indian market and would like to strengthen our cooperation with Jet Airways who have grown their presence into European markets. We have a very strong network in Latin America and certain West African countries and the US. In India, we are also looking into courier as a product, as a very integral part of our business plan.”

Marcel de Nooijer, you are the Managing Director of Martinair and Executive Vice President at KLM Cargo. Recently, you have also joined the group’s executive committee. How are you coping with the challenges and responsibilities that are coming your way?

our operation handling process much more effective and efficient. So, I am extremely pleased with the development which we set ourselves last year in New York. For me, that is a proof that we are on the right track and we have to move on to our key destinations to see similar developments.

Fortunately, there are 24 hours in a day.

Actually, it helps a lot because we are an integrated company and business and we combine the strength of our two hubs at Charles de Gaulle and Schiphol. Our joint organisation is working together in an agile way. This helps to make clear ‘trade-offs’ and speed up the decision making process.

Providing an ef ficient cool chain has become imperative for all airlines transpor ting perishables and temperature sensitive products.

How does AFKLMP Cargo ensure an uninterrupted and transparent cool chain to the end users?

The North Atlantic Joint Venture (NAJV) offers more than 250 daily transatlantic flights. The joint venture between Air France, KLM, Alitalia and Delta Cargo, North Atlantic Joint Venture (NAJV) has proved beneficial and fuelled transatlantic relations. Do you have any similar plans for the emerging markets such as Middle East and Far East?

We are creating strong partnerships with one of the driving teams. So we have an ongoing cooperation model with China Southern and Kenya Airways, next to Delta. As Jet Airways operates in Amsterdam and Charles de Gaulle, I clearly see a lot of potential there which we are going to work in the coming months to see if we can truly capitalize. But I am confident we can further strengthen our cooperation model.

Last year, Franco-Dutch airline venture AFKLMP Cargo opened the doors to its improved freight handling facility at New York’s biggest and busiest airfreight gateway, JFK. How far do you think the upgraded facility had been successful?

It has been really successful. For instance, we move a lot of horses, perishables and pharmaceuticals. In New York, our handling facilities have benefitted to strengthen our quality levels on these products and even further. Next to that, it has proven to make

We should deliver an uninterrupted cool chain to the end users by making sure there is a transparency and proper measurement.

Shipments which are needed to be cooled are cooled in the right setting, be it warehouse cold facilitation or in its own as a container based solution. We heavily invest in the proper setting of processes, handbooks and training of our staff so that they work according to the expectation and also the fact we were the first to get the approval of CEIV certification which indicates that the process is very well aligned.

What kind of investment opportunities do you see in India? Are the government’s proactive policies to increase FDI inflow (like 100 per cent FDI and Ease of Doing Business) a huge push for international airlines to venture into India? What are the primary products exported from India through AFKLMP Cargo freighter services?

As mentioned earlier, we see good potential in the Indian market and would like to strengthen our cooperation with Jet Airways who have grown their presence into European markets.

We have a very strong network in Latin America and certain West African countries and the US. In India, we are also looking into courier as a product, as a very integral part of our business plan. We want to do it both online and offline.

Last year, AFKLMP Cargo has been awarded IATA CEIV Pharma certification for its hub operations in Amsterdam and Paris and has confirmed its position as an industry leader for air transportation within the pharmaceutical logistics chain. What significance do such certifications hold for an airline?

We proactively look to improve the process and invest into training the people about the right work procedures and registration from a warehouse perspective and from an airline perspective which come hand in hand. If the customers need something they are going to get it delivered. We can promise that.

Tell us about your action plan for 2017.

We have quite a few plans for the current year: • Finalising SPAs with various domestic carriers like BD/9W/SG to increase our market share from GSA stations and provide feeder cargo to AFKL aircraft not only from online Indian stations but also from Middle East stations.

• Adding more GSA stations like GOI, JAI, and VNS. • Discounted deals on Small shipments to be implemented more aggressively to improve yield and revenues.

• Enhance number of Short and Long term agreements with potential customers • Promote E-tools like E-AWBs, E-Booking, Q & B, Click n Book, Push messages.

• Re-emphasize with GSA on AFKL policy to optimize Load Factor and Shipment Contribution.

• Strong communication and synchronization to be maintained between GSA and online stations providing cargo well in time in low seasons to ensure AFKL flights goes full.

• LATAM, Africa, extreme density cargo will be areas of focus for sales and customers service at all GSA stations.

What are your plans to promote eTools in the current year?

We are mainly focusing on three aspects: a. Cargo Portal Service • Promote CPS for small weight breaks to potential customers • Monthly results to be shared with Customers Copy Sale • Quarterly Refresher, if required - Dedicate E-Expert. b. Quote & Book • Enroll more customers in Quote & Book • Promote Get a Quote for + 500kg shipment. c. My Cargo and Track & Trace • Plan visits with top customers to promote

may 2017 - CargoConnect 67

Interview Air Canada Cargo is Canada’s largest provider of air cargo services in terms of handling large volumes of cargo. The airline provides direct cargo services to over 150 Canadian and international destinations and serves around 450 destinations through interline agreements with other air carriers. Currently, the airline operates to Indira Gandhi International Airport, Delhi and now the operations to Chhatrapati Shivaji International Airport, Mumbai is on cards. Ameet Sareen, GSM, Product and Business Development, Air Canada Cargo, in an exclusive interview to Gaurav Dubey, speaks about the latest innovation and services and facilities provided by Air Canada Cargo to its clients.

Specialist in the Handling of HighValue Commodities 68 CargoConnect - may may2017 2017

Transportation of luxury goods through airways faces several security issues.

What measures does Air Canada Cargo take for providing the security to goods for the safe and timely delivery?

Air Canada Cargo is specialised in the handling of high value commodities. One of Air Canada Cargo’s products called ‘AC Secure’ has been designed specifically to ensure the safe and secure transportation of high value commodities. It includes luxury goods, artwork, money, precious metals or any goods with a known value of CA/US $1,000/ kg or more, or when insurance is purchased in the same amount per kilogram, regardless of the commodity. If customer demands the arrangement of third party security can also be provided for safety of the goods.

The handling of AC Secure shipments is limited to cargo stations that meet the requirements to handle such shipments.

The cargo buildings are very secure on their own, equipped with cameras and security guards and with strict procedures in place with regards to on-site access. Apart from it, there are additional secure rooms for small shipments and containerised freight in our automated racking setup (where available) can be locked down. Any form of secure packaging must be provided as part of the shipment tender by our customer.

As far as the issue of timely delivery is concerned, Air Canada Cargo has a great track record when it comes to on time performance and cargo delivery standards. Delivery standards are generally driven by the service level and declared value of goods.

Considering the fact that small fluctuation in temperature can cause marginal damage to pharma products, how do you maintain an effective cold chain for transport of pharmaceutical products?

Large volumes of pharma products are handled by Air Canada Cargo every year. We are known for following the best practice in the industry. It is a part of our DNA and it makes us effective in the handling of cold chain commodities.

Through our AC Absolute and AC Pharmacair solutions, we handle a vast range of temperature-sensitive commodities, from those requiring precise temperature controls to commodities shipped in passive packaging.

For commodities which require precise temperature control, our AC Absolute solution offers a variety of containers with dry ice and electrical-based temperature

“As far as the issue of timely delivery is concerned, Air Canada Cargo has a great track record when it comes to on time performance and cargo delivery standards.” control technologies – this is ideal for highvalue healthcare products that are extremely sensitive to time and temperature. While on the other hand, our AC Pharmacair solution suits temperature-sensitive healthcare commodities that are pre-packaged to maintain the desired product temperatures and therefore do not require an active temperature controlled unit. There are some common handling attributes for all pharma products, including expedited ramp handling, limited exposure to extreme temperatures and a high level of boarding priority.

Indian GHA services have evolved with increased competition What tools do airlines provide to its customers for tracking their shipments?

As far as customer tools are concerned, the track and trace tool on our website and the mobile app serves as an indispensable tool for tracking of the shipments. We regularly gather feedback on the tool for its improvement – the current version has been recently updated with a friendlier interface.

Do you think India has the potential to become a leading international cargo hub? And, what role do international airlines play in making this a reality?

Absolutely! India holds a great potential of becoming an international cargo hub.

This is a known fact that India has a great

productive export market. Infrastructure and the regulatory regime may pose some challenges for India in its way of emerging as leading international cargo hub. This could be challenging for India to compete against the established European and Middle Eastern hubs.

How much importance of Indian market do you perceive in the overall growth of air cargo industry?

India has been an off-line destination for Air Canada until the last couple of years.

Currently, Air Canada operates to Indira Gandhi International Airport, Delhi (DEL) from Toronto Pearson International Airport (YYZ) and Vancouver International Airport (YVR) and will be starting operations to Chhatrapati Shivaji International Airport, Mumbai (BOM) this summer. Both DEL and BOM are major hubs in India. India is the one of the largest and the fastest growing economies in the world and projected to reach greater heights in the coming times. We consider India to have the potential to be a significant contributor in the overall air cargo industry.

Our DEL and BOM routes are operated with new 787-9 aircraft, which are great for cargo, and fly into Toronto. Toronto is our hub and we move freight easily from there to other wide body flights across our network including to the US, South America and Mexico.

Every country has its own standards for the handling of air cargo. Do Air Cargo Canada is satisfied with the way of handling cargo at Indian airports?

Undoubtedly, Indian GHA standards have evolved to a great extent with the introduction of new suppliers. This is a proven fact that handling standards rise with the growth in competition and improved handling standards ultimately benefits the overall industry.

may 2017 - CargoConnect 69

Interview

“We are more focused on positioning ourselves right

“

Venturing into the Indian territory in 2007, Cargo Partner has seen the highs and lows of the logistics industry in India quite closely. Nonetheless, it has never tried to jump on the bandwagon and establish itself as another run-of-the-mill organisation in the logistics sphere. Now, after an interim period of ten years, the company is all set to achieve new milestones and emerge as one of the major players in the industry.

Vikram Paul, Regional MD – South Asia and Board Member, Cargo Partner, shares the roadmap for future operations in India and much more in an exclusive interview with Tariq Ahmed. Here are the excerpts:

Technological advancements are taking the industry by storm. Organisations are looking at more and more technological solutions to better serve their clients. So, how have you implemented technology to better streamline your logistics services?

There are a couple of innovative solutions that we have implemented in our organisation.

SPOT 2, which is not just our track and trace solution, but also our communication platform with all stakeholders that are involved in a particular shipment and its transportation, has recently been launched in the month of March. It is an upgraded platform of what the company was originally operating on. It is a supply chain visibility and collaboration platform streamlining the flow of communication, information and goods along the entire supply chain. Some features and functionalities are still in the

70 CargoConnect - may 2017

development stages. Through SPOT 2, we position ourselves as probably one of the leading technology service providers in the market. It’s a global platform and is mobile enabled. It’s an app that can be installed on mobile devices and on entering shipment reference numbers; one can get instant information about each of their shipment. I am not sure how many other service providers have their track and trace feature on a mobile visibility level, but I think that’s a key feature that will potentially allow us to position ourselves better in the market. We really see ourselves catching up with leading 3PL technological players that are well positioned in the market.

From a Cargo Partner India standpoint, we make sure that 100 per cent of our shipments are entered and visible on our new operating system.

Considering the fact that perishables and temperature sensitive shipments poses a high risk of damages due to even the slightest deviations in temperature, how to you ensure a timely delivery of such products?

We have some of the typical cool chain compliant processes already running and operating in India. In that sense, we can talk about GDP, partnerships and relationships with Envirotainer, as well as partnerships and relationships with shipping lines which are able to understand and support our reefer transport requirement. We are also keeping a close eye on what are the best practices in the markets, and also trying to invest and expand into these markets. We are fully confident that we can meet the compliance and the cool chain requirements of the clients.

Cargo Partner also has a reputation of being

a major reefer operator in the world. Roughly, we operate 15000 to 20000 reefer boxes a year.

In Hamburg, we have a cool chain competency centre. Recently, we have established a similar one in Thailand. We are currently in the process of transporting some of the competencies and knowledge into the Indian market as well. In all probability, we will have a Pharma competency centre either based in Bombay or Hyderabad.

Cargo Partner has been providing surface transportation under ROAD-Xpress services. Please comment on the present day scenario of Indian transport industry.

Where do you see the graph moving in the future?

ROAD-Xpress is a very developed product for us, particularly in Europe, where there is point-to-point selling and moving of regular truckloads. We are moving on a very time predictable schedule. Our trucking volumes are a mixed ratio of assets owned by Cargo Partner itself as well as leased assets, particularly in Central and Eastern Europe. The demand for this service has grown multi-fold.

In India, we don’t necessarily see ourselves trying to get into the transportation space directly. We would work on providing reliable and competitive transport solutions while working with certain partners that we have either already got or we will source, at the right time, when there is enough business for us to be able to do that.

As far as transportation industry is concerned, GST will create not only huge opportunities but also bigger challenges for us.

It does throw the spotlight on efficiency and high amount of predictability and reliance on transportation, which might not necessarily be the strength as far as India is concerned at the moment. We do expect that the transportation industry will develop in the next three to five years. There are some very good PAN India transportation companies which are already equipping themselves with things like GPS etc. We would support this industry as much as possible. We would partner with this industry as much as possible and provide the best practices and guidance from our European network side.

But for us in India, there are a couple of other important milestones that we have to cross in our own freight forwarding offering before we get into the ultimate level of providing transportation solutions for ourselves as well.

Post the roll out of GST, warehousing sector will witness marginal transformations, with the introduction of

Centralised Warehousing. How will these Centralised warehouses differ from the traditional distribution centers? How are you preparing yourself for this shift?

Having not being in this particular side of this industry for two decades or so, where most of the MNCs have invested and grown in this side of the business, we see that fundamentally for ourselves as a disadvantage. But then, there is a bright side to it as well. From the user side, I think the warehousing landscape is going to change dramatically over the next couple of years, where PAN India warehouses and distribution park model will become a reality.

And since we do not carry with us some of the legacy infrastructure and legacy costs that many of the big logistics players have today, we are not in an extremely difficult position. What we see for the warehousing space presently are huge emphasis on quality of facilities and real estate, emphasis on size and scale etc. and, with the GST policy and legislation passed and fully implemented, the transit times and

“We are planning to launch a Make In India service desk, a first of its kind, in Mumbai to meet the sophisticated needs of our clients.” delivery times can become a lot more reliable.

The direct and indirect confidence that this will give to the international community, who is still skeptical about operations in India, will give us a fast-paced marketplace to compete with the fast developing marketplaces of the world.

Initiatives like 100 per cent FDI are attracting a lot of other MNC players into the market, which will surely create tremendous competition in the Indian market. What strategic policies are you adopting to wade through this competition? Are you looking at any collaborative ventures?

First of all, the confidence around the Indian subcontinent was reinforced by our Chairman many years ago in the sense that we have not tried to break ourselves into the Indian market, or, for that matter, the Sri Lankan and Bangladesh market, with long standing agents, joint ventures etc., like most of the major 3PLs have done. We are a 100 per cent owned entity

of Cargo Partner Global in India, as much as we are in Sri Lanka and Bangladesh.

Also, there is a lot of interest from our headquarters to continue to look at opportunities in the PPP model. We are continuing to look at the Indian subcontinent with a lot of interest.

The synergy with our business model and service offering is very good and conducive.

Notably, we are not a public listed company.

So, we do not have street expectations to meet.

We are a private company and our Chairman and owners are very cognizant of the fact that whatever has to be done, it has to be right for the business model.

At this stage, it is early for us to look at strategic partnerships and collaborative venture as presently we are looking at making our company stabilised and positioned in the right way as far as India is concerned. We will look to make investments as and when the right opportunities come up.

The demand for project cargo in India is experiencing rising demand. Do you plan to tap this lucrative opportunity?

We have good project teams sitting at different parts of the world. We have one that sits in The Netherlands, one in China – closer to home. We do some very complex projects, both on the forwarding side as well as on contract logistics side, predominantly in Europe as well as Asia Pacific. In India, one lane that we are trying to focus on is India-Africa lane, where we see ourselves as fully capable on the project side as well as have partners and network to manage projects as well. We have a reasonably good footing in that market and we are planning to expand into that market in the coming years, particularly in projects.

What are your future plans for expanding your arms in the logistics sector in the coming years?

We are in the process of relaunching our brokerage and trade services product, in certain areas of compliance, which a few of the big clients in India might understand. We want to take the first step into the unique and niche market, while ensuring that there is compliance, minimum risk exposure etc. We are planning to launch a “Make In India” service desk, a first of its kind, based in Mumbai. It will comprise of a team of highly qualified supply chain consultants who will be able to deal with the sophisticated needs of our clients.

From there, we would like to make the right investments, which are win-win for us, in the areas of warehousing, supply chain and distribution etc.

may 2017 - CargoConnect 71

Interview

Lending competitiveness to India’s trade industry Indian Chamber of Commerce (ICC) is the leading and only National Chamber of Commerce operating from Kolkata and one of the most pro-active Chambers in the country today. Its membership spans some of the most prominent and major industrial groups in India. Known as a premier body of business and industry in Eastern and North-Eastern part of India, ICC supports the industry in various sectors like policy advocacy, investments, trade, EXIMs etc. Aditya Vardhan Agarwal, President, Indian Chamber of Commerce, in an exclusive with Sheena Sachdeva talks about how does the chamber support the industry along with favourable changes in the coming days that shall benefit the industry. our Prime Minister’s “Make in India” initiative.

Proper taxation would do away with the need for designing layered subsidies and will help in fiscal consolidation.

As Trade Facilitation Scheme has been given a push by the present government, how will it affect the trade and logistics industry?

In the recent budget, according to you, where do our policy makers and ministers still lack? What are the drawbacks in it?

Union Budget 2017-18 can be broadly termed as growth oriented. While we cannot overlook the much needed impetus provided to agriculture, infrastructure development, MSME sector, tax reforms, FDI reforms and fiscal consolidation, I am afraid this year’s budget failed to meet industry expectations in terms of corporate tax rationalisation. No definite policy contours are available for recapitalisation of weak banks also. Even Organisation for Economic Cooperation and Development (OECD) has advocated corporate tax in India to be scaled down to 25 per cent. Statutory corporate income tax was 34.6 per cent in India during 2016, vis a vis 20 per cent for Russia, 25 per cent for China and 34 per cent for Brazil in the concerned period. However, the devil lies in the details, as the actual effective tax rate was higher for smaller companies in the country.

As per OECD, effective tax rate (as per cent of profit) by taxable income in FY 2013-14 was 23.22 for ‘All Companies’ in India, whereas the MSME segment mostly attracted regressive taxation. This contradicts the very essence of

72 CargoConnect - may 2017

A growing economy is supported by a robust trade and logistics industry. The Merchandise Exports from India Scheme (MEIS) at present covers 7914 tariff lines at eight digit HS Codes. In sync with India’s efforts at export diversification, subventions should be extended for a larger number of industry verticals, eg for sectors like cotton yarn, mobile handset manufacture etc. The idea is to figure out the sunrise sectors with substantial export promotion potential and extend fiscal support to those sectors, towards building our export competitiveness.

E-commerce is a thriving industry in India; keeping in view the exponential growth potential of the industry, the Foreign Trade Policy (FTP) 2015-20 incentives for e-commerce exports should go beyond the current selection of low-value goods.

The logistics industry will no doubt be benefited from the trade facilitation schemes being launched by the GoI, but in my perspective, it would mostly lead to an increase in volume for business. However, some ground level compliance issues need clarification.

For instance, the Express Delivery Service/ Courier Service Industry in India, which was worth INR 14,000 cr in 2015-16 and employed an estimated 17.2 lakh people, seeks some key modifications in the proposed GST draft, which are listed as follows: zero-rating of international transactions; single pan-India registration for output and input tax; non-taxability of self-supplies etc. This would not only put the industry on a level playing field, but will also lend competitiveness to India’s trade.

To leverage the Digital India drive for the

logistics sector, small operators like truck drivers should have access to pre paid cards, and a comprehensive chain of electronic payments mechanism should be put in place throughout the country. The government can handhold the small businesses in the sector to leapfrog them into an organised mode of production and governance.

As an investment matchmaker, ICC supports the investment sector to gauge the proper way in terms of investment.

What are the major investments that shall bring a huge transformation in the transport and logistics sector?

A multimodel approach can help to forward the transport and logistics sector in India and will also make it competitive. So infrastructure investment in connectivity is a crucial growth driver for the sector. A refurbished logistics network would allow seamless inter and intra country movement of intermediate inputs and finished goods.

Economic corridors and multimodal logistics parks would form the backbone of this integrated hub and spoke model. In view of the quantum of investment required, it is essential that we look towards a PPP model.

As India is a robust market, how has it been coping up with some big changes like demonetization et cetera?

Demonetisation will definitely drive long term economic interests of the country but the short term liquidity crunch has adversely affected the SME segment. where daily business is mostly conducted on the basis of regular cash flows. The short term impact has also been negative for the microfinance sector. I feel, to meet the basic objective of turning into a cashless economy, and to bring in its fold the informal sector, the process of doing business has to be simplified in India. A framework should be in place where the credit history of borrowers would be available readily and obtaining credit cards should be much more easier.

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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Interview

Seamless Blend of Strong Customer Service and Technology

Boxco Logistics is one of the leaders in logistics in the country. Nandan Yalgi, Managing Director, Boxco Logistics India Pvt Ltd, J M Baxi Group, in a candid interview with Sheena Sachdeva throws light on the company’s forthcoming projects and further progression of its operations in the coming days. He is responsible for the strategy and future direction for Boxco as it embarks onto a high growth phase.

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

Boxco is into providing its clients total logistics solutions with a focus on EXIM. Our presence in the Maritime and EXIM Logistics Industry for more than 100 years across multiple segments with robust infrastructure and arguably the best professional talent in the industry has itself given us an edge over our competitors. What sets us apart is our customer service and transparency in the processes with clients and vendors.

What has been the genesis of your company’s operations in the country?

We have commenced our operations on strong footing of customer service. Based on our unique real-time perspective, we understand

the resultant challenges and explore every available opportunity to help identify optimum solutions. Our strength lies in our network and relationships, built on trust and reliability. We focus on tailoring solutions for our partners, and build lasting relationships with a view to integrate ourselves in our customer’s business processes, ensuring our teams are always a step ahead in anticipating customer needs and delivering results exceeding their requirements.

Currently we are based out of 55 offices in India and Bangladesh, executing projects globally.

Boxco Logistics India Pvt Ltd, the logistics arm of J.M. BAXI Group recently collaborated with Coldman Logistics Pvt Ltd. What is the collaboration aimed at?

This collaboration is aimed at developing and operating cold chain businesses across J M BAXI Group’s Cargo Handling Terminals. Under this cold chain alliance, the first facility to come into operation will be Boxco’s world class Temperature Controlled Warehouse (TCW) located at Sonepat, Haryana.

The TCW is strategically located with close proximity to Asia’s largest wholesale fruits and vegetables market (Azadpur Mandi, Delhi), Mega Food Park (Panipat), Delhi NCR region, the upcoming Delhi Mumbai Industrial Corridor (DMIC) and Kundli Manesar Palwal Expressway.

What innovative and technological measures have you adopted at Boxco Logistics in order to achieve the dream of a seamless supply chain network?

Digital technologies are transforming industrial processes globally and bringing in efficiencies.

We at Boxco Logistics are integrating all our systems and processes on digital platform.

It has several benefits like better planning and execution, real-time tracking of goods, optimisation of costs and energy, automated electronic data exchange, better equipment and asset management, network optimisation etc.

As Boxco Logistics has different verticals from cold chain to logistics services to freight forwarding to shipping services, how do you plan to synergize all the verticals to become a market leader?

We have a centralised marketing team whose prime focus is to optimise costs and provide one stop seamless solution to our customers benchmarked to international standards.

Apart from that we leverage within our group (backward and forward integration) along with our infrastructure vertical for first and last mile services.

Our verticals constantly exchange customer database with combined requirements on real-time basis. We feel intelligent evaluation and right customer approach is the only tool between our teams which sets us apart to be a market leader.

What are your further growth plans to boost the projects of the organisation?

2017-18 is expected to improve the overall economical scene in India with government spending improving in the various segments.

Demand from Power/Nuclear Power Oil and Gas and Metro projects is expected to dominate the project logistics segment. Rise in agrocommodities imports and containerisation of same is the newly seen trend. Cold chain industry is growing at a CAGR of 20 per cent over the last three years and the cold chain market is anticipated to reach INR 60,000cr by 2017.

“Hub and Spoke Model will come into play across segments like warehousing, CFSs, ICDs, Cold Chains etc. It will bring in more efficient operations with fewer wastages, fast truck turnaround times and more savings”.

Significant investment opportunities exist across every segment in Indian logistic industry and we are geared up to participate in these opportunities and be a market leader in this industry in the interim.

We are expanding our base from India to Bangladesh, Myanmar, Singapore and Dubai.

Alongside, we are collaborating with foreign forwarders and global heavy-lift operators for exchange of services. Also, we are investing in state-of-the-art equipment. On the bulk division front, we are now focusing more on providing end to end logistics services to large manufacturers apart from handling various commodities at different regional ports.

The landmark reform bill, GST will be soon introduced in the industry. How will it affect the whole logistics and transportation industry?

GST is a path breaking reform which would be changing the entire dynamics of the logistics and the transportation industry. Logistics companies in India have evolved over the years from being a 1PL first-party logistics

company to now 4PL covering all services from transportation, warehousing to consulting and optimising of costs with seamless state-of-theart supply chain network.

Post GST, it will facilitate easier interstate movement by road and would encourage more digital processes. Hub and Spoke Model will come into play across segments like warehousing, CFSs, ICDs, Cold Chains etc.

It will bring in more efficient operations with less wastages, fast truck turnaround times and more savings.

Overall, it will lead to greater economies of scale for transport operators and will see forward integration in terms of outsourcing services to 3PL and 4PL operators. It will be a game changer and would accelerate growth in the transportation industry.

Boxco Logistics is among the market leaders in the project logistics segment.

Can you share some of the recent projects which were undertaken in this vertical?

Boxco Logistics offers unparalleled services which gives us an edge over our competitors.

One such case was when Larsen & Toubro was looking for a self-propelled Ro-Ro carrier to deliver a super heavy cargo from Hazira to Tanjung Setapa under its RAPID refinery project.

We understood our client’s requirements and designed a customised solution using our own self-propelled modular trailers (SPMTs) and Ro-Ro vessel, Vir Varenya.

After intense bidding processes, we bagged the job due to our unique offering and continuous focus on value addition. This was implemented in record to L&T’s total satisfaction.

Another recent project of ours was with BHEL. For NTPC’s North Karanpura Project, BHEL floated a tender for the import of an STG package for a 2x660MW power plant. Boxco smoothly handled the rigorous procedures of ocean freighting, project import registration, customs clearance, trucking and handling of the project cargo.

While dealing with various areas and verticals, you must be facing some hardhitting challenges. How do you deal with it in order to get best results?

The pursuit of synergy pervades the management of most large companies and similar is the case with us at Boxco. I do not want this to distract me from the nuts and bolts of the business. My approach is not to have any synergy biases.

Synergy can be a boon, creating additional value with existing resources and hence, I keep this in mind while also considering the downsides.

may 2017 - CargoConnect 75

Shippers Speak

Warehousing serves as a backbone of the supply chain system and it is considered as a centre stage activity for any organisation.

Implementation of Goods and Service Tax (GST) act with the introduction of centralised warehousing would change the entire landscape of the Indian warehousing industry.

Akkash Gupta, Head Global Sourcing and SCM, Intex Technologies (I) Limited in an interview to Gaurav Dubey keeps his opinion on the changing warehousing scenario of the country.

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Warehousing Space Provider should have Tailor-made Solutions to the Problems How important is warehousing for the overall scheme of your business?

What specific qualities do you look for in a warehousing space provider?

If we term warehousing as a backbone of the supply chain system then it won’t be an exaggeration. Warehousing is a centre stage activity for the organisation as before dispatching the finished goods to the customer; the goods need to be stored in a warehouse. If a product reaches to the end customer in an excellent condition then it certainly creates a good reputation of the company involved in the handling of the product. Packing also plays a great role as it gives first feel of the product to the customer.

We look into certain qualities before choosing the services of a warehousing space provider.

The warehousing space provider should have a professional and flexible approach towards working, the space provider should be flexible enough to make changes and adopt the systems as per the requirements of a customer. Quick response to a problem and the space provider should have tailor-made solutions to it. These are also some of the essential qualities which we seek in a warehousing space provider.

Apart from it, the network reach at the local level also plays an important role in establishing the LSP’s deliverables.

GST is going to change the entire landscape for warehousing in India.

What is your take on the concept of centralised warehousing?

Certainly, the consolidation will happen and the logistics industry will move towards the concept of centralised warehousing but it will be primarily driven by the distribution channel/ sales partner market requirement of the each organisation. We are also evaluating the same with all channel partners and would come up with final outcome before GST comes into the force. The centralised warehousing at certain strategic locations would support the complete distribution Value Chain and help to optimise the Supply Chain as well.

How has the price for warehouse leasing/renting changed over the years?

The price of warehousing services had seen a boom due to the scarcity of quality warehouses in the markets till 2000. The situation changed after the year 2000, as more modern warehouse started coming up in the market, but parallelly the rentals also started increasing due to the scarcity of quality warehouses in the market till the year 2010.

However, from the last couple of years, it has been stagnant and also got reduced at many places. The warehouse rentals have become stagnant because of the entry of several new LSPs in the market, which created huge facility across all major cities. This has helped the organisation to move to these facilities wherein the complete cost of the value chain can be optimised.

What are the premium or value added ser vices of fered by w arehousing companies in India? How do these services facilitate the growth of your business?

Good warehousing companies with proper infrastructure are coming up with legal complaint warehouses. All laws related to statutory, government, safety and labour act are being taken care of by these reputed LSPs. Apart from it, the quality manpower, transportation support, connectivity and hygiene are the services which support the overall business.

The business gets the enhanced service levels with the confidence of proper storage. The business gets facilitated by shorter response time and by meeting customer expectations.

Do warehousing companies have accountability for losses incurred during the storage of goods in their warehouses? Tell us about most common problems faced by your company in storage of goods in a warehouse?

Yes, good LSPs take complete responsibilities of any goods losses during the storage. They have placed all systems such as cameras, trained manpower, continuous checking and correcting to ensure that losses become negligible in the warehouses. If any case is reported, they take immediate action in terms of owing the 100 per cent accountability, to give confidence to the customers and take necessary actions to avoid these activities in future.

Global Hi-tech Logistics Infrastructure

Hi-tech Logistics Infrastructure Project Features Spread over 100 acres of land Total warehousing capacity- 14 lac sq. ft.

Built up facility- 7 lac sq. ft.

Construction in full swing- 1 lac sq. ft.

Ample truck and car parking area Firefighting and fire prevention systems Direct access to National Highway Distance from Highway- 0.5 km Distance from Airport- 7 km Distance from MIHAN- 1 km 24 x 7 operational hours 24 x 7 CCTV monitoring 24 hrs common security 24 hr sufficient light and water with drainage.

High compound wall for safety.

Infrastructure of international standards.

80 feet primary cemented road.

60 feet secondary tar road.

Site: Khasra No. 80, 81 & 82, Shivmandka, VillageGumgaon, Tahsil, Hingna, District, Nagpur (MS), India Office: Sheikh Fida Ali Sultan Ali, Lahaoli, Itwari, Nagpur (MS) - 440002 | Tel 0712- 2763079

Warehouse Specifications Modern PEB structure Insulation to reduce temperature Column spacing- 8.4 m @side walls and 16.8 m @ midspan High load bearing capacity- 12 ton/sq mtr Floor height- 1.2 mtrs from road level Building height- 12M @ gable and 17 m @ the centre Sky lights for minimum electricity consumption Turbo ventilators to maintain temperature Internal washroom for staff Sufficient office area on ground and mezzanine Dock levellers

Contact us at: Najumuddin Fidvi: +91-9373102959; najmuddin@gmail.com Shabbir Husain: +91-9373101873; shahidrules@yahoo.co.in Shabbir Poonawala: +91-7387095152; shabbir@oclp.in

guest column

Why Shipment Monitoring Cannot be Ignored in Times of GST

By Premsai Sainathan

In a post GST scenario, companies who invest in getting shipment visibility using the Internet of Things (IoT) to make their supply chains more efficient are the only ones who will survive the competition.

Shipment monitoring will turn from a ‘nice to have’ to a ‘must have.’

78 CargoConnect - may 2017

T

he Goods & Service Tax (GST) will not just result in a complete overhaul of our complex tax system, but also impact the supply chain processes of companies across India. Supply chains built for tax optimisation will be reengineered for true business efficiency. Consolidation of warehouses will result in longer hauls, generating the need for better ETA predictions to avoid supply chain disruptions. With the disappearance of check post delays and taxdetermined routing, companies emerging as industry winners will be those who can get their goods across to their customers faster, safer and match up to ever-improving delivery SLAs. Real-time visibility empowers enterprises to make the right business decisions and avoid disruptions – be it improving time to market, preventing lost sales, reducing theft or ensuring that products sensitive to temperature, pressure or humidity maintain their quality throughout the supply chain.

With the benefits being unquestionable, why has visibility not been a must-have till date? The reason is simple. In our current state-based taxation system, check-posts are aplenty, and routing is done to incur minimal tax impact. In such a scenario, real-time monitoring provides route planning and insights into the disruptions and choke-points, but these insights are not actionable due to many uncontrollable factors in-transit.

For instance, last year, an FMCG company while deploying a shipment monitoring solution for moving goods from Kolkata to Guwahati, observed that the average transit time for this sector was nine days. Further analysis of the data showed that this window could be reduced to five days by better route planning and quicker trans-shipments. The interesting part was that, out of the four days cut from the nine days, nearly 50 per cent were attributed to in-transit efficiencies while the remaining 50 per cent still depended on the inter-state check-posts clearing the goods. Hence, the net efficiency obtainable by implementing shipment monitoring last year was just 50 per cent of what could potentially be achieved on that route. This was also not guaranteed because unusual check post holdups could occur.

Now, consider a post GST scenario where there are no delays attributable to check-posts, and route planning can be driven 100 per cent using data analytics – the same FMCG company can shave all the four days from their lead time and drastically optimize their inventory and working capital. This essentially means that post GST implementation, real-time foresights and insights obtained from monitoring a shipment can be put into action and most importantly - even a small increment or decrement in routine efficiencies can determine the market share of a company.

With a convincing case to get onboard with monitoring shipments, enterprises have one final challenge left; how to monitor shipments across market vehicles, rail, air, sea or multi-modal scenarios. GPS vehicle tracking does not work in these scenarios as it is truck-based, nor do many GPS companies offer the level of data analytics or a single dashboard view to help make business decisions on the go. What is required is a solution that consists of a portable wireless monitoring device usable across multiple modes of transport, real-time data connectivity even in remote locations, efficient management of the device’s reverse logistics, and a data analytics platform which integrates with the existing enterprise software for scalability.

(The author is the Director of Marketing for Roambee, a global IoT firm that specialises in providing real-time goods and assets monitoring solutions as an on-demand service)

Mumbai-based logistics startup Emiza raises $4.5M in round led by Mayfield

Carlyle Group takes minority stake in Indian logistics firm Delhivery

Mumbai-based third-party logistics startup Emiza announced that it had raised $4.5 million, in a funding round led by Mayfield. The round also saw participation from existing investors Nishant Rao, COO, Freshdesk, and Dileep Nath. The funds will be primarily used to expand the business to other geographies, in hiring a robust leadership team, and to focus on technology. This is the third round of funding for the logistics startup, which was started in early 2016

by Ajay Rao and Rajesh Sharma. Having worked in logistics for over 14 years, Ajay realised in 2015 that in e-commerce logistics, specifically in the warehousing side, nobody could claim to be an expert in the space.

The company claims to have a network of over 23 hubs, and a captive fleet in North India catering to even Tier III and IV cities. Emiza also offers its clients an integrated warehousing platform, giving them endto-end visibility and a single-window solution. Emiza’s clientele consists of SMEs as well as Indian and foreign MNCs across FMCG, pharma, automobile, consumer durable and publishing industries.

The Carlyle Group has acquired a minority stake in Indian logistics firm Delhivery, while existing investor hedge fund Tiger Global also raised its stake, for a combined investment of more than $100 million. The investment comes amid expectations India’s logistics sector is set to expand strongly as the country unveils a new unified national sales tax and through growing online retail sales. Delhivery was founded in 2011 as a food delivery company but has since shifted to providing logistics services in more than 600 Indian cities through 12 fulfilment centres. “We see significant potential for technology-enabled logistics in the country with the growth of e-commerce,” Neeraj Bharadwaj, Managing Director of the Carlyle Asia buyout team, said in the statement.

Logistics startup Freightos lands $25 million in funding from GE Ventures Freightos, a startup that wants to digitize more of the international logistics process, announced that it has raised a $25 million Series B extension round led by GE Ventures, General Electrics’ venture capital arm. This brings the total funding raised by Freightos, which was founded in 2012 and is based in Hong Kong, to $50 million.

Founder and CEO Zvi Schreiber says Freightos added GE Ventures to the round because one of his previous companies, Lightech, was acquired by the conglomerate in 2011. Schreiber wanted to continue working with GE, which he describes as an important strategic investor for Freightos. “GE is such a big industrial company and it is helpful to us because it gives us insight into the world’s biggest shippers,” he said. The startup’s new capital will be used to launch Freightos Marketplace, which Schreiber describes as “booking.com, but for international shipping,” into more countries. The service lets customers compare freight-forwarding quotes and book online and is currently available in China, Hong Kong and Taiwan.

Myntra ‘acqui-hires’ logistics startup InLogg Flipkart-owned fashion e-tailer Myntra has acqui-hired logistics startup InLogg, which is operated by InLogg Intenet Pvt Ltd, to help solve delivery inefficiencies in terms of cost and reach, it said in a statement.

Founded by former Flipkart employees Preeti Jain, Hemant Agrawal and Prateek Gautam in 2015, InLogg is an aggregator of logistics vendors providing services to ecommerce and retail companies. It joins hands with courier firms in tier II and III towns to enable delivery services in remote areas. With this acquisition, Myntra will be able to strengthen its logistics capability with an expanded reach and improved customer experience, it said.

Logistics startup ElasticRun raised $7mn Logistics startup ElasticRun has raised $7 million (`47 Crore) of Series A funding from existing investors Kalaari Capital and Norwest Venture Partners. Previously, in November 2016, the startup raised seed funding of $2 million from the same investors. The startup raised the total amount of $9 Million. The Pune-based startup was founded in the year 2015 by Shitiz Bhansal, Sandeep Deshmukh, Saurabh Nigam. ElasticRun is operated under NTex transportation services, which appears to be building a similar app-based asset-light model for receiving orders and dispatching delivery drivers.

may 2017 - CargoConnect 79

news

Logistics reshaping e-commerce ecosystem in India

Centre mulls nodal body for transport

Indian e-commerce has experienced some major changes, yet there is surety of better advancement for its future in it. It seems to be completely clear that the reasonable focus on contribution sustainability and margin will be versus the previous race of the market. The ecosystem is key empowering influence of manageability or sustainability for an industry. For instance, it is unviable for all e-commerce players to manufacture end-to-end logistics and payments/wallet competences internally. Certain patterns or trends of ecosystem are rising which may help web based e-commerce business organizations turn out to be more reasonable after some time.

Along with time, not only technology has moved to another level, but the demand of the market has also been directed to complete new direction. In comparison of past report results of market, it is quite clear that the market demand has been increased to a huge level due to the presence of online buyers which make e-commerce even major part of the market and revenue.

Prompted by the Prime Minister’s Office, the Centre has begun discussions to set up a national level nodal body for all transport-related matters across modes including aviation, railways, surface transport and waterways. The proposed ‘Logistics and Integrated Transport Board’ will initially work on improving inter-ministerial co-ordination to facilitate an efficient multi-modal transport system in India, official sources told. The ‘umbrella’ Board — likely to be chaired by a Union Cabinet minister or a Secretary to Government of India — will include top officials from other ministries concerned such as Finance, Commerce & Industry, External Affairs and Home, as well as senior representatives from the Indian industry and legal experts, especially to address competition aspects.

E-way bills under GST get mixed signals from logistics players

New intermodal park to support doubled Mundra capacity

The proposed electronic way bill under the Goods and Services Tax regime (GST) has evoked a mixed reaction from logistics players, who expect challenges in operationalising it in its present form in the short run.

However, they agree that ultimately this would lead to easier funds flow. The Central Board of Excise and Customs (CBEC) put out a proposal on e-way bill, as a part of easing inter-state traffic movement under the GST regime. “The proposed e-way bill in the GST regime will put an additional layer of documentation by way of prior online registration of the consignment for transporting shipments exceeding `50,000. The objective of the GST is to bring a lot of ease in doing business. “However, the requirement of securing e-way bill for inspection by GST officials in transit seems a dilution, as this is likely to lead to interception of vehicles in all inter-State and intra-State movement of goods,” said K Satyanarayana, Co-founder and Director, Ecom Express Private Ltd.

Adani Ports and Special Economic Zone has opened a new MMLP to support a doubling of container capacity at its flagship Mundra Port.

APSEZ’s subsidiary Adani Logistics Ltd opened the park at Kilaraipur, near Ludhiana. The logistics center is strategically located close to Indian Railways’ dedicated freight corridor connecting northern hinterlands to major west coast ports and features two rail-sidings capable of handling double-stack container trains, according to a trade advisory. “Having an ICD in Ludhiana will help capture cargo from Punjab and nearby states and contribute towards consolidating additional volumes for Mundra Port,” APSEZ CEO Karan Adani said in a statement on the company’s third inland container depot (ICD) in India.

80 CargoConnect - may 2017

news

Ministry approves 101 new cold chain projects

Industrialists perturbed over high logistics cost in India

To reduce wastage of agricultural produce and add value to farmers’ harvests ranging from fruits and vegetables to fish, dairy and marine products, the government has approved 101 cold chain projects across the country.

“With a subsidy of `838 crore, the cold chain projects will bring in investments of nearly `3,100 crore,” food processing minister Harsimrat Kaur Badal said . She added that about 2.6 lakh farmers will benefit from these projects which will also provide employment to 60,000 youth. Citing studies commissioned by the ministry, Badal said about `92,000 crore of farm produce goes waste every year and farmers are often forced to dump their harvest of fruits and vegetables. “Hardly 10 per cent of the horticulture produce is processed or reaches cold storages which is mostly used to store potatoes,” Badal said. She added that the focus of the food processing ministry is to create a national food grid, reduce post-harvest losses and make the agriculture supply chain efficient. “Our goal is to push farmers towards value addition and improve their incomes,” Badal said.

The industry has to incur a large amount on logistics and the cost is one of the highest in the world, say industrialists. They said the government, both at the centre and state, should take measures to bring down the cost to aid the industry. “The logistics cost in India is the highest in the world,” said SC Ralhan, President, Ludhiana Hand Tools Association. The logistics cost within the country is higher than the cost of sending goods from the port to the final destination. The cost of sending freight from Punjab to Mumbai is higher than the cost of sending it from Mumbai to Dubai. This issue must be addressed by the government.

“Such cost is much lesser in other countries,” he said. “The cost is indeed very high as the cost of sending material Chennai to Shanghai is about `1,600 per tonne, whereas the cost of sending freight from here to Chennai is `6,000 per tonne,” said Upkar Singh Ahuja, general secretary, CICU.The government needs to regulate the cost of freight, as the amount charged by Container Corporation of India was very high, Ralhan said. “The government also needs to regulate the amount charged by the shipping lines to lower the logistics cost,” he said. “With the increase of international business, the dependency on ports has increased and 70 per cent of the industry is located far from the ports,” said Ahuja.

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International North South Transportation Corridor for better Indo-Russian connectivity inches towards reality

Inching closer to making the International North South Transportation Corridor (INSTC) a reality - connecting India with Russia and Europe via Iran - a dry run of container movement via the green corridor (smooth customs facilitation) may be conducted soon, marking the 70th anniversary of Indo-Russian diplomatic ties this month. INSTC will substantially reduce time taken and cost for transport of goods between India and Eurasia once fully functional and increase economic activities between India and the resource-rich Russia as well as markets of Europe.

The INSTC has moved closer to implementation after India decided to

join international customs convention TIR following cabinet approval.

The modalities of making INSTC functional was discussed at a multistakeholder meeting recently, people familiar with the developments told ET. INSTC is one of corridors that Delhi is working on as part of connectivity initiatives parallel to China’s One Belt One Road strategy.

Prime Minister Narendra Modi might visit Astrakhan entry point of INSTC in Russia during his June trip to St Petersburg for International Economic Forum. India and Russia celebrates 70 years of diplomatic ties on April 13 and a series of events and visits are planned through the year.

INSTC is a land-and sea-based 7,200-km long network comprising rail, road and water routes that are aimed at reducing costs and travel time for freight transport in a bid to boost trade between Russia, Iran, Central Asia, India and Europe.

The network is expected to provide faster and more efficient trade connectivity between Europe and Southeast Asia.

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Mumbai Airport earns CEIV Pharmaceutical Certification MIAL has constantly strived towards achieving operational efficiency by imbibing technological developments relevant to its expertise and infusing them in all processes and procedures that are implemented at the airport. The latest feather in the cap was earning the CEIV Pharma certification. The unique infrastructure design that MIAL’s cargo terminal offers, has played a crucial role towards enhancing the transshipment business in the region, offering exclusive handling for bonded cargo. This has strengthened Mumbai’s position as a prime location for handling cargo across the country, especially for pharmaceutical products.

With an endeavor to create a high quality supply chain for pharmaceutical and healthcare products, MIAL recently joined “Pharma Aero”, a new global initiative in the pharmaceutical industry that fosters the development of pharmaceutical routes between CEIV certified airport communities.

Boost for India, Bangladesh inland water transportation With the Union cabinet, chaired by Prime Minister Narendra Modi, giving its approval for the agreement between India and Bangladesh to develop fairways on the Ashuganj-Zakiganj stretch of the Kushiyara river and the SirajganjDaikhawa stretch of the Jamuna rivers, officials here said these steps will expedite the process of using the Brahmaputra and Barak rivers as viable inland water routes.

The cabinet approved a MoU between India and Bangladesh for the fairway development along the India-Bangladesh protocol route by undertaking joint dredging. A fairway is a navigable channel in a river or harbour. The Barak river in Assam branches out as Kushiyara and Surma in Bangladesh, while the Jamuna branches out of the Brahmaputra. Officials here said the northeast is all set to benefit from the reduction in the cost of logistics for cargo movement in the region.

They said that with the Centre and the state government already working on developing the Brahmaputra (national waterway 2) and Barak (national waterway 16) for navigation, developing the two rivers in Bangladesh will be a boon for inland water transport in the region.

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As a part of MIAL’s strategy to create reliable pharmaceutical transportation passages internationally, the airport has partnered with Brussels, an active CEIV airport, founder member of “Pharma Aero” and one of the major international hubs for pharmaceutical air transport. This partnership aims to facilitate knowledge-sharing on the best handling practices, and minimizing temperature excursion while implementing CEIV recommendations that will strengthen the EXIM supply chain between Mumbai and Brussels. In the near future, MIAL plans to form strategic tie-ups and partners across Europe and the US, developing CEIV Pharma certified trade lanes from Mumbai to potential pharmaceutical destinations. This will offer pharmaceutical customers speedy and efficient transport for high value and temperature sensitive pharmaceutical cargo.

In line with executing strategies that are essential to showcasing the airport’s credibility, commissioning the new “Export Heavy and Bonded Cargo Terminal” on the onset of 2017 was another such initiative in this direction. Adding 3, 00,000 tons of cargo per annum to the overall capacity, MIAL is now moving towards doubling its existing capacity by 2019. Therefore, strategic steps like capacity enhancement and CEIV certification are a validation of the airport’s commitment towards providing the highest standards of handling to its stakeholders.

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ACTL partners with Konoike Transport to form Trac1 logistics

DMRC offers Richa Industries an order of INR 35 cr

Associated Container Terminals Ltd (JOSHI GROUP), a pioneering Indian Logistics company has inked a partnership with the Japanese Logistics Company, Konoike Transport. Both the well-known majors in this field are forming a Joint Venture called JKTI (Joshi Konoike Transport and Infrastructure Pvt Ltd), which has obtained license for running private container trains in India, and shall operate under the brand name Trac1 Logistics. With state-of-the-art infrastructure and a wide spectrum of services, the expertise of both the companies will further strengthen their foothold and scope of services for customers, in India. ACTL prioritizes customer satisfaction as a part of its core strategy and this partnership will play a critical role in providing an overall seamless logistics experience. ACTL will now offer all the services of the value chain through a single window.

Commenting on the occasion, RR Joshi, Chairman of ACTL said, “We believe this is a win-win relationship as both partners are committed to having a customer-centric approach in our business.

We at ACTL, believe in building long term relationships with customers and all our stakeholders. With this association, we aim to further emphasize on the core ethics of this business which include punctuality, safety and innovation and these together will be the hallmark of our operational excellence.”

Richa Industries Limited has secured an order of INR 35 crores from Delhi Metro Rail Corporation (DMRC) for constructing the six elevated metro stations on Mukundpur-Shiv Vihar Corridor and Depot cum Workshop of Jahangirpuri-Badli Corridor Phase III of Delhi MRTS. Richa Industries received this back to back projects from DMRC. The first project involves the construction of six elevated metro stations and second project involves construction of workshop, inspection shed, stabling shed, pit wheel lathe shed and parking shed. The complete scope of work entails Engineering Design, Fabrication, Shipment and Erection of the Pre Engineered Buildings. Dr Sandeep Gupta, Managing Director, Richa Industries Limited said, “We are glad to get this back to back project of DMRC and this will be our fifth achievement after associating with Metro Rail Sector. Our focus will remain to take up more challenging projects in future for infrastructure development and enhancing public services.”

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Railways to allow corporates to run own freight trains Indian Railways will soon allow private companies to run freight trains from their own private terminals, a move which could potentially break the monopoly of the national transporter on the country’s rail roads.

Companies from sectors such as cement, steel, auto, logistics, grains, chemicals and fertilisers have evinced interest in having their own fleet under the special freight train operations scheme of the railways, a senior rail official said.

“Through these private terminals, we’ll be able to add almost 20-25 million tonnes of additional loading capacity. The demand for all commodities other than coal have seen an uptick. So, we expect companies from various sectors to come forward and invest in their own terminals at their plants or any other convenient location,” the official said, adding, “They will also be able to run their own trains.”

India, Australia sign MoU for adopting smart transportation Indian Academy of Highway Engineers (IAHE) has signed a Memorandum of Understanding (MoU) with University of New South Wales (UNSW) for establishing Centre of Excellence in Smart Transportation. This MoU is in line with the Ministry of Road Transport and Highway’s vision to influence and adopt global innovation into the transportation sector. The MoU was exchanged between the Director of IAHE VL Patankar and Vice Chancellor of UNSW Ian Jacobs on April 10, 2017 in the presence of Simon Birmingham, Australian Minister for Education. The vision for the Centre of Excellence is to - accelerate the evaluation and adoption of new transportation technologies and explore market opportunities for them in India and Australia, and conduct research, development and training in the areas of transport system modelling and data for smart cities. This would be the world’s first transportation centre involving two countries committed to seeing technological innovation for economic development through improved safety and reduced congestion, informed the Ministry in a statement.

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Adani Logistics commissions MMLP in Punjab

Kerry Logistics launches ‘One Belt’ UK-China rail services

Adani Logistics recently said it has commissioned and commenced operations at its multimodal logistics park at Kilaraipur, Ludhiana in Punjab. Adani Logistics is a subsidiary of Adani Ports and Special Economic Zone Limited (APSEZ). “The state-of-the-art terminal was dedicated to the nation by Suresh P Prabhu, Minister for Railways, Government of India,” the company said in a statement. The logistics infrastructure facility, spread across 77 acres, is strategically located on the dedicated freight corridor feeder route and will facilitate double stack train services to Mundra Port.

“With commissioning of this multimodal logistics park –our third inland container depot (ICD) — we are a step closer to attaining leadership in the logistics sector. “We aim to increase our footprint pan India and further expand in the logistics sector, mirroring the growth of our ports business. Ludhiana, in Punjab, holds a strategic location advantage with high industrial presence,” said Karan Adani, CEO, APSEZ.

A slew of stories have emerged about new rail connectivity between Europe and China demonstrate that the latter’s “One Belt, One Road” initiative is becoming an economic reality.

Now, Kerry Logistics is making the initiative tangible on the Western end, too, as the first eastbound freight train is poised to begin chugging away from London to Yiwu, in central Zhejiang province, China. The new link also reinforces Kerry’s expansion into the railfreight and multimodal services. The train, departing from London on May 10, is scheduled to reach its destination in around 18 days. The 7,500-mile route will pass through nine countries, including France, Belgium, Germany, Poland, Belarus, Russia and Kazakhstan. Kerry said that the freight cost is lower than both air and ocean freight, and twice as fast as ocean transport. The rail link from Yiwu to London launched on Jan 1, 2017 and took 18 days to complete. Since then, it has carried clothes, shoes and other consumer goods made in China.

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United Airlines and Lufthansa Cargo announce Cargo JV

Global air freight demand up by 8.4pc in Feb

United Airlines (UAL) and Lufthansa Cargo have signed a joint venture agreement for extensive cargo cooperation on routes between the U.S. and Europe. The cargo joint venture partners plan to provide a wide range of benefits to customers by cooperating on the availability of their capacity and aligning booking and handling processes. The carriers’ joint venture route network will provide greater flexibility and time savings to customers with thousands of new route combinations and more than 600 direct connections per week between the U.S. and Europe. The combined network offering creates additional benefits through access from either partner’s booking channels along with coordinated handling processes and transfers at numerous stations.

“The Lufthansa-United cargo joint venture will generate numerous benefits for our customers because our continental and transatlantic networks, our hubs and our fleet complement each other effectively,” said Peter Gerber, Lufthansa Cargo CEO. “We are excited about the benefits that will be generated by our teams’ cooperation and our combined capacities,” said Jan Krems, President of United Cargo.

Global air freight markets showed an 8.4 per cent increase in demand measured in freight tonne kilometers in February compared to the same period last year, according to figures released by IATA. After adjusting for the impact of the leap year in 2016, demand increased by 12 per cent – almost four times better than the five-year average rate of 3.0 per cent, said a statement from Iata. Freight capacity, measured in available freight tonne kilometers, shrank by 0.4 per cent in February of this year, it said. Middle Eastern carriers’ year-on-year freight volumes increased 3.4 per cent in February 2017 and capacity decreased 1.7 per cent. The continued growth of air freight demand in 2017 is consistent with an uptick in world trade which corresponds with new global export orders remaining at elevated levels in March, it added.

DHL inaugurates Asia Pacific’s 1st solar powered Service Center Frank Appel, CEO of Deutsche Post DHL Group, inaugurated in India the first DHL Express Service Center in the Asia Pacific region powered by solar energy. Located in Goregaon, Mumbai, the 25,000 sq ft facility uses solar-powered panels that reduce the consumption of grid electricity by 30 percent. The successful adoption of “green technology” paves the way for increased use of alternative energy sources in current and new facilities going forward. To further support growth in the country, over the next three years, the company also plans to invest close to €45 million in new upcountry developments, upgrading and expanding its infrastructure and bolstering its retail presence. Frank Appel, CEO, Deutsche Post DHL Group, said, “India’s integration into the global economy has been accompanied by economic growth and progressive policy initiatives. With the country emerging as a global trade hub, India remains a critical growth market for us and we will continue to invest proactively to support the business here.”

Good days lie ahead for global dry bulk market There could be no looking back for the Baltic Dry Index (BDI) hereon. Hovering around 1300 levels at present, this freight index, which measures the price of shipping majors’ raw materials, is expected to move only northwards in the coming months.

With global dry bulk traffic set to increase on select routes and discarding of old vessels only on the rise, BDI could have a smooth and steady uphill journey. Experts are of the view that US president Donald Trump’s policies on pollution norms and thrust on coal production in the world’s largest economy would have a significant impact on dry bulk trade on the trans-Atlantic route.

The earlier Obama administration, for environmental safety, had enforced a moratorium on coal leases and also asked coal mining companies to avoid mining practices that harm the environment.

DP World defends port freight charge increase Backlash has followed port operator DP World’s introduction of an infrastructure charge for Sydney and Melbourne port drivers last month. The changes include an increase in Melbourne port fees from $3.50 to $32.50 per container, and a $21.16 container fee in Sydney. Defending statements made by Road Freight NSW, that accuse the terminals of using market power to unilaterally impose fees, terminal operators maintain the charge is to cover increasing costs of rent, rates etc. “As we have publicly flagged on many occasions, we are in a similar position of facing significant and unavoidable cost increases for the use of the port infrastructure, including the cost of council rates, land tax, rent and terminal infrastructure maintenance, which we are reluctantly passing on,” DP World Chief Commercial Officer Brian Gillespie said.

may 2017 - CargoConnect 87

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The Economic Times Global Logistics Show held in Mumbai The Economic Times Global Logistics Show turned out to be a convergence of 120+ exhibitors, 6000+ trade visitors, 400+ conference delegates, 100+ world class speakers from April 17-19, 2017 at the Bombay Exhibition Centre, Mumbai. Some of the most important topics that were discussed in the show are Industry 4.0 and “Make in India�, Reimagining supply chain post GST, DDMRP: the next evolution of MRP and Lean, effective strategies in bridging the gap between PLM practice and needs across demand-driven value networks and taking a comprehensive approach to supply chain cost reduction. According to reports, the absence of necessary infrastructure, palletized handling, barcoding investments in multimodal logistics solutions could impact the present scenario of perishable wastage taking it to the tune of INR 90,000 crores per annum.

The Economic Times Global Agri and Perishable Logistics Show put a spotlight on products, services, technologies and best practice that can help India surmount this challenge. With an exhibition, a conference and a set of excellence awards, the event was truly a convergence ground for all stakeholders of the Perishables Value Chain.

88 CargoConnect - may 2017

events

Summit on GST organised by Car Carrier Association Car Carrier Association, on March 24, 2017, organised a Summit on GST at Hyatt Place, Gurgaon. The event was attended by Kamal Aggarwal, who presented an overview on GST and also by Arun Gupta, who gave a presentation on use of IT for GST. The event also witnessed an presentation session by Manoj Mishra on the impact of GST on outbound automotive logistics business, followed by a panel discussion moderated by Jasjit Sethi, CEO, TCI Ltd.

may 2017 - CargoConnect 89

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Logistics associations meet GST Working Group; Seek exemption for Exim trade services

In a bid to ensure the smooth implementation of GST, the Central Board of Excise and Customs (CBEC) on March 24, 2017 constituted ‘GST Working Groups’ to interact with select industry sectors to address their concerns relating to GST implementation issues. Accordingly, the government designated officers to address issues relating to certain identified sectors like transport and logistics, to submit their report by April 10, 2017.

On April 4, J M Kennedy, ADG DGR, Working Group, Transport and Logistics-GST had an interactive meeting in Chennai with the Logistics

PM flags off the first UDAN flight Hon’ble Prime Minister Shri Narendra Modi recently flagged off the maiden UDAN - Ude Desh Ka Aam Naagrik flight under the Regional Connectivity Scheme (RCS).

Already touted to be a revolution in the aviation sector, the first flight took off from Jubbarhatti Airport, Shimla to New Delhi. On this occasion, the Hon’ble Prime Minister also flagged off flights on Kadapa Hyderabad and Nanded - Hyderabad sectors under the scheme through video link. The flag off ceremony was held in the august presence of Acharya Devvrat, Governor, Himachal Pradesh; Virbhadra Singh, Chief Minister, Himachal Pradesh; P Ashok Gajapathi Raju, Union Minister of Civil Aviation; JP Nadda, Union Minister for Health and Family Welfare; Jayant Sinha, Union Minister of State for Civil Aviation and other dignitaries.

90 CargoConnect - may 2017

Industry leaders from FFFAI, ACAAI, AMTOI and Consolidators Association of India (CAI). FFFAI was represented by Samir Shah, Chairman; A V Vijaykumar, Vice Chairman and S Ramakrishna, Vice Chairman. Also present at this meeting was eminent tax consultant and advocate Vatheeswaran to represent the industry. Welcoming the basic objective of the tax reformation called Goods and Services Tax (GST) as a revolutionary step, the associations maintained that there are certain provisions in the proposed GST Law causing concerns for freight forwarding, customs broking, logistics services and manufacturing and exports industry in the country.

The joint delegation emphasised on exemption from new tax burden to be levied by GST structure on the freight forwarding, customs broking and logistics industry as a whole, which hitherto have been exempted to make Indian manufacturing and export less expensive and competitive in the international market.

The association leaders pointed out that currently, freight forwarding in the air and sea cargo segment there is no Service Tax, based on Rule 10 of the ‘Place of Provision of Service Rules 2012’, which provides that in respect of taxation on transportation of goods criteria should be the ‘Place of Destination of Goods’. In the freight forwarding segment pertaining to export of goods from India, the place of destination is outside India and, as a result, Service Tax is not payable. This aspect was also confirmed by CBEC by a Circular issued on August 12, 2016.

DP World Mundra wins Terminal of the Year Award DP World Mundra has been awarded the highly coveted Terminal of the Year – Containerised award at the Gujarat Junction 2017 – Cargo and Logistics Awards.

The terminal has been honoured with this accolade because of the operational excellence displayed throughout the year. The Terminal of the Year – Containerised award was received by the CEO, Sumesh Padmanabhan at a ceremony held at Radisson Hotel Kandla, Gandhidham. DP World Mundra handled over 1.1 million TEUs in 2016 and continued to excel in the areas of efficiency and productivity, achieving a berth productivity rate of 88.62 in 2016. This was accompanied by a 17.56 per cent increase in capacity utilisation.

events

ACAAI Regional Meeting held in Bengaluru Air Cargo Agents Association of India (ACAAI) recently held their Regional Meeting on March 25, 2017 at Hilton Bangalore Embassy GolfLinks in Bangaluru.

An informal fellowship dinner and cocktail was hosted after the meeting, which was attended by top dignitaries from Customs, Custodian, Airlines and other stakeholders of the industry. The highlight of the programme was the presence of Rajeev Bhushan Tiwari, Chief Commissioner of Customs; Anup Dayanand Sadhu, Group General Manager, CONCOR and other senior officials from Customs and Custodians, with whom members had a lively interaction.

Blue Dart conferred with two prestigious awards

Dachser launches air freight gateway at expanded facility

Blue Dart Express Limited, South Asia’s premier courier and integrated express package distribution company has been conferred with two prestigious awards - the ‘Business Superbrand’ Award by the Superbrands Council for the 10th consecutive year and the Reader’s Digest Trusted Brand Award for the 11th consecutive year.

On the awards, Ketan Kulkarni, Senior Vice President and Head – Marketing, Communications and Sustainability, Blue Dart Express Ltd said, “It gives me immense pleasure for Blue Dart being recognised as the ‘Business Superbrands 2016’ for 10th time in a row and the ‘Trusted Brand 2016’ by Reader’s Digest for 11th time in a row. Both the prestigious accolades testify the fact that Blue Dart has been able to sustain its growth momentum in its performance and build a strong equity with its valued customers. Our endeavour to deliver excellent service quality, high customer satisfaction and innovative methods to enhance our service offerings has been consistent through the years. We would like to thank the jury and all our patrons who acknowledged our efforts.’’

Dachser streamlined air freight processes in the North China region after making their new air freight gateway operational. The Shanghai Pudong Airport Bonded Zone branch expanded from 3,000 to 6,000 sqm. “The North China gateway demonstrates Dachser’s high quality process management across continents,” explains Yves Larquemin, Managing Director Air and Sea Logistics, North China.

Air freight handling is continuously facilitated by applying gateway procedural standards worldwide to increase response time and transparency. Inbound and outbound cargo for the ten Dachser branches in North China will be routed through the Shanghai Pudong Airport and the Beijing International Airport, depending on their geographical proximity, specific requirements of the goods and current market situation.

“Consolidating cargo via the gateway instead of handling it individually at local airports will harmonize processes and extend service capabilities,” said David Wang, Air Freight Gateway Manager North China. All single steps like capacity planning, flight schedule updates or pre-alerts are synchronized throughout the company’s global network.

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Maersk Line leads the way for EXIM trade in North India

Zebra Technologies awarded at Global Logistics Excellence Awards

Maersk L ine, th e glo bal containerized division of the Maersk Group has announced key offerings for the NCR region, aimed at enabling and facilitating trade. These offerings namely, introducing End to End to End Carrier Haulage for Rice Exports, bringing Reefer Imports to the Northern Hinterland, introducing Import Store Door Service, are an industry first. The company is leading the way in creating integrated logistical solutions for the Indian marketplace to help facilitate and add momentum to trade in the region. Commenting on the occasion, Franck Dedenis, Managing Director, Maersk Line (India, Sri Lanka and Bangladesh) said, “We are happy to announce these key offerings to our customers in the NCR region. Our role is to simplify and enable trade through our increased service offerings and constant innovation to help our customers. This is in line with our belief of enabling the India growth story by providing customers with a reliable, cost-effective and viable logistical solution.”

Zebra Technologies Corporation has been recognized as the Supply Chain Technology Achiever of the Year for Hardware at the inaugural Global Logistics Excellence Awards, organized by Tata Strategic Management Group in association with India’s CNBC TV18 network. The awards ceremony is part of The Economic Times Global Logistics Show that runs April 17-19, 2017 in Mumbai.

Deep Agarwal, India Regional Sales Director, Zebra Technologies Asia Pacific said, “We are delighted and honored to be recognized in the inaugural Global Logistics Excellence Awards as the Supply Chain Technology Achiever of the year. This recognition is the testimony of Zebra’s continuous innovation in the logistics sector, through our solutions that make organizations as smart and connected as the world we live in.”

Agility expands operations in Vadodara

Dachser acquires majority interest in Johnston Logistics

Agility, a leading global logistics provider, has moved into a new larger office premises in Vadodara.

The new office was inaugurated on 3rd April 2017 by Detlev Janik, CEO, South Asia, Agility, in the presence of various existing customers, partners and senior management of Agility in India. The new office located in heart of the city will allow Agility to cater to the ever growing volumes and business opportunities in the Vadodara Market. The facility will also enable the customers to access the various logistics services offered by the company in India. To mark the official inauguration of the office, Agility also organized lunch for its valued customers and partners highlighting its commitment to Vadodara and its customers. At the inauguration, Detlev Janik, said, “Vadodara is a very important market for Agility in India. In the coming years, it is the tier 2 and tier 3 cities which will drive the next wave of growth in India.”

Effective immediately, Dachser becomes majority shareholder of its partner in Ireland, Johnston Logistics Ltd. This allows Dachser to expand and strengthen its logistics network in northwestern Europe.

“Our customers in Ireland benefit from uniform services and quality standards, fixed transit times, and a tightly meshed network of Dachser branch offices throughout Europe,” says Michael Schilling, COO Road Logistics at Dachser. “In Johnston Logistics, we’ve acquired a well-established family company that we’ve worked with and trusted for a long time, and we see this investment as an exciting opportunity to further enhance our all-important European network.”

Albert Johnston will remain a shareholder and Managing Director of Dachser’s new subsidiary in Ireland. “Ireland’s tremendous economic growth makes it a key logistics region. This purchase allows us to offer our customers the entire range of high-quality services that Dachser is renowned for,” says Wolfgang Reinel, Dachser Managing Director of European Logistics for North-Central Europe.

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events

Co-founder of Ecom Express wins ‘Woman Supply Chain Icon of the Year’ award

Jayem Warehousing honoured with “Excellent practices in Environment, Health and Fire Safety Award”

Manju Dhawan, Co-founder, Ecom Express Private Limited, a leading end-toend ecommerce logistics solutions provider, was the recipient of the ‘Woman Supply Chain Icon of the Year’ at the ‘Global Logistics Excellence Awards’ held at The Leela, Mumbai on 18th April 2017. The award was presented by Tata Strategic Management Group in association with CNBC TV 18.

Manju Dhawan was recognized for her outstanding contribution to the Logistics and Supply Chain Industry.

With over 30 years of experience in the Courier and Express Delivery Services Industry, Manju has been instrumental in conceptualizing and developing the delivery services and business distribution model for e-commerce industry. As Co-founder of Ecom Express, she has passionately led the Company to operational excellence through client-centric strategies and championing innovation.”

Jayem Warehousing, a unit of Jayem Logistics, was honored with “Excellent practices in Environment, Health and Fire Safety Award” by Aarush Fire Systems and selected by National Institute of Personnel Management, Pune. Health, Safety and Environment (HSE) is an umbrella term for the laws, rules, guidance and processes designed to help protect employees, the public and the environment from harm. HSE department of Jayem Warehousing is committed in establishing and maintaining environment protection, occupational health and safety at work for our staff, visitors and surrounding communities. Every Jayem Facility across India runs Employee Safety Awareness programs time to time, each facility has a proper display and signage system, emergency evacuation plan, notice boards and First Aid box, emergency contact numbers etc. Employees are trained to handle natural calamities and other adversities through regular mock drills and workshops.

Safexpress conferred with the title of Iconic Brand by Economic Times Safexpress has been conferred with the title of Iconic Brand by Economic Times. This honor was bestowed upon Brand Safexpress in a grand ceremony at Hotel Taj Santacruz in Mumbai.

Speaking at the award ceremony, Vineet Kanaujia, Vice President – Marketing said, “I would like to express my heartfelt gratitude to our customers, partners and employees who have all provided their invaluable support to Brand Safexpress over the last two decades. It is only due to their contribution that we have created industry leadership for our brand and gained the iconic status.”

Vineet Kanaujia added, “For the last 20 years, Safexpress has been striving very hard to provide world-class services to its customers.

As a result, today Brand Safexpress is considered synonymous with supply chain and logistics in India. The ET Iconic Brand award is truly an affirmation of the iconic status of Brand Safexpress in the field of supply chain & logistics. This award will motivate our firm to work even more passionately in the field of supply chain and logistics.”

Explaining about the unique marketing strategy of Safexpress, Vineet Kanaujia said, “We have created Integrated Marketing Communications strategy at Safexpress a decade back. The keystone of our IMC strategy is based on pillars like ATL, BTL, Digital Marketing, PR and Corporate Communications, Cause Marketing, and so on.

He concluded by saying, “Through our pioneering initiatives, Safexpress has totally redefined the way supply chain functions in the country. Following a unique hybrid model of ‘hub & spoke’ and longhaul routes, Safexpress network covers every square inch of India. Our supply chain and logistics operations are driven from our 30 ultramodern Logistics Parks built at strategic locations across the country, and operated by a highly dedicated and skilled workforce. This award is a fitting tribute to the work Safexpress has put into the supply chain and logistics domain over the last two decades.”

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PEOPLE CONNECT

Every task should be seen as a challenge RE Rogers, the market leader in exhibition logistics driven by Ravindra Sethi,Founder and Director, RE Rogers India Pvt Ltd, has been supporting various trade fairs and exhibitions. He has been in the industry for about 30 years now and has been an example for various people across the sector. Reflecting on his journey, Ravindra Sethi, in an exclusive interview with Sheena Sachdeva, talks about his success mantra in the service driven industry and its transformations.

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

I never wanted to be in the logistics industry or running business. I wanted to be a professor in Economics. After completing Bachelors from Hindu College in Economic (Hons) and further Masters in Business Economics from Delhi School of Economics and I was planning to go to London School of Economics to further pursue Phd. But due to personal reasons , I had to start working. Further, I started working as a Marketing Manager in Cox & Kings in the cargo department. Accidentally, I was placed in the imports and customs department.

The organisation has been a career ladder for me, from there I got a chance to learn the whole exhibition structure. And the journey started from there. It has been really eventful.

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

With advent of 21st century, things have become more organised in terms of manpower, technology has now become more mechanised. Laws have become more relaxed. More foreign companies are coming to India. The change which has sadly come about is that earlier the

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organisers use to look at their logistics provider as a partner. But nowadays most of the organisers look at their logistics provider as just a service provider. The mindset needs to be changed.

Which is the biggest challenge that you have faced till date?

Everyday is a challenge. Also, in order to move forward, one has to see tasks as a challenge. The consumer these days has become service and price conscious.

Hence, in the service sector, nowadays no one can get away just by delivering the services but it has to be at the level of customer satisfaction. We are the market leaders but still there is a lot of competitions. So, in order to attain this we have to be on the toes always. We make sure we don’t lose a single kilo where we look at challenges from the macro level.

What specific beliefs or values do you live by? How do you define success?

One should be god fearing and live in humility. I always abide by these two mantras. When it comes from the top it has to be genuine. When you are humble, it should be at every level of your personality. As human beings are easy to adapt in any environment, they learn through experience while adapting.

Hence, genuine adaptability comes automatically in people willing to achieve something in their path.

Where do you see the graph of the logistics industry will head in the coming years?

As we have growth, young demography and demand which will be a stimuli towards increase in investments. Hence, as exhibitions and logistics are directly proportional. So, if there are investments in exhibitions, logistics sector is meant to flourish.

Apart from work, what are your other interests?

I love to be with with friends and family. I try to keep not just my first family but my extended family together and happy. It’s not easy although one needs to be with there closed ones through thick and thin in both there good and bad times. I also love music and I am still a traditionalist where time and again I go back to oldies of those times. I am also interested in political happenings all over so, reading political material is also an interest that I follow.

What message would you give to the aspirants who want to make a mark in the logistics industry?

The scope in the industry is tremendous and it is extremely time sensitive and extremely service driven. Unless it is not embedded in a person’s mind, one shouldn’t get into it. Hence, in order to fit into the system and drive it through, one needs to have that sort of mindset.

A Trusted Name in the Domain of Logistics for More Than a Decade The EXTRA EDGE • • • • • • • • • • • • • • • • • • •

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Scheduled rail service between ACTL & Nhava Sheva/Mundra/Pipavav Dedicated Railway Siding equipped to handle EXIM as well as Domestic Cargo.

State of the art infrastructure for reefers containers with plug in points andpower packs.

Shortest Transit Time from NCR to Nhava Sheva.

QC facility within Bonded Area.

Special dust free enclosure for GOH in the export warehouse with provision of temperature control.

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Bonding of Import Cargo in warehouse as well as containers.

Provision of clearing and consolidating air cargo.

Security: CCTV surveillance, intruder alarms and motion sensors.

Online tracking of shipments.

Value adds like Palletisation, shrink wrapping, Sorting, Segregation, Snakeloading, Bar coding, etc.

All equipment owned and operated by ACTL. EDI, Bank, Dedicated Customs teams.

Customized daily reports for customers via email.

Impeccable cargo handling.

Provision for customs clearance on Sundays/holidays.

Door-to-Door delivery/handling of cargo.

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