CargoConnect September 2016 by Surecom Media

www.surecommedia.in

VOL VII ISSUE X september 2016 `20

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

Technology Trends Shaping the Future of Logistics

D E S What PAS Next L

BIL

Dedicated Freight Corridors: The Future of Railways Military logistics: Guns, Roses and More | Elevating the Soft Corner in Aviation Logistics

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CargoConnect - SEPTEMBER 2016

Contents

Volume VII • Issue X • SEPTEMBER 2016

Editor and Publisher Smiti Suri Principal Correspondent Ritika Arora Bhola Special Correspondent Sana Husain Feature Writer Nikhil Mishra Tariq Ahmed Nicin Varghese

22 COVER STORY

GST BILL PASSED, WHAT NEXT?

SPECIAL FEATURE

Technology Trends Shaping the Future of Logistics

FEATURE

NEWS ........................................6-10 & 74-78 We bring you a wide spectrum of updates that will keep you informed about the industry’s plans, performance and initiatives.

INTERVIEW Dedicated Freight Corridors: The Future of Railways .......................40

Halit Anlatan, Vice President, Marketing and Sales, Turkish Airlines ..................................62 Husain Rajab, Executive Director, Manufacturing and Logistics, Economic Development Board of Bahrain ................64 Stuart Scott, Solutions Marketing Lead, Zebra Technologies ...............................................66

Military Logistics: Guns, Roses and More .....................................................48

GUEST COLUMN ...............72-77 appointments .....................79 EVENTS ..............................82-85

Director Marketing Ajeet Kumar Manager Marketing Niti Chauhan Marketing Executive Chetan Pathak Rajesh Basu Asad Mohammad Mehuli Choudhury Marketing Support Sheetal Singh Administration Vipin Marwah Lavish Thakur Designer & Visualiser Shaique Ahmad Mayank Bhatnagar All material printed in this publication is the sole property of CargoConnect All printed matter contained in the magazine is based on the information of those featured in it. The views, ideas, comments and opinions expressed are solely of those featured and the Editor and Publisher do not necessarily subscribe to the same. CargoConnect is printed, published and owned by Smiti Suri, and is printed at Compudata Services, 42, Dsidc Shed, Scheme–1, Okhla Industrial Area Complex, Phase–II, New Delhi-110020, and published at 6/31-B, Jangpura–B, New Delhi-110014. Editor–Smiti Suri

SURECOM MEDIA

PEOPLE CONNECT Suresh Bansal, Director, DTDC ............86 Elevating the Soft Corner in Aviation Logistics ..............................................56

TOTAL PAGES: 88 (inclusive of cover)

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

news

Logistics sector could save $200 billion annually post GST

Chiplun-Karad rail link to boost port link, regional development

Logistics sector, which accounts for nearly 14 per cent of the GDP, could see savings to the tune of USD 200 billion annually on implementation of GST, which will ensure faster movement of goods and less idle hours, say experts. With the introduction of Goods and Services Tax, many taxation procedures will come down, nearly halving the cost of inventory as customers will not need to pile up stocks in different warehouses, say experts. Describing the passage of the GST bill in Rajya Sabha as a “positive reform”, apex transporters body All India Motor Transport Congress (AIMTC), which represents 80 lakh truckers, said the new regime would create efficient ecosystem and bring down the cost. The government intends to roll out the GST, which will subsume central excise, services tax and various local levies from April 1, 2017. Implementation of GST will enable creation of a common market, thereby allowing free movement of goods and services across the country.

The proposed railway line between Chiplun and Karad, once completed, will enable port connectivity to the hinterland of Maharashtra and play a big role in regional development, an official said. The over 100km line between Chiplun (in coastal Konkan region) and Karad (Western Maharashtra) will be constructed on public–private partnership basis. An MoU in this regard was signed between a private firm and Konkan Railway. A senior Konkan Railway officer said, “This new project, envisaging construction of 103km long line from Chiplun to Karad, will enable port connectivity to the hinterland of Maharashtra and further pave the way for development on this entire stretch of the state.”

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The Cabinet Committee on Economic Affairs on Wednesday approved `24,374 crore of rail projects that will give a major boost to transport infrastructure by de-congesting key routes. The investment, which will be in nine projects, seeks to construct 1,937.38 km of tracks across nine states. The CCEA also revised the cost estimate of the National Highways Interconnectivity Improvement Project to `6,461 crore from `5,193 crore. The decision will help develop 1,120 km of National Highways in Karnataka, Odisha, Bihar, Rajasthan and West Bengal. Over 27 per cent of the rail investment will go to two projects connecting Uttar Pradesh, a state heading for Assembly elections next year, and Madhya Pradesh. A rail line between Mathura and Jhansi in Uttar Pradesh and another between Jhansi and Bina (Madhya Pradesh) will be developed at a cost of `6,650.97 crore. “The goods trains supplying food grains from one region to another, various industries, mines, coal fields and power plants will have additional transport capacity through these lines resulting in more revenues to the Indian Railways,” the official statement said. Eastern States have also received sizeable investments. Projects in Jharkhand, Assam and connection between Odisha and Chhattisgarh and Assam will come up at a cost of `6,368.53 crore.

news

Revised trade facilitation measure to ensure speedy clearance at ports The Central Board of Excise and Customs (CBEC) has recently revised the Authorised Economic Operator (AEO) programme to make it more lucrative for trade in speedy clearance of cargo from ports, and reduce time and cost in cross border trade, said BK Bansal, Member (Customs), CBEC. Customs is moving away from a regime of control to facilitation and partnership. The revised AEO was launched with this in mind, he said. AEO will enable direct port delivery of imports to ensure just-in-time inventory management by manufacturers and clearance from wharf to warehouse. It is a programme of trust and confidence between the customs and trade. The department will grade assessees based on compliance track record. Accordingly, assessees will be facilitated much better, can have reduced bank guarantee and can get deferred payment of customs duty. There will be international recognition also with China, Korea, Hong Kong and the US looking forward to have mutual recognition agreements with India.

Ports to promote waterways as Centre plans policy The Centre is framing a policy to enable all major ports to set up subsidiary companies to develop inland waterways. This is part of its plan to cut logistics costs for exporters by moving more cargo on water instead of over land. The establishment of separate units will facilitate easy foreign funding for inland waterway projects by capitalising on the financial credentials of the government owned ports, Union Minister for Shipping, Highways and Waterways Nitin Gadkari said on the sidelines of a summit organised by the Indo-American Chamber of Commerce. “We are framing a policy at the department level,” Gadkari said. “As nobody will give loans to inland waterway projects, we will use the financial credential of ports, which will set up subsidiary companies for developing inland waterway projects. We will be framing it in 15 days,” he said. The objective of the government is to reduce logistics costs to make exports competitive and all ports will be asked to improve inland waterways in their periphery to divert large part of the cargo on waterways which is cost effective. India’s biggest container port Jawaharlal Nehru Port Trust (JNPT), which posted a profit of `1,000 crore last year, has been asked to set up a subsidiary for this purpose.

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CargoConnect - SEPTEMBER 2016

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Shipping Corporation of India Ltd signs MoU with Government Shipping Corporation of India Ltd. has signed the Memorandum of Understanding with the Ministry of Shipping for the financial year 2016-17. The MoU was signed by Shri Rajive Kumar, IAS, Secretary (Shipping) and Capt. B.B. Sinha, Chairman and Managing Director, Shipping Corporation of India Ltd., in New Delhi. The MoU is based on the MOU guidelines 2016-17 issued by the Department of Public Enterprises (DPE). It consists of parameters drawn on the prescribed evaluation criteria and factors such as capacity and its expansion, business environment, projects under implementation have been considered. SCI has set ambitious, growth-oriented and aspirational targets against these parameters keeping its growth plans and objectives in view. These are also in line with the vision of the Ministry of Shipping and the Government of India to escalate the growth for the Maritime sector in India. The MoU will be periodically reviewed by the Ministry and the performance of the PSU would be evaluated and ratings awarded at the end of the financial year. The shipping industry is cyclical and is presently experiencing a down turn.

Adani Kattupalli Port becomes AEO certified Adani Kattupalli Port (AKPPL), a subsidiary of Adani Ports and Special Economic Zone (APSEZ), Indiaâ&#x20AC;&#x2122;s largest port developer and operator, has been certified by the Indian Customs in its Authorised Economic Operator (AEO) programme, with their AEO status being extended up to July 2020. The Port of Kattupalli has successfully demonstrated their complete compliance with the stringent requirements that have to be fulfilled in order to attain the AEO status. As the process of AEO certification gains momentum, exporters and importers will find it increasingly beneficial to partner with AEO certified entities, as this will optimise the smooth operation of the overall supply chain. The AEO certification is yet another achievement for Kattupalli port and exemplifies its deep-rooted commitment towards providing a superior customer experience to all users and stakeholders of the port.

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SPECIAL feature

Technology Trends Shaping the Future of Logistics With the advancement of technology and continuous innovations, Indian logistics industry, which is estimated to grow at a CAGR of 12.17 per cent by 2020, has come a long way. Logistics experts highlight emerging technologies that are going to change the future of the industry. Ritika Arora Bhola, with respective opinions from the experts, talks about the revolution technology is going to bring in the industry in the years to come

12 CargoConnect - SEPTEMBER 2016

SPECIAL feature

ith the passage of ti me, there has b e e n a d r a s t ic cha nge on the technological front. New technologies have taken over and the old ones have become stale. The Indian logistics industry and Logistics service providers should consider four emerging technologies as a part of their service offerings. In order to serve their

companies an edge over the rest:

1. 3D Printing 3D printing has been floating around for years as an idea and has very recently turned into reality. This reality has transformed the logistics industry. According to 3PL Selection and Contracting Survey conducted by EFT, more than 40 per cent of the manufacturers and retailers questioned expect that their 3PL providers should have some knowledge/

human input,â&#x20AC;&#x2122; surely reads as a brilliant futuristic idea. This technology can lead to massive cost savings and can act as a golden pot for the logistics companies. But the question of the hour is whether logistics companies are ready for this innovative technology? A st udy t h at fou nd most of t he manufacturers and retailers would like 3PLs to have some knowledge and expertise of driverless vehicles. However, 0.75 per

Vikas Anand, Managing Director, DHL Supply Chain

The future of logistics is paved with innovation and technology. It was not long ago that ideas like 3D printing, the Internet of Things (IoT), drone delivery, and augmented reality were things of science fiction. Today, the industry is cautiously adopting these technologies to provide faster, cheaper, more reliable and sustainable delivery. customers better, they need to understand these technologies and integrate them into their service practices. There has been a rapid and unparalleled transformation in the logistics industry. The ideas like 3D printing, the Internet of Things (IoT), drone delivery, and augmented reality, which were things of science fiction, have now turned into reality. The customers - primarily the manufacturers and retailers are advocating their LSPs and 3PL providers to integrate these technologies and offer reliable and cheaper deliveries. Let us look at some of the emerging technologies which ought to provide modern day logistics

expertise about 3D printing. Whilst on the other hand, the EFT study revealed that 19.2 per cent of manufacturers and retailers are already using 3D printing in their businesses. Only 2.6 per cent of those surveyed have comprehensive knowledge and know-how and plan to provide the services, 1.5 per cent have complete knowledge, 12 per cent have some knowledge and 7.5 per cent plan to have knowledge and provide services.

2. Driverless Vehicles â&#x20AC;&#x2DC;A vehicle equipped with electronic eyes and ears and capable of navigating without

cent of the 3PL companies can provide expert knowledge and service, 1.5 per cent of them have comprehensive knowledge and expertise and plan to provide the service. On the brighter side, 12.78 per cent said that they have some knowledge, and 6.02 per cent said they plan to have knowledge and services.

3. The Internet of Things (IoT) In the last few years, the Internet of Things has been successful in increasing speed, decreasing waste and most importantly reducing costs. IoT works without human intervention and lets devices communicate with each other within an existing internet infrastructure. A study conducted found out that 26.25 per cent of 3PL companies are currently using machine-to-machine (M2M) technology and 46.62 per cent plan to deploy them in the future. When asked about the impact of IoT on logistics and supply chain management, 47 per cent said they believe it will have a tremendous impact while 49 per cent said that it would have some impact. Only three per cent said that it would have no impact.

4. Drone Delivery Most recently, the e-commerce giant Amazon announced its plan to use drones to deliver products to customers. This has led to a new heat wave in the industry and most companies are considering the idea of drone delivery. But, drone delivery still has battles

14 CargoConnect - SEPTEMBER 2016

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SPECIAL feature Mark Martyn–Fisher, Managing Director, UPS India

It is technology that has brought the world closer. Advanced communication networks have changed the way things work. The logistics industry has adapted to the fast paced technology and that in-turn has led to the revolution in the industry."

A study conducted found out that 26.25 per cent of 3PL companies are currently using machine-to-machine (M2M) technology and 46.62 per cent plan to deploy them in the future. to fight as it has been subjected to a lot of skepticism. Yet, not everyone has seen drone delivery with skepticism. In a recent survey, 27.31 per cent of survey respondents believe drone application in shipping will occur only in highly specialised areas, such as delivering drugs to remote locations. Around 36 per cent of respondents believe that there will be some form of drone delivery in 5-10 years and 6.3 per cent believe that it will be

16 CargoConnect - SEPTEMBER 2016

commonplace in 10 years. Thirty-one per cent of manufacturers and retailers want to see logistics companies use drones for product delivery. But, are the 3PL companies ready to adopt the technology? The study found that only 1.5 per cent of the companies can provide expertise, knowledge and service while 1.5 per cent of businesses have comprehensive knowledge and knowhow, and plan to provide the service. This suggests that it is quite clear from the manufacturers and retailers that they would want their 3PLs to consider what’s emerging. This has rather caused 3PL companies to take a new leap of faith and take a cautious step in the direction of accepting these emerging technologies. Observing the same, Vikas Anand, Managing Director, DHL Supply Chain, avows that technology is literally growing by leaps and bounds and it has brought a revolution in the logistics industry. Anand continues, “Technology is playing the role of a facilitator and disruptor in

literally every field in modern day. A lot of industries have embraced technology and revolutionised themselves. DHL saw the advent of a technology-led future of logistics well-beforehand. Globally, the logistics industry is going through a time of rapid and unprecedented transformation. The future of logistics is paved with innovation and technology. It was not long ago that ideas like 3D printing, the Internet of Things (IoT), drone delivery, and augmented reality were things of science fiction. Today, the industry is cautiously adopting these technologies to provide faster, cheaper, more reliable and sustainable delivery. At the same time, the customers-primarily the manufacturers and retailers-are wasting no time by urging service providers to integrate these technologies into their service. We think that the future holds a lot of pleasant surprises as far as technology is concerned.” Agreeing with Anand, Mark MartynFisher, Managing Director, UPS India reiterates, “It is technology that has brought the world closer. Advanced communication networks have changed the way things work. The logistics industry has adapted to the fast paced technology and that in turn has led to the revolution in the industry. With businesses sourcing and selling goods throughout the world, the need for predictability, visibility and information has gained critical importance. Sophisticated and integrated technology is the answer to fulfil all three needs.” Mark Martyn-Fisher elaborates by saying that in the last 20 years, information about the package has become as crucial as getting the package to its final destination. He adds, “This is especially the case for e-commerce transactions, where date definite delivery, tracking visibility and simple returns are a critical part of the purchase decision and customer experience. UPS has harnessed the importance of keeping up with technological

SPECIAL feature J Sivan, Senior Consultant, Supply Chain & Logistics Transformation Practice, Frost & Sullivan

Cloud computing, Intelligence Transportation Systems, automation will help companies to provide customer-centric solutions based on their needs. Barcodes and RFIDs are very useful in tracing the location of shipments and tracking them on real time basis."

The logistics industry has adapted to the fast paced technology and that in turn has led to the revolution in the industry.

trends and demands by evolving company’s traditional business of delivering the packages to managing supply chains – utilising technology to oversee the goods as they move across the world. To transform and grow further in a market as dynamic as India, we will continue to innovate and bring greater value to the market. Future success will require even more advanced

18 CargoConnect - SEPTEMBER 2016

technologies, the use of more data for driving sophisticated processes and faster decision making – all critical aspects of tomorrow’s logistics services.” J Sivan, Senior Consultant, Supply Chain & Logistics Transformation Practice, Frost & Sullivan, also puts down his views and asserts, “Technologies and digitalisation of logistics related

infrastructure has become crucial in the past decade. With increasing globalisation, alignment of technologies with source destination is expected to bring in efficiency and faster end-to-end freight movement.” Naming few of the latest technologies being used efficiently by the logistics industry he further adds, “Cloud computing, Intelligence Transportation Systems and

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SPECIAL feature Samik Chakraborty, Business Head-East, DIESL

Companies that are well-equipped with proper IT systems and are able to create higher performance visibility with minimum manual intervention are going to have the competitive edge over others in long run. And to survive and stay competitive integration of logistics operations and technology is inevitable.”

The ‘Logistics Market in India 2015-2020’ report states that Indian logistics market is estimated to grow at a CAGR of 12.17 per cent by 2020. automation will help companies to provide customer-centric solutions based on their needs. Barcodes and RFIDs are very useful in tracing the location of shipments and tracking them on real-time basis. Use of warehouse automation and cold storage technologies also are becoming widespread in e-commerce related logistics in India.”

20 CargoConnect - SEPTEMBER 2016

On a positive note, Samik Chakraborty, Business Head-East, DIESL, explains, “The logistics Industry in India has, so far, not been very responsive towards technology adaptation, but gradually the trend is changing. The expectation of consumers, competitive scenario and the need for cost optimisation is making organisations more cognizant about technology. The entrance of global players in e-commerce, logistics and consumer segments are also playing a key role in technology adaption as they try to standardise their product offerings across the globe and rely extensively on strong IT systems. To survive in this competitive environment, Indian organisations have now started allocating higher budgets for IT and are increasingly using IT systems in different fields of operation.” Chakraborty further adds, “Automatic Identification technologies like RFID/RFT are increasingly being used now for vehicle tracking and fleet management. Bar coding is also widely incorporated for material storage/

retrieval/dispatch with minimum error. Communication technology is a core business enabler now as the systems like EDI, GPS and IDS etc. are helping logistics companies become more efficient. Tools like ERP, WMS, and software related to inventory management, scheduling and planning, optimisers, and customer management are favoured by the logistics industry leaders now. In the organised segment, the product offerings of different logistics companies are not unlike each other operationally but technology plays a significant role as a differentiator. Companies that are wellequipped with proper IT systems and are able to create higher performance visibility with minimum manual intervention are going to have the competitive edge over others in long run. And to survive and stay competitive, integration of logistics operations and technology is inevitable.”

Conclusion With the latest developments and easy adaptation of latest technologies by logistics players for efficient operations, we can conclude by saying that technology has literally brought a revolution and is actually the future of the industry. Technology not only helps in cutting down costs but also improve overall standards of working. Experts predict a very bright future of Indian logistics industry which is at present worth $300 billion, according to the ‘Logistics Market in India 2015-2020’ report by market researcher Novonous. In fact, the report states that Indian logistics market itself is estimated to grow at a CAGR of 12.17 per cent by 2020. Innovations are very important in this sector, as the demand is always high for more reach and faster shipping at lower costs. Yet, the companies will need to invest more in technology and automation, while utilising existing resources well.

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cover story

GST BILL PASSED

WHAT NEXT

To make India a massive and attractive market, it needs a single shot solution, termed as The Goods and Services Tax (GST). It works in amazing ways, which happens to dramatically alter tax administration by consolidating the web of levies into a single tax. Sana Husain talks to experts and figures out what it holds in store for them, by understanding other relative situations associated with it

22 CargoConnect - SEPTEMBER 2016

cover story

State UNION I

f you consider the following problem scenarios and how they can be killed with the GST weapon, you shall know how quite often we miss the obvious in search of the solutions to what we consider ‘complex’ problems, when very basic and simple facts escape our attention. When you check into a restaurant, you will be separately charged VAT and service tax on top of the base cost of fare that the restaurant charges. Now, such a muddle of levies can strain not only your wallet, but also the economy altogether. With GST, the layers of taxes in a restaurant bill will morph into a single levy, GST, subsuming VAT and services tax into it. A long line of lorries on both sides of a state’s border usually catches one’s eye. These trucks, sometimes running into miles have to pay entry taxes or octroi; a tariff commercial which the road carriers have to pay before entering the geographical territory of the state. Needless to say, that these slow down the system. According to a road ministry study, a typical truck spends nearly 16 per cent of the time at check posts or at toll plazas in queuing up to pay tax only to pass through a state. As a result of these welter of inter-state taxes, firms currently face lengthy transportation delays owing to stoppages at interstate check-points for tax compliance checks. According to one study by a government-appointed panel, eliminating check-point delays can

SEPTEMBER 2016 - CargoConnect 23

cover story Daniel Chopra, Executive Chairman, Elektrans Group “We are in logistics and shipping business which are secondary service industries and our fate and rate of growth are totally dependent on the state of economic affairs in the country.”

enable trucks to travel six hours more per day, thus reducing transportation time and costs and boosting productivity. Hopefully, with GST such labyrinthine taxes will be a thing of the past. Investors want hassle-free entry into the Indian economy. India continues to be seen as a difficult destination for anyone wanting to do business here, a fact that even state governments now have begun to admit. Daniel Chopra, Executive Chairman, Elektrans Group, says, “GST will be a game changer for the Indian economy and for all Indian corporates across the industries. It will step up the GDP growth rate by at least two per cent. We are in logistics and shipping business which are secondary service industries and our fate and rate of growth are totally dependent on the state of economic affairs in the country. Thus, anything which is good for the economy is music to our ears. We congratulate the present government for this historic achievement.” Abhishek Chakraborty, Executive Director, DTDC Express Limited, says, “The GST Bill will lead to higher vehicle capacity utilisation resulting in increased efficiency at every node of the logistics ecosystem. Overall, this is a positive move that will generate growth opportu-

Abhishek Chakraborty, Executive Director, DTDC Express Limited “The GST Bill will lead to higher vehicle capacity utilization resulting in increased efficiency at every node of the logistics ecosystem.”

nities for the organised players within the logistics industry.” India ranks 130th among 185 economies in the World Bank’s latest ‘Doing Business’ report. Starting a business in India is daunting — requires going through 14 procedures, which can take 29 days and can be expensive. Registering a property or building a warehouse is time-consuming. Experts often point out that ambiguous tax laws and byzantine local levies are among a barrage of hurdles that analysts often blame for keeping away large-scale private investments in what should otherwise count as a massive, attractive market. It doesn’t because each state operates like a separate country with its own

24 CargoConnect - SEPTEMBER 2016

set of laws and rules. Such a state of affairs is not happy augury for a country that takes pride in becoming the world’s fastest growing major economy. Oliver Bohm, CEO, DB Schenker India Pvt Ltd, says, “Logistics industry is projected to grow at a compounded annual growth rate of 15-20 per cent between 2015-16 and 2019-20 that will get a further boost if GST is rolled out from this year, which can trim costs by 20 per cent. Another reason for lower logistics cost is that operators will be able to rationalise and restructure their warehouses and other logistical infrastructure.” Praveen Somani, Director, Inland World Logistics, says, “Passing of GST creates sim-

The new tax was resisted by others because it might mean stricter enforcement for industries, particularly those with many smallbusiness people, where tax collection isn’t presently watertight.

plification of taxes for all stakeholders. From a logistics standpoint in terms of road transport apart from increase in efficiency, although don’t expect much change. For a small warehouse owner, pressure will be there from larger players as they are able to provide better cost savings and efficiency. Even fleet owners will receive benefits as part of this change.” Every deadline missed translates into fewer jobs created, lesser revenues for states, and lower investments made. India cannot afford to delay its date with a unified nationwide indirect tax system forever. States should realise that it is in their interest to create a “One India” market.

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cover story Oliver Bohm, CEO, DB Schenker India Pvt Ltd “Logistics industry is projected to grow at a compounded annual growth rate of 15-20 per cent between 2015-16 and 2019-20 that will get a further boost if GST is rolled out from this year, which can trim costs by 20 per cent.” Swaminathan S Anklesaria Aiyar WITH THE HISTORIC VIBE The Constitutional amendment to facilitate a goods and services tax has been called the greatest economic reform since 1991. Political scientists have hailed the new “co-operative financial federalism”, and “one nation, one tax, one market”. Trucks in India average just 270km a day against 800km in the US because of checkpost delays at state borders, and GST could slash these. Economic optimists hope GDP will improve by over `100,000 crore. The states are supposed to be fully compensated for any loss of revenue they suffer through the switch to GST. It is far from clear how the “loss of revenue” will be calculated, and what disputes will arise. Fortunately, the new law provides for a dispute settlement mechanism. This body will also have to deal with issues like the refusal of some states to toe the line on agreed GST rates. It remains to be seen how well and quickly disputes are settled. Historical experience in dispute settlement in India reveals constant, long delays. Preparations have already been made for a strong GST digital network to help companies and tax officers deal with the new system. Training and documentation has also started, but is inherently a tricky job. Tax officials are constantly at war with companies in the existing system, and tax litigation is rife. In theory, a simplified, uniform system will reduce litigations and tax disputes. But moving from one system to another can increase misunderstandings and differing interpretations in the short run, causing a spurt in litigation and disputes. Many countries have taken years to sort out the glitches and misunderstandings that are inevitable in shifting to a new system.

26 CargoConnect - SEPTEMBER 2016

Swapan Dasgupta BRACES THE POLITICAL AGENDA The members of the Rajya Sabha who sat till late in the evening to unanimously pass the Constitutional amendment to facilitate the goods and services tax were, however, deeply conscious of the fact that what they were undertaking was indeed historic. Every MP who supported the move — and even the handful from the AIADMK who walked out in protest, rather than vote against the measure — were deeply conscious that the journey India had undertaken from 1991 had moved to a higher level. They included those who gleefully prophesied that inflationary pressures would come to bite the Narendra Modi government in 2019, and the two or three Congress MPs who made an unsuccessful last-ditch attempt to prevent voting. Yet, while deeply conscious that history was being made, the political class as a whole is still unsure of how the change will affect politics and economic management. Some purists have felt that any measure that doesn’t include petroleum and electricity in its purview is a halfmeasure. Others believe that the GST has spurred the process of centralization and will, in due course, trigger a Brexit-type backlash. Many MPs compared the GST with the creation of the European Common Market (as distinct from the European Union), and they were not wrong. When GST comes into force, hopefully in April 2017, India would have taken a giant step towards the creation of a national market. The impact of such a bold development on India’s global economic fortunes cannot be underestimated. Politically, however, the suggestion that this will force the pace of economic centralization is a half-truth. In his speech, finance minister Arun Jaitley referred to “pooled sovereignty”. What this catchy phrase implies is that both the Centre and the states have agreed to shed some of their own sovereign powers over revenue mobilization. However, both entities have simultaneously acquired extra-territorial rights. Once GST comes into force, the Centre’s rights to determine the rate of national taxes will cease to be absolute. The proposed GST Council, in which the states together have two-thirds voting rights, will now have a direct say in the rates of taxation. In effect, this implies that the states have a potential veto on the Centre’s powers of taxation. In a curious sort of way, by negotiating the passage of the GST through its most difficult hurdle, Jaitley has contributed to the most significant dilution of the Centre’s powers since Manmohan Singh did away with the absolutism of the notorious licence-permit-quota raj in 1991. The GST Council’s decision on the rate of the proposed unified tax will no doubt be the subject of intense bargaining — and more so since no political party can claim dominance in both the Centre and the states. However, once the rate is set, changing it will become a herculean task. This would imply that Union budgets from 2018 would lose the paramount importance they now enjoy. The finance minister’s principal task would be reduced to determining the pattern of government expenditure. Revenue generation would, by and large, run on auto. While predictability is the biggest gain from GST, there is a potential flip side. If any state feels particularly aggrieved at any juncture and is unable to get other states and the Centre to see its point of view, there is precious little it can do but grin and bear it. Will this promote a greater sense of responsibility by state governments or will the frustrations of impotence drive their politics in the direction of irresponsible adventurism? The answer is still unclear.

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cover story Praveen Somani, Director, Inland World Logistics “Passing of GST creates simplification of taxes for all stakeholders. From a logistics standpoint, in terms of road transport, apart from an increase in efficiency, although don’t expect much change.” ALL THAT JAZZ ABOUT GST BILL 1. It would bring India in line with the rest of the world The GST, also known as a value-added tax, has become the most common way for governments worldwide to tax consumption. It is easier to administer than other kinds of sales tax, and to some degree, it polices itself: A buyer can only claim a refund if the seller issues an invoice. As a result, VATs and GSTs have spread rapidly over the last two decades. Today, around 160 countries have one. The U.S.—in this as in other domains—

is the big exception. Anshuman Magazine, Chairman – India and South East Asia, CBRE, says, “Once GST is implemented, it is likely to have a positive impact on the real estate sector, which has linkages with over 250 ancillary industries. Unified taxation will also infuse the much needed transparency into our taxation system. While a lot depends on the final rate of the GST to be decided by the Government, overall it is expected to have a long lasting and progressive impact on the economy, enhancing the prevalent business sentiment in the country.”

2. India’s current tax system is a mess At present, India’s federal government taxes purchases of services while its 29 states tax purchases of goods. But New Delhi also slaps a duty on the production of manufactured goods and on sales that take place across state lines. Some states impose further taxes on luxury goods and gambling as well as on goods that enter from other states. Because one kind of tax usually can’t be credited against another, some goods and services end up being taxed on more than their final

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cover story Anshuman Magazine, Chairman – India and South East Asia, CBRE “Once GST is implemented, it is likely to have a positive impact on the real estate sector, which has linkages with over 250 ancillary industries. Unified taxation will also infuse the much needed transparency into our taxation system.” Sector-wise impact of GST Change in Tax rate

Sector

Availability of Unorganized Input credit to organized

Supply Chain Management

Overall

Auto - batteries Consumers - retail Logistics Media-multiplex Auto-two wheeler / four wheeler

4. Policy makers have been debating it for years

Consumers: FMC G- Ex alcohol and cigarette Capital Goods: Light electrical Media-Pay TV is Distributor Cement Metals Pharma Capital Goods: Industrial IT Media-pay TV broadcasters Textiles Telecom Auto-CV Media-Print Media Consumers- Cigarette Highly Negative:

; Negative:

; Slightly Negative: ; Neutral,

; Slightly Positive:

; Positive:

; Highly Positive:

Source: www.financialexpress.com retail value. Vijay Kumar, COO, Express Industry Council of India, says, “Express Industry Council of India (EICI) congratulates the Government and Opposition on the political maturity shown in unanimously passing the GST Amendment Bill in the Rajya Sabha. The international import and export shipments should be zero-rated under GST regime. For International shipments to ensure seamless movements with in the country it is vital that the Customs clearance system (ICEGATE) is linked to GSTN. Aviation turbine fuel is currently treated separately from other petroleum products for claiming mod vat credits and if ATF is not brought under the GST regime there would be a substantial cost impact on ATF used in our member aircrafts due to cascading duties leading to an increase in prices.”

3. The GST still leaves many problems Under the new system, a GST would replace many of these levies, helping ensure that companies are taxed only on the value they add at each stage of production. But in the GST’s current proposed form, several items—including alcohol, petroleum products and electricity—would be exempted from GST, meaning some degree of double-taxation will continue. The GST also wouldn’t subsume a host of other levies, from local taxes on movie tickets and other entertain-

30 CargoConnect - SEPTEMBER 2016

ment to stamp duty on land sales. Prakash Tulsiani, Executive Director & Chief Operating Officer, Allcargo Logistics, said, “GST Bill is set to revolutionize logistics with unified and simplified structure versus multiple taxes at various levels. We expect the industry to move away from pure vanilla warehousing needs to contract logistics. Allcargo will benefit as we have a panIndia presence with a strong management team and the strength to bring in efficiencies and take costs out of the system. We have also taken steps towards investments in logistics parks in NCR and have already taken steps to further explore the potential of contract logistics business with the merger of CCI Logistics.”

By design, the GST would be about tax consumption, not production, and the revenue therefore would go to the state where an item is consumed, not where it’s produced. That made governments of big manufacturing states like Tamil Nadu nervous about losing money under the new system. The opposition Congress party also wanted a cap on the GST rate to be written into the constitution. Others resisted the new tax because it might mean stricter enforcement for industries, particularly those with many small-business people, where tax collection isn’t presently watertight. D e ep Ma l hot r a , Co-Fou nder, BECKFriends.com, says, “Convenience, clarity & opportunity is what GST will bring for young Indian entrepreneurs. Now is the time to build global businesses based out of India by solving need gaps of users that can be converted into billion dollar businesses. GST will Startup India & Build India for the future. The logistics sector which is in dire need for a revamp with technology will gain the most with the simplicity in tax structure that GST offers. Though the tax structure doesn’t affect the logistics sector much with GST, the overall clarity that it brings will boost trade for the country.”

5. There is still a long way to go before the tax can be put into effect Once the lower house of Parliament ap-

cover story Vijay Kumar, COO, Express Industry Council of India “Aviation Turbine Fuel is currently treated separately from other petroleum products for claiming mod vat credits and if ATF is not brought under the GST regime there would be a substantial cost impact on ATF used in our member aircrafts due to cascading duties.”

BSE Sensex

363.98

28,500

27,144.91

28,000 27,500

28,07835

27,000 26,500 1

July 2016

August

Close:

28,200

28,078.35

28,100 28,000 27,900 27,800 27,700

Open:

27,810.55 9 10 11

Previous close:

27,714.37

13 14

363.98 (1.31%)

Change

Intra-day on August 5

15 16

Source: www.ibtimes.co.in

1 2 3 4 5

Top Gainers

Hero 5.02 MotoCorp Bajaj 4.38 Auto Axis 3.62 Bank

Top Losers

Sun -0.79 Pharma Power -0.67 Grid Wipro

-0.65

3.21

Bharti -0.56 Airtel

Tata 3.16 Motors

Infosys -0.44

SBI

proves it, the constitutional amendment authorising the GST will go to India’s state legislatures. When a majority of them give their signoff, both the national and state legislatures will then need to pass their own versions of another law, currently being drafted, that implements the new system. A council of federal and state representatives will iron out important details, including the GST rates, the products to which they apply and those that are exempt. India wants to have all this done and dusted—and the new system up and running—by next April. Speaking on the impact of GST on logistics, Bhavik Chinai, Founder & CEO of Vamaship

32 CargoConnect - SEPTEMBER 2016

says, “For logistics, there are several positive points to watch out for: 1. Warehousing - Companies will now be planning their warehousing differently as under the VAT regime, warehouses in every state were essential to avoid taxation losses. We’re going to witness an incredible rise in larger warehouses and large number of smaller warehouses near end customers, enabling faster delivery of products. 2. Trucking - Trucking is expected to see incredible efficiency improvement with the government officials at state borders who will spend less time on vehicle checking in the short run and elimination of border check posts in the long run, helping save up to 20 per cent of transit time. 3. E-commerce - Within three years, with smaller forward stocking locations implemented by large companies, there’s going to be a large last-mile fulfillment need, through deliveries via small commercial vehicles and bikers, enabling an extended sales channel for existing e-commerce logistics companies. 4. Overall Impact - Despite these positives, the first draft of GST has procedures which are applicable for manufacturing units only, but have made those procedures applicable for services too. A large number of processes might need an overhaul of the ERP used with an incredibly higher compliance need. For smaller entities, this would be a tough task with a major need for a larger finance and compliance team, adding to costs instead of saving them. Overall, the corrections in the GST law in the next few months will help businesses understand the exact impact on each sector.” Anshul Singhal, CEO, Embassy Industrial Parks says, “The proposed Goods and Services Tax (GST) has the potential to change the landscape of the economy. GST will lead to more consolidation in the warehousing sector that would provide the ideal platform for the emergence of large scale nationwide players. An increase in consumption demand is expected, which will indeed boost the economic growth. The implementation of

cover story Prakash Tulsiani, Executive Director & COO, Allcargo Logistics “GST Bill is set to revolutionise logistics with unified and simplified structure versus multiple taxes at various levels. We expect the industry to move away from pure vanilla warehousing needs to contract logistics.” GST will be a significant step in the reform of indirect taxation in India.” “With the onset of GST, there is likely to be a spurt in demand in ecommerce and the industry stalwarts will be carefully planning their network. Modern warehousing facilities that allow for consolidation of distribution hubs will be a vital component in making this a reality. Supply chain efficiency is going to become the single biggest differentiator in the ecommerce space as organisations strive to make ‘same day delivery’ a cost effective reality. The GST is going to be a game changer for the fast-growing Indian economy.” Dr P Alli Rani, Director (Finance), CONCOR sharing her perspective, says, “The GST Bill, if it is implemented in its entirety will herald in an era of centralised indirect taxation where credit can be taken for taxes paid and end the current system of multiple agencies imposing taxes on products thereby creating multiple layers of tax which ultimately make the product costly. The movement of products across state borders will no longer cause tax-layering on the product, and hence distribution will gain momentum through development of the wholesale warehousing industry.

D e e p M a l h o t r a , C o - F o u n d e r, BECKFriends.com “Convenience, clarity & opportunity is what GST will bring for young Indian entrepreneurs. Now is the time to build global businesses based out of India by solving need gaps of users that can be converted into billion dollar businesses.”

Existing Tax Structure in India

Essential commodities will be charged at low rates, offset by higher ‘sin’ taxes on goods considered to be luxuries. A so-called standard or GST rate will be the middle slab and will apply to most goods and services.

There would be a structural change in domestic trade with distribution shifting to hub or wholesale warehouses. This will create a demand for railconnected warehousing hubs, which would in turn provide an opportunity to multiple users to reap large scale economies. With the high degree of electronic interface, which GST would hopefully bring, tax-disputes may come down. In the GST scenario, logistics parks would be an essential infrastructure since several services would be bundled here making taxation procedures simpler as many services currently provided in a scattered manner would be provided in one locality.”

THE SEVEN TAXING STEPS BEFORE GST BECOMES A REALITY

Source: money-wise.in

34 CargoConnect - SEPTEMBER 2016

The Rajya Sabha clearance to the GST Bill, touted as the biggest tax reform since India’s Independence, lifted market mood, but only briefly. The bill is set to improve the government’s revenue and help it achieve better transmission of prices. It is expected that certain goods, such as capital goods, would become cheaper by 12-14 per cent, increasing

cover story Dr P Alli Rani, Director (Finance), CONCOR â&#x20AC;&#x153;The GST Bill, if it is implemented in its entirety will herald in an era of centralized indirect taxation where credit can be taken for taxes paid and end the current system of multiple agencies imposing taxes on products thereby creating multiple layers of tax which ultimately make the product costly.â&#x20AC;?

demand for them, raising investment and, thus, economic growth. However, the landmark legislation still needs to clear some more hurdles before the bill becomes a law, enforceable by the April 1, 2017 deadline. We list out the next key steps for the same: >>The bill will now be sent to the Lok Sabha, which has already passed the bill but will have to discuss and ratify the amendments made in the Rajya Sabha. The BJP has majority in the Lower House and thus a quick clearance is a given. In case the amendments are not cleared, the bill will go to parliamentary committee, though the chances are slim. >> Once the amendments are cleared, then the bill will go to state assemblies for clearance. This would be an important step, as at least 50 per cent of states (i.e. 15 states) must approve the legislation. Only Tamil Nadu looks tough at the moment, as the AIADMK MPs skipped the voting in the Upper House. The BJP is in power in 13 states as on date, while JD-U - another strong backer of the GST legislation - is in power in Bihar. The Congress-ruled states too are likely to clear it. >> The legislation will then go to the President, whose signature will turn it into a law ahead of its rollout by the intended deadline of April 1, 2017. >> The next step will be the formation of

36 CargoConnect - SEPTEMBER 2016

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cover story Bhavik Chinai, Founder & CEO, Vamaship “The first draft of GST has procedures which are applicable for manufacturing units only, but have made those procedures applicable for services too. A large number of processes might need an overhaul of the ERP used with an incredibly higher compliance need.”

Dual GST Within State W

SGST paid ` 10

SGST @10%

SGST paid ` 10 ( `20- `10 input tax credit

CGST paid ` 10

TIMBER MAKER

STATE

A CGST paid $ 10 ( `20- `10 input tax credit

FURNITURE MAKER

CENTRE CGST @10%

SGST paid ` 10

CGST paid $ 10

( `30- `20 input tax credit

FURNITURE RETAILER TAX INVOICE A

TAX INVOICE B

TAX INVOICE C

Cost of goods

`100

`200

`300

SGST @ 10%

`10

`20

`30

CGST @ 10%

`10

`20

`30

`10

`20

`30

Total

CONSUMER

Source: indianexpress.com

A n s h u l S i n g h a l , C EO, E m b a s s y Industrial Parks: “Modern warehousing facilities that allow for consolidation of distribution hubs will be a vital component in making GST a reality. Supply chain efficiency is going to become the single biggest differentiator in the e-commerce space.” the GST Council. This council will have representatives from both the Centre and states. All this will be made within 60 days of the enactment of the bill. It will decide the Revenue Neutral Rate (RNR), the rate at which there will be no loss in aggregate central and state tax revenue. >> The RNR will then get converted into a three-slab GST rate structure, depending on exemptions. Essential commodities will be charged at low rates offset by higher ‘sin’ taxes

38 CargoConnect - SEPTEMBER 2016

on goods considered to be luxuries. A socalled standard or GST rate will be the middle slab and will apply to most goods and services. The single GST rate will be split between central GST and state GST. The split shares will be decided by the GST Council. >> Three more laws will need to be passed: laws on the Central GST (CGST), integrated GST (IGST) and 29 separate state GST legislations (SGST) While the first two laws will be cleared by Parliament, the third law will be cleared by the respective state assemblies.

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ue to economic liberalisation and basic restructuring of the financial sector, the Indian economy has witnessed more than 7.5 per cent growth over the past decade, with exports growing at more than 20 per cent. This, in turn, has given rise to an accelerated demand for land transport services of the order of nearly 12 per cent per annum. Unfortunately, our land transportation systems are currently not equipped to respond to this demand. Transport requirement in the country, being primarily a derived demand, is slated to increase with GDP growth by 10 to 12 per cent in the medium and long term range.

Dinesh Goyal, Head – Rail Division, Darcl Logistics Limited

“DFC with objective to create world-class rail infrastructure with advanced technology and

Riding on the waves of economic success, Indian Railways has witnessed a dramatic turn around and unprecedented financial turnover in the last two and a half years. This has been made possible by higher freight volumes without substantial investment in infrastructure, increased axle load, reduction of turn-round time of rolling stock, reduced unit cost of transportation, rationalisation of tariffs resulting in improvement in market share and improved operational margins. In a little over four years, a freight train originating in Delhi in the evening will reach Mumbai the following morning – taking only as much time as a Delhi-Mumbai Rajdhani Express does currently to cover the distance – as against several days which is a norm now. What we are set to witness is a sharp increase in the average speed of freight trains – from a frustrating 25 kmph to 70 kmph. Maximum speed of these trains could go up to 100 kmph and perhaps more. And it will not be limited to Delhi-Mumbai sector alone. Freight trains between Ludhiana and Kolkata too will travel at that speed. In the subsequent years, freight trains elsewhere in the country, too, would be moving at that speed. But that’s the primary objective of building rail corridors dedicated exclusively to freight trains. In many ways, the dedicated freight corridors will have the same impact that rivers and highways had in the process of development. These corridors will be a key infrastructure project that will drive the economic growth that the Prime Minister Narendra Modi-led National Development Alliance (NDA) government hopes to deliver.

know ledge to car r y higher The Beginning throughput per train will improve Accordingly, the seeds for the project were overall transport efficiency.”

42 CargoConnect - SEPTEMBER 2016

sown as early as in April 2005, wherein, Honourable Prime Ministers of India and Japan made a joint declaration for feasibility and possible funding of the dedicated rail freight corridors. Immediately, thereafter, Rail India Technical and Economic Service (RITES) was entrusted with the feasibility study of both eastern and western corridor. Being executed by the Dedicated Freight Corridor Corporation of India Limited

(DFCCIL), a Special Purpose Vehicle set up under the Ministry of Railways in 2006, the two dedicated freight corridors would provide relief to the railways’ heavily congested Golden Quadrilateral along the western and eastern rail routes, and facilitate fresh industrial activity and multi-modal valueaddition services hubs along the corridors. DFC would enable the rail infrastructure to carry very high levels of freight leading to a reduction in unit cost of transportation and inventory. It will also achieve greater customer satisfaction and increase the Indian Railway’s share in the freight market. This shall also provide increased throughput by higher axle loads increasing the moving dimensions, track loading density and improved pay load ratio. The 1,493 km double-track western

DFC would enable the rail infrastructure to carry very high levels of freight leading to a reduction in unit cost of transportation and inventory. corridor will run from Jawaharlal Nehru Port in Mumbai via Ahmedabad, Palanpur, Phulera and Rewari to Dadri in Uttar Pradesh, close to New Delhi. This will handle the rapidly growing container traffic between the ports of Gujarat and Maharashtra and the hinterland in northern India, cutting the Mumbai Delhi time from 60 to 36 hours. There will be a feeder route to serve the container depot at Tughlakabad. The 819 km doubletrack eastern corridor between Sonnagar and Khurja runs parallel to the existing Howrah - Delhi main line via Mughalsarai, Fatehpur and Etawah. Bypasses are planned around the urban areas at Allahabad, Kanpur, Tundla, Hathras and Aligarh, and the corridor will be grade-separated from intersecting branch lines. A single-track extension of the eastern corridor will run to Ludhiana in Punjab via Khurja, Meerut, Saharanpur and Ambala. Consultants are currently examining

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feature the technical and economic feasibility of extending the route to Gomoh and the ports in western Bengal.

The New Additions In the Rail budget for 2016-17, the Ministry of Railways has proposed to take-up NorthSouth, East-West & East Coast freight corridors through innovative financing including PPP, in addition to WDFC and EDFC that are already under implementation. Attempts have been made to increase the rail share in loadings through various measures and DFC is one of such step in that direction. The railways has proposed to develop freight corridors between Delhi-Chennai (north-

Samir Kumar, Director (FM), Railway Board

“It is necessary for railways to have dedicated freight corridors and passenger corridors. We are bulk movers of cargo in the country and it’s a necessity to bring the goods on time.” south), Kharagpur-Mumbai (east-west) and Kharagpur-Vijayawada on the east coast. Dinesh Goyal, Head - Rail Division, Darcl Logistics Limited says, “The genesis of the Dedicated Freight Corridor is due to saturation in rail transportation capacity of Indian Railways on the Golden Quadrilateral. The Indian Railways' network linking the four metropolitan cities of Delhi, Mumbai, Chennai and Howrah, along with its two diagonals (Delhi-Chennai and MumbaiHowrah) commonly known as the Golden Quadrilateral, adding up to a total route length

44 CargoConnect - SEPTEMBER 2016

of 10,122 km, carries more than 58 per cent of its revenue earning freight traffic. The DFC with faster transit time, terminal capacity building, increased throughput and cut in operating cost by 40 per cent will be a driving force in the infrastructural development of logistic sector of our country.” It will be one more step in making India an easier and attractive place to do business. Many of the 100 smart cities that the government plans to build would be along the freight corridor. According to Samir Kumar, Director (FM), Railway Board, “There are two dedicated freight corridors which are put on track which connects Kolkata- Delhi and Mumbai - Delhi. This time, three more have been announced in the budget. It is necessary for railways to have dedicated freight corridors and passenger corridors. As we are sharing the same tracks with the passenger trains, delivering goods on time is not possible.” Providing separate and exclusive tracks for freight trains is expected to reverse the trend over time. The new tracks being laid for the freight corridor can handle heavier trains – this will increase freight handling capacity of railways. Freight train capacity is proposed to be more than double the current capacity of 6,000 tonnes to 13,000 tonnes. The western corridor would primarily cater to containerised traffic, mostly exports and imports, while the eastern corridor will be used mostly to move coals from mines in east India to power plants in north. It is also proposed to operate double stack container trains, thereby increasing the handling capacity of the railways and also help decongest ports when consignments arrive.

Easing the Congestion The congestion on the Golden Quadrilateral is affecting railways’ efficiency and it is

not able to retain or increase its share in the growing goods traffic resulting from the economic boom. A fundamental reason for this, the Railway Minister, Shri Suresh Prabhu, said in his Railway Budget 2015-16 speech, was "chronic underinvestment" in the railways. This had led to congestion and overutilisation, along with sub-optimal freight and passenger traffic and fewer financial resources. To ease the situation on the saturated Golden Quadrilateral, the Government of India has, in the first phase, approved construction of the two corridors and now the other three corridors are also in the pipeline. Samir Kumar sees a streak of hope as he says, “One of the greatest advantage of railways is that, we contribute green economy or we are the green transporters. Since we are environment friendly, we do not create any pollution. Railway creates fewer accidents on road and also no traffic at all. So, definitely this will be a game changer.” Moving most freight trains to the new corridor will also benefit passengers – it will reduce congestion on the main tracks and enable passenger trains to move faster. Dinesh Goyal adds, “DFC with objective to create world-class rail infrastructure with advanced technology and knowledge to carry higher throughput per train will improve overall transport efficiency and would offer customers guaranteed, faster, energy efficient, environment-friendly transport. This will encourage total supply chain management and increase rail share in the freight market and ease the congestion in the road transport.” Referring to saturation of the capacity in different routes, the Railway Minister in his Budget speech earlier this year said, “On a single track, the Indian Railways have to run fast express trains like Rajdhani and Shatabdi, ordinary slow passenger trains as well as goods trains. Is it

feature surprising that though Rajdhani and Shatabdi are capable of doing 130 kmph, the average speed does not exceed 70? Is it surprising that the ordinary train or a goods train cannot average more than around 25 kmph?” It is noteworthy that the two dedicated freight corridors can allow train speeds up to a maximum of 100 kmph. N Ramakrishna, Head – Business Development, Kribhco Infrastructure Limited says, “Revitalising railways as a major sustainable transport mode in modern societies faces many issues and challenges. This in-depth overview places the importance of railways in the wider context of comprehensive sustainability, which encompasses sustainable development,

N Rama krishna, Head – Business Development, Kribhco Infrastructure Limited

“The 21st century is a period of renaissance for railways and this transport mode can fulfill people’s desire for high mobility with low negative environmental, social, economic and financial impacts.” social and economic equity and community livability. The 21st century is a period of renaissance for railways and this transport mode can fulfill people's desire for high mobility with low negative environmental, social, economic and financial impacts.”

The PPP Mode and L and Acquisition As mentioned in the budget, these corridors will be funded through public-private partnership

46 CargoConnect - SEPTEMBER 2016

(PPP) mode, thus attracting many foreign investors in this project. Dinesh Goyal opines, “Dedicated Freight Corridor Corporation of India (DFCCIL) is a Special Purpose Vehicle set up under the administrative control of Ministry of Railways to undertake planning & development, mobilisation of financial resources and construction, maintenance and operation of the Dedicated Freight Corridors. The 81 per cent project cost is financed by Japan which makes it believable that the project will get completed on time.” The Japanese Government is ready to extend their full cooperation towards building of DFCs in India, by providing technologies for the building a new DFC, with automatic signalling system, communication and automated locomotives. The NorthSouth corridor was initially planned to be implemented in the Public Private Partnership (PPP) mode, implementing it under FDI is also under consideration. Since the government has permitted 100 per cent FDI in railway projects, the entire Western corridor is being funded by Japan International Cooperation Agency and a major section of the Eastern corridor is being funded by the International Bank for Reconstruction and Development. In the development of Dedicated Freight Corridors, land acquisition also appears to be a major challenge. Addressing this issue, Adesh Sharma, MD, DFCCIL was quoted as saying, “In a mega infrastructure project, which is linear in nature, land acquisition is the biggest challenge. In the Dedicated Freight Corridor (DFC), land acquisition has reached 84 per cent in the Eastern and Western corridor – 79 per cent in the Eastern corridor and 88 per cent in the Western corridor. The remaining 16 per cent will depend on the new Land Acquisition Act. Based on the land acquisition status and the contracts position, both the corridors will be completed by December 2019.” In the acquisition of land, the DFCCIL has implemented one of the best rehabilitation and resettlement packages for the people affected by the projects. In the budget, railway minister proposed for the development of rail side logistics parks. To this, Dinesh Goyal adds, “The DFC network would attract setting up of Multimodal Logistics Parks along the corridor to facilitate value addition including packaging, retailing, labeling, pelletising, transportation, etc. The last mile connectivity in terms of door to door services will be

provided to the customers by 3PL service providers. Logistics Hubs will be developed either by DFCCIL or in joint venture with suitable partners or private entities at different locations along the corridor. More than 90 per cent of land has already been acquired.” Multimodal logistics parks and private freight terminals will be developed on the DFC route, which will give additional assured traffic to DFCC. Highlighting the importance of DFC, Samir Kumar says, “India is growing exponentially and the growth is not limited to some specific places or cities as in countries like China. Each and every corner of the country is exponentially developing. Major production centers are blooming everywhere in India. So, there is a need for improvement in cargo industry also. Here lies the importance of

To a large extent, the success of the Make in India programme too hinges on a rapid execution of the dedicated freight corridor dedicated freight corridors.”India has one of the largest transport sectors. Railway tracks under DFC are often provided with a higher voltage overhead power line than that of normal passenger railway networks, so the freight trains can attain higher speeds.

Conclusion No doubt that the implementation of the DFC program will provide India the opportunity to create one of the world’s largest heavyhaul freight operations, adopting proven international technologies and approaches which can progressively be extended to other important freight routes throughout the network.If completed on a timely basis, DFC has the potential to be a game-changer not just for Indian Railways, but for the trade and economics of the country as well. It will reduce the overall logistics cost of trade between the hinterland and gateway ports, making India a favourable destination for EXIM trade. It will help the railways regain its market share of freight transport as well as provide an efficient, reliable, safe and cheaper system of goods movement.

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Guns, Roses and More 48 CargoConnect - SEPTEMBER 2016

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feature “The line between disorder and order lies in logistics.”

-Sun Tzu

nhancing the sustainment capability of the military supply requires attention towards the technological, operational, analytical, managerial, and cultural elements of the ecosystem across a wide spectrum of activities, both inside and outside the logistics community. India is a vast country with various terrains, and hence, the set-up of a logistics command apparently seems to be a daunting task. In the present scenario, logistics support is imperative to boost the operational efficiency of our military force and take on countries like China and Pakistan. Experts opine that while India has sufficient logistics infrastructure for defensive purposes, it lacks logistics for offensive operations. However,

there are several other aspects of the Indian military logistics and supply chain set-up, including planning and procurement to storage and supply, which need to be overhauled.

Precursor Indian Armed Forces over the years have continued to grow under the traditional framework. After years of brainstorming and indecision, India has still not managed to set up a centralised Logistics Command to deter future wars. Until now, the country has also not been able to decide which of the Indian ‘Military Forces’ will have the primary and commanding role, and the question of hierarchy is making things worse. Paul Kettle, Business Development

50 CargoConnect - SEPTEMBER 2016

and Marketing Director, TVS SCS, UK, avows, “If the Indian government, specifically Ministry of Defence, is seeking to adopt industry’s best practice to deliver a more efficient and effective process across the military supply chain and enhance the quality of support provided to the Indian Armed Forces then there is potential. If not, then the current level of service and cost will ensue.” The IMMOLS (online materials management) model used by the Indian air force is a decisive step towards digital support in the battlefield. Similarly, the inventories of all three defence forces must be integrated online to combat the enemy. Indian Defence Ministry also needs to systematically place fresh inventories to help get rid of ammunition which are unusable. The idea that ‘logistics supports the weapon’ or the fact that logistics can be claimed as a ‘support’ element at all should be considered archaic in this age. Harpreet Singh Malhotra, CMD, Tiger Logistics says, “Logistics information should always be the right information, delivered to the right people, in the right place, at the right time, to enable the right decision, to deliver the right effect and achieve the right outcome. Modern military logistics systems must provide the assurance that concept, structure, focus, and management of military logistics are effectively aligned to cater to the needs of today’s military in general and its combat forces in particular. The ability to deliver effective logistics command, control and information is essential for any deployment and must be considered in the earliest phase of planning. Situational awareness can be enabled through timely and accurate management of logistical information.” Whereas, Kettle believes that military and commercial supply chains are effectively of the same industry and share the fundamental elements of supply chain management. He tells, “Historically, they have been viewed and managed in separate ways resulting in differences in service levels and costs. However, in the last five years there has been a significant move to integrate the military logistics experience with private sector expertise to optimise procurement, supply, maintenance, and distribution times. This

means military supply chain management is integrating commercial best practice. TVS believes military and commercial supply chains have similar drivers; getting the right part, to the right place, at the right time and at the lowest cost. Whilst we recognise there are different challenges associated to military and commercial requirements both in terms of equipment and environment. The following fundamentals of supply chain management apply to both:  Data management  Order management  Inventory management  Strategic purchasing  Manufacturing support  Storage/Warehousing  Transport  Aftermarket support”

Outsourcing: Opportunities Galore Today, there’s an increasing acceptance of the concept of defence outsourcing, which is outsourcing frees commanders, in order to focus on their primary task instead of non-core logistical tasks. However, outsourcing of defence logistics is an extremely sensitive activity that needs to be handled with care. While defence logistics’ outsourcing can marshal cost savings and derive additional organisational benefits, there are risks associated as well. Kettle shares on a positive note, “There are current examples across the globe where defence logistics has been outsourced to ‘trusted’ industry partners who have delivered significant savings and thereby allowed defence departments to prioritise capital acquisitions over operational cost. In addition, the right outsourced solution delivers stateof-the-art inventory management processes, systems and infrastructure.” With the ambitious plans of modernising the defence and warfare equipment and outsourcing, this sector seems to offer huge potential for stakeholders in the coming years, as the private players looks buoyant towards collaborating with the Indian Army. ‘Make in India’, one of the flagship programmes that the new government has initiated, has been at the centre of the new government’s development campaigns. Speaking on the opportunities arising from ‘Make in India’, Malhotra informs, “It’s a campaign to make India a manufacturing hub, by attracting foreign direct investment. There are 25 prominent sectors within manufacturing to which government is seeking foreign

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TVS invests heavily in intelligent IT to ensure our clients have improved analytics embedded across their supply chain to help in problem solving and decision making. It has developed its own market leading system in the form of ‘Msys’ which is a suite of software solutions that have been designed and developed to meet the requirements of Blue Chip organisations and government departments. Paul Kettle, Business Development and Marketing Director, TVS SCS, UK

investments by the program. In the defence manufacturing sector, where the relationship between the US and Israeli corporations are a high priority, the government is also seeking investment for the “country’s extensive modernisation plans, an increased focus on ‘homeland’ security and India’s growing attractiveness as a defence sourcing hub”, which also indicates army deployment in the states where AFSPA and other draconian laws are enacted as well in the central Indian tribal belt, where security is in making.”

IT and Visibility Factor in the Military Supply Chain In case of defence logistics, the operational environment should be essentially backed with an efficient IT system that can provide real-time information for effective decisionmaking, on and off the battlefield. Having reliable information is vital and it is one of the main reasons that armed forces across the world are turning to outsourcing to deliver this capability, typically though proven commercial supply chain systems. The added benefit of this approach is that it also comes with an improved level of service at a reduced cost. Kettle shares, “Many organisations, including defence departments, are often found to be drowning in data but starving of information’ thereby restricting the ability to make informed decisions. In the military environ-

52 CargoConnect - SEPTEMBER 2016

ment, this can have serious consequences. Not having clear visibility or control of logistics restricts your ability to enact an operational plan which in turn limits your speed of response to incidents or threats. In the military context, visibility is as important as communication. Having real-time information on the current supply status is a key attribute in achieving a military’s readiness, including the management of maintenance regimes. Integrated information about procurement actions, repair parts, stock and transport status is not only a military advantage but also a way of reducing costs i.e. stocks in warehouses being kept at a minimum through continuous resource reduction. He adds, “Some logistics providers have become information management firms through the adoption of the internet, as customers have come to expect ready access to real-time inventory procurement, ordering, and tracking. The Information Revolution is leading the changes in supply chain management. TVS invests heavily in intelligent IT to ensure our client has improved analytics embedded across its supply chain to help in problem solving and decision making. It has developed its own market leading system in the form of ‘Msys’ which is a suite of software solutions that have been designed and developed by TVS to meet the requirements of Blue Chip

organisations and Government departments.” According to Malhotra, “The primary function of military forces is to wage some level of war (armed conflict) when called upon. Therefore, in order to accomplish their primary function, military forces must have the capability to wage a required level of war. In today’s military environment, wars (armed conflict) are waged by sophisticated weapons. Therefore, the capability of military forces to wage war is vested in the weapon. The ‘amount of war’ that can be waged by these weapons, stated in quantitative terms, is called military capability. It is defined as the intensity (power) and duration of war that can be waged by operational weapons possessed by combat forces. So yes, the operational environment should be essentially backed with an efficient IT system that can provide real-time information for effective decision-making, on and off the battlefield.”

Future Forecast As we mentioned earlier, the raison d’être for a military logistics system is to ensure that the correct item and service is provided to the end-user, at the right time, place, and in correct quantity and quality for the required situation. India and the US are poised to enter the next level of defence and strategic ties following an agreement in principle to share logistics. The two countries agreed in-principle to sign an agreement on providing logistics but have yet to finalise the draft of the agreement. This agreement included expanding collaboration under the Defence Technology and Trade Initiative (DTTI), and tapping new opportunities to deepen cooperation in maritime security and maritime awareness, military-to-military relations, knowledge partnership in the field of defence, and regional and international security matters of mutual interest.

feature

Modern military logistics systems must provide the assurance that concept, structure, focus, and management of military logistics are effectively aligned to cater to the needs of today’s military in general and its combat forces in particular. The ability to deliver effective logistics command, control and information is essential for any deployment and must be considered in the earliest phase of planning. Harpreet Singh Malhotra, CMD, Tiger Logistics

TVS has a long standing relationship with UK MoD and is playing a key role in their logistics transformation program. Through its military contracts with UK-MOD, TVS manages provision of spare parts for Land Rover and Armoured Fighting Vehicles, along with workshop spares for a range of fighting vehicles. Kettle tries to figure out the real ‘fight’ areas from the Indian context, “Trying to forecast the military operational environment in the future is a real challenge and I’m not a military strategist. However evidence suggests that wars, social unrests, threats due to eco-political pulls and terrorist group activities in future, across the globe, will get more organised and complex, requiring advanced logistical resourcefulness and innovative organisational skills. The current complexities of Indian military supply chain system first and foremost stem from the fact that the three services–Army, Navy, Air force and their associated logistics is not an integrated system in India and is not aligned to one department and decisionmaker at the central level. This apart, while on the one hand there are instances of divergent and archaic sourcing, stocking, maintenance and support functions; on the other hand, duplication is seen in areas where common types of inventory and weapons systems are used. For example, within the Army HQ itself there are 4 agencies

54 CargoConnect - SEPTEMBER 2016

providing various logistics services leading challenges related to budget, management, control, and bureaucratic delays. In addition, experts have pointed to issues related to policy, infrastructure and decision making systems which result in delayed action and less accountability. Procurement lead times are also very long, and inventory management, spares supply and timely and adequate after-sales support are real challenges that the Indian Military faces today.” Malhotra adds, “The future battlefield shall be characterised by the full-spectrum conflict ranging from low intensity to fullscale conventional combat including noncontact warfare in a nuclear backdrop. In such a scenario, logistics sustenance becomes critical thereby necessitating introspection and review of the existing capabilities. Movement aspects are critical for a smooth induction of personnel and equipment to the theatre of war. Certain essential considerations as part of operational move are safety and comfort of the troops, their timely movement and safety of the equipment. Peacetime movement is undertaken as a part of general mobilisation at a much smaller scale and is usually tenure-driven. Movement plan is a part of the overall grand logistical plan, which supports the designated levels of war ranging from tactical,

operational to strategic. With each enhancing level, the quantum, scale of troops and equipment also rises. At the strategic level, additional movement aspects such as strategic airlift, deception plan, and sidestepping of troops need to be factored. This is unique in two ways: firstly, private players cannot participate in these operations, and secondly, since major movement takes place through railways and the air transport there has to be a lot of inter-ministerial coordination to facilitate these movements. Private sector however is intricately involved in hiring civil hired transport (CHTs) and Civil Hired Tank Transporter (CHTTs) for movement of stores.”

Final Words Wars in the future are going to become increasingly complex, demanding logistical ingenuity and organisational skills of a higher order. Logistics support and operations of the Indian Army are clearly uneven and need re-structuring. Malhotra rightly concludes by saying, “Military logistics has not kept pace with the needs of ‘present day’ combat forces. Its current operation has rightly been termed as ‘a Toonerville trolley in a jet age’. The old philosophy was that the big eats the small. Now, it’s the fast eat the slow. Our goal should be for the military to be fast and lean. We must be competitive. Efficient military practices and reduced overhead not only free up resources, they also contribute directly to the transformation of the army support structure. The purpose is to produce savings so that resources can be redirected into weapons’ systems and improve the readiness of the forces. The weakest chink in the Indian armour today is that of the Army. It must first achieve intra-service integration. To enable that, the most essential prerequisite is the computerisation of the log.”

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he air cargo segment of the Indian aviation industry, one the important links in the country’s economic growth, is also growing at a fast pace in tune with the growth in the passenger segment. A strong and dynamic aviation logistics network provides a fillip to EXIM trade. However, India still accounts for a meagre 3 per cent (approx) of the size of the world’s overall air cargo market in the world. The cost of air freight is still pretty much expensive in comparison to road and rail; also, there are not many cargo airlines in India and few attempts on this front have failed to take off. However, the demand for air cargo service is growing with the domestic air cargo traffic registering a growth of 3.9 per cent increase in 2015 as compared to the previous year. Presently, the aviation logistics in the country is troubled with numerous bottlenecks. Inadequate infrastructure is one of the major problems faced by the sector. India’s air traffic is highly concentrated at a few airports with most of the tier 2 and tier 3 cities being ignored or having negligible facilities. Another major issue is the poor cargo handling facilities at major airports leading to high dwell times. In near future, the driver for growth in air cargo will be the demand and enabler will be the infrastructure. Infrastructure development with strategic planning and manpower development can prevent many hurdles faced by domestic air cargo industry. In the race to build infrastructure on the ground, India is restrained by lack of talent and capacity building to execute the plans laid out by the Government and authorities. This needs to change soon, and for this, focus on soft infrastructure issues can only be the way forward.

Key Issues Confronted Opportunities in the Indian air cargo market are phenomenal. An average of 4 per cent growth in airfreight is projected for the coming five years. However, there are key issues ‘on ground’ remain unaddressed. Vipan Jain, Regional Manager Logistics, South Asia & Middle East, Lufthansa Cargo AG explains, “Export dwell time at Indian stations is approximately 40 hrs and flying time in air is about 10 hrs. On the other side, import dwell time is nearly 100 hrs. So, most of the times, cargo

58 CargoConnect - SEPTEMBER 2016

Vipan Jain Regional Manager Logistics, South Asia & Middle East, Lufthansa Cargo AG

E xport dwell t ime a t India n sta t ions is approximately 40 hrs and flying time in air is about ten hrs. On t he ot her side, import dwell time is nearly 100 hrs. So, most of the times, cargo sta ys on g r ou nd w h ich is purely driven by infrastructure and soft infrastructure.

stays on ground which is purely driven by infrastructure and soft infrastructure. During this period, on ground everyone is keen to know the status of cargo if it is with the handling agent or under customs clearance or in air; so, the efficiency in soft infrastructure is useful to provide latest up-to-date information related to cargo handling.” In the Indian scenario, much more emphasis should be given on proactive assistance to cities and states to build soft infrastructure. Steven Verhasselt, VP Commercial, Liege Airport stresses, “Airfreight customers pay a premium price for shipment to reduce delivery time. The processing of the cargo consists of two parts: the physical flow of cargo, unloading pallets, breakdown, physical movement and delivery is determined by infrastructure and manpower, whereas, the documentation flow depends on the soft infrastructure, and the way information is shared and handled by all parties involved in the process (shipper, forwarder, handler, airline, customs, etc.). The physical flow and documentation flow together determine the speed of delivery, and the soft infrastructure to integrate all parties in the documentation flow is becoming ever more important.” He continues, “Connectivity is the key, as the airfreight business is not an integrated chain. The bottleneck, with the highest risk of making mistakes, is at any transfer point of cargo (road-air, air-air, air-road) or documentation.” In terms of infrastructure development, the government is working hard facilitate increasing the capacity of the airports in tier 2 and tier 3 cities and simplify the processes with electronic data interchange (EDI), which would ease the paperwork and speed up the transactions. Jain elaborates, “Every player in logistics is using its own EDI system which is reliable for internal use only. However, when it comes to connectivity with other trade partners, we are really lacking. Common platform CCS is the dire need of the industry; it means movement from one stakeholder to another should be mapped and available to everyone involved in the entire supply chain.” Verhasselt adds another interesting angle, “Declining yields add pressure to becoming more efficient in what we do. In

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Steven Verhasselt VP Commercial, Liege Airport

Tech nolog y helps, both in preventing safety issues as well as in implementing safety and security measures. The key to increase security is data management, prevent breaches, etc. lies as much in data management, as in more x-ray machines, sniffer dogs and decompression chambers. this way, the industry becomes more efficiency driven. Still, the value of air cargo, the price paid for a shipment, is not always related to the value added for shipper by delivering the goods. The increase of quality and efficiency comes at a cost, which should be taken into account when discussing rates and yields as well. Shippers are willing to pay more for quality products, as we see from the market growth and success of the integrators.”

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Regulatory Concerns and Technology Implementation Mounting regulation is challenging the ability of stakeholders in aviation logistics to operate efficiently. Successive governments have failed to frame a policy with a long-term vision for airline industry. Verhasselt analyses, “There are already so many standards and regulations in air cargo. New initiatives tend to add layers, and increase the differences between different standards applied worldwide. In a global industry, it would be good to have a simple, global standard. That would be very simple to achieve in a perfect world, and it would help a lot, but…” The industry standards can be developed by utilising the trained pool of technicians and engineers to create opportunities for manufacturing, MRO, cargo, and other allied activities. Airline industry should be viewed as a tool of economic growth and job creation. According to Jain, “We have better standards at one airport than other airports within India itself and we need to adopt the best practices and try to standarise them. Once we are able to implement the qualitative process of the best airport on other airports, probably that will be the time to look for amendments in regulations to speed up the entire process in totality.” Verhasselt also enlightens, “Technology

helps, both in preventing safety issues as well as in implementing safety and security measures. The key to increase security is data management, prevent breaches, etc. lies as much in data management, as in more x-ray machines, sniffer dogs and decompression chambers. On the other hand, Jain informs, “Reliable technology works like a real booster for faster and seamless processes without compromising on safety and security. With technology, we should be able to identify and map the entire supply chain. It means pick-up from shipper to delivery on the other side to consignee as this data is essential for security and safety purposes.”

Final Words There is room for improvement throughout the industry, in India as in any other part of the world. Soft infrastructure must precede hard infrastructure; only then, the required development can happen. Jain rightly concludes, “ As cargo stays on ground more than in air, it is basically the infrastructure which matters as it needs to go through different processes. In case system is efficient and well-planned, then it gives better service and satisfaction to both end customers i.e. shipper and consignee. In case of efficient system, the cost also drops as customers are able to clear their goods within free period.”

Interview

Turkish Airlines Scales New Heights With Cargo Previously working at “Miles&Smiles,” Turkish Airlines’ frequent flyer programme department, Halit Anlatan was promoted to Cargo as Vice President (Marketing & Sales) after showing keenness in the logistics segment. In an interview with Editor Smiti Suri, he talks about the crucial developments in Turkish Airlines and how they are tracing the globe, offering excellent services What’s the current size of Indian export pharma cargo dealt by Turkish Airlines? We export pharma from India, which includes both ambient and COL shipments from our online origins; BOM/HYD/DEL.

Considering the fact that small temperature excursions can do a huge damage to pharmaceutical products, how does Turkish Cargo ensure an uninterrupted and transparent cool chain to the end-users? Turkish Cargo’s cold chain logistics is prepared specifically in order to protect the contents and prevent them from deterioration. At Turkish Cargo, all transportation of medical supplies is executed in accordance with IATA regulations. We offer our customers various

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services including temperature-controlled active and passive systems. Our new cargo terminal comprises of over 3.000 m2 special storage area and 39 separate special cargo rooms which have high quality standards, including climate-controlled storage units designated for drug, vaccine and medical supply shipments. All of our temperaturecontrolled storage units are monitored for temperature and humidity levels via an online tracking system. Temperature-sensitive cargos are stored safely in storage units which are suited for the type of cargo and are stored under the temperature range requested by the sender. Medical supply cargos containing medicines in our temperature-controlled storage units are then transported from storage and

emplaned before take-off. Additionally, there are active temperature controlled containers, which are time and temperature sensitive and as such are kept at a designated temperature from the acceptance stage until their arrival to their destination. We provide some special equipment such as single use thermal covers and dry ice. To prevent our cargos from being exposed to often changing temperatures during flights, we use active temperature controlled containers. We’ve made agreements with international container suppliers, namely, Envirotainer and CSafe. In containers, which contain highly sensitive cargos such as medical supplies, vaccine, insulin and cancer drugs, we manage to maintain the desired temperatures even during long-distance flights. With our

“With our data entry log, we also report to our customers about the changes in temperature of their shipments during the whole transportation process. Thanks to our agreements we’ve made with international container suppliers, we can realize shipments between -20°C and +25°C at the demanded circumstance and capacity.” data entry log, we also report to our customers about the changes in temperature of their shipments during the whole transportation process. Thanks to our agreements we’ve made with international container suppliers, we can realize shipments between -20°C and +25°C at the demanded circumstance and capacity.

The new route of Turkish Airlines from Istanbul has proved beneficial for Cambodia’s fashion sector by providing direct export link to European markets. Does the airline plan to target other sectors in a similar fashion? How do you perceive the Indian market for the same? We are using air cargo as a freighter, so we don’t have any problem. We began to associate with Hyderabad in freight. But we are not able to use wide body aircrafts or belly cargo for Indian airports because of the slots problem in such airports. If we achieve this, I think we will have a chance to get more airports and also more flights to Delhi, Mumbai, Bangalore or Hyderabad and even Ahmedabad, given that there are so many airports in India.

What’s your take on the much debated Open Sky Policy proposal by Indian government? If given an opportunity, would you like to turn the odds in your favour? We appreciate any liberalisation effort, to increase our traffic volume.

had the chance to see which destinations we can mostly focus on and how we can go further with these destinations and the capacity. For example, we are talking about the work lease options, and in parallel, we are working on our IT system. Then, we are collecting customers’ needs from the system and are seeing that we need extra capacities for the destinations. After that, we apply for the work lease options. So, this enables us towards a more concrete structure and timetable on the freighters’ schedule. Hence, we are able to serve the customers better. We are constructing NDU portal on our site. What this portal can do is, for example, you can apply as a customer with your username and password and look at your tonnage, revenue, prices, and almost everything. Probably, we will realize this until the end of September. In October, it’ll be open to the customers. I don’t think we could have achieved this with the old IT system we had used.

Born in the East, how has been the journey of Turkish Airlines to the West, in pursuit of American cargo? This year is a good year for us. We opened two new destinations in Miami and Atlanta. Also, we put the freighter to Atlanta this year, New York, and also Chicago. So, we want to be with these three freighter destinations and also wide body capacities. We’ll increase the capacity in Los Angeles in the beginning of August. Also, we will resume 777 flights to New York. So, there are chances for us to increase the tonnages with these new capacities. We hope the development won’t be a problem in the USA. Besides, we are looking for opportunities in the best businesses. For example, our charter-based businesses are there in Houston, Miami, or South America.

Expected to solve IT based problems and improve processes in all areas of operation, COMIS project won Turkish Cargo the ‘Logistics Project of the For the Indian market, what’s your marketing Year’. How and when was COMIS conceptualised? strategy in the coming years? Has it attracted any potential investments by oth- We focus on pharmaceutical products and er organisations in air cargo logistics industry? express business and capture the market After implementing the new IT system, we

in European destinations. This year, we

have changed much of the freight, wide bodies; putting together Europe’s cargo from countries like Germany, Netherlands, and also a shuttle to Paris.

Can you please talk about your specialised cargo segments? We have around 3,700 sq. metres area of warehouse, containing around 40 rooms for us. We have segregated our products according to varying temperature requirements like perishables, flowers, fishes, etc. that we are carrying from Africa to Europe. We don’t mix these products as their different smells might get mixed up. So, we split these products in these rooms.

What is your USP? CIV (Commercial Individual Value) is our USP, which is suitable for pharma companies. We had observed a range of different customers visiting our warehouses from the beginning of the year to the end of the last month, especially shippers and forwarders like DHL, Roche, Novartis and Pfizer. As you know, it’s not easy for a pharma company using each warehouse, the way it is suitable for us. Every time they come to us, they see the warehouses and the processes. If they need any processes to be changed, we do it for them. This is what makes us unique.

How has the Indian market evolved for the group till date? Compared to last year, the tonnages are promising for us. We will focus on mainly the special products, like pharma and express.

What do you see as the vital global trends in the air cargo industry, considering the last financial year? There are good things related to e-airway bills. When last used, it was 30 per cent. I hope they are targeting at least 50 per cent more than the previous one, in 2017 and 2018. Also, from the cargo aspect, security is very important. So, hopefully that will be more convenient around the world in 2017 and 2018.

SEPTEMBER 2016 - CargoConnect 63

Interview

The Middle East Saga of Success

With strong regional transport links, encompassing road, sea and air, and with airport modernisation and rail development moving forward, today Bahrain is a logistics hub for the GCC. Husain Rajab, Executive Director, Manufacturing and Logistics, Economic Development Board of Bahrain in a candid interview with Nicin Varghese speaks about Bahrain’s unique and progressive journey in logistics industry

for the rest of the Gulf market, currently worth about $1.5 trillion and is expected to reach $2 trillion by 2020, and Indian companies with branches in Bahrain serving the region stand to benefit from access to this lucrative market. These opportunities have led to investment from a number of high profile Indian companies, including State Bank of India, Chemco, JBF Industries and First Flight Couriers Ltd, and manufacturing firms Ion Exchange and Electrosteel, all of which are established here in Bahrain. The continuing trend of Indian businesses launching operations in Bahrain reflects the growing economic ties between our two nations, with bilateral trade standing at $674 million in 2015.

Several case studies showcase Bahrain as a hub for investments and expansions, especially in the logistics industry. Also, several Indian companies have expanded their operations in the country. What could be the impact of this on the Indian economy? It opens doors for thriving Indian businesses onto a large and relatively untapped consumer base. Bahrain’s strategic geographical location makes us the perfect gateway

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Where does the logistics industry fall in Bahrain’s Economic Vision 2030? Logistics is an industry where we feel that Bahrain has unique advantages, with its geographical location at the heart of the Gulf, excellent infrastructure and connectivity, including a 25km causeway to Saudi Arabia, world-class port facilities and the strongest regional route network in the GCC. Indeed, the 2016 Emerging Markets Logistics Index published by Agility and

Transport Intelligence ranked Bahrain the seventh most connected emerging market based on its high-quality domestic and international transport infrastructure. Additionally, Bahrain ranks 44th globally in the 2016 Logistics Performance Index, which represents a jump of 8 positions from the 2014 report. The Bahrain Economic Development Board (EDB) continues to prioritise attracting foreign investment into Bahrain’s logistics sector and supporting industries. In order to raise awareness about the advantages the Kingdom has to offer to international logistics companies and to assist companies in setting up or already established in Bahrain, we have a dedicated Logistics Board comprising of members of the Office of the First Deputy Prime Minister, EDB, Ministry of Industry, Commerce and Tourism, Ministry of Transport and Telecommunications, and Bahrain Customs Affairs. As well as contributing to growth and diversification of the economy in its own right, the logistics sector also helps to support the growth of other key areas such as manufacturing by helping businesses access the opportunities in the GCC market from Bahrain.

To become a global leader in logistics, it is important to attract global players. How far is Bahrain’s logistics industry open to the global air cargo investors? The Bahrain government has worked hard to create the best possible operating environment for foreign businesses. A

number of incentives have proven key to attract big names to our shores, for example in the Kingdom there are no designated free zones. Rather, the whole country operates as a free zone, with 100 per cent foreign ownership allowed in most sectors – this is particularly important for businesses looking to access the GCC market as it means they are treated as a GCC business, not a freezone company. Numerous Free Trade Agreements (FTAs) have been signed as part of the GCC. Bahrain enjoys its own FTA with the US and is currently in negotiations on behalf of the GCC to establish FTAs with the European Union, China, Japan, Iraq and Australia. The GCC also enjoys an FTA with Singapore, allowing Bahrain to bridge the East with the West, which is a significant draw for logistics companies. It is this environment that has helped to attract a number of global logistics companies, including Aramex, UPS, Fedex, KWE and Agility. International cargo carrier DHL set up operations in Manama in 1978 and the airport has served as the firm’s regional distribution centre in Eastern Europe, the Middle East and North Africa ever since, employing more than 1,000 people in Bahrain.

Today, logistics is one of the most widely chosen career options. How does the Government of Bahrain prepare itself to start-up and encourage education programme in logistics and supply chain management? The labour fund Tamkeen aims to equip Bahrainis with high level leadership and business management skills and supports a large number of Bahrainis each year with their educational aspirations. Institutions such as Bahrain Polytechnic offer a number of training courses suitable for developing careers in the logistics and supply chain management industries. Furthermore, as almost all Bahrainis speak both Arabic and English, communicating with suppliers and customers around the world is quick and easy, making bilingual local staff a real advantage to employers in these industries.

How do the existing facilities such as the King Fahad Causeway, The Khalifa bin Salman port etc. help Bahrain to create an integrated logistics cluster and benefit from the global market in turn? Capitalising on Bahrain’s strategic geographical location at the heart of the GCC market, the government has developed a robust transportation network, linking

together the various hubs throughout the country and connecting them to the wider world by sea, land and air. Bahrain is 40 per cent closer to the major cities in the region than its competitors and provides access to all of Saudi Arabia, the largest market in the GCC, within 48 hours driving time. Bahrain has the shortest travel time in the region between its main logistics processing zones, enabling more efficient and faster processing of goods and offering the best value for money with regards to its operating costs. The King Fahad Causeway, which was established in 1986, provides direct access to Saudi Arabia, the region’s largest individual market, making travel and transportation between the two countries quick and easy. Bahrain International Airport hosts 32 airlines, flies to 51 destinations and provides sophisticated facilities for logistics operators and is home to Bahrain’s national carrier Gulf

The Bahrain Economic Development Board (EDB) continues to prioritise attracting foreign investment into Bahrain’s logistics sector and supporting industries Air. The Khalifa Bin Salman Port, barely 13km away from the airport, offers world-class services to shipping lines, freight-forwarders and beneficial cargo owners and is widely regarded as the most efficient port in the GCC with an average container clearance time of less than 3 hours registered in 2016 The Bahrain Logistics Zone (BLZ) is also an integral part of Bahrain’s logistics offering. It is the Middle East’s first multi-modal logistics hub to focus on re-export and value-adding logistics and is situated close to Khalifa bin Salman Port. BLZ is home to several large scale corporations and is still expanding. Schmidt Middle East Logistics is currently building $30 million dry bulk logistics hub which will store, handle and distribute around 30,000 metric

tonnes of materials and create up to 100 local jobs, directly and indirectly.

What are the future plans of EDB to develop Bahrain as a logistics hub? Also please tell us about the second phase of Bahrain logistics zone expansion to cater for future demand? The government of Bahrain is investing more than $32 billion in developing important infrastructure projects across Bahrain. By improving the quality of existing infrastructure and proactively developing new facilities, we can dramatically enhance Bahrain’s logistical offering. The EDB is supporting the government ministries responsible for this activity in their endeavours. Some key projects underway or in planning stages are the modernisation of the airport, the construction of a second causeway linking Saudi Arabia to Bahrain and the development of an inter-GCC railway. The airport modernisation project is due to be completed in 2019 and will increase capacity from nine to 14 million passengers a year, improving cargo facilities in the process and increasing handling capacity to one million metric tonnes per year. For improving international transport connections we are looking at facilitating interregional travel with new road and rail links between Bahrain and the rest of the GCC. Expansion of the Bahrain Logistics Zone is also being planned for the future to accommodate more regional distribution centres and companies engaged in value added logistics services. Alongside these key projects, there are numerous initiatives underway that are directly aimed at improving efficiency such as the ‘single window’ customs clearance system which is currently being developed, the ‘Known Shipper’ certification and the streamlining of processes across all points of entry and adjustment of the King Fahad Causeway’s infrastructure. Likewise, demand is being driven by the diversification and expansion of regional economies. The logistics market in the GCC expanded at an annual rate of 10.2 per cent from 2008-2012. The ongoing development of domestic manufacturing industries in the region, as countries look to diversify their economies away from a reliance on hydrocarbons, is helping to support that growth. We anticipate steady growth in the logistics sector in the near future to medium term. By investing in our infrastructure, we are now laying the foundations for continued success in the future.

SEPTEMBER 2016 - CargoConnect 65

Interview

Zebra’s Total Wearable Solutions promises “visibility that’s visionary”

66 CargoConnect - SEPTEMBER 2016

Zebra Technologies Corporation, a global leader in solutions and services, that provides real-time visibility into organizations’ assets, people and transactions, has recently released the Asia-Pacific results of its latest Warehouse Vision Study. It reveals that enterprises are expected to increase the number of warehouses as global online sales continue to grow. Sana Husain finds out more in an exclusive interview with Stuart Scott, Solutions Marketing Lead at Zebra Technologies for the Asia Pacific region, who has more than 25 years’ experience in automatic identification and communication technologies including mobile computing, BYOD, wireless networks, data capture, RFID and the Internet of Things (IoT). Having worked in both global and regional roles, directly with customers and channel partners, he brings market know-how of technologies that can be applied to help businesses reduce cost, improve efficiency, increase market share and improve customer satisfaction

In the warehouse, DHL predicts augmented reality will be used to streamline the picking process, which accounts for 55 to 65 per cent of the cost of warehousing operations. For instance, virtual reality headgear will enable workers to automatically find items within their field of vision instead of relying on paper-based picking procedures. At other points along the shipping route, augmented reality input will allow drivers to automatically check to see if loads are complete and instantly identify boxes for delivery. Will this always guarantee efficiency? Should logistics sector be increasingly dependent on technological advancements in this manner? That’s a good point. Different economies move at different speeds. There are some basic things that we need to put in place. We have augmented reality, for example, on roadmaps. There is a lot of talk about augmented reality. But as of today, we are not augmented. I know a couple of logistics companies who have tried this in Europe. They have said that this technology looks promising and might deliver results in one-two years. Even though we don’t have a headset today, but you have started to see augmented reality on mobile computers, in pretty much the same way. There are some enhancements taking place. The other thing, in terms of technology, in the warehouses is called mobile bio-mentioning. You can effectively use this to see the size of the packages moving in the warehouses. It becomes important when you are in the world of e-commerce and shipping clothing, where inevitably the clothing is always picked up in this dimension. Historically, logistics is a business where the weight is accounted for, not the volumes.

TECHNOLOGY INVESTMENT PLANS

• Technology investment is a top priority for warehouse executives, exemplified by nearly three out of four (74%) of those surveyed planning to outfit their staff with technology in five years. • The top 10technologies warehouses are most interested in are: 1. Internet of Things (72%) 2. Barcode scanning (70%) 3. Tablet computers (69%) 4. Big data/analytics (67%) 5. Warehouse/truck loading automation (64%) 6. Advanced imagers (61%) 7. Mobile thermal printers (60%) 8. Stationary label printers (59%) 9. Wearables (58%) 10. RFID (53%) • Technology deployment in the warehouse is expected to increase productivity, efficiency, and visibility in the supply chain.

What kind of opportunities do you see in Indian smart warehousing industry? In every item, if you see, there’s a barcode. We do barcode printing. Every product has various check points and it will be scanned several times in the supply chain system before it gets delivered at your doorstep. Our value addition is that we have the entire technology piece which allows the complete track and trace of that barcode, in e-commerce.

What are the key trends in the Asia-Pacific regarding Warehouse Vision Study? The key trends involve the move to best warehouse management systems to increase the functionality and an increase in technology adoption. Regarding technology adoption around IoT, there’s barcode scanning technology available which needs to be adopted. Then, talking about big data and analytics, analytics piece refers to the collection of the data for better information.

As Zebra Technologies will benefit various sectors from retail, manufacturing, logistics, transportation to wholesale distribution with its wearable devices, how will it specifically help in the networking aspect? Our wireless network is not an office-based wireless network. So, our network historically has been built for environments that deal in manufacturing and warehouses. Hence, the network communicates seamlessly with our mobile computer. Also, we can use that wireless network for real-time location services. We can use anything on the back of our existing networks. So, when I talk about IoT capabilities, that wireless network effectively serves as the backbone of IoT too.

Could you throw some light on the wearable devices, that Zebra has more specifically on TWS? The wearable stuff of our company is actually 20 years old. We built the first wearable device many years ago and we continuously strive to improvise the technology. Therefore, what you see now is our first generation of total wearable solution. So effectively, there is not one solution that fits all size, as there are different usage cases for different mobile devices.

What is your roadmap for growing IoT in the wearable market? Focusing on B2B side and not only on the consumer side, we actually call that category as Enterprise Asset Intelligence because it describes what we do. For the IoT, our strategy is to bring the solutions at the centre, with real-time location solutions around the warehouse, that’ll help people track assets and enhance productivity. We thought a lot about IoT and how we can deliver maximum value. Having exciting technology in the B2B space, manufacturing, transportation and retail are the core market areas for us.

SEPTEMBER 2016 - CargoConnect 67

guest column

Measures to take for Cargo Safety By Sushant Sarin

Cargo Transportation Cost & its Solution Cargo operations in India are a costly affair. A study conducted by World Bank found out that the logistics cost, as a percentage of total value of goods, in India is as high 13-14 per cent when compared with seven-eight per cent in developed nations. This proportion has increased over the past few years, indicating structural inefficiencies. Factors attributed to this undue logistics cost are congestion, transaction and Infrastructure. Congestion: Congestion at ports, inland roads and highways have a direct impact on augmented costs and the explosion in cargo movements. This directly increases inventory costs as delivery time of cargo increases and also raises risk for marine cargo insurer, as the cargo is in transit for an extended period of time. It is factored that an average speed of freight vehicles is about 2530 kmph in India, which is 50-60 per cent slower than the US, adding to the freight cost.

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Transaction: Transaction costs include various government taxes and insurance costs which hopefully will be controlled with GST getting implemented in the coming time. Infrastructure: Infrastructure cost - EXIM is increasing at a fast pace and the available infrastructure is not able to absorb the impact. The high cost of terminals development along with relatively latest innovation in finalising strategies result in only moderate pace in the supply chain addition. There is also a lack of proper road infrastructure in the Class-B & Class-C towns. Additionally the lack of proper logistic professionals also increases the costs of cargo operations. If we talk about domestic cargo, we find that it is still pretty unorganized in India. It is estimated that 30 per cent cargo is moved by railways and the remaining is transported by road. Rising fuel prices and axel load reduction are making road transport uneconomical over a long haul. This is also a highly capital intensive business and the cost of rolling stocks is pretty high by rail. It is estimated that the cost of operating an inland container depot (ICD) is around Rs. 150 crores. The entire infrastructure such as yards, containers, signals are still provided by one service provider, namely Indian Railways. There is a long gestation period and the projects sometimes take up to ten years to achieve a breakthrough. On the other hand there is a high concentration of traffic at selected ports. Presently, it is estimated that 70 per cent of the total container cargo is handled by the west coast of India. Some major ports on this coast are Kandla, Mundra, Mumbai, JNPT and Goa. With such a high concentration of the traffic of the cargo on the west coast and the cargo movement towards Northern & Central India, it leads to heavy congestion along these routes. To counter this situation and control

the growth inhibiting transportation costs, Indian government has shortlisted 15 locations with the highest freight movement for the development of multimodal logistics parks. The locations shortlisted areâ&#x20AC;&#x201D;Delhi NCR (Delhi, Gurgaon, Ghaziabad, Faridabad, Noida); Mumbai (Mumbai, Mumbai suburbs, JNPT, Mumbai ports, Raigad district); north Gujarat (Ahmedabad and Vadodara); south Gujarat (Surat and Bharuch); Hyderabad; north Punjab (Amritsar, Jalandhar, Gurdaspur); south Punjab (Ludhiana, Sangrur, Patiala); Jaipur; Kandla; Bangalore; Pune; Vijayawada; Cochin; Chennai and Nagpur. Through the programme, the government is trying to improve efficiency and reduce logistics costs by as much as 20 per cent. The parks are expected to serve four key functions: freight aggregation and distribution, multimodal freight movement, storage and warehousing, and valueadded services such as custom clearances. Government will form a multi-modal company (MMC), which will manage the development of logistics parks and will have representation from the National Highways Authority of India (NHAI), Indian Railways, Airports Authority of India (AAI), Inland Waterways Authority of India (IWAI) and Indian Ports Association (IPA). These multimodal logistics parks are important because when you shift from one mode of transport to another, there is time loss and wastage in handling. But, with such multimodal hubs, cost of handling will be reduced and processes will become more streamlined and efficient, so much so that even government clearances would become streamlined. Thereby, in the long run itâ&#x20AC;&#x2122;ll reduce the logistics costs and bring it at par with the developed nations. (The writer is the Senior Vice President-Commercial Lines, TATA AIG General Insurance Co. Ltd)

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Implementation of GST By Ajay Khosla

mplementation of GST will be one of the most fundamental amendments after the economic liberalisation of 1991. On August 3, 2016, the Government clears the roadmap for the Constitution Amendment Bill for Goods and Services Tax (GST). The Government seems steadfast to replace all meandering taxes i.e. Excise Duty, Service Tax, VAT, CST and Entry Taxes levied on goods and services by the Centre and States. The (GST) Goods and Services Tax is proposed to be a comprehensive indirect tax levied on manufacture, sale and use of goods as well as services. This is a grouping of multiple taxes levied by both central and state authorities. It will put back all indirect taxes imposed on goods and services by the Indian states and Central Government. The present combination of central and state tax comes out to be around 26.5 per cent while after implementation of GST the same is expected to shrink around 21 per cent. Experts say that there are many ways

in which GST will improve supply chain and logistics systems. All the LSPs are also eagerly waiting for the roll out of GST, because other than automobiles, FMCG and consumer durables, LSPs are going to be the biggest beneficiaries of the GST. After execution of GST, inter-state sales transaction will become tax impartial and our nation will become one big single marketplace. This will reduce logistics costs as taxation will be done at a national level rather than various local levels and become simple and indirect taxes will get abolished. At present, a complicated tax precept with poor infrastructure has resulted in exorbitant logistics costs in India. It is now 14 per cent of the total value of goods as compared to seven–eight per cent in the developed world. Implementation of GST in the logistics industry will diminish logistics costs upto 25 per cent in coming few years due to savings in logistics sector by making supply chain leaner. Warehouses/Depots are an important part of any supply chain. Strategically placed warehouses not only improve the levels of customer satisfaction but also reduce cost of other supply chain elements. Implementing GST will eliminate CST, SCM and manufactures would not have the necessity of warehouses in each state. After GST, the deciding factor of SCM design would be strongly dependent on logistics cost & matching with customer demands and create a highly flexible SCM system. Further, this boosts the share of organised players as demand of bigger and efficient warehouses is raised rather than small godowns in different state pockets. The locations of the warehouses would be more driven by the market forces of demand and supply. LSPs will focus on building fewer but larger warehouses based at strategic locations. GST will also trim the transit timings because the state-border crossing is likely to be simplified. In the current scenario, trucks are immobile for more than 30 to

40 per cent of their total transit times at various tax check points. Post GST, most of the check-posts will be abolished and that means a large reduction in transportation turnaround time. This will mean more trucks and higher business by the same truck and further enhancement of efficiency for LSPs. On account of entry taxes and heavy paper work at state check posts, there is an additional five-seven hours addition to the transit time for inter-state transport of goods. The implementation of GST will also give a huge push to e-commerce. As we know, presently, E-Commerce industry in India is moving at a superlative speed which requires a constant refurbishment of the policies in retail sector. E-Commerce players who are buying & selling goods face lot of complexities & ambiguities related to taxation, forms & tax credits and GST will address these issues more speedily and efficiently, resulting in economical and quicker deliveries. Most importantly, with common tax structure countrywide, goods can be valued with right margins without worrying about issues related to shipping locations. GST will give not only leaner and simpler system of buying for businesses but will also address the issues of states who get to tax on shipments. This will lead to optimisation of delivery schedules and the operational costs of transporters, resulting in competitive pricing. The roll out of GST will defiantly bring transparency, and simplify taxation system of the country and make SCM and LSPs more cost-effective, resulting in better customer satisfaction. The Indian logistics industry is expected to grow steadily, led by proposed GST implementation and government initiatives like “Make in India”. With reference to a study, implementation of GST bill is expected to trim the logistics costs up to 20 per cent from the current level. (The writer is the DGM – (Delhi and Uttrakhand) of Jaipur Golden Transport Co. Pvt. Ltd.)

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INDIAN WAREHOUSING INDUSTRY: REAPING THE BENEFITS OF A GROWING ECONOMY By Dr Samantak Das

ndian businesses have long ignored the significance of the logistics segment, which continues to remain one of the most under-invested sectors in thecountry. While it undertakes the critical role of connecting production centres to consumption markets, inefficiencies in managing the sector could lead to a severe disruption in the entire supply chain network. In India, the logistics sector experience has not been very encouraging, leading to colossal losses during the entire transaction. The logistics sector can be broadly classified into three areas–transportation, distribution and storage. In India, the transportation and distribution sectors have traditionally been a part of many studies, with numerous reports and findings affiliated to them. However, it is the storage and warehousing sector that has mainly remained underresearched. Although the warehousing segment constitutes only 15–35 per cent

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of the total logistics costs, its importance is significant with respect to the role it plays in the smooth functioning of supply chain networks. The Indian warehousing industry is highly fragmented and unorganised at present. It is still in the initial stage of development and has a long way to go to catch up with most of the advanced economies. However, we strongly believe that the industry is on the cusp of a turnaround and the current environment is likely to accelerate progress, considering the interest from government as well as private enterprises. The Government of India brought out the National Manufacturing Policy with the objective of increasing the share of manufacturing in the GDP to 25 per cent. ‘Make in India’, the government’s national initiative places great importance on building best-in-class manufacturing infrastructure. Further, interstate industrial corridors, such as the ambitious Delhi-Mumbai Industrial Corridor (DMIC), and freight corridors, such as the Western and Eastern Dedicated Freight Corridors, are gaining renewed focus. All these efforts will have a substantial positive impact on the warehousing sector in India in the medium to long term. From the short term perspective, two important events are likely to propel growth in the warehousing sector ofthecountry. First, the upcoming Goods and Services Tax (GST) Bill will amalgamate several central and state taxes into a single tax, thereby mitigating double taxation and facilitating a unified national market. The sector will experience a structural change, backed by consolidation and operational efficiency. Second, the emergence of the ecommerce (e-tail) sector and the recent FDI relaxations brought in by

the Government of India in the ‘ecommerce marketplace’ will unleash a huge potential for the sector. In fact, the consumption (retail) led warehousing space demand will be driven majorly by the e-tail sector in the next couple of years. As per Knight Frank Research estimates, retail spending in the top seven cities will more than double to touch `7,650 bn between 2014 and 2019, and e-tail’s share will increase from 2 to 11 per cent – a jump of more than five times. Keeping in mind both the short-term and long-term perspectives, the total warehousing occupied space (including manufacturing, consumption and EXIM) in India is estimated to grow at a CAGR of 9 per cent, from 919 mn sqft in 2014 to more than 1,400 mn sqft in 2019. In other words, the market will witness the requirement of an additional 104 mn sqft of storage space per annum till 2019. The warehousing sector in India is witnessing the heightened interest of international financial and development institutions, global institutional investors and developers to participate in this accelerating opportunity. The Indian developer community, which has long been fixated on the traditional real estate asset classes, viz residential, office, hotel and retail, has now opened its mind and wallet to enter into the segment. The improving regulatory environment for the Indian Real Estate Investment Trust (REIT), which also covers the warehousing segment, has added to this inclination. E-tail is already proving to be a juggernaut, expanding the market in terms of space and service standards. In light of such a promising environment, we believe that this sector will soon be in a high growth trajectory. (The writer is the Chief Economist and National DirectorResearch, Knight Frank (India) Pvt Ltd)

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LSPs: A key beneficiary of GST By Vikash Khatri

ST, one of the biggest tax reforms since Independence, is going to become a reality from the next financial year. This reform will have organisation wide impact across industries, but the functions having maximum impact are taxation and supply chain. In this new era - LSPs/3PL and end-users - both would need to re-engineer their supply chains and focus is going to shift from regulatory driven supply chain to optimisation driven supply chain with enhanced customer service. The first question is always about time; When GST will actually be implemented? But there is no doubt about its certainty of implementation. The time gap can be of few months only. So the time has come to initiate the process, to plan and prepare for GST readiness, especially for LSPs, so they can offer services from day one and partner various organisations in reaping benefits of this tax reform. In a GST scenario, cost of logistics outsourcing as the 15 per cent service tax charged by logistics companies can be largely offset against the Central GST liability, which will boost outsourcing in supply chains and provide greater impetus to 3PLs. Post GST, organisations will work on inventory optimisation to reduce inventory carrying cost and wastages as movement of goods across border will have free flow. Due to such changes in customers’ behaviour, LSPs have to reinvent themselves. Changes required for LSP can be divided into these five broad categories:

Warehouse a) Infrastructure: GST will enable free flow of goods across the country and will provide border-free interstate transaction, following which, current structure of state specific warehousing will be replaced with a structure where decision will be based on economic factors. This consolidation will lead to bigger sizes of warehouses. These warehouses will attract high capital investment, automation and efficient management, resulting in larger role of organised sector in this industry. b) Location: Post GST, LSPs and their endusers, both would need to reconfigure their supply chain network with a key factor of optimal locations for warehouses and logistics centres along with size. These new locations of warehousing will emerge as consequence of not only cost benefit, but will also include other factor like infrastructure, providing ease and speed of transportation to serve customer better, etc.

Network Transition from an origin based tax regime to destination based tax regime will significantly impact the procurement patterns, manufacturing location, supply chains and distribution networks of manufacturing firms. The service provider engaged in transportation and express distribution will have to redesign the network to minimise the cost with greater efficiency. As of now, primary lanes consist from manufacturing units/centralised warehouses in each state. But in the future, primary lanes will reduce in absolute numbers with increase in transported volume in those lanes due to regional warehousing structure. On the other hand, secondary lanes catering replenishment to dealers/distributors from regional warehouses are going to cater to larger geographies.

Fleet Structure With GST, fleet configuration of LSPs is going to change. With setup of mega warehouses, lot size of stock transfer to these warehouses is going to increase. This means that the supply chain companies will need bigger vehicles for primary transportation. Apart from truck size, the trend of containerisation will also increase with increasing lot size.

Higher containerisation and dedicated freight corridors may result in some shift from road to rail mode. On secondary lanes, frequency of replenishment will be more critical than size of vehicle. In order to improve customer service and reduce stock out situation, service window will get reduced for LSP.

Automation Post GST, IT systems would need to be migrated, aligned and upscaled for a robust performance in the new world of larger warehouses. Clients of LSPs work on their respective softwares/ERP, but they look for seamless information flow between their system and LSP’s system for visibility of inventory, track&trace, etc. The adoption of efficient technological tools like intelligent WMS, RFID, SKU level barcode will get deeper penetration in supply chain domain. Along with it, LSPs will have to make IT investment in integration of specialised best-in-class tools like supply chain network optimisation, lastmile delivery optimisation, etc. Increasing scarcity of skilled labour and increasing real estate prices will also force firms to go for automated and efficient warehouses.

Finance Finance is going to be the key in the era when supply chain companies will need drastic changes to be “GST ready” with automation post implementation. LSPs will not only need finance for capex, but also for their working capital requirement, especially on transportation, as liability to pay tax may shift from the recipient of service to provider of transport service. In absence of centralised registration, administrative cost of the service providers is going to increase. GST is expected to unleash a plethora of opportunities for organised LSPs. Early mover companies will definitely have an edge in the supply chain industry. But these opportunities come with few challenges for the industry, which need to be tackled smartly for gaining grounds. Two major challenges which we foresee are talent availability and control on cost of service. But in the long run, impact of GST will be a win-win for LSPs and its clients. (The writer is the Founder of Aviral Consulting Pvt Ltd)

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Robotics: A much needed panacea for the Indian logistics industry By Yaduvendra Singh

Warehouses face high cost and lead time due, wrong shipments lead to reverse logistics, and inaccurate ocumentation. Robotics solutions can eliminate these challenges and bring the Indian logistics industry at par with its global peers.

ver wondered how a product ordered on a popular e-commerce site reaches you the same day? Before arrival, it exchanges several hands and passes through multiple touch points. So, if the packet is on or before time, the credit goes to the logistics management by the seller company. On the other hand, if it is not on time or has wrong items in it, the company may have lost a customer to the competition, forever. This scenario explains the importance of logistics for e-commerce business. However, this is not merely limited to the e-commerce industry. Several other industries such as retail, pharma, healthcare, automobile, hospitality, etc. have been aiming to develop competence in logistics management. Warehouse operations are the first touch point for any logistics service provider and make up about 60 per cent of the entire supply chain management process. Therefore, focusing on efficiency and accuracy in this part is critical for businesses. A typical warehouse has three broad operations, i.e., receiving the incoming goods, storing at the right place, and sending it out to the right location. However, the volume and diversity of items, dispatch locations, size of consignments, specific protocols (First in First Out, First Manufactured First Out, and First Expiry First Out etc.) and the pressing need to optimally utilize the expensive real estate makes it extremely important to automate the warehouses. Imagine if a warehouse needs to send out 50,000 packages in a day that carry 1,000 different items (or combinations of it) across 5,000 different regions. Also, these items may be required to be picked up based on respective protocols. Apart from the high operational cost, the complexity of operations may bring in errors and slip-ups. Hence, it is important to transform this part of the value chain through robotic solutions in order to bring efficiency and accuracy in warehouse operations and to enhance user experience across multiple industries. However, fragmented, unorganised, chaotic, and inefficient are some of the adjectives currently associated with the Indian logistics

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industry. Warehouses face high cost and lead time due, wrong shipments lead to reverse logistics, and inaccurate documentation. Robotics solutions can eliminate these challenges and bring the Indian logistics industry at par with its global peers. For example, by cutting down the transportation cycle for perishable products, companies can deliver faster, increase penetration, and grow their business exponentially. On the other hand, not automating the warehouses will stagnate the growth of many industries and will hamper the prospects of competing with global players (who leverage automated warehouses). Therefore, automating the warehouses is not a choice but a business need (deploy or perish). Several leading e-commerce and logistics players have transformed their supply chain using advanced robotic technology by GreyOrange, leading to multiple business benefits. GreyOrange focuses and invests heavily in R&D, designing, and developing its own hardware and software. The indigenously developed robotic systems, the GreyOrange Butler and the GreyOrange Sorter automate complex warehouse processes, optimise space utilization, reduce operating expenses, eliminate errors, pilferage and stock damages, and help in real time inventory audit, thereby increasing the overall warehouse efficiency manifold. GreyOrange is headquartered in Singapore and has operations in India, Hong Kong and Japan. Moving forward, the company will expand its presence further in regions. Markets like the Middle East, China and Europe have shown interest and demand for warehouse automation and are on GreyOrangeâ&#x20AC;&#x2122;s radar. Apart from e-commerce and logistics, GreyOrange is also gearing up to transform industries like automobile, retail, FMCG, pharma etc. In the coming days, as more and more companies understand the importance of automating their warehouses, GreyOrange will play an extremely important role in disrupting supply chains across industries. (The writer is the Global Head, Sales, Marketing and Solutions Group, GreyOrange)

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Achieve Supply Chain Flexibility with Scenario Planning By Sandeep Chatterjee

cenario planning is a structured program where executives or people working on a transactional level are looking at different scenarios in the future based on supply, demand and inventory. Every business should concentrate on scenario planning, either at very strategic level or even at the lower levels, while considering factors in the external environment or in the internal environment that will impact their business. With an ever-changing business environment, the winner will be somebody who has done his homework well in terms of supply chain simulation, agility and flexibility. Supply chain executives today face a tough battle of trying to adhere to the CEO’s agenda of sustainable growth and shareholder value while dealing with an ever-changing supply chain business model. The drivers for success are operational flexibility, risk management, and continuous innovation and they can only really achieve this by bringing analytics and optimisation together into a common platform, as also described by AMR in one of their recent studies. Yet, the risks involved in supply chain needs attention. For instance, Company A recalls 13 million Firestone tires costing $3 billion and severe brand damage

after learning that design and quality glitches were putting certain tire models at the risk of shedding their treads. Company B was forced to recall 15 million cans and bottles due to contaminated chemicals in a bottling plant. The incident cost the company $60 million. Then, Company C was forced to halt production for several months at a cost of $400 million and a steep loss in share price, triggered by a fire in the production facility of a strategic supplier. Performance enhancement alone may create additional supply chain risk. Hence, it becomes imperative to weigh the supply chain risks while designing the supply chain network. According to a recent Aberdeen report, risk management leaders in the supply chain improved performance across a variety of supply chain metrics as compared to the risk management laggard. Supply chain complexity has significantly increased and it won’t get any easier. Higher supply chain complexity significantly increases risk of execution in the following ways: • Global manufacturing competitiveness forces companies to continuously improve performance and eliminate waste. • Ever increasing quality requirements requires additional focus on perfecting manufacturing operations and visibility of partner quality capability • Global sourcing opportunities reduces purchase price but significantly increases supply chain risk • Commodity volatility is causing many companies to re-think network and transportation strategy • Lean manufacturing pressures entire supply chain and requires increased partner visibility • Terrorism concerns requires additional concern for transportation security and shipment visibility • New regulatory and environmental concerns requires constant attention • Logistics capacity constraints increases pressure for more efficient planning and lead time reduction Risk is a threat of damage, liability, loss, or

any other negative occurrence that is caused by external or internal vulnerabilities. It may be avoided through pre-emptive action, while we plan for the known risk. Unknown risk creates havoc in the supply chain, as we cannot pre-empt every unknown risk. Some amount of preparedness and building redundancies in the supply chain helps in building a resilient supply chain. Some of the common, unplanned events are as follows: • Failures: suppliers, plants, warehouses, lines, transport • Costs: increase/decrease in costs of labor or resources • Prices: increase/decrease in price due to competitive activity, market conditions, or currency fluctuations • Capital Investments: new purchases, capacity increase • Natural Disasters: hurricanes, port closures, earthquakes With unplanned event scenario management, you can__ • Proactively identify choke points in your supply chain • Identify risk for unplanned events • Formulate response strategies • Determine risk mitigation strategies • Design your network and inventory strategies for resiliency Some of the scenarios which may be simulated for building a resilient supply chain network are as follows: • Inventory pre-build versus overtime • In-house versus outsourcing • Single sourcing versus multi-sourcing • Varying safety stock levels • Asset rationalisation and expansion • Perform sensitivity analysis • Purchasing cost optimisation In a nutshell, rather than focusing on execution today, supply chain professionals need to plan ahead and have risks embedded in their strategy which need to be dynamic rather than static. But, there’s a word of caution: “Strategy and Execution should not be decoupled.” (The writer is the Director, KPMG)

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news

AAI to develop ten airports in Maharashtra

India, US set to ink logistics agreement

The Maharashtra government signed an agreement with Civil Aviation Ministry and the Airports Authority of India for developing ten airports in the state under the centre’s regional connectivity scheme (RCS). RCS, which is part of ambitious National Civil Aviation Policy 2016, is aimed at developing regional connectivity through fiscal support and infrastructure development from the centre. “The MoU, signed in presence of Civil Aviation Minister Ashok Gajapathi Raju, aims to facilitate regional air connectivity by making it affordable by enacting different concessions offered by Centre, the state government and the operators,” Chief Minister Devendra Fadnavis said. The ten airports - Kolhapur, Shirdi, Amravati, Gondia, Nashik, Jalgaon, Nanded, Solapur, Ratnagiri and Sindhudurg will be developed, wherein state will contribute 20 per cent cost of Viability Gap Funding, whereas the centre will bear the remaining 80 per cent cost. The MoU states that government will provide essential land free of cost. These airports will be provided with roads, rail, Metro and waterway connectivity. The state government will also provide electricity, water and necessary facilities at concessional rates, the MoU says.

India and the US are set to ink a historic agreement to allow exchange of ‘logistics’ enabling their militaries to use each other’s assets and bases for repair and replenishment of supplies. A formal agreement is on the cards during the three-day US visit of the Defence Minister Manohar Parrikar commencing August 29. The two sides had announced the in-principle decision on April 12 in New Delhi saying they had agreed “in principle to conclude a logistics exchange memorandum of agreement (LEMOA) in the coming months”. Now the draft is ready and the two countries have agreed upon the text for the agreement, sources said. This will, however, not entail ‘positioning of US troops on Indian soil’. In April, Parrikar, at a joint press conference with US Defence Secretary Ashton Carter, announced the new agreement saying it would take few weeks for the draft to be ready. The LEMOA is not just expected to help the US, it will act as a vital tool for India as it expands its naval footprint and outreach. The US has a string of bases in East Africa, Persian Gulf, Diego Garcia (Indian Ocean), The Philippines, Australia and Japan. Indian warships and planes can seek similar refuel and repair facilities at these bases on long deployments, which are very frequent nowadays. The LEMOA will cover four aspects — training, exercises, port calls and the humanitarian assistance.

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Logistic Data Bank Project on Pilot Basis at JNPT

Bahrain Airport Services goes live with Kale’s GALAXY System

The Commercial Operation of Logistics Data Bank (LDB) Project has been operationalised at JNPT from 1stJuly, 2016 on a pilot basis. The logistics Data Bank Service would bring efficiency in the current logistics and supply chain environment through use of information technology that would be helpful for tracking and viewing the movement of containers across the port. This LDB Project will provide visibility and transparency in EXIM containers movement and will help in reducing overall lead time of the container movement across the western corridor and lower the transaction cost incurred by the shippers and consignees as a result of predictability and optimisation achieved through Logistics Data Bank (LDB) services.

Kale Logistics Solutions - a Leading Global IT Provider to the Airports, Logistics & Transportation segments on July 18, 2016 announced that Bahrain Airport Services (BAS) has gone live with Electronic Advance Manifest Filing using Kale’s GALAXY system. The Advance Manifest filing is in conformance with IATA’s CARIMP messaging standards. Bahrain customs needed to know the status for all the Import Shipments arriving on a given flight from Airlines. Kale’s GALAXY system in use at BAS accepts the messages such as FFM, FWB, FHL from airlines ahead of flight arrival, verifies the syntax and version requirements before transmitting the same to Bahrain Customs. In case such information for a given flight is not received from the airline or is not as per the agreed version, Kale’s GALAXY system is also able to generate relevant messages and transmit the same to Bahrain Customs System post flight finalisation. The system will aid Customs in better planning of activities for different type of commodities like –hazardous cargo, precious cargo & perishable cargo and will enable preventing mis-declaration of expected cargo and save considerable time & efforts for trade.

Mumbai port sets new record with 6316 cars shipped Mumbai Port has set a new record of shipment of 6316 cars on a single ship on its new berth OCT-2. This is a quantum jump over the previous record of shipment of 5376 cars. The ship M. V. HOEGH ST PETERSBERG berthed on August 6, 2016 and sailed on August 9, 2016 with 6316 cars’ shipment mainly consisted of 3115 cars of general motors and 3093 cars of Volkswagen and exported mostly to Mexico. Mumbai Port Trust is consistently contributing to the ‘Make in India’ campaign by facilitating the export of “Made in India” cars. Mumbai Port has been focusing on the export and handling of cars and has emerged as number one port on the West Coast of India growing at about 25 per cent for last few years. It is committed to improve the facilities and help reducing the cost of handling cargos.

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Multimodal logistics park in Kochi

Air India to start cargo service from Surat

Kerala figures on the list of 11 States to have multimodal logistics parks. The parks will be set up at a cost of `32,853 crore, outside urban agglomerations, as part of a move to improve logistics efficiency and to reduce logistic costs, pollution from automobiles and congestion in key cities. The parks are to be set up under the Logistics Efficiency Enhancement Programme (LEEP) of the Ministry of Road Transport and Highways (MORTH). Of the total cost, `10,665 crore is for acquisition of 4,816 acres, `10,359 crore for development of storage areas, and `11,828 crore for creating allied infrastructure. Fifteen cities, including Kochi, have been selected on the basis of the highest freight movement (40 per cent of the total freight movement in the country) in Phase I. The logistics parks will address the issues of unfavourable modal mix, inefficient fleet mix and under-developed material handing infrastructure. In Kochi, 264 acres of land — 110 acres for storage, 88 acres for allied infrastructure and 66 acres for future expansion and landscaping — is needed for setting up the park. The proposed parks will act as hubs for freight movement enabling aggregation and distribution. Freight from production zones will be shipped to nearby logistics parks, where it will be aggregated and shipped to a park near the consumption zone on a larger sized vehicle.

Air India, the lone operator in the Diamond City, is planning to start belly cargo service on passenger flights to Mumbai and Delhi from Surat. The AI will use spare volume in the aeroplane’s baggage hold (‘belly’) that is not being used for passenger luggage. The decision was taken after AI authorities were convinced with a presentation by team members of ‘We Want Working Airport at Surat (WWWAS)’ over the potential of cargo services from Surat during their visit to New Delhi recently. Sources said that senior officials from AI’s cargo division were very impressed with the huge cargo potential in south Gujarat. There is a huge potential for air cargo in textiles, diamonds and horticulture sectors. Diamond cargo worth `40,000 crore is transported every year from Surat to Mumbai. Airport Authority of India (AAI) has given in-principle approval for cargo terminal in the city and the total annual expected cargo is pegged at 40,000 metric tonne for the first year.

Govt to set up 50 regional airports in three years The Centre will set up 50 regional airports over the next three years, according to Civil Aviation Minister Ashok Gajapathi Raju. “We estimate about 50 new regional airports to come up in the next three years. Ten of them would be ready by the end of this year,” Gajapathi Raju said. Development of regional airports was a key component of the draft civil aviation policy, which suggested levies on airlines to fund creation of new airports in areas not well-connected by rail and road such as the North-East as well as popular tourist destinations across the country. “We are talking to all state governments to provide concessions for these new airports which include low tax on ATF at one per cent and elimination of service tax at these airports. Maharashtra could lead the effort with six such airports to be ready in the next one year,” the Minister said. He said that the government expects to raise `500 crore per year by levying a tax on airlines flying to these routes while offering them concessions to offset the cost. The cost of each of these airports would be about `50-100 crore. Many of these airports will utilise the existing 400 airstrips across the country. In Maharashtra, Shirdi airport is expected to begin operations from November while others at Nanded, Sholapur, Kolhapur, Jalgaon , Gondia and Akola will follow suit.

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APM Terminals Pipavav sets a record

Sagarmala project might save `40,000cr in logistics sector

The higher productivity helped create faster turnaround of trains which resulted in container train operators attaining better train utilisation, faster cargo transit times, and reduced dwell time of stored cargo at ICDs. APM Terminals Pipavav has set a new record of handling 17 container trains in 24 hours surpassing the previous record of 15 trains in February 2016. The trains were a combination of single stack as well as double stack. Managing Director of APM Terminals Pipavav Port, Mr. Keld Pedersen said, “We are working closely with our customers to constantly improve our service to them and help them compete in world markets.” APM Terminals Pipavav leadership teams in operations, engineering, safety & security, administration along with clients, shipping lines, customs, Indian railways (WR, Bhavnagar Division), Pipavav Rail Corporation Ltd (PRCL) and Container Train Operators (CTOs) were all involved to ensure success in this milestone. The higher productivity helped create faster turnaround of trains which resulted in container train operators [CTOs] attaining better train utilization, faster cargo transit times, and reduced dwell time of stored cargo at ICDs.

A Shipping ministry study has claimed that the ambitious Sagarmala project could lead to an annual saving of `40,000 crore by optimising logistics. “The study estimates that the potential to save around `35,000-40,000 crore per annum by optimising logistics flows for key commodities by 2025. Some of the key drivers identified for this are promoting coastal shipping of bulk commodities like coal, setting-up coastal clusters for bulk commodities like cement and steel and providing last-mile connectivity of ports with national highways and railway network,” a government statement said.

Waterways for cargo back Ram Ghat, the first of the 80 ghats in Varanasi, will get a new dimension. Nitin Gadkari will lay the foundation stone of the inland waterway terminal at Varanasi and flag off the trial run of two cargo vessels from Varanasi to Haldia near Kolkata. The pilot ship will be carrying 200 new Maruti Suzuki cars and other construction material from Varanasi to Kolkata. Gadkari explained that the cost of ferrying goods via waterways is as low as 30-50 paise per kilometre per tonne. The minister will also inaugurate a MultiModal Terminal or MMT at Varanasi. The ministry has big plans for using Ganga river as one of the arterial waterways.

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APPOINTMENTs

Ecom Express appoints Sivram S D as VP

Jochen heads Dachser Air Sea Logistics

Ecom Express Private Limited, a leading logistics solutions provider for ecommerce industry, has appointed Sivram S D as Vice President for Corporate Strategy and Planning. In this new position, Sivram will work with the leadership team to define the company’s future strategy including identifying new business avenues, leading acquisitions & synergies, launching new products, international & cross-border solutions. In addition, he would also focus on optimizing the company’s operations, productivities, cost structures and further improve business and performance analytics. Sivram would be leading the company’s action plan focusing on execution to transform the business into a high performance organization.

Experienced logistics manager Jochen Müller (52) will soon be joining the Dachser team. On January 1, 2018, he will take over from Thomas Reuter as Chief Operations Officer (COO) of the Air & Sea Logistics business field. The transition period, during which Müller will work on developing projects, will start on October 1 of this year. Thomas Reuter will remain on the Executive Board in his role as head of Air & Sea Logistics through the transition period until he retires on December 31, 2017. Jochen Müller was born in 1964 in Worms, Germany. In 2011, he joined the Executive Board of Schenker Deutschland AG, where he was in charge of air freight and sales (Air/Sea) for Central Europe, as well as logistics for worldwide relocations, trade shows, and sporting events. Prior to that, Müller served as CEO of Schenker’s British country organization, where he was responsible for land, air, and sea freight as well as the trade show business. “Jochen Müller is a top manager and logistics expert with extensive experience in air and sea freight, but he is familiar with the requirements and processes of overland transport as well,” says Bernhard Simon, CEO of Dachser. “As COO of Air & Sea Logistics and future member of the Executive Board, he will build on what Thomas Reuter has accomplished. This will include further expanding our intercontinental air and sea freight network and creating a closer link with our comprehensive European overland transport network. All of this will enable us to intelligently dovetail customer supply chains.”

Essar Shipping MD new Shipping Corp boss The National Democratic Alliance government on Saturday appointed Essar Shipping managing director Anoop Kumar Sharma to head the staterun Shipping Corporation of India, a move that comes months after it relaxed rules to let the Centre recruit private sector managers to top jobs. Shipping minister Nitin Gadkari had made up his mind to pick a private sector manager to head the company last year and got Prime Minister Narendra Modi’s approval. Gadkari had kept the post vacant for most of this year. It was temporarily assigned to SCI director BB Sinha. Sharma’s appointment on a three-year tenure comes just a day after SCI announced its net profit for the first quarter of this fiscal had dived 72 per cent to `56 crore as compared to the corresponding period last year.

Thomas Krüger appointed Managing Director of Air Sea Logistics EMEA As managing director of Air & Sea Logistics EMEA, a role he assumed on July 1, Thomas Krüger (52) reports directly to Thomas Reuter. Krüger has held a variety of management positions at Dachser Air & Sea Logistics. From 2004 to 2006, he was sales manager for Germany, after which he headed up global sales management until 2012. Most recently, he was responsible for the Northern Central Europe (NCE) region. He succeeded Rüdiger Klug, who joined Dachser in 2009 and retired on June 30, 2016.

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Profile

Supreme introduces ‘INSUflex’, a high vapour resistant insulator for air-conditioning applications The Supreme Industries Ltd., founded in 1942, pioneered many path-breaking products in the country.

Supreme’s Insulation Division offers solutions in the areas of: - - - - - - - -

Ducting insulation Underdeck insulation Pipe insulation Floor insulation Insulation joint sealing tapes Sound insulation Overdeck insulation Wall insulation The main goal of a good insulation material should be that of preventing water vapour from spreading through insulation as water is an optimal heat conductor. INSUflex, by Supreme Industries, is a CFC-free, black, flexible elastomeric closed-cell Nitrile Rubber thermal

insulation, that provides a highly efficient method of insulation and effectively controls condensation against both heat loss and heat gain. The material is particularly suitable for insulating pipe works for condensation control. It can be used on chilled water pipe lines, refrigerated pipe-works, hot & cold water services and on sheets or rolls in airconditioning ductworks.

‘INSUflex’ advantage - Good flexibility at low temperature - Clean, dust-free, fast and easy installation - Low thermal conductivity

- High water vapor resistance factor ≥7000 - Protects pipes against corrosion by environment elements - Low toxicity index offers minimal toxic fire hazard for safety assurance and rescue operations - Good fire performance, for buildings with high occupancy, Class 1 product - Unique closed-cell structure, provides an ideal vapor barrier resistance INSUflex is available in combinations of various wall thicknesses and diameters to suit G.I., copper and PVC pipes.

focus

R Prahalad, VP (Aerospace & Defence), MAINI GROUP

GREEN GSE A MAJOR

CONTRIBUTOR TO SUSTAINABLE AIRPORTS The human’s intrinsic quest to conquer speed has made us appreciate less the technological effects on our environment. The importance of Civil Aviation cannot be undermined though. In the last decade, we have become aware of the environmental effects and are in pursuit of sustainable technologies while preserving the environment. Sustainability is greatly dependent on environmental and economic demands and social equality, all three popularly known as the three pillars of Sustainability. Aviation stakeholders need to ensure “Engineering for Sustainable Growth”. Emissions due to aviation contribute around 3-4 per cent to the pollution. Out of the total pollution produced in airport environment, 20 per cent is from Ground Support Equipment. An effort to reduce this is the need of the hour. Globally, IATA (International Air Transport Association) has laid down its vision for ‘Carbon –Neutral Growth” from the year 2020.

Indian Scenario Economic demands are of utmost concern in India. The country’s culture and financial aspects play a major barrier for the switch to green technology. Efforts by the government to enforce policies with financial support to change to green technology will help overcome these barriers faster. Recognising this need, India has made a domestic commitment to reduce the emission intensity of our GDP by 20-25 per cent (as compared to the 2005 levels) by 2020. To attain this commitment, the need of the hour is to change the culture of the country from environmental abuse to ethical consumerism. MOCA has also proposed that all equipment operating within the airport environment will be in compliance with the latest emission norms by April 1, 2017. Ground handling vehicle will need to use alternative fuels that can provide significant Local Air Quality (LAQ) emission benefits as compared to the

petrol and diesel equipment. Options include LPG/ CNG vehicles, low emissions vehicles (LEV), hydrogen vehicles, and electric vehicles. In the airport the operational dynamics vary between the airside, landside & passenger terminals. Safety requirements, operator training, etc are exclusive to each other. The products that are to be used in each of these areas need to be designed specifically. This is easily done in electric platforms in comparison with IC engines (speed, acceleration, etc).

India, we need to implement our sustainability policies uniformly across all airports in India. The airport operator has a major role to play in providing the infrastructure required for deploying the electric vehicles. For green field and brown field airports these can be ensured at the design stage. But to ramp up the existing infra, it is a big challenge. Airport operators need to find innovative methods to enhance the infra in terms of the availability of power, adequate charging stations, quick chargers, parking space, etc.

Indian OEMs

Few options for Green vehicles for passenger terminals and land side use are: 1. Passenger transport 2. Wheel Chair Buggy 3. Medi – assist (ambulance) 4. Waste disposer 5. Mobile Food & Beverage dispensers Few of the electric GSE platforms for the airside are: 1. Baggage tow 2. GSE tow 3. Foreign Object Damage (FOD) disposer 4. Light aircraft tow 5. Tugs for MRO requirements 6. Customised electric Material Handling Equipment for MRO

The Airport Operator’s Responsibility With the modernisation of airports to world class standards and focus on sustainable airports, it has become imperative for the airport operators to switch over to electric vehicles. The dependence on imports of electric platforms, non-availability of adequate infrastructure at the airports, etc are challenges we need to overcome today. Also, with the increase in international airports in

Today, there are very few companies who have a legacy in manufacture of electric vehicles. Understanding the airport environment and development of the product for this niche sector is hard to find. However, we have OEMs in India who have been contributing to this sector for a long period of time. Apart from being competitive, the domesticafter-sales support by Indian OEMs is a welcome boon for the stakeholders. The flexibility Indian OEMs offer in terms of customisation is matchless.

Present Electric Technology The best and affordable technology available today is lead acid traction battery. There has been much research on this for more than the last three decades. The electronics have been improved with a host of safety features not feasible in IC engines. Economies of scale will pave way for use of Lithium ion batteries.

Conclusion The major obstacles faced during the requirement and growth of electric vehicles at the customer’s end is the awareness of the benefits we accrue from them. India is taking several proactive steps to be in sync with this technological change. (The writer has more than 25 yrs of experience in aviation. For queries, he may be contacted at prahaladr@maini.com)

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events

China Airlines launches Direct Freighter service to Europe On August 24, 2016, China Airlines and Ascent Air, hosted a party on the occasion of the Launch of China Airlines Direct Freighter Service to Europe ex Del at The Leela Ambience, Gurgaon. The Freighter service will be ex Del into the heart of Europe, Luxembourg effective August 28 2016. It will be covering majority of ports in Germany, France, Netherlands, Belgium, Italy, Switzerland and UK. The opening ceremony was addressed by the Honourable Ambassador of Taiwan, Tien Chung Kwang, who mentioned the important role that India plays in the cargo industry. He also remarked about the strong and friendly relations between India and Taiwan. Further, Eric Lin â&#x20AC;&#x201C; AVP, China Airlines Cargo also took the opportunity to speak about the latest development of the Launch of the CI freighter services to Luxembourg from Delhi. Later in the evening, a brief product presentation was given by Prithviraj Singh Chug, Director, Ascent Air. The event was a huge success and was largely attended by cargo professionals and international delegates, including special guests, Ambassador Tien Chung Kwang and his wife, AVP China Airlines Cargo, Eric Lin and many other dignitaries.

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events

Grace emphasises on the importance of networking, at ACCD Luncheon Under the flagship of Ravinder Katyal, the new president along with the managing committee started off the new financial with a great lunch on July 27 at Radisson Blu Hotel, New Delhi. The very talented Grace Sun along with her team who flew all the way from China to New Delhi gave an interesting introduction presentation on GLA network. Grace Sun shared her views on how different GLA network can be from other networks which was very informative and beneficial to all the members. The afternoon was further complimented with scrumptious food and drinks.

“Freight Forwarder of the Year” in India Schenker India Pvt. Ltd, part of global logistics s e r v i c e provider DB Schenker, received the “Freight Forwarder of the Year” award on August 24, 2016 for its solid network strength and innovative ocean freight solutions. The prestigious Maritime Gateway Award was presented last week to DB Schenker to honor the achievements in the field of ocean freight forwarding category in India. The award criteria includes volume handled, number of offices, operational efficiency, network & reach, quality of customer service, expansion plan and new investments. The award consolidates DB Schenker’s leading position in India, in the ocean freight forwarding business. DB Schenker was recognized for its innovative solutions for customers, enabling them to connect with any global location for their FCL, LCL and break-bulk cargo with ease and cost effectiveness.”

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VOL VII ISSUE VI MAY 2016 `20

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MEGATRENDS & OPPORTUNITIES ROADMAP FOR LOGISTICS

Supply Chain Complexities in Emerging Markets

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VOL VII ISSUE IV MARCH 2016 `20

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

Young Blood Rules the Roost in Logistics

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SPECIAL FEATURE

Inland Shipping:

In Search of the Lighthouse

PFT: A FILLIP TO COST EFFECTIVE LOGISTICS

SPECIAL FEATURE

Green is In

Evolving Logistics

Sector Seeks Skilled Professionals

Logistics Attractiveness Index

Budget 2016: Great Expectations

AEO: Securing the Supply Chain

Bonded Trucking: Rough Roads Ahead?

Pharma Logistics: One Mistake Can be Fatal

SEPTEMBER 2016 - CargoConnect 83

VOL VII ISSUE VIII JULY 2016 `20

HANDLING THE SUPER HEAVIES RIGHT

events

Vasundhara Raje inaugurates Safeducate Container Library in Ajmer

On the occasion of Independence Day, Honorable Chief Minister of Rajasthan, Vasundhara Raje inaugurated an innovative Safeducate Container Library. Many Rajasthan Government dignitaries were present, most notably Gaurav Goyal, District Collector, Ajmer. The occasion was also graced by Divya Jain, Founder & CEO, Safeducate, Pawan Jain, Founder & Chairman, Safexpress and Rubal Jain, Managing Director, Safexpress. While inaugurating the Safeducate Container Library, Hon’ble Chief Minister of Rajasthan, Vasundhara Raje said, “This Container Library signifies our efforts towards promoting education in Rajasthan. We will create many

such Container Libraries all over Rajasthan and ensure that our people benefit from the high quality books available in these libraries. I strongly believe that education must be imparted to each and every person, irrespective of her economic status or gender.” At the inauguration ceremony, the District Collector of Ajmer, Gaurav Goyal was present. He said, “It is a matter of great pride for us that under the inspirational leadership of Hon’ble Chief Minister of Rajasthan, Vasundhara Raje, India’s first-ever Container Library has been launched today at Ajmer. Not only is Ajmer known for its rich cultural heritage, it is also popular for being an education hub. Keeping that in mind we have launched the Safeducate Container Library at Ajmer.” Speaking at the inauguration ceremony, Divya Jain, said, “Safeducate Container Library is a unique endeavour by us to create a Mobile Library. This Container Library is made out of a refurbished Container, as a part of our Go Green initiative. The Safeducate Container Library can be easily moved to any location across India. Many such Container Libraries will be set up in the near future.”

Çelebi organises Doll Making Workshop

Çelebi Delhi Cargo Terminal Management India Pvt. Ltd. in association with NIV Art & Cultural Society, a Delhi based NGO and PUTUL ARTS has initiated a vocational training program of Doll Making from scrap & waste material for underprivileged and street women. As part of its CSR practice, the aim of this exercise, facilitated by NIV and Sheela Choudhary, Founder at PUTUL ARTS is aimed at offering training to twenty trainees for six months so that they become self- dependent. Choudhary is a well-known name in the industry as the trainer/ faculty of Doll Making. Starting August 2016 for three weeks, during the ongoing training sessions, each week there will be a display of the finished material to promote efficiency and encourage the performance of trainees. Çelebi through its social responsibility projects aspires to form the framework of the principle of giving back to the community via different activities, particularly in terms of nurturing the community by providing direct or indirect support.

fam album

Splash of FAM from Turkey

Turkish Cargo organised a four-day FAM (Familiarisation) Trip for their partners and associates to allow a better understanding of its scale of operations and to showcase their existing warehouse facilities in Turkey. The memorable journey was initiated in Istanbul. On the third day, it took an interesting turn in Cappadocia, with a hot air balloon ride, which was the best part of the FAM Trip. Evident from the snapshots, all the associates had a ball of a time. CargoConnect was glad to be a part of this trip.

SEPTEMBER 2016 - CargoConnect 85

PEOPLE CONNECT

“I enjoy working morning till evening, seven days 24*7” Having been associated with the industry since last 25 years, Suresh Bansal, Director, DTDC, has become the man of principles and values. He believes in working honestly and with integrity. In a candid conversation with Ritika Arora Bhola and Sana Husain, he talks about his journey in the industry first with an IT firm and now with DTDC. He also shares his interest and hobbies, beliefs and values and challenges he has faced so far. Excerpts: Journey So Far… I was Founder and Chairman of an IT company which we listed off under Stock Exchange and National Stock Exchange. At that time I was hundred per cent collective business partner in IT firm and we had offices all over the world. So I used to travel to UK, US, Germany, Europe, Singapore, etc to meet software developers. Later on, I joined a British company and was a permanent resident of UK till now when I came to India and joined DTDC. I have always been an international person and from last many years I have witnessed many international market very closely. Also, I was one of the few NRI’s who came back to India to contribute to Indian market rather than serving markets in the US and UK.

Biggest Challenge Sometimes I get little bit frustrated seeing the rekey of work in India and rekey of work in other international markets. For example, China, if we compare their productivity, speed and work efficiency with India, we are still lagging behind. The biggest challenge is that

86 CargoConnect - SEPTEMBER 2016

we have to work really hard to get the best of productivity out of people. For whatever reasons – our culture, lifestyle, people, work environment etc we don’t focus on the end result. We don’t really focus on taking business ahead.

Beliefs and Values The main principles of life should be that you are happy & satisfied with your work. You should not cheat your shareholders or clients and practice standard ethics of work. We work with honesty and don’t do anything which is less official. I would believe in ‘Doing simple and straight things in life honestly.’

Interests and Hobbies I like to travel, I read a lot. I listen to music; watch Hindi films as it provides a break from work. I think I enjoy working from morning till evening and seven days a week. I started working in 1996 and completed 25 years recently.

Message to Readers There’s no shortcut to hard work and honest work. People should work with patience

and honesty. They should learn from others mistakes and continue to grow.

Industrial Transformation

Our industry has witnessed massive change in the last ten years. Now electronic work has taken over paperwork. E-commerce industry has also grown exponentially in the last few years. And there has been massive change in the way people do business here.

DTDC E-fulfillment Centres E-fulfilment cannot be provided by e-commerce players to each other as it’s usually provided by logistics companies. DTDC Express is providing the same in 25 cities pan India. DTDC’s E-Fulfillment is fully equipped to take your business portfolio to new heights through its extensive pan India & global outreach through its Cross Border solutions. DTDC has five International Gateways, dedicated 24x7 Custom Clearance Team and direct presence in 22 countries. International eTailers wanting to reach Indian customers will find DTDC a one stop solution for all their B2B as well as B2C solutions.

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