CargoConnect December 2015 by Surecom Media

CONTENTS

Volume VII • Issue I • DECEMBER 2015 Editor and Publisher Smiti Suri Executive Editor Samaya Chhabra Assistant Editor Dr Kirti Mudgil Pathak Reporter Ritika Arora Bhola Roselin Kiro Joydeep Banik Deepannita Chakraborty

COVER STORY

SPECIAL FEATURE

Opting for the Right Track

Capture The Fracture

FEATURE

Feature Writer Kiran Sabherwal Director Marketing Ajeet Kumar Manager Sales Niti Chauhan Marketing Support Suman Kumari Chetan Pathak Rajesh Basu Asad Mohammad Administration Vipin Marwah Lavish Thakur

• The Smart Yard • Being Materialistic India Yearns .........50 ............................60

• Perishable Goods:

• Warehousing: An InvestThawing Roadblocks ..70 ment Opportunity ........88

NEWS .......................... 6-13 & 114-124

SUPPLY CHANGE

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

Rajesh N Shetty, Director-Distribution, Yum! Restaurants (India) Pvt Ltd ..........106

INTERVIEW Kruti Jobanputra, Director, JWC Logistics Park Pvt Ltd .............................................................96 S Ravichandran, ED, TVSLSL ...........................98 Akash Bansal, Head, Logistics, Om Logistics Ltd .................................................................100

GUEST COLUMN Dhananjay Prasad, AVP: DTDC Supply Chain Solutions .......................................................102 Samir Gandhi, Director, Gandhi Automations Pvt Ltd ...........................................................104

Prashant Bhatmule, VP-SCM, HSIL Limited ........................................................108

REPORT ............................112 PROFILE ...........................126 EVENTS .....................128-131 PEOPLE CONNET K U Thankachen, Managing Director, CRWC.....................................................132

Layout & Design Shaique Ahmad Ritesh Kumar 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 feature 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 6/31-B, Jangpura-B, New Delhi-110014 Tel: +91-11-24373365, 24373465 Mob: 9711383365, 9810962016 Email: cargoconnect@gmail.com

TOTAL PAGES: 134 (inclusive of covers)

info@surecommedia.in Website: surecommedia.in

NEWS

India to get first dedicated rail freight corridor in December

Three new ports by December

India is likely to get its first freightspecific rail line commissioned in December, three months ahead of schedule, in Bihar. The 56-km stretch, part of the eastern arm of the ambitious `82,000-crore dedicated freight corridor project, will ease coal evacuation traffic from mines in the eastern region. “We will be able to bring the stretch between Durgawati and Sasaram into operation in December, ahead of the targeted commissioning at the end of the current financial year. We have submitted the papers to the CRS (Commission of Railway Safety) for safety clearance and his approval is expected to come in two months,” a senior executive at Dedicated Freight Corridor Corporation (DFCC) said in a statement.

The Union Government will give clearance to develop three new ports at Dahanu near Palghar district in Maharashtra, Kolachal in South Tamilnadu and Sagar Island in West Bengal within two months, said Nitin Jairam Gadkari, Union Minister for Shipping, Road Transport and Highways in a statement. The `6000 crore satellite port planned at Dahanu is expected to decongest the Jawaharlal Nehru Port Trust (JNPT) in Navi Mumbai. JNPT will be the main developer for this project. The estimated Rs 21,000 crore Colachal port in Tamilnadu will be located about 50 kilometres away from the proposed Vizhinjam International Deepwater Multipurpose Seaport in Kerala, which was recently awarded to the Adani Group which plans to set up that port within 1000 days. There is huge potential for cargo movement in that region and there is no harm in having two deep water ports at close proximity”, said the minister.

The double-line pilot section will be commissioned with an investment of `1,000 crore, which has been sourced from the Indian Railways as equity. DFCC had already eliminated the 18 railway level crossings that existed on the route by constructing road over bridges and road under bridges. The executive also clarified that at present, DFCC will not take contracts for running separate freight trains on the relatively small section. The trains occupying the capacity of the small stretch will have to emerge from Indian Railways’ busiest networks in the east and also merge into it. The project is aimed at relieving the congested railways network by separating freight traffic from passenger lines.

CARGOCONNECT - DECEMBER 2015

NEWS

Aegis allotted 3 acres at Mangalore port

India to sign motor agreement

Aegis Logistics has been alloted three acres land at Mangalore Port to build a storage terminal. “The land is allotted on a lease for a period of 30 years by New Mangalore Port Trust. New Mangalore port ranks 3rd, in terms of POL traffic handled among Major Ports of India. In FY15 New Mangalore port catered 12 per cent of POL traffic handled by Major Ports,” the company said in a statement. With this allocation, Aegis Logistics will expand its presence to six ports in India - Mumbai, Pipavav, Kandla, Kochi, Haldia, and New Mangalore. Anish Chandaria, Group MD and CEO said, “Aegis Group is continuing with its strategy of building a necklace of terminals along the Indian coastline. The land allotment at Mangalore fits well with its strategy to add more terminals to our portfolio, offering its customers logistics services throughout India at every gateway into and out of India.” Mangalore Port is a modern all-weather port situated at Panambur, Mangalore in Karnataka on the West Coast of India, South of Mormugao and North of Cochin Port. Aegis Logistics is an oil, gas, and chemical logistics company.

India is set to sign a motor transport agreement with Myanmar and Thailand for seamless movement of cargo among these countries next year. “The agreement, the protocol for which is being finalised, will be signed by the last week of March or the first week of April 2016”, Union Road Transport and Highways Secretary Vijay Chibber said in a statement. The agreement was earlier scheduled to be signed by December this year. The delay is owing to elections in Myanmar.

AAI airports above world average score Airports Council International (ACI), the world-wide professional association of airport operators in its ASQ Airport Service Quality Survey for Quarter - III (July – September) 2015 has rated 11 AAI Airports at 4.56 which is above the world average of 4.12. Out of 11 AAI airports, 10 airports have achieved the score higher than the targets set in MOU for excellent rating, i.e., 4.20 for the year 2015-16. Trivandrum Airport has achieved the highest score of 4.89 and is ranked at 15.

NEWS

GST to benefit transport & supply chain sector: Report

Coastal shipping of cargo to save 40k cr

Country’s transport and logistics sector will be a big beneficiary of the GST implementation, even as the indirect tax regime will drive a ‘consumption-led growth’ in the country with less cess burden on consumers, says a report. The overall tax on the supply of indigenous goods is approximately 29.37 per cent. With the implementation of GST, the Revenue Neutral Rate will be much lower than the present tax rates on goods. This will lead to a lower tax burden for consumers, thereby facilitating a consumption-led growth, a CII-PwC report on ‘Goods and Services Tax -Transport and Logistics Sector’ said.

As much as `40,000 crore could be saved by promoting cargo transportation by enhancing coastal shipping in 10 years under the ambitious Sagarmala project, a port-led development scheme, as per government estimates. “Higher coastal shipment of coal by 100 million tonne per annum (MTPA) and higher coastal shipment of other commodities (cement, steel, fertiliser, food grains, POL) by 50 MTPA” alone could result in savings to the tune of `11,500 crore by 2025, as mentioned on an official document on Sagarmala. Building of new coastal capacities for 120 MTPA steel and cement in southern Gujarat, Central Andhra Pradesh, northern Karnataka, Odisha and northern Andhra Pradesh would result in savings of another `8,500 crore, it said. According to the document, another `12,500 crore could be saved in the next ten years by reducing time to export container by five days through customs efficiency and last mile connectivity by building dedicated road corridors. Apart from these, the government plans saving `7,500 crore by increasing “share of railways in modal mix from current 18 per cent to 25 per cent.

The report also mentioned that the Indian industry will be able to migrate to an efficient supply chain model as against the present supply chain model, which is dependent on tax considerations vis-a-vis operational considerations and GST will contribute to the ‘Make in India’ and ‘Ease of Doing Business’ initiatives of the government. It is anticipated that GST will result in consolidation of warehousing alongside facilitating seamless interstate flow of goods, he said adding, GST is also expected to provide an opportunity to dismantle various check posts, thus bringing about a substantial reduction in logistics costs.

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NEWS

Safexpress announces launch of maiden Service Center

Flipkart plans building logistics

Safexpress announced the launch of its maiden Service Center in New Delhi. Located at Dwarka, one of the fastest growing hubs in Delhi, the Safexpress Service Center will cater to the C2C and B2B needs of the region. The opening ceremony took place on October 23, 2015. The Safexpress Service Center was inaugurated by Rubal Jain, MD in the presence of Pawan Jain, Founder & Chairman, Safexpress, alongside various senior officials. Speaking on this occasion, Jain said, “Safexpress has been growing at a reasonably good rate for the last few years. As a growing firm, we have always felt the need for continuous innovation. It is this quest for innovation which has led us to create innovative retail services like Easy2Move, Campus2Home, and so on. To help the consumers avail of such unique services right in their neighbourhood, we have launched the Safexpress Service Center.”

Building a robust logistics network will be the core area of investment for India’s biggest etailer Flipkart in the next five years, co-founder and chief operating officer Binny Bansal said recently. “We plan to invest $3-4 billion (about `19,500-26,000 crore) over the next five years to create a strong logistics network, with a focus on technology,” said Bansal, speaking at the inauguration of the company’s 17th warehousing facility in Medchal near Hyderabad. He has been mandated to build the company’s supply chain facility following an internal reorganisation of roles.

He elaborated, “Safexpress Service Center complements an already existing extensive partner network of Safexpress and will help us penetrate the market better. These Centers will be equipped with packing material at all times, and will facilitate order booking for Door Pickup of goods through Tata Ace vehicles. Also, any sort of enquiries regarding Safexpress and its complete range of services can be made here.”

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SPECIAL FEATURE

CAPTURE THE FRACTURE

14 CARGOCONNECT - DECEMBER 2015

SPECIAL FEATURE

Data analytics systems

INSIDE

typically have three parts: data capture,processing and visualisation. With the bliss of industry-ready technology solutions, validation and tracking at every stage of the supply chain helps to identify the right product to be picked and shipped and helps stakeholders. Joydeep Banik explores the present opportunities of data capturing integrated

INTRODUCTION MOBILITY SOLUTIONS AND ADVANTAGES DATA ANALYTICS TOOLS VALUE ADDEED IT SOLUTIONS VISIBILITY IN THE SUPPLY CHAIN PEOPLE PROCESS TECHNOLOGY CONCLUSION

with software technologies for the logistics sector and evaluates how strategic technology decisions improve supply chain effectiveness

DECEMBER 2015 - CARGOCONNECT 15

SPECIAL FEATURE

ime is a matter of serious concern for the logistics industry in India, or as a matter of fact, for any business. Globally, the supply chains are constantly facing challenges in getting accurate information to the right place at the right time. Operational and executional aspects are often hampered by incorrect or incomplete data caused by inefficient data transfer through the use of manual forms. As more and more data is being captured, there is a need to mine the data to generate useful insights. While nearly 52 per cent of the data is input manually, more worrisome is that one-fifth of the data captured manually is not entered at all. Data capture in transportation and logistics can be defined as a three-step process-sending, receiving and storage of data. Outbound movement (sending) or inbound movement (receiving) of transactional or tracking data may be either internal exchange (for example, replenishment shipments within a manufacturing network) or a handoff from a third-party logistics provider. Storage is the permanent capture of both sent and received data within the systems infrastructure so that it is available to the broader supply chain business process and is therefore, the most significant and difficult part. Although use of digital capture devices is gradually gaining prominence in the transportation part, experts predict that substantial improvements can be made in the data capturing sector with respect to the ability of the devices to store/retrieve information. In the longer run, data capturing also plays a role in the Governance, Risk and Compliance (GRC) activities in logistics arena. Management of trade and customs compliance, anti-counterfeiting and supply risk management–all are increasingly becoming dependent upon accurate data capture. Logistics providers are wrestling increasingly with data requirements and data accuracy, particularly as they face tougher cost environments and greater service-level expectations; also, large logistics firms are using tools that are in sync with their existing ERP implementations. Some organisations are also building bespoke solutions to meet their specific requirements. In this article,we discuss about the different business intelligent tools, devices and IT solutions for the transportation and logistics sector and their impact till date.

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Mobile Solutions: The Fast Forward Mode Mobile solutions help validation and tracking at every stage of the supply chain and help identify the right product to be picked and shipped and the right carrier and the right shipment being sent through the right carrier. According to Dinesh R Pilgaonkar, Vertical Head-Logistics and Transportation, Bar Code India Limited, “With mobility solutions, any transhipment or part shipment is easily identified for movement. The accuracy of data is far higher than a semi-automatic or manual process. Mobile solutions with an integrated bar code reader or a RFID reader have a chance of a 1 in a 300 million error.” In the present scenario, the mobile solutions integrated with various gadgets reduce the time wasted in transportation of cargo. Here are some key advantages that we can have with the use of advance technology in logistics: • Fast decision making • Faster data entry into the computer rather than handwritten • Accurate and efficient data reading • Less paperwork • No queuing even during peak time • No need of experienced hands to operate the machine

16 CARGOCONNECT - DECEMBER 2015

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SPECIAL FEATURE Bruce Stubbs Director-Industry Marketing, Honeywell Sensing and Productivity Solutions Mobile solutions can capture information exchange in real time, increasing both the accuracy and productivity of loading and unloading cargo from any transport vessel (truck, railcar, ship, airplane) and thus expedite the transfer between systems.

According to Bruce Stubbs, DirectorIndustry Marketing, Honeywell Sensing and Productivity Solutions, “Mobile solutions can capture the information exchange in real time, increasing both the accuracy and productivity of loading and unloading cargo from any transport vessel (truck, railcar, ship, airplane) and thus expedite the transfer between systems of the actual inventory, the freight charges for AP/ AR and the real time location of the goods in the supply network.” Mobi le solut ion s i nc lud e mobi le computers, pr i nters, RFID, ba rcode scanners, RTLS and GPS global tracking systems.Mobile technology has the power to transform every logistics process, from determining when to pick up goods, how to route them and when to deliver them to delivering more flexible and responsive fleet management.Delivery confirmation, mobile payments, tracking of material enroute and image capture are some of the other outputs evolving with the thrust to implement hitech solutions. For instance, M Ravindra, Associate Director-Logistics, Panasonic India highlights, “Our Toughbook mobile computers help transportation professionals manage all aspects of in-transit cargo, from loading and unloading to storage, bin and location management and yard management. These computers are lightweight and portable enough to go anywhere.” A l s o, mobi le s olut ion s he lp t he sta keholders get f ul l v isibi l it y i nto cargo stat us v ia integ rated barcode scanners, built-in RFID capabilities and comprehensive wireless communications capability. Ravindra confirms, “Integrated GPS capability makes it easier for logistics managers to find, locate or map the equipment involved in the process. With drop-tested magnesium alloy construction and resistance to liquids and extreme

18 CARGOCONNECT - DECEMBER 2015

temperatures, Toughbook computers are rugged enough on the loading dock or in the cargo hold. In addition, advanced mobile features, such as long-lasting, hot-swappable batteries for continuous uptime and sunlightviewable touch screen displays for quicker data entry and access.”

Information Technology: The Value Addition The modern day supply chain must be prepared to handle the proliferation of data. Use of Information and Communication Technology (ICT) is the only way to do this. Although most of the conversations around data have focussed on the demand side, the supply side is an equally important source of data as well. According to Stubbs, “There are two ways to interpret this: 1. Add on services referring to Value Added Services (VAS) in the warehouse such as special labelling, gift wrap, monogramming, etc., of direct-toconsumer orders requiring WMS systems should be able to bill for these services and charge accordingly, whether to an end -user or in the instances of a 3PL charging a supplier for things such as rewrapping pallets, special handling/labelling. Either way the WMS needs to be able to bill for these activities and that takes special software elements. 2. Add-on services for Transport and Logistics (T&L) can include secure signature capture, mobile POS to increase sales or collect in COD (cash on delivery) accounts, etc. In either instance, the real time capture of the desired or required information is enhanced by using mobile solutions to include mobile computers and printers.” The up g r ad at ion i n i n for m at ion technology have made possible for business

intelligence software to offer end-to-end solutions. According to Anshoo Pandey, Asst General Manager, Stallion Systems and Solutions Pvt Ltd., “With latest technology, logistics service providers are no longer handicapped by geographical limitations and can very well expand their business to any location. Technology allows them to operate from anywhere and at the same time maintain high visibility and control. They are also able to integrate their operations with partners and customers. The biggest challenges of holding on to competitive advantage can be overcome with information technology. Given the rapidly changing market scenario, it is certain that adoption of IT is the only way to face the new challenges of the future.” It would not be an exaggeration to say that one of the best things that happened due to the telecom boom in India is the surge in the way people have been connected. Speaking

With the emergence of lowcost, always connected, location aware devices, the current generation of mobile technology allows logistics companies to move beyond simply making existing processes better, by making it possible to dynamically track both vehicles and the packages they carry.

SPECIAL FEATURE M Ravindra Associate Director-Logistics, Panasonic India With new technology come new challenges and risks. Security will inevitably be a concern with IoT due to the interconnectivity and complexity of the technology. Resistance to new technologies can also hinder a company’s ability to fully capitalise on IoT solutions.

on the adaptability issue, Pilgaonkar opines, “In a way, we as a country are far ahead of some developed nations of the west. Industry has been quick to respond to these infrastructural developments, availability of mobile devices and abundant talent to develop apps around it. The initial resistance or hesitance of acceptability that usually lingers when new technology is introduced is vastly reduced because the smart devices are no longer confined to the four walls of the work arena. Most of the people today are well versed with the latest devices and have a comfort level of using smart devices. This has encouraged the IT within the logistics industry to implement new solutions which are not only cost effective but in novative too.” The data capturing s e c t o r that we have as of now in our country is a combi n at ion of uniquely identified data being exchanged over an effective communication infrastructure. While the telecom infrastructure is gaining ground from 3G to 4G, the government has planned the smart cities concept to enable seamless data transfer on a wireless platform. Also, the government’s ‘Digital India’ campaign is giving the much needed boost for the effective use of technology at the first place. Ravindra rightly points out, “As the accelerating growth of new technologies cont i nues to cha nge the enter pr ise landscape, the integration of embedded

20 CARGOCONNECT - DECEMBER 2015

software and sensors into physical objects, also known as the Internet of Things (IoT), will allow for more efficient collection and use of data. Using connected devices such as mobile PCs and cell phones; logistics providers have begun improving efficiency, tracking packages with unprecedented accuracy, and are giving shippers delivery time and shipment updates.”

The Visibility Factor Tr ac k i n g a n d Tr ac i n g ( T T ) i s a n indispensable part of freight forwarding. Smooth transportation solutions during the movement of cargo from point A to point B enhance the power to track and trace. Pilgaonkar believes, “Whether it’s a chain of retail stores or an e-tail company or a trans-global forwarding organisation, the infrastructure is robust enough to use different data analytics tools to track the material real-time at defined stages without manual intervention.” GPS-enabled tracking allows providers to optimise shipping distances, times and costs. TT deals with internal processes of enterprises as well as the trade relationships between them. This creates a complexity which cannot be solved by enterprises alone but requires concrete action. It is a proven fact that the establishment of appropriate tracking and tracing systems is a necessary pre-condition to ensure visibility in the overall value chain along with establishment of risk control and transparency. Pandey confirms, “Technology allows logistics providers to operate from anywhere and at the same time maintain high visibility and control. They are also able to integrate their operations with partners and customers.Given the rapidly changing market scenario, it is certain that adoption of information technology is the only way to face new challenges in the future.”

GPS-enabled tracking allows providers to optimise shipping distances, times and costs. Tracking and Tracing deals with internal processes of enterprises as well as the trade relationships between them.

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How do you survive in the hypercompetitive T&L space? You could use technology to mitigate risks. But then, how do you prioritize investments for a dynamic Indian market? Do you invest to save on space? Or on improving productivity? Or may be on ensuring better efficiencies? Or may be something else altogether. The answers are hardly textbook. Each business, each operation, each warehouse is different and you need tailor-made solutions for your aspirations. With Honeywell’s services, products and solutions for pickup & delivery, proof of delivery, inventory location, freight management, sorting, worker management, labeling, point of sales and more, T&L businesses can fast-track their transformation. To see how you can use Honeywell’s global and Indian experience to your advantage, connect with us now.

Dinesh R Pilgaonkar Vertical Head-Logistics and Transportation, Bar Code India Limited One of the best things that has happened due to the telecom boom is the surge in the way people have been connected. Industry has been quick to latch on to this infrastructure, availability of mobile devices, and abundant talent to develop apps around it.

What Else is there in Store? • Digital pen/tablet technology is the most interesting technology for automating data capture in many transportation and logistics processes. It is portable and fits nicely with the level of personnel

‘Digital India’ campaign is giving the much needed boost for the effective use of technology. interaction that characterises many transportation processes such as arrival confirmation, unloading completion or dock departure • Automated data acquisition technology (barcodes, RFID, sensors) are most appropriate for asset tracking applications rather than for transactional business process applications. Certainly, RFID tags applied to trucks/trailers could be used to confirm arrival at a destination point (front gate of a distribution centre or the actual dock door) or to locate within a drop lot facility. However, they are less useful when a confirmation signature is needed. Most automated data acquisition technologies have a fairly high infrastructure. Pilgaonkar says, “The basic difference between Barcode & RFID technology is that a barcode needs line of sight and usually a single barcode can be read at a time. RFID enables multiple reads at the same time. RFID as a tool can be used to secure data unlike the barcode which has limitations in terms of the encryption.” • Integrated communication technologies (EDI, GPS) are in heavy use by many 3PL providers to offer real-time asset tracking and arrival/departure verification. They are not as useful, however, where

confirmation signatures are required or where a verification of exception is required. Increasingly, though, EDI capability, particularly, is considered “table stakes” in the transportation and logistics field.

Feasibility With the vast growth and increased velocity of the logistics sector in India, it is absolutely necessary to implement advanced technology solutions (hardware & software) in order to handle the volumes effectively. Paper based solutions and manual solutions are ineffective at handling these volumes and will cost more in the long run due to costly errors and excess time. These solutions will necessitate an initial investment but the ROI periods will be relatively short due to volumes handled. Ravindra says, “Despite being a relatively lowcost country, logistics cost in India is higher due to administrative delays led by paper work, leading to huge inventory investments and wastage, and a complex tax structure. Also, low penetration of new technology in the supply chain process is resulting in damage of goods and loss of revenues. India has the least warehouse capacity with modern facilities, and given the fragmented industry state, investment in IT infrastructure is almost absent at required scale.” Ports, airports and rail yard operators that don’t use the latest technology to manage and track cargo are at a significant competitive disadvantage in this new era.

With the emergence of low-cost, always connected, location aware devices, the current generation of mobile technology allows logistics companies to move beyond simply making existing processes better, by making it possible to dynamically track both vehicles and the packages they carry. Ravindra goes on to say, “The combination of increased revenues and lower costs that is created when new connections are made, will lead to huge potential when the internet and networks expand their connections to warehousing, freight transportation and other elements of the supply chain.” According to Ratnakar Gore, HeadTransportation Solutions, CloudMoyo (An Icertis Co.), “I believe that like most other industries, the logistics sector in

India, too, is at an inflection point as far as technology is concerned. Availability of internet connectivity, penetration of mobile services to remote areas in the country and the availability of affordable smart phones are key factors supporting this. To add to this, reduced resistance of business stakeholders to adapt to cloud-based solutions only

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SPECIAL FEATURE Ratnakar Gore Head-Transportation Solutions, CloudMoyo Dynamic pick-up and deliveries are accomplished more easily when there are good mobility-based solutions available. Additionally, the proliferation and penetration of smart phones is providing good computing power in the hands of the people involved in the movement of goods.

facilitates the use of advanced technologies. In times to come, we will see a shift from traditional on premise solutions to ondemand solutions in the space of logistics, whether it is related to transportation management, warehouse management or any other supply chain need. Cloud-based solutions reduce the overall TCO for any solutions as compared to on-premise implementations. Capital expenditure required for procuring the necessary hardware as well as the system software is no longer required. This is replaced by a subscription based model that covers the application software license as well as charges to ensure solution uptime.” With such solutions being deployed, organisations can afford to be agile and nimble as far as their technology teams are concerned, thus reducing cost. The number of dedicated personnel required can be reduced drastically with the solution provider taking the responsibility of ensuring system availability as well as performance.

Challenges and Opportunities The opportunities for using modern digital technologies to better capture and store transportation and logistics-related data are significant. Data capture remains an issue along with rampant data accuracy problems. Companies have started to understand that both accuracy level of their data and importance to cost and service levels increasingly require automated data capture techniques and have involved their logistics partners in the technology trade. Why is it, then, that paper forms persist? The outsourced nature of transportation and logistics resulting in the ‘long tail’ of thirdparty logistics providers creates a significant technology vacuum as one gets to smaller providers. This problem magnifies when we consider the extensive use of low-cost regional

24 CARGOCONNECT - DECEMBER 2015

sourcing and the often technologically poor nature of 3PLs in emerging countries. There is also the elusive nature of ROI to consider when talking about data accuracy. Because data accuracy is fundamental to the operation of any business, it is often difficult to add up savings and generate an ROI. The fundamental challenge of data capture and accuracy ultimately falls to adequate governance and appropriate scrutiny. It is also about framing the selection of facilitating technology, balancing labour cost, technology cost and data inaccuracy cost. Pandey looks a bit disappointed as he says, “Companies have not adapted to the changing scenario and have failed to keep pace with the technological requirements of modern times. The low penetration of technology in the logistics sector coupled with the highly redundant processes wastes lot of time. It is an obstacle to expansion of operations beyond certain limits.” However, Stubbs believes, “The only limitation in the use of technology in this sector will be not getting enough people trained fast enough to take advantage of the benefits. A good rollout plan is vital to success.”With new technology come new challenges and risks.Security will inevitably be a concern with IoT due to the interconnectivity and complexity of the technology. Discussing these issues, Ravindra says, “Enterprises must approach these challenges with caution by setting new measures in place to ensure consistent and reliable security. Resistance to new technologies can also hinder a company’s ability to fully capitalise on IoT solutions. Employees may be reluctant to use new devices and additional training may be necessary. This issue applies to executives as well; unwillingness for executives to take risks could hurt their company’s ability to remain competitive.”

source: www.indiaretailing.com

Data capture in transportation and logistics can be defined as a three-step process-sending, receiving and storage of data. Outbound movement (sending) or inbound movement (receiving) of transactional or tracking data may be either internal exchange or a handoff from a third-party logistics provider.

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SPECIAL FEATURE Anshoo Pandey Asst General Manager, Stallion Systems and Solutions Pvt Ltd With the latest technology, logistics service providers are no longer handicapped by geographical limitations and can very well expand their business to any location. Technology allows them to operate from anywhere and at the same time maintain high visibility and control.

But all the experts in the industry agree to the fact that the logistics sector can no longer afford to put off adoption of new technologies and integrating the same into their operations.Manufacturers are increasingly stressing on service as a way to drive revenue; in the context of service performance, data accuracy benefits are somewhat easier to quantify.

The Ideal Mix The amalgamation of people-processtechnology can be very helpful because all three components are required for best-inclass transportation and logistics performance. • People: People implement data capture educat ion i n it iat ives to i ncrease understa nd i ng a mong person ne l. Interestingly, most logistics personnel at the execution level have very little appreciation for the value of accurate data and even less understanding of the negative business impact on service and profitability. Best-in-class companies have embedded a ‘data culture’ typically by implementing information acquisition. • Process: Processes are used to identify logistics business processes ripe for transformation. Certainly, the relatively long history of transportation and logistics outsourcing has resulted in an inevitable adoption of automated data capture and communications technology. Yet, material usage of paper forms and manual data input persists. • Technology: Technology is used to evaluate appropriate tools based on role and need. The choice of the best ‘tool in the toolbox’ depends on the specific business dynamics and challenges, but the solution in most situations is likely to be a mix of technologies. Lastly, it is also critical for transportation and logistics organisations to understand that

26 CARGOCONNECT - DECEMBER 2015

Because data accuracy is fundamental to the operation of any business, technology is inevitable for accurate data capture and data analysis.

Conclusion Tools and apps used in logistics include execution apps like WMS (Warehouse Management Systems), TMS (Transportation Ma n a ge me nt Syste m s), Y MS ( Ya r d Management Systems), LMS (Labour Ma nagement systems), BI (Busi ness Intelligence Systems – sometimes a module of WMS but most times a bolt on standalone system), WCS (Warehouse Control Systems) and alerting tools that provide insight into events in real time. BI has become a musthave for the transportation and supply chain sector. Companies are adopting supply chain BI tools for their ability to make sense out of the array of data that has become available through logistics technologies such as TMS, WMS, and supply chain execution systems. While access to data is key, being able to find, understand, and use that data to

it is often difficult to add up savings and generate an ROI. make strategic decisions that improve supply chain effectiveness is crucial. Data analytics help identify negative trends in cost and performance and conduct analyses to evaluate the service and cost tradeoffs of different transportation strategies and tactics. The processes of picking, sorting and delivering involve use of manpower. To arm the manpower with technology means huge investment. Only companies with sheer belief and a long term vision are being able to take a firm stand on investment without a compromise. Technology is growing leaps and bounds and is the only way forward to a seamless future.

COVER STORY

OPTING

28 CARGOCONNECT - DECEMBER 2015

for the

COVER STORY

gic e strate iv s n e h pre l n of com le, initia io b t a a il a in v b a es com yed ort mod quires a p e s r n in a s emplo r a e t c h r t c u n y l o e r p s s diffe nt re le sup scenario ignifica h many s e ed vehic it l g h W ip is in t . l v n l n u fi invo em ern cutio lores th nal exe the mod ted task p a x io in t e ic a l s r s p s t e es e r p m Succ of expe d vehicl cient o be a co e fi n f h n io e a is c in n d p fi n n o ga ry of with olutio plannin fe delive Pathak e best s a l h s i t g f d d o n u a t en oth rti M assessm e a smo e. Dr Ki r u im s t n f e o ed to eriod compar over a p d n a d nsidere to be co

DECEMBER 2015 - CARGOCONNECT 29

COVER STORY

inished vehicles logistics is the ter m used to describe all the activities that happen to a vehicle from the time it leaves the factory until it reaches t he d e a le r. Ma n ag i ng the logistics involved in moving finished vehicles from factory to dealer or directly to the customer requires an extensive transportation and intermittent storage network. Like other goods, vehicles are transported via road, rail or ocean mode. In cases of multimodal transportation, intermediate storage facilities are used for temporary parking and retrieval of the vehicles.

High Value Items Need Utmost Care New vehicles are high value items and like any other high value consumer goods, they need a high level of protection for delivery. But despite all safety precautions, sometimes the vehicles get damaged as they travel from the factory to the dealer. Damages happen for many reasons, but one of the main areas that damage occurs is

when the vehicle is being handled and driven on and off the various modes of transport, or into and out of storage compounds. Other causes include adverse weather or airborne contamination from industrial fallout. Captain Dinesh Gautama, President, M/S Navkar Corporation Ltd opines, “A new vehicle cannot have even the slightest scratch. Hence all care needs to be taken to ensure that vehicles are protected at all times. Thus in the logistics industry, unprotected cars or vehicles are always moved in covered trailers or rail wagons.” Capt Sandeep Chawla, Executive Director, NYK Auto Logistics India Pvt Ltd says, “Majority of factory new vehicles in India

30 CARGOCONNECT - DECEMBER 2015

are transported in closed body car carrier trailers which prevents damage to the vehicle from external environment factors during the transit.” Logistics service providers (transporter, storage or workshop owners) endeavour to create processes and training programmes for their staff to raise the awareness of how damages may be avoided. V Anand, Senior General Manager, Hyundai Motor India Ltd shares, “We check for the hardware quality/ hydraulics as part of our routine pre-loading checks. Most of the damages in our opinion take place either during the loading or unloading phase. We make sure truck drivers operating our cars during the loading/unloading operation are fully familiar with controls such as automatic transmission, LHD drive in export cars, reverse gear mechanism in some models of cars, etc. Our 3PL supervisor also checks the lashing and normally in transit we do not encounter any damages as the current methodology of wheel lashing with the perforated floor is adequate to withstand the pitching and rolling encountered in road transportation. Total losses occur with regular periodicity due to side overturns of trailers/ trucks as the design itself is faulty. The centre of gravity is raised in a car carrier making them vulnerable for a side overturn. In all these cases, the body shell of the car gets deformed. We have a clear cut service line agreement with our underwriters that when the body shell of any of our cars is deformed, no cutting/welding is permitted and they are classified as a Total Loss. Also, when the repair cost exceeds 25 per cent of the invoice value, it is treated as a construed Total Loss. In all such cases, the cars are sold to salvage buyers and the dealers are compensated 100 per cent through the mechanism of Transit Insurance.” In fact, even the smallest damage to a vehicle has a disproportionate result in that not only will it cost dearer to repair it back to the new vehicle standard required, but the vehicle will also be delayed in its final delivery. Prabha Chand Chandwar, Director, K M Trans Logistics Pvt Ltd

INSIDE HIGH VALUE ITEMS NEED UTMOST CARE CONCERNS OVER RAIL SERVICES BRACING UP FOR ROBUST GROWTH OF AUTOMOTIVES GAP IN INFRASTRUCTURE URGENT NEED FOR ROAD INFRASTRUCTURE DEVELOPMENT LACK OF VIABLE ALTERNATIVE MODES LAST MILE CONNECTIVITY ROAD VS RAIL IDEAL SOLUTION

COVER STORY

Captain Gur-Prasad Kohli MD, Head of India, Wallenius Wilhelmsen Logistics

New vehicles are mostly carried in standard car carrying trailers or rail bogies or ships that allow a separation of 10 to 15 cm between cars, which is good enough. In addition the cars are tied with lashings to the deck or the walls to prevent them from moving in transit.

32 CARGOCONNECT - DECEMBER 2015

says, “Vehicles during transportation are always tied with lashing belts and put a stopper on cars so that they could be protected during the transportation. Secondly, at the time of delivery, the unloading is done under supervision so that the damage could be minimised during delivery. With so much emphasis on lead time, delays cause damage to the reputation of manufacturers. Utmost care, therefore, is the need of the hour.” Captain Gur-Prasad Kohli, Managing Director, Head of India, Wallenius Wilhelmsen Logistics says, “New vehicles are mostly carried in standard car carrying trailers or rail bogies or ships that allow a separation of 10 to 15 cm between cars, which is good enough. In addition, the cars are tied with lashings to the deck or the walls to prevent them from moving in transit.” While the cost of damages may be insured or recovered from logistics service providers, damage rectification simply adds inefficiency and administrative burden into the logistics process. PV Subramani, President (South Zone), Cargo Wings Madras Pvt Ltd also opines, “Lots of care is taken during any vehicle transportation from loading till delivery .There have been innovations and improvements in the quality of wheel lashing belts, stoppers and perforated sheets used in the base. Further, as a practice, the minimum acceptable gap between loaded vehicles is 150 mm. Overcrowding of cars is avoided.” Speaking on the same lines, Vipul Nanda,

Chairman, Mercurio Pallia Logistics Pvt Ltd & President, Car Carrier Association suggests, “Today consumers are not merely looking for their product, consumer desires and demands to be served as per the R’s of logistics. They want Right Product on Right Time in Right Condition at Right Place on Right Price. So safe and secure delivery is a very important aspect and though the standard is improving, we need to push for further improvement and for this, continuous training of drivers and loading/unloading supervisors is very important so that proper lashing of cars is done to avoid any damages and simultaneously, knowledge of whereabouts is also important to keep in mind.” Transport, storage and workshops that are used for finished vehicles’ logistics are typically designed and can only be used for vehicles. Companies that provide these services are also typically specialists with staff who are dedicated and trained only in vehicle handling. The trucks, trailers, barges and ships used are also purpose -built and not used for any other goods transport.

Concerns over Rail Services Due to changing consumer preferences and rising competition, it is expected that there would be an increasing number of car models in the near future, directly affecting the Indian automotive logistics market. With the rising demand for vehicles and bulk of the road network

COVER STORY

Vipul Nanda Chairman, Mercurio Pallia Logistics Pvt Ltd & President, Car Carrier Association

T he M i n i s t r y of Roa d Transport is very keen to introduce the Central Motor Vehicle Rules in regard to the dimension of the car carriers.

being poorly paved, there is an urgent demand to improve in frastr uct ure to support intermodal services. Material transported on trucks can take up to three days to travel from Delhi to Pune. The question then arises as to why do manufacturers depend on road to transport their finished vehicles, despite the numerous congestions and other problems related to road transport? Why is rail not a viable option? Umesh Bhanot Managing Director, Apll Vascor Automotive Pvt Ltd reveals, “Over 95 per cent of transportation is done by road car carriers. Though OEMs enforce strict standards on these carriers , these carriers have limitations because of the vagaries of road transport.” There are concerns over rail services in India, including the priority given to passenger movement as well as commodities and bulk goods like coal, fertiliser and steel. 1. No Point to Point Delivery Nanda says, “Around 83 per cent of auto transport is being done through road transport only. Although road transport has many bottlenecks and traditional long standing problems such as poor connectivity, below par infrastructure and various socio-political issues, still automobile transportation through road is preferred because railway mode is in a very nascent stage and currently does not provide point to point delivery. AFTO license is an issue and feeder services for the first leg and last leg are also required for rail transport which make the process more complex and time consuming so for the time being, road transport provides a simpler and known process but I would align myself towards the opinion that railway has a bright future as robust growth is expected in the industry.” The primary means of transport in India is by road. 98 per cent of all the automotive logistics in India is on road. Rail freight has not really been developed. Currently, passenger and bulk transport takes priority and the transport of goods is at the call of the rail operator. Generally, a 90 TEU volume is required for a rail move and, if the volume isn’t available, the train won’t leave. Rail transport is used very sparingly because the availability of the rails or the loading space is not guaranteed by the railways and time slots are not promised by them. At the same time there is a small amount of space available on the mail train that is sometimes utilised to cope with urgencies. 2. High Risk of Transit Damage Chandwar feels, “Despite numerous problems related with road transport, it is the biggest mode of transportation for finished vehicles. Road transport is much cheaper than rail transport as finished vehicles come under luxury goods. Secondly, in case of rail transportation, there will be the need for road transportation from OEM to railway station (loading) and from railway station (unloading) to dealer point. This will take additional cost of transportation. Moreover, since there are a number of times that loading and unloading is done, chances of transit damages is too high, hence transportation through rail is not preferred.” Gautama

CRWC keeps the trust. C

W R W C R W C C CRWC W C C the length W C across and Cof C R in 2007, C R C R breadth WIncorporated R W nowCstretches C R W C C W C W C C C R C C R C R offering the group W R W R W to its Cdiverse C C the country W C services C logistics W C of Rclients, W C R C C R terminals. C R W railClink R W C R C W C through W C C W C C C R C C R C R W R C

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W R W C C W C C W C C W C C C R C R R Wthe meticulous R W our growth C And it's R W pace with CmannerRof C W C C W C C C that has kept R C C R W R W C R W C C W C C W C C C R nation's C C R C W R growth, rail/road W by Cproviding R W supportCRby integrating C R C W C logistics W C W C R C C R C R C R W R W C R C W C C movement. Growth in value added services in a seamless supply chain W C C W C C C R C C R C R W R W C R W attainCits C C W CsolutionRto C W C Corporate W C R C C avowed C R W under Ca Runified Csingle stop R W C system R C W W C C W C C C R C R C R W Objective R ofC planning, cost effective W developing C R W C C C & providing W C andRW C services W C R C C R C R W W R W the Cdemand Cof the trade C R C W and its C paceRwith C to keep W upgrade logistics skills W C R C C R C C R W R W C R C W C C W C Indian C W C C CRWC C R C C R C lifeline R Railways, W R W Along R W C customers. C valued W C C with nation's W C C W C R C C R C R R W Integrated R W provides Logsitics Solutions for nation's growth. C R C W C C W C C W C C C R C C R C R W R W C R W C C W C C W C C W C R C C R C R W R W R W C R C W C C W C C W C C C R C Hubs R Logistics C Warehouses R W Railside R W C R W C C W C C W C C C R C C R C R W R W Warehouses R W C R C W C Solutions C W C C Logistics W C R C C R C RIntegrated C R WCold-Chain R W C R C W C C W C C W C C C R C C R C R W R W C R W C C W C C W C C W C R C C R C R R W R W C R C W C C W C C W C C C R C R C R W R W C R W C C W C C W C C W C R C C R C R W R W R W C R C W C C W C C W C R C C R C R C R W R W C R C W C C W C C W C C C R C C R C R W R W R W C C W C C W C C W C R C C R C R R W R W C R C W C C W C C W C C C R C C R C R W R W C R W C C W C C W C C W C R C C R C R W R W R W C R C W C C W C C W C C C R C R C R W R W C R W C C W C C W C C C R C C R C R W R W R W C C W C C W C C W C R C C R C R C R W R W C R C W C C W C C W C C C R C C R C R W R W C R W C C W C C W C C W C R C C R C R Enterprise-Mini R W R W of India C R Ratna) C W C (A Govt. C W C C W C C C R C R C R W R W C R W C C W C (An C W C C W C R Co.) C C R C R : 2008CCertified W R W R WISO 9001 C R C W C C W C W C R C C R C R C R W R W C R Provides Integrated Logistics Solutions C W C C W C C W C C C R C C R C R W R W R W MetroCStation C C W Delhi C Maidan C Pragati W C W C R C C R C Ground Floor, Building, New 110002 R R W R W C R C W C C W C C W C C C R C C R C R W R W 011-23379434 R W : www.crwc.in C C C Website Email:Wpro@crwc.in, C W C Fax: contact@crwc.in C W C R Ph:C011-23480120, C C R C R R W R W R C W C C W C C W C C C R C R C R W R W R W C C W C C W C C C R C C R C R R W R W C C W C C W C C W C C C R C R C R W R W R W C C W C C W C C C R C C R C R R W R W C C W C C W C C W C C C R C R R W R W R W C C W C C W C C C R C C

’

CENTRAL RAILSIDE WAREHOUSE COMPANY LIMITED

COVER STORY

V Anand Senior General Manager, Hyundai Motor India Ltd

Currently road offers the best in terms of an optimised balanced solution. Rail is also a viable option but there are several limitations.

suggests, “The rail option is prevalent in Europe and USA. In India, cars were originally out of reach for many families. Today, the prices of cars have dropped and become affordable and hence the railways are themselves looking at getting into the vehicle transport sector. Presently, rail is still not a viable option because dedicated auto freight rakes are not common and likely to take some time before such rakes come on regular schedules.” While only 2-3 per cent of automotive freight currently moves by rail, initiative should be taken to increase this level to reduce burden on the road network. Initiatives such as rail network through the AFTO and the dedicated rail freight corridor need to be expedited. Better road safety policies need to be implemented through the use of safety devices. 3. Expensive Subramani comments, “As of now, rail is not considered a viable option because of the following major factors: a. Cost b. Too much of loading and unloading activity from OEM till dealer.

c. Last mile delivery still an issue – dependency on road transport. d. Theft and damage If all OEM’s decide to have rail transportation as a viable option, enough wagons are not available and the rail infrastructure development for on time delivery still remains a concern. “ Almost 70 per cent of new vehicles sold in North America – both imports and domestic – are moved closer to the dealerships using railroad carriers. Automakers have worked with railroad carriers in North America (and also in Europe) to design rail cars specific to their requirements. Some even have exclusive and branded railcars built for this purpose. Road auto haulers carry cars using 18 wheeler tractor–trailers from almost 70 manufacturing plants and more than 25 ports in North America to their final destination of more than 14,000 new vehicle dealers. The average distance for truck transport falls within a 250-mile radius of the pickup point. 4. Rail Carriers Not User Friendly However, the scenario in India is different.. Chawla feels, “None of the OEM plants have rail sidings which means vehicles need

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COVER STORY

98% of all the automotive

Capt Sandeep Chawla Executive Director, NYK Auto Logistics India Pvt Ltd

The entire chain of rail logistics is multimodal & involves six handling of vehicle. Trucking is the cheapest and quickest mode of transportation of finished vehicles.

to be t ra nspor ted rail options are not to the nearest rail developed in India.” logistics in India is on siding by car carrier While only road. Rail freight has trailers. Similarly at 2-3 p e r c e n t o f the discharge end, the automotive freight not really been vehicles needs to be cur rently moves by transported by car carrier rail, initiatives should developed. trailers from siding to dealer be taken to increase this point. The entire chain of rail level to reduce burden on the logistics is multimodal and involves road network. Initiatives such as rail six handling of vehicle. In addition, there network through the AFTO and the is shortage of storage space in rail sidings dedicated rail freight corridor need to and availability of auto wagons. In current be expedited. Better road safety policies circumstances, trucking is the cheapest need to be implemented through the use and quickest mode of transportation of of safety devices and modern technology, finished vehicles.” tougher rules on vehicle testing and The scope of work thus includes enforcing stricter penalties. Increasing transportation planning and strategy regulations with respect to environmental consu lt i ng, customer re l at ionsh ip and safety standards is increasing the cost management (CRM), business intelligence and complexity of automotive logistics and asset management. Discussing the in India. issue, Kohli highlights, “Trains and ships have multiple handling in transit (damages 5. No Private Goods Sheds for Vehicles Anand elaborates, “Logistics is all about are caused) and there is a threshold distance for them to be viable. For train, Cost and Time. Currently road offers the the distance is 800 km, for coastal Ro-Ro best in terms of an optimised balanced that distance is 1,100 km. Both road and solution and hence it is preferred despite

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38 CARGOCONNECT - DECEMBER 2015

COVER STORY

New vehicles are high value items and like any other high value consumer goods, they NEED A HIGH LEVEL OF PROTECTION FOR DELIVERY. But despite all safety precautions, sometimes the vehicles get damaged as they travel from the factory to the dealer.

PV Subramani President (South Zone), Cargo Wings Madras Pvt Ltd

As of now, rail is not considered a viable option because of the following major factors: a. Cost b. Too many of loading and unloading activity from OEM till dealer. c. Last mile delivery still an issue –dependency on road transport. d. Theft and damage.

all problems. Rail is definitely also a viable option but there are several limitations in terms of flexibility and routing. It is also not cost economical. If we compare the road vs rail transit time for the sectors South – North or the sector South- West, it does not offer any significant advantage over road. This is due to the uncertainties in the last mile distribution/ insurance coverage from the unloading rail head to the dealership. Further, there is a time taken to aggregate the cars at the origin, waiting for the rail placement. Overall there are no private freight terminals/ goods sheds that can accommodate cars/ passenger vehicles in any part of the country and in my opinion, if rail coefficient needs to improve, it is this infrastructure that needs to be provided by the railways themselves, as it would be unviable for any private player to get a payback within a reasonable time after an investment in a terminal to handle auto traffic.” 6. Limited Availability of Automotive Rail Wagons Bhanot hits the nail on the head. He says, “Road has a share of over 95 per sent in finished vehicles’ distribution in India. Rail was not a viable option for two reasons: a. The lot sizes available for movement were small since overall automotive production in India itself was not high volume; also, it was concentrated among a few OEMs . Small lot sizes favour road despatches. b. There was limited availability of automotive rail wagons operated by Indian Railways ( mostly refurbished passenger coaches called NMGs). A policy to attract private expertise into this specialised sector came out in 2013. This policy, called Automotive Freight Train Operations Scheme (AFTO) attracted two licensees (an

40 CARGOCONNECT - DECEMBER 2015

OEM, Maruti and a 3PL, APL Logistics Vascor Automotive) both of whom started operations in 2014 using newly designed (by RDSO) double-deck wagons. As production increases and private automotive rail operation also spreads to cover most production and sale centres of the country, we can expect increasing numbers of finished vehicles to be transported by rail. An incentive from the government to the OEMs to use “greener and more energy efficient” modes of transport like rail would incentivise a modal shift from road, thereby easing congestion on roads and saving precious energy.”

Bracing Up for Robust Growth of Automotives Robust growth expected in the Indian automotive sector will increase demand and complexity in the logistics market. Across India, automotive manufacturers are ramping up their volumes, both for internal consumption and export. Gautama agrees.” Yes, in a way you are right. While the road infrastructure is catching up fast enough, the demand for road vehicles is going up by the day. Every year, new models of cars are on the roads resulting in more cars on the roads. To add to the challenges, scrapping of cars in India is just unheard of. They are again sold and are back on the roads. While used cars do not require to be moved in wagons/trailers as they are used and sold locally, they still add to India’s heavily congested roads.” India is drastically slow in terms of putting up the infrastructure compared to China. That is one of the key weaknesses that India has got. What is likely to happen is that the vehicles that are being added to the capacity will be primarily for the export market, similar to what Hyundai is doing. The government is going to have

COVER STORY

Implementation of an integrated to do a lot of homework Chawla, too, speaks logistics plan is key for if the growth rate is on the same lines.” building a competitive NYK Auto Logistics going to be realistic as far as the auto industry India provides automotive road is concerned. complete outbound logistics capability Bhanot is confident logistics of fin ished and optimistic of being vehicles covering from for India.

Captain Dinesh Gautama President, M/S Navkar Corporation Ltd

In India, cars were originally out of reach for many families. Today, the prices of cars have dropped and hence the railways are themselves looking at getting into the vehicle transport sector.

geared up and ready. He says, “Increasing production with a more even geographical spread will introduce the demand for various products that are commonplace in mature markets overseas: rail transport in high capacity wagons, complex yard and hub management, value addition in yards , accessorisation, etc. We are fully equipped to offer the services: Vascor Ltd , the JV partner in APLL Vascor Automotive , has a 28- year experience in offering such services in the highly discerning US market and has the knowhow and technology to do the same in India. The expertise for rail transportation and yard management, especially the proprietary IT system of Vascor Ltd, have already been transferred to the India JV and can be seen in our operations. We are fully geared up for the future.”

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plant to dealer to customers in India. As part of our FY 20 strategy, we intend to expand our car carrier trailer fleet to 300 from the current 126 trailers. In addition, we are investigating investments in auto wagons and coastal Roro. NYK has also recently launched India’s first integrated RoRo terminal at Pipavav. The biggest challenge in automotive logistics sector is shortage of skilled staff. NYK Auto Logistics has also launched inhouse management trainee and other training programmes to meet the future demands.”

Gap in Infrastructure But other players do not share the same level of optimism. A general conception is that there is at the moment a big gap in infrastructure and it is not going to get any smaller, so the government has to

COVER STORY Chart 2.1: Indian Auto Components industry

Prabha Chand Chandwar Director, K M Trans Logistics Pvt Ltd

Despite numerous problems related with road transport, it is the biggest mode of transportation for finished vehicles. Road transport is much cheaper than rail transport as finished vehicles comes in luxury goods. Secondly, in case of rail transportation, there will be the need for road transportation from OEM to Railway Station(Loading) and from Railway Station(Unloading) to dealer point. This will take additional cost of transportation. Moreover, since there are no. of times loading unloading done, chances of transit damages is too high, hence transportation through rail is not preferred.

44 CARGOCONNECT - DECEMBER 2015

Source: Automotive Component Manufacturers Association of India (ACMA)

do something. Anand reveals, “Today there is a huge imbalance of loads from the various auto clusters in the north, west and south. This leads to a long waiting time and empty backhauls in some cases, increasing the logistics cost and reducing both efficiency and productivity. There is already a shakeout happening in the industry with only new models being demanded and hardly 4~5 players consistently selling over 1,5000 units monthly. The Hub and spoke distribution may not be the only choice when it comes to finished vehicle distribution post GST introduction. While it is likely to bring down the overall inventory level in the outbound supply chain, it could add to the costs very significantly. The choice will therefore depend upon the service level expectation from a very competitive market and the cost to serve that market. Truck/ trailer sizes will, however, need to come down to meet the last mile distribution challenges.” Nanda also presents his view on the matter. He says,” The Indian auto industry is one of the largest in the world with an annual production of 23.37 million vehicles in FY 2014-15, following a growth of 8.68 per cent over the last year. The automobile industry accounts for 7.1 per cent of the country’s gross domestic product (GDP). Further growth is expected as global giants are planning to invest hugely in India. India is also a prominent auto

exporter and has strong export growth expectations for the near future. In FY 2014-15, automobile exports grew by 15 per cent over the last year. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the two wheeler and four wheeler market in the world by 2020. This will result in higher absorption trend by consumers and the auto transport industry needs to incorporate effective practices which are being applied in developed

Initiatives should be taken to increase this level to reduce burden on the road network.

INITIATIVES SUCH AS RAIL NETWORK THROUGH THE AFTO AND THE DEDICATED RAIL FREIGHT CORRIDOR need to be expedited.

COVER STORY

Logistics service providers endeavour to create PROCESSES AND TRAINING PROGRAMMES for their staff to raise the awareness of how damages may be avoided.

Umesh Bhanot Managing Director, Apll Vascor Automotive Pvt Ltd

Over 95 per cent of transportation is done by road car carriers. Though OEMs enforce strict standards on these carriers , these carriers have limitations because of the vagaries of road transport.

46 CARGOCONNECT - DECEMBER 2015

countries like resource optimisation and pooling, smooth and timely flow of relevant information across verticals to maintain visibility and transparency about the real time situation.”

Urgent Need for Road Infrastructure Development There are independent service agencies that are coming forward who will possibly design trailers that are specifically for carrying vehicles. Kohli shares,” There is adequate spare capacity in the factories and the ports. You will need to build new roads to drive the cars.” As of today that is not really happening. India can be a difficult market for manufacturers. The supplier base is characterised by many small players There are instances where parts from a supplier’s workshop have had to be pulled using a hand cart. It can be difficult and complicated and more and more manufacturers who used to manage it themselves now prefer to give it to a 3PL service provider. Gautama presents a rosier picture. He says, “We have noticed the increase in demand for auto logistics. Our Container Freight Station at Panvel is geared to receive auto freight rakes, as we have a PFT (Private Freight Terminal) for rail. We have handled cars that come from north India by rakes into our facility and more and more AFTOs have approached us to assist them with auto logistics.” Subramani opines, “Road infrastructure development needs to be done on a war footing with more of private /public partnership to enhance the road paved in kilometers and secondly, despite increase in truck fleet strength , the viability is a concern since return loads are becoming lesser and lesser in such specialised categories of carriers.” It is common knowledge that the demand for road logistics for finished vehicles and the growth rate in road

development are mismatched in India. Chawla feels, “It is nearly impossible for growth of road network to cope up with increase in vehicular traffic. In recent times, we have seen several initiatives from the government to fast forward road development projects. Further, the government is also pushing the industry towards modal shift from predominantly road to coastal and rail. We believe a combination of these measures, once implemented, should be able to support the growth of the automotive sector in India.” I mple me nt at ion of G o o d s a nd Services Tax (GST), which is meant to centralise certain taxes and help make India a common market across its state borders, will go a long way in building a competitive automotive road logistics capability. With sales of passenger and commercial vehicles expected to increase by overa11 per cent in the coming years, pending projects such as the eastern and western corridors, NHDP and other NHAI projects in the southern part of the country need to be completed. Bhanot agrees,” The pace of growth of the highway network, measures to increase speeds to international standards and easing out the highway bureaucracy have been very slow.”

Lack of Viable Alternative Modes Road challenges continue to grow, with an overburdened road structure, increasing stoppages, slowing speeds, regulatory issues with road carrier dimensions, keeping logistics costs in check, and the sheer number of finished vehicles needing to be transported. Rail can move large volumes and is more economical over long distances. Anand says, “ Today road logistics account for well over 97 per cent of finished vehicles basically due to the lack of viable alternative modes of transport.

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COVER STORY Overall 60 per cent of freight is still carried by roads across all sectors. If these are compared to the development in national highways/state highways, there is a huge mismatch. But having said that, we have come a long way and the present government is focused on improving the infrastructure to put the country on a high growth path of GDP. The investment required for such PPP projects needs to be funded, which is the main reason of the projects lagging behind schedule. Domestic coastal shipping can never match the time that the road sector offers, neither is there a cost advantage seen in other developed countries.” Nanda says,” In comparison to growth in the Indian auto industry, the growth rate in the development of road transport is lagging

says, “ The outlying suburbs of Mumbai/ Panvel have huge numbers of new cars parked for car dealers and awaiting sales. Literally all small plots of land are being used by car dealers or suppliers to store cars for the dealers. In India we still do not have defined and especially constructed parking spots where cars awaiting last mile connectivity can be parked before sales. Anand dittoes, “Entry restrictions during day time is there in most metro cities. This is fast catching up in many other cities as heavy vehicles endanger safety and create law and order problems. Vehicle sizes that are most popular today is a 10-car trailer of almost 22-23 ft. These certainly will pose great challenges in future especially for the last mile distribution. Vehicle distribution centres outside the cities and drive down options to cover a radial distance of 50 km from the hub will become common place in future.” “Last mile distribution is the Holy Grail of logistics and the key aspect which determines the profitability for LSPs and sweet buying experience for the consumer. It has increasingly become very complex as the demand clusters are growing in numbers because of increased purchasing power propensity.” opines Nanda.

Road vs Rail

far behind because of socio- political issues such as change in ruling parties and focus shift in priorities, problems related to the sloth rate of progress in constructions, among others.” Chandwar, however, is of the view that “The new government is focusing on infra development hence it will be minimised in coming years.”

Last Mile Connectivity Sharing his views on last mile connectivity where t he ca r buyer popu lat ion is stead i ly increasing Subraman i feels “Road development should be focused on connecting satellite townships and towns which are the new market place.” He also recommends an increase in PrivatePublic partnership for more investments in dedicated freight corridors.This is a real challenge and easily noticeable. Gautama

48 CARGOCONNECT - DECEMBER 2015

Currently, rail transport is used very sparingly because the availability of rails or loading space is not guaranteed by the railways and time slots are not promised by them. Passenger and bulk transport takes priority and the transport of goods is at the call of the rail operator. A 90TEU volume is required for a rail move and, if the volume isn’t available, the train won’t leave. Gautama prefers the rail route which is “economical, environmentally-friendly and avoids adding more vehicles on the road.” On the other hand, Anand begs to differ. He prefers road over rail as it provides a great deal of “flexibility in operations.” De spite Automot ive Fre ig ht Tra i n O perators(AF TO) a l low i ng pr ivate operators to manage their own fleet of rail wagons, there were very few takers for finished goods vehicles. Bhanot informs, “The scheme was announced 2013 and two companies have taken up licenses. A total of seven trains are under operation under the scheme. There are few takers thus far because rail freight is very high .”

Chart 2.2: Product range- Share of products in FY12 (%)

Source: Annual Report ACMA FY12

Ideal Solution Increasing regulations with respect to env ironmenta l and sa fety standards increases the cost and complexity of automotive logistics in India. Continuous investments to improve infrastructure is the need of the hour. Increasing regulations, high interest rates, complexities with respect to environmental and safety standards, complications in obtaining permits, use of inter-state permits, complex and opaque tax regime need to be done away with. In the current situation, road dominates the proceedings but there is hope for railways revival in near future because of growth trend and government’s policies to develop India as a manufacturing hub for auto sector. A perfect scenario would be the mix of the two modes to attain the utmost utilisation of time, money and resources. Road give flexibility in terms of delivery points, small consignments and for “Hot” consignments but Rail provides the bulk and fast movement of FVs for further distribution. The option of multimodal logistics which incorporates the flexibility of road and smoothness of rail would be the ideal scenario in doing justice to the ever growing field of the Indian automotives industry.

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FEATURE

The

Smart Yard

I n d ia Ye a rns In order to increase the traction of its operations and scale up its sales and revenues, an OEM requires sound and sophisticated systems. Yard management being one such mechanism is slowly making inroads in a still maturing market like India. A sound yard management enables manufacturers to connect to their activities in the yard and on the docks, thus improving the flow of goods in and out of the facilities. Roselin Kiro with views from industry experts delves on the extent to which the concept of yard management is adopted by the OEMs, and how it benefits them

50 CARGOCONNECT - DECEMBER 2015

FEATURE

hough yard management is relatively a new concept in India, it is now very wellaccepted. Ups and downs in business cycles, seasonality fluctuations, differences in demand and supplies, huge variety, pressure to meet customers’ demands and severe competition has forced OEMs to adopt the yard management concept. Gone are the days when cars, after Pre-Delivery Inspections (PDI), were immediately sent to customers and were rarely parked at the plant. Whether it is a steel stock yard or auto car sales yard, the stock of finished products is maintained in yards, anticipating customers’ demand. Sophisticated yard management is gaining traction; some companies manage their yards on their own, and some outsource to 3PLs. The idea behind creating enabling systems like yard management is to create an external yard with the same efficiency and quality as the plant itself, so that every vehicle dispatched to the dealerships remains ‘factory fresh.’

How Beneficial has the Concept Proved for OEM Yard management is gaining traction amongst OEMs and 3PL organisations which are associated with yard management works. The concept upholds a sustainable competitive advantage in today’s marketplace and provides an endto end solution, right from the vehicle rollout stage to the final departure from yard to the dealer’s delivery or export port. This includes custody transfer (buy-off) from production to yard location through own power mode, safe storage as per layout, periodic short and long term storage maintenance, washing, retrieval, PDI, loading and lashing in car carriers /trucks, gate-out procedures and documentations, both manually as well as through system. Yard Management System (YMS) software ensures better services in transporting the goods safely. KV Verma, Manager-Materials, Dura Auto Systems (I) Pvt Ltd says, “The concept of yard management arose with the need to increase the traction of operations and scale up the sales and services and hence has proved to be quite beneficial for the OEMs.” Pressure to meet customer demand and severe competition has forced OEMs to adopt the yard management concept. Aditya Gupta – Zonal Business Head (DIESL) adds “Supply chain is all about the best utilisation of resources. A professionally managed yard will increase the visibility of vehicles stored and help in better allocation of space. It ensures effective planning and improves safety. Thus it improve overall efficiency of the operations.”

Solid operating

processes and skilled

Benefits of YMS

staff, together with yard

management IT system, form the backbone of an efficient yard management.

52 CARGOCONNECT - DECEMBER 2015

CLOSE MONITORING / CONTROLLING AND RELIABLE INPUT /LOGISTICS PROVIDER /SKILLED MANPOWER is the key to success for the yard management concept.

People. Partnership. Performance...

Entrance

Infrastructure & Advantages Custom Bonded Warehouse. 1) Storage of 7000 pallet,15 identical chambers of 432 Import & Export Pallets eachHub. Buffer Yard & Factory Stuff. 2) Temperature range of +25°c to -25°c Cold Storage & Cold Chain. 3) 24x7 Operational Hours Storage area 28,000 sq meter. 4) VAS Facility of Processing, Repacking, Labeling & Direct access to the National Highway 4B leading to the JNPT port. Sorting Ample space for parking of 10000 cargo trucks. 5) Customs Bonded Area 24x7 CCTV monitoring. 6) reach trucks,forklifts pallet CFSOperated Owned equipments4 Top Lifters,&80hand Trailers, 30 movers Forklifts, 2 Empty Handles, 1 Crane. 7) Distance from Dock JNCH Shelters 11 kms. with Dock Levelers. 8) Inflatable Distance Belapur Station 7 Kms. 9) 100%from Power back-up with multi generators Zero Toll Charges, Zero Congestion in the CFS, Zero Carting Charges, 10) Fire- fighting & fire prevention systems Zero Congestion on the approach Road. 11) LED eco-friendly lighting Carting & Stuffing dine in Covered Area. 12) 22000:2005 HACCP Certified Forwarders. IdeaISO Location for Exporters/CHA’s/Freight 13) Reafer Vans & Support Secondary Distribution Prompt Carting of Cargo. Wi-Fi Enable CFS.

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

Custom Area

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FEATURE

Multi OEM yards can bring economies of scale and thus reduce costs for all players in the chain. Multi OEM yards can also be used to combine cars with commercial vehicles in the same yard to bring optimum utilisation of space. Aditya Gupta, Zonal Business Head, DIESL

A 3PL can bring in pan India presence, domain expertise, a M a n a g i n g a n software to manage yard, n ie s m a n age t he i r own yards and some External Yard outsource it to 3PLs. better costing and Managing an external Talking about the most yard outside the factory transfer of risks. reliable and productive way requires equal or more efforts in terms of maintenance in order to provide the same efficiency and quality like that of the OEM plant, so that vehicles dispatched into the dealerships remain factory fresh. An external yard would require greater effort as it is not directly under supervision as in the case of the OEM plant. An external yard will require a clearly defined SOP, training to the people managing it and constant audit and monitoring of operations. Managing an external yard outside the factory is reliable and productive. However, being a relatively new concept, yards in India still do not have the scale and amenities of their western counterparts. In spite of that, the concept of YMS holds a lot of potential, and is fast establishing its roots in the country. Sophisticated yard management is gaining traction where some compa-

54 CARGOCONNECT - DECEMBER 2015

of managing a yard, Gupta says, “There are merits and demerits in both options. Advantages of outsourcing the yard management to a professional 3PL company are no different from outsourcing any other logistics services to them. A 3PL can bring in pan India presence, domain expertise, a software to manage the yard, better costing and transfer of risks.”

Success Lies in ‘IT’ Technology plays an important role in the yard management system. Robust IT penetration in the yard management concept plays an important role in its success. Solid operating processes and skilled staff, together with yard management IT system, form the backbone of an efficient yard management. The IT system assists in storage, maintenance, inventory management and quick retrieval and dis-

GST is likely to result in NEW DISTRIBUTION AND NETWORK MODEL S AND POS SIBLY MULTI-OEM AUTOMOTIVE YARDS at key locations in India.

FEATURE

The concept of yard management came up with the need to increase the traction of operations and scale up the sales and services and hence the concept has proved to be quite beneficial for the OEMs. KV Verma, Manager – Materials, Dura Auto Systems (I) Pvt Ltd

patch of cars, thereby reducing human intervention and errors. Yard management systems which are integrated with transport management system provide complete visibility and assist in improvement of quality and optimisation of the entire supply chain. Suggesting ways for the betterment of the yard management concept, Verma says, “Close monitoring/controlling and reliable input /logistic provider /skilled manpower is the key for success for the yard management concept.” Yard Management System (YMS) software which is designed to oversee the movement of vehicles in the yard of a manufacturing facility or in warehousing and distribution centres can play a significant role. YMS can be an important tool to manage and improve yard operations. YMS provides real-time information on

the location of trailers in the yard and allows yard employees to move trailers from staging to docks to fill orders in an efficient manner. YMS assists in providing visibility of what is in the yard and the ability to plan and sequence dock-

56 CARGOCONNECT - DECEMBER 2015

ing, loading and unloading which could improve velocity of operations, ensure process consistency and ensure implementation of best practices. YMS can be integrated with ERP, EMS or TMS to ensure seamless flow of information between systems. However, sophisticated technologies like RFID are still expensive and inappropriate for yards in India. The major cost in RFID technology is not towards technology or hardware, but towards fitment of RFID tags on every vehicle. The cost of RFID tag has fallen over the years, but it may still take some more time before it is implemented in yards in India.

Ensure Better Services in Transporting Goods Handling the flow of goods between the point of origin and the point of consumption requires a lot of expertise. Gupta says, “Transporting vehicles is a very different ball game from transporting cartons. The vehicles need to be driven or carried in large containerised vehicles to destination. OEM needs to maintain a pool of good drivers who can drive safely from origin to any location in India. In case of containerised vehicles, OEM needs to ensure that proper stowing and lashing is done for safety during transit.” Therefore, it is clear that trained manpower and correct implementation of technology can introduce global standards in this field. The situation can be quite easy if there is proper connectivity in the movement of vehicles from the manufacturing plant to the location. Verma adds, “Proper connectivity will reduce the lead time be-

The centralised tax, which will eliminate duties required for crossing state borders in India will PAVE THE WAY FOR LARGER REGIONAL HUBS SERVING MULTIPLE STATES.

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FEATURE regional hubs serving multiple states. Sophisticated yard management is gaining traction where some companies manage their own yards and some outsource it to 3PLs. Gupta avows, “There are merits and demerits in both options. Advantages of outsourcing yard management to a professional 3PL company are no different from outsourcing any other logistics services to them. A 3PL can bring in pan India presence, domain expertise, a software to manage yard, better costing and transfer of risks.”

GST Benefits

An external yard will require greater

tween the customer ing business and customer a nd t he s uppl ie r efforts as it is not directly requirements. The market and increase the opsuffers from a shortage of under supervision as in skilled staff and a high portunity for higher sales.” Highlighting turnover. The problem case of OEM the transformation takpartly lies in the fact that the ing place in the modes of OEMs do not pay enough atplant. transportation over the years, tention towards the training and Gupta says, “Till a year back, road skill level necessary to work in yards. was the only mode of transporting vehicles. Except for a small management team, 3PLs Specialised wagons for carrying cars have and OEMs tend to use contract labourers, started operating in India. RORO vessels drivers and handlers. Since 3PLs and OEMs can be deployed in coastal shipping and have no direct control over them, drivers ofinland waterways to carry vehicles in the ten change jobs. coming times.”

Stumbling Blocks The biggest challenge for yard management in India is investment in real estate. While an expanding market might prompt OEMs to look for external yards in a stagnant or declining market that India has experienced for much of this year, most look to make use of the existing, unused space. Manpower or skill development is another big concern for OEMs and 3PLs. Except for a small management team, 3PLs and OEMs tend to use contract labour for drivers and handlers. As well as the necessary licence, these drivers need to be specially trained to meet OEMs’ specifications for driving in yards, which include strict speed limits and handling processes. Lack of skilled human resources with quality mindset is the biggest challenge in the Indian market, considering the grow-

58 CARGOCONNECT - DECEMBER 2015

Possibilities of 3PLs

Yard management and its outsourcing is still in their infancy in India and margins are low. There is a limit on what one can demand from OEMs for parking their vehicles in the yard. A successful business model insists on value addition at the yard. Most of the larger yard management players are from overseas, but Indian domestic players are also on the march. Despite the market’s current chill, the future of yard management in India looks bright. Consumers demand cars quickly and in perfect condition. Meeting these requirements means selling out of a certain stock level, a practice already common in India. Yard management is also likely to change considerably once the Goods and Service Tax (GST) is phased in. This centralised tax, which will eliminate duties required for crossing state borders in India will pave the way for larger

GST is likely to result in new distribution and network models and possibly multiOEM automotive yards at key locations in India. Talking about the benefits that GST holds in the coming days, Verma says, “GST is likely to result in new distribution and network models and possibly multi-OEM automotive yards at key locations in India. These yards will ease the regional distribution of smaller consignments of vehicles to nearby dealers. Nowadays, OEMs park the vehicles in open space without proper care, but through yard, it can improve the quality and response to the consignee and the dealer with minimum lead time for the product. Further, talking about the benefits of multi OEM yards, Gupta says, “Multi OEM yards can bring economies of scale and thus reduce costs for all players in the chain. Multi OEM yards can also be used to combine cars with commercial vehicles in the same yard to bring optimum utilisation of space. The proposed centralised tax system is widely perceived to quicken the pace of the development of yard management in India. This centralised tax will pave the way for larger regional hubs serving multiple states. Most of the vehicle distribution is based on direct delivery from plant to dealers. GST shall result in new distribution and network models and possibly multi OEM automotive yards at key locations providers in yard management space. OEMs are slowly but gradually realising the need for good yard practices to help maintain healthy inventory management and a robust brand image, which would ultimately help them sell more. Therefore, global logistics providers, and yard management specialists in particular, will have to push hard to educate OEMs in India of their added value.

FEATURE

BE N Materialistic Material handling deals with equipment related to the movement, storage, control and protection of materials, goods and products throughout the processes of manufacturing and distribution.The size of the Indian MHE industry is estimated to be approximately `5,000 crore, and is likely to grow 20 per cent year-on-year in the next five years. Joydeep Banik digs deep to analyse the strengths, weaknesses, opportunities and threats of the material handling sector in India and also points out why adopting automation solutions is an absolute necessity

60 CARGOCONNECT - DECEMBER 2015

FEATURE

aterial handling plays an important and indispensable part in logistics. The speed of the flow of materials across the supply chain depends on the type of the material handling equipment and thesophistication in the system, which is generally designed in and around the warehouse. From unloading the incoming material and moving the unloaded material to the assigned storage place, to lifting these material for order picking and moving them for inspection and packing, to finally loading the packages onto the transport vehicle – all activity is coordinated with integrated material handling systems. In fact, an up-to-date material handling system helps to empower distribution and manufacturing facilities. It is the secret weapon in logistics for improving productivity and speeding up throughputs. Gaining control of your warehouse, you gain control of your overall profitability as well as the value chain. Investment in the material handling system is a sheer waste if it is not compatible to the warehouse layout plan.

The economy and material handling operations trends How does your company’s spending on materials handling solutions in 2012 coming with 2011? And by what percentage? 21 %

30 %

Current Scenario In the last few years, material handling has become a new, complex, and rapidly evolving science. The efficiency of material handling equipment adds to the performance level of the warehouse. The internal movement of goods has a direct bearing on the order picking and fulfilment cycle. Material handling sector is a critical intermediary in the growth of the economy of the country. MHE may not directly contribute towards the production of goods but brings about efficiency in handling, transport and storage. In fact, this industry practically complements the manufacturing industry by ensuring smooth and efficient distribution of goods. Ajay Mandahr, Director-Operations, Toyota Material Handling India discusses, “I would like to emphasise on the fact that MHE industry is still in a nascent stage in India. If you look at China, the business volumes are 25-30 times greater than the current levels in our country.” However, he also foresees a huge growth potential and elaborates, “Although the last few years have been challenging, the future outlook for this industry is positive and we expect the volumes to grow around 10-12 per cent CAGR for next several years.The central government policies and directions look positive and the feather in the crown would be the ‘Make in India’ drive.”

Opportunities and Challenges Steady inflow of investments from foreign multinationals, increase in domestic spending on infrastructure and construction projects, robust domestic growth rates, strong internal fundamentals and a healthy banking system makes India one of the best destinations for global investment options. As long as industrial investments continue to be made, the demand for capital goods such as material handling systems will grow. Some key catalysts predicted to drive the growth of material handling in industry in the next few years are: • Upskilling of manpower • Increasing the level of efficiency and productivity • Safety and environmental considerations Mandahr highlights, “The Indian government has realised the importance of ‘Ease of Doing Business’ and is seriously looking at simplifying the tax structures. There has to be rationalisation and uniformity of taxes across the country. Entry barriers for intra-state and inter-state transactions need to be removed for making the tax environment more conducive to carry out the business efficiently.We are looking forward to GST implementation from the next fiscal year, but still there are some hurdles to cross.” Cost of auxiliary equipment and lack of flexibility are the two major

62 CARGOCONNECT - DECEMBER 2015

49 %

30%

49%

Increasing

21% meta-chart.com

Will stay the same Decreasing

How do you expect your company’s Spending on materials handlings solutions In 2013 to compare with 2012? And by what percentage?

27 %

60 %

14 %

Increasing

Will stay the same Decreasing Source: Peerless Research Group (PRG) Survey

meta-chart.com

FEATURE

I would like to emphasise on the fact that MHE industry is still in a nascent stage in India. If you look at China, the business volumes are 25-30 times greater than the current levels in our country. Ajay Mandahr, Director-Operations, Toyota Material Handling India

drawbacks in the modern material handling process of our country. Speaking on the issue, Rahul Sagar, AGM-Marketing, Maini Materials Movement says, “Various material handling applications demand auxiliary equipment and various attachments to make the entire process more dynamic and efficient. However, they come at an extra cost. Many a time, flexibility in the storage layout is also overlooked causing extra spend in the material handling equipment. By applying three simple strategies, plant and warehouse managers can realise significant cost savings from material handling systems

and equipment-reduce, reuse and recycle. Having said that, bringing down the initial cost of acquisition and creating a more flexible material handling process remains a challenge for most organisations.” Mandahr points out one more important issue, “MHE rental industry in the past was dominated by regional players with a smaller fleet size but this scenario is changing fast. These regional players are gradually expanding to pan-India operations

64 CARGOCONNECT - DECEMBER 2015

and the fleet size is growing from a typical 10-20 units to 100-200 units. This growth aspiration of going-pan India has its own set of complications viz.,different taxation structures for different states, entry taxes, work permits, way bills, etc.”

Types of Material Handling Equipments Material handling activities start with the unloading of goods; the goods then pass into storage, then machining, assembly, testing, storage, packaging, and finally loading onto transport. Each of these stages requi res a sl ightly d i fferent design of handling equipment and some processes require integration of multiple items. Some of the commonly used equipment for material handling are stackers (electric, semi-electric and counter balanced), manual and electric pa l let t r uc k s a nd platform trucks,dock levellers, lift tables, tow trucks and other high-end equipment like forklifts(electric and diesel), reach trucks, order pickers and very narrow aisle trucks. For moving material in and out of warehouses, many different types of equipment and systems are in use, depending on the type and volume of the products to be handled. Design or selection of the right material handling system is one of the most important decisions in the overall manufacturing process and it depends on

the storage layout of the warehouse, type of goods stored and application. The three fundamental types of material handling equipment are:

In the MHE space, people are going for the latest generation equipment which are high on safety and productivity, more reliable, durable, and fuelefficient and have minimal environmental impact. • Loading equipment: This type of equipment is aimed at providing the capability to load and unload vehicles. They help in moving the product from the loading bay to the vehicle and vice versa. Equipment that falls into the access category are scissor lifts, goods lifts, dock levellers, loading ramps, doors, dock seals, pallet trucks, conveyors and fork lift trucks. • Lifting and Transport Equipment: Lifting and transport equipment are used to move the product around the production facility, from loading bay to storage, from storage to production, around production, from production to storage and finally from storage to loading bay. Equipment that falls into this category are fork lift trucks, order picking trucks, overhead cranes, tower cranes and belt, chain and overhead conveyors. • Storage Equipment: Storage equipment, as the name suggests is used to store

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FEATURE

By applying three simple strategies, plant and warehouse managers can realise significant cost savings from material handling systems and equipment-reduce, reuse and recycle. Bringing down the initial cost of acquisition and creating a more flexible material handling process remains a challenge for most organisations. Rahul Sagar, AGM-Marketing, Maini Materials Movement

Automation: The Right Choice The general trend in the MHE industry in our country is towards increased automation that in turn leads to safety.Maximum productivity is obtained in material handling through minimising the number and complexity of handling operations. It is desirable for all the movements to be as simple and automated as possible.The level of automation varies, depending on the handling requirements. Automated handling equipment used in warehouses includes automated guide vehicles, storage and retrieval equipment, conveying systems and product sortation equipment. Fully automated handling systems ensure that the mater ia ls/ components/assemblies are delivered to the

66 CARGOCONNECT - DECEMBER 2015

Next Generation India is basically jumping generations in terms of equipment technology. In the MHE space, people are going for the latest

generation equipment which are high on safety and productivity, more reliable, durable, and fuel-efficient and have minimal environmental impact. In terms of capacity range, we are very close to the global norms. With more and more companies moving to greener technology, demand for battery operated equipment is on the rise. Also, there are a lot of initiatives to ensure that the products are environmental-friendly without sacrificing the cost competitiveness. Efficient and right material handling aligns the warehouse to the business requirement. According to Mohan, “The primary objectives of material handling are to:

Source: www.statista.com

materials, components and assemblies. The level of complexity of this type of equipment is wide ranging, from a welded cantilever steel rack to hold lengths of stock materials to a powered vertical carousel system.Also within this category are pallet racks, mobile shelf units, and plastic, wood and steel containers.

production line when required without significant manual intervention. Semi-automatic handling systems provide less advanced solutions that deliver materials/components to the production line with some manual intervention. Also, the use of automated systems enhance the effectiveness of human energy in material movement. Samir Gandhi, Director, Gandhi Automations Pvt Ltd shares, “Automated products increase safety, efficiency and even an unskilled labourer can perform the operation of these products. Our products isolate warehouses from the external environment and protect it from the outside temperature, humidity and dust.” He adds, “At the very first look, automation machines and equipment seem to hamper the employment scenario. But when we retrospect, we figure out that automation solutions in material handling leads to nothing less than efficiency.” Sagar goes a step forward and says, “Increased efficiency and productivity with the use of automation equipment will not only save time of the labourers in doing mundane jobs but will also lead to an elevated confidence level among the labourers, facilitating the scope of more learning for them , transforming them from skill workers to knowledge workers.”

• • • •

Increase efficiency of material flow Improve facility utilisation Improve safety and working conditions Facilitate the manufacturing process And if all the above happens, productivity is automatically taken care of and costs are also reduced .Material handling can account for 3075 per cent of production costs and can reduce operational costs by 15-30 per cent. Hence, it does become an obvious area of focus for any productivity enhancement and cost reduction movement.”

OBRO final.pdf 1 28-07-2015 16:27:39

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DECEMBER 2015 - CARGOCONNECT 67

FEATURE

At the very first look, automation machines and equipment seem to hamper the employment scenario. But when we retrospect, we figure out that automation solutions in material handling leads to nothing less than efficiency. Samir Gandhi, Director, Gandhi Automations Pvt Ltd

Megatrends A few megatrends observed as of now in the material handling sector in India are: • E-commerce has been a big boon for this industry with several warehouses getting operational in the country. • Aut omot ive c ompa n ie s a r e now outsourcing their material movement (both in-house & distribution) to specialist players • 3PL companies are following the best international practices to improve the

loads method prevalent in our country. With increasing awareness and the global aspiration of the Indian industry, this method is now changing. I would reckon that the adoption of palletised load handling would be the single most important enabler for this industry.” • M2M com mu n icat ion a nd voicerecog n it ion syste m s a re ga i n i ng popularity. People are able to understand t he bene f its of usi ng h a nd s-f ree communication system and being trained to use technology for minimal error in operations.

Conclusion

efficiency while being cost-effective. This calls for mechanisation and envisage higher usage of pallets and MHE. Speaking on the same issue, Mandhar says, “Internationally, palletised handling is considered to be a safer and efficient way of handling loads as compared to the conventional pick-n-carry i.e. hanging

68 CARGOCONNECT - DECEMBER 2015

In the past, many considered material handling control s yst e m s s i mply a c ol l e c t i o n o f mech a n ica l a nd control devices that caused objects to be moved from one place to another within the walls of a manufacturing or warehouse facility. With the advent of advance technology and introduction of software based Warehouse Management Systems (WMS) and Manufacturing Execution Systems (MES), the isolated connectivity of MHE is being replaced by comprehensive interfaces. Handling material is a daily function in the workplace. All too often, it is a task taken for granted, with little knowledge

of or attention to the consequences if done incorrectly. Management and employees need to look at and evaluate how material goods are handled inside and outside their facilities. According to Sagar, “Application of right material handling equipment plays a pivotal role in complying with the safety standards within the warehouse. People working in the warehouse should be aware that regardless of how small or lightweight an item, only a designated, trained individual should move it. Also, working conditions within a warehouse improves drastically with the use of optimum material handling equipment. It not only helps in improving maximum utilisation of the available space, but also makes the warehouse aligned with the business needs. Operators feel secure and safe while working and therefore become more efficient.” Mandahr believes, “Higher growth rates in the MHE industry would open up other functional, operational and organisation challenges, not to mention the safety and environmental impact resulting from unrestricted/uncontrolled importation of second hand machines. We feel, these are part of the learning curve for the industry and are expected to iron out as the industry evolves to the next higher level of growth and customer expectations.” As outlined before, the trends and technological innovations are all pointing towards enhancing productivity multifold in warehouses and at the same time ensuring the safety of the people working with it in an environmental-friendly manner. The industry is waiting to see a lot of exciting new developments in the near future that would help customers to maximise the returns on their investments.

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Perishable Goods Thawing Roadblocks - DECEMBER - DECEMBER 70 70 CARGOCONNECT CARGOCONNECT 20152015

FEATURE

The success of an industry dealing in perishables depends upon its ability to supply the product fresh and safe for consumption. Indiaâ&#x20AC;&#x2122;s middle class consumer base is due to reach an estimated 583 million by 2025, but the countryâ&#x20AC;&#x2122;s reefer transportation is unfortunately lagging far behind the need of the hour. Dr Kirti Mudgil Pathak, with the help of experts in the industry explores the dampers and attempts to find solutions to the roadblocks in the sector

DECEMBER 2015 - CARGOCONNECT 71

FEATURE

hile globalisation has decreased the gap between communities, the physical distance will remain ever so. The greater the physical separation, the more the likelihood of freight damage of perishables during the complex transport operations involved. Some goods can be damaged by shocks while others by undue temperature variations. Perishables can be maintained if the rate of the chemical reactions involved is mitigated with low temperatures. Hence, reefer transportation has become an integral part of the supply chain management for the shipment of temperaturesensitive goods. In a country as large and geographically diverse as India, the need for efficient and reliable cooling technology for urban deliveries through refrigerated road transport becomes all the more relevant with a rise in demand for fresh and processed fruits and vegetables, pharmaceuticals, flowers, ice-creams, etc., consequent to a change in the consumption habits of people not only in metropolitan cities, but also in small towns. Consumers with increased purchasing power have become preoccupied with healthy eating, prompting producers and retailers to respond with an array of exotic fresh fruits and vegetables originating from around the world. Besides, temperature controlled movement of pharmaceuticals and medical supplies, which is a much more recent activity than the shipping of refrigerated or frozen foods, also needs very careful handling because temperature fluctuations could be disastrous for the effectiveness of a life saving medicine. The testing, production and movement of drugs relies heavily on controlled and uncompromised transfer of shipments. If these shipments experience any unanticipated exposure to variant temperature levels, they run the risk of becoming ineffective or even harmful to patients. According to a report released by the Technopak, India’s food industry is soon expected to grow to USD 300 billion. The agriculture sector is currently witnessing a major shift from traditional farming to horticulture, meat, poultry and dairy products. The emergence of an organised retail food sector, as well as changes in FDI laws are creating fresh opportunities in the domestic perishables and food industry. But, according to Benzon John, General Manager-Logistics, Haier Appliances India Pvt Ltd, “The potential of reefer transportation is very high in our country. But we still lag in providing adequate warehousing and faster transportation of perishable goods and the loss on account of this is huge to the farmers in case of fruits and vegetables and to the manufacturing sector where the goods lose quality due to poor transportation facilities and warehouse infrastructure. Absence of prominent transporters in this field is hampering the availability of trucks as of now, though of late more players are coming into the arena. Perishable goods need faster delivery and due to poor road conditions and obstructions on the road (RTO, Sales Tax, etc.) the deliveries get affected. If a refrigerated van with material is stuck on the road, the cost of delivery goes up as the temperature needs to be maintained even when the vehicle is stuck or slow moving.” The reefer market, which concerns a number of sectors like agriculture, horticulture, fisheries, aquaculture, dairy, processed ready-to-eat food, pharmaceuticals, together with packaging companies, retailers, wholesalers, transporters, etc., is gradually moving ahead after e-commerce firms started delivering food products and groceries in particularly smaller reefer trucks.

72 CARGOCONNECT - DECEMBER 2015

However, in our country, the reefer transportation of perishables is at an early growth stage and still rather vulnerable. Dr Cosima Klinger-Paul, Managing Director, Lamilux India Pvt Ltd opines, “We have learned that only 3.5 per cent of perishable goods are transported with adequate reefer trucks in India, while it is 75 per cent in China and 85 per cent in USA. Approximately 35-40 per cent of fruits and vegetables are going waste in the entire cold chain from harvest to sale to customers. This is slowly changing.” Rakesh Pachauri, Vice President- Marketing & Sales, Coldex Logistics Pvt Ltd, totally agrees, “Yes, there are losses amounting in crores in value terms due to shortage and cost of reefer operation in India. Due to high capital involvement in reefer logistics, many service providers have winded up their business in India. Shortage of trained drivers also poses a major challenge.”

Need for Introspection Fragmented logistical support from the production centre to the consumption centre results in waste and loss of value of perishable commodities. The potential to understand local rules, customs and environmental conditions as well as an estimation of the length and time of a distribution route are vital for a safe delivery, which is not quite up to the mark in our country. Pankaj Joshi, Supply Chain and Cold Chain Professional, explains, “Owing to cost constraints or unavailability of reefer transportation at their disposal due to seasonal demands, perishables that do not get moved in reefer transport amount to loss in quality, value and quantum. Seasonality, skewed volume, ability to absorb higher reefer transportation cost and geographical volume imbalance of a commodity requiring reefer transportation are key constraints in the business.” According to

Despite increased production, availability of the products is insufficient since VERY LITTLE GOVERNMENT MONEY IS SPENT ON THE MARKETING OF AGRICULTURAL PRODUCTS

FEATURE

Rakesh Pachauri Vice President, Marketing & Sales, Coldex Logistics Pvt Ltd

REEFER

Yes, there are losses amounting in crores in value terms due to shortage and cost of reefer operation in India. Due to high capital involvement in reefer logistics, many service providers have winded up their business in India. Shortage of trained drivers also poses a major challenge.

74 CARGOCONNECT - DECEMBER 2015

industry estimates, approximately 104 million metric tons of perishable produce is transported between cities each year. Of this figure, about 100 million metric tons moves via non-reefer mode and only four million metric tons is transported by reefer. Currently, most of the refrigerated transport in India is operated by small, non-integrated firms that do not make use of state-of-the-art technology. Mihir Mohanta, General Manager, Supply Chain, Mother Dairy Fruit and Vegetables Pvt Ltd pinpoints, “The cost of reefer transportation is more than double that of ambient transportation. Consumers are usually not willing to pay for the additional cost of fruits and vegetables. People manage transportation with traditional knowledge and ‘jugaad’ technology. Cost-wise, these are significantly lower than reefer transport. This kind of ambient movement competes with reefer transport. “However, Sandeep Nair, Senior Director, Ocean Freight, India, DHL Globa l For warding presents a rosier picture, “Reefer containers address the challenge of long distance transportation of goods and have enabled commodities that were earlier not possible to be exported in large quantities owing to high cost (airfreight being the only mode available) to be shipped with ease. The loss being referred to on perishables is more to do with the long- term storage in temperature controlled facilities and not so much in reefer transportation, which is by far the most reliable mode of temperature controlled transport.” Some big food bra nd s i mpor t reefers from Europe or south Asia in an attempt to offer world class refrigerated distribution in India. But those reefers may not be very effective in Indian conditions which work under a fragmented, unorganised retail system serving one of the world’s largest consumer markets. While in developed countries, retail distribution items are sorted before loading on to the reefer, in India it is often sorting of items in the reefer at the retail drop off point due to the unpredictable and unstable order quantity of retailers, apart from lack of process-driven loading and unloading. Sorting at drop-off point means more

DO YOU KNOW? In the pre reefer vehicle era of the 1940s, a combination of crushed ice and salt was widely used for the transportation of fish and meat products. Around 80 per cent of all reefer transportation in India is related to milk and dairy products.

FEATURE ambient temperature entry into the reefer, which increases the container temperature, directly affecting the product quality and shelf life. Mihir Mohanta General Manager, Supply Chain, Mother Dairy Fruit and Vegetables Pvt Ltd

REEFER

The cost of reefer transportation is more than

Current Scenario Despite the extensive financial and economic growth that is articulated about India, our system of reefer transportation is still very immature, using age- old techniques and methodologies when compared to world standards. Interstate barriers, intercity or state taxes, lack of two-way cargo movement, back haulage and bad roads are some of the issues which increase operating costs and delay timely deliveries. Joydeep Som, General Manager-GTA, Icetrail Logistics Pvt Ltd says, “GPRS is the latest technology which most of the reefer transporter have adopted but the information is used to do a post-mortem and not a real time corrective action, which is the need of today’s market condition.” Mohanta backs this view,” During a breakdown, there is hardly any backup arrangement. Most of the times, breakdowns impact the quality. There

double that of ambient t ranspor tation. Consumers are usually not willing to pay for the additional cost for fruits and vegetables.

are a very few large fleet owners across the country who can provide backup in a breakdown situation.” The worst part is that the consumer seldom realises that the product he is purchasing from a fancy display freezer may not have sustained its quality anymore due to its ineffective

There has been a steady growth in the reefer segment after e-commerce firms began to deliver food products and groceries in particularly smaller reefer trucks. transportation. Mohanta adds,” Each item requires a different temperature and humidity condition for transportation. Like fresh grapes are transported at 8 deg C, whereas frozen corns are transported at -18 deg C. Many times there is temperature abuse. Like in grapes, the driver might switch off the refrigeration system for some time (may be while taking food or rest) and then bring down the temperature to -5deg C to make it up. But this seriously damages the quality of the grapes. After freezing, these w i l l not regain their original form.” Pachauri however, feels, “All major A-class cities are well connected by good road infrastructure. The challenges are in B & C-class city connectivity.” Long transit time and poor handling lead to spoilage and waste, not to mention potential food borne illnesses due to

To ensure optimum benefits from REEFER TRANSPORTATION REQUIRES AN UNDERSTANDING OF THE CHEMICAL AND BIOLOGICAL PROCESSES linked with perishables. 76 CARGOCONNECT - DECEMBER 2015

Celebi Final.pdf 1 28-07-2015 17:26:48

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FEATURE

Dr Cosima Klinger-Paul Managing Director, Lamilux India Pvt Ltd

REEFER

We have learned that only 3.5 per cent of perishable goods are transported with adequate

reefer trucks in India, while it is 75 per cent in

bacterial, microbial and Commodity wise Capacity Utilisations, 2012 fungal contamination It Cold chain capacity is estimated that each Commodity (Percentage) year, some 25 per cent of foods produced go waste. 92.82 Potato Waste creates a new set 7.63 Multi purpose of environmental issues 1.07 Fruit vegetable as food waste converts into water waste and a 0.73 Fish host of greenhouse gas 0.15 Meat emissions. Dairy & milk 0.68 Our country being o n e o f t h e w o r l d ’s 0.36 Others la rgest producers as Source: Global Agri System Pvt Ltd Report well as consumers of food products, the reefer nearly 40 per cent of the domestic fruit and transport industry could play an important role in contributing to vegetable production goes waste due to the the development of the economy. Despite lack of storage, cold chain and transport increased production, availability of infrastructure which includes road, rail and the products is insufficient since very port infrastructure, last mile connectivity, little government money is spent on dependence on road over rail, customised the marketing of agricultural products. transportation, technology adoption and Our villages are in need of pack houses government support. with pre-coolers, without which the domestic harvest gets destroyed for lack of opportunity to enter the cold chain. Mohanta compares, “A classic case is ‘Washington Apple’. They are able to penetrate every nook and corner of India despite being brought from US. Washington Apple board provides a very strong support on their marketing activity from promotion to branding.” But in India,

Causes for Slack Transportation

Reefer

Lack of adequate number of refrigerated vehicles for movement of perishables (with the exception of milk). According to industry estimates, around 100 million tons of perishable cargo moves via non-refrigerated transport and only four million tons are transported on reefer trucks.

China and 85 per cent in USA. Approximately

35-40 per cent of fruits and vegetables are going waste in the entire cold

chain from harvest to sale to customers.

78 CARGOCONNECT - DECEMBER 2015

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FEATURE

Pankaj Joshi Supply Chain and Cold Chain Professional

REEFER

India has recently witnessed the usage of PCM and eutectic technology. Apart from that, visibility tools such as VTS with real time tracking of vehicles and online visibility of live temperatures in vehicles, followed by an SMS- based alert systems to respond to temperature failures / abuse have created a lot of sensitivity on the service providers and customers’ end. 80 CARGOCONNECT - DECEMBER 2015

Lack of knowhow and trained manpower with appropriate skill and training to handle modern technology. Frequent fuel cost escalations which are not adequately compensated by customers who equate the operation cost of reefer vehicles with that of non-reefer vehicles, resulting in under coverage of cost in respect of reefer vehicles. Pathetic road conditions except for national highways, result in breakdowns and freak accidents. This also adds to vehicle maintenance cost, and transit time is thus longer than normal. High cost of operation of reefer vehicles as compared to normal transportation because vehicles frequently detained at sales tax check posts consume excessive fuel by running the AC system during detention. Besides, compliance of sa les ta x regulations of different states, sales tax check posts at state borders and toll tax at numerous points cause not only delays but also increase the cost of the operation. It is expected that only the implementation of Goods and Services Tax could solve this issue. No safety for vehicles plying at night, which face the ever present risk of getting robbed or becoming prey to miscreants. No insurance for the cargo the vehicle carries. Truckers expect that the client will take insurance cover in transit. In absence of this, additional burden comes to the transporter. There is a system for carriers taking legal liability coverage for the cargo, but the process of making an insurance claim when the situation arises is very protracted and above all, any loss arising out of AC failure is not entertained by insurance companies. Return load is not easily available to the reefer transporter. Over dependency on roads

Bad Roads No Insurance

Rising Fuel Cost

Reefer Transportation No Return Load

Lack of Knowhow No Safety

since rail and inland waterways are still not suitable for perishable goods due to infrastructural issues.

Ensuring a Smooth Delivery Smoother transportation of perishable goods needs to be facilitated by providing redressal to issues that reefer van operators face on Indian highways. Joshi informs, “India has recently witnessed the usage of PCM and eutectic technology. Apart from that, visibility tools such as VTS with real time tracking of vehicles and online visibility of live temperatures in vehicles, followed by an SMS- based alert system to respond to temperature failures / abuse have created a lot of sensitivity on the service providers and customers end.” Som suggests that since the “quality of roads and high speed expressway road network is still not adequate and there are delays due to multiple checkpoints at state borders, therefore, police and RTO entries need to have a proper control mechanism.” To ensure optimum benefits from reefer transportation requires an understanding of the chemical and biological processes linked with perishables. The team of transporters should be well equipped

Our villages are in need of pack houses with pre- coolers without which the DOMESTIC HARVEST GETS DESTROYED FOR LACK OF OPPORTUNITY TO ENTER THE COLD CHAIN.

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FEATURE

Sandeep Nair Senior Director, Ocean Freight, India, DHL Global Forwarding

REEFER

One way to address a breakdown is to opt for duel gensets which although costly, provide a higher reliability during the domestic transport of live reefer containers.

82 CARGOCONNECT - DECEMBER 2015

to handle a crisis situation, for example a vehicle breakdown. Nair suggests a remedy, “One way to address a breakdown is to opt for duel gensets which although costly, provide a higher reliability during the domestic transport of live reefer containers.” Paul argues, “The better the technology around the manufacturing of reefer trucks, the lesser the chance of a breakdown and temperatures for perishable goods can be maintained.” Som opines, “Use of next generation vehicles, efficient transport management system and an interactive telematics technology for better control” would improve the current plight of reefer transportation in India. Among other factors, noise is another cr itica l factor in tr uck ing. Besides environmental standards, drivers with sleeper cabs find their beds only a few feet from their reefer’s engine. Engine and compressor noise interferes with sleep. Intake silencers, acoustic barriers and special door seals are thus necessary in a reefer. Some operators use curtains at the rear of the trailer which helps maintain the temperature inside and should be considered high-maintenance items; Care should therefore be taken not to

damage them. In order to provide relief to reefer van operators, a Reefer Vehicle Call-In Centre (RVC) was last year launched by the Minister of Agriculture, which will help create a database of bottlenecks and their types across national highways. The response generated from this exercise will help devise long term plans and policies to alleviate bottlenecks and thus control inflation in prices of perishable goods in the country. This initiative is expected to help in registering the complaints of more than 30,000 vehicles carrying perishable goods. They can register their complaints on tol l f ree number 180 02676223. Complaints may include extortion, transit delays, harassment, etc. Paul suggests that an awareness should also be created regarding “subsidies from Ministry of Food Processing Industries and National Centre of Cold Chain Development of Ministry of Agriculture. These government bodies have created an excellent subsidy system for reefer transportation with 35 per cent of costs.” Besides, we also need to look at dedicated freight corridors which will ensure smooth passage for these reefers. John says, “Google maps and GPS services are extensively used in case of reefer

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FEATURE

Benzon John General Manager - Logistics, Haier Appliances India Pvt Ltd

REEFER

Absence of prominent transporters in this field is hampering availability of trucks as of now, though of late more players are coming into the arena now. Perishable goods need faster delivery and due to poor road conditions and obstructions on the road (RTO, Sales Tax, etc.) the deliveries get affected.

transportation. Of late, the average per-day trucking speed has gone upto 350 km from 250 km which is a positive sign. With the rolling out of GST and dedicated freight corridors, the conditions should further improve in the coming days.” Experts also feel that although cargo insurance is critical, good equipment and proper procedures on the part of the shipper, diligence by the driver and proper receiving can keep insurance out of the picture altogether and ensure safe food for us all. A viable real time fleet management system (proactive response) is the key to limit the risk associated with transporting frozen products. Pachauri suggests technologies to survive in the market, “Online vehicle and temperature tracking system (GPS), temperature recorders (data loggers) Eutectic vehicles, working on nitrogen flush technology (cold chain logistics) Transport Management System (TMS), Fleet Management System (FMS) Warehouse Management System (WMS)

and Business Intelligence tool (BI).” John raises a rather valid point, “Apart from better road conditions, the authorities on the road need to be educated about the fragility of materials that are carried in reefer trucks so that they won’t create trouble to the transporters. Maybe separate certificates/ priority passes, etc., can be tried to cut short the interference of officials enroute. Dedicated freight corridors will also improve delivery of goods at a faster pace.” Som suggests, “Prepaid toll card to avoid cash transaction would save time.” Som has more solutions to offer. “The government needs to implement GST, provide a Green Channel for reefer vehicles, and subsidise energy cost, thus making the cold chain services economically viable to the end user.”

Hi-Tech Reefer Vehicles Indian road and transport conditions need creative solutions. Besides, refrigerated carriers are also bound to have equipment

In order to provide relief to reefer van operators, A REEFER VEHICLE CALL-IN CENTRE (RVC) WAS LAST YEAR LAUNCHED BY THE MINISTER OF AGRICULTURE, which will help create a database

of bottlenecks and their types across national highways. 84 CARGOCONNECT - DECEMBER 2015

FEATURE breakdowns. What becomes imLong transit time and poor portant is whether the carrier has the ability to monitor the reefer handling lead to spoilage temperature and how fast the and waste. Waste creates reefer can be repaired if it breaks down. It is even more a new set of environmental important to have profesissues as food waste converts sional drivers and well maintained equipment into water waste and a host of so that the possibility of a breakdown is comgreenhouse gas emissions. pletely ruled out. Paul says that her company is “working closely with customers to develop new technologies suitable for the Indian market.” She adds that they have “developed a special High Impact FRP which is suitable for rough loading and unloading conditions.” Joshi is optimistic of a great improvement in solutions of cold chain transportation “which are largely revolved around the asset viz. reefer containers / box and refrigeration systems in combination with the type of vehicle used. However, there is great scope available in the supply chain design, logistics solutions, implementation of best practises and collaborative partnership which can not only become path breaking in the cold chain industry, but also address the issue of spoilage and losses.” Major technologies in providing a temperature controlled environment during transport are: Dry ice to keep a shipment frozen for an extended period of time. Gel packs for pharmaceutical and medicinal shipments that are required to be stored in a temperature range between 2 and 8°C. Eutectic plates and cold plates which are similar to gel packs and used in delivery vehicles to keep the temperature constant for short periods of time. Liquid nitrogen or a cold substance of about -196°C to keep packages frozen over a long period of time. Mainly used to transport biological cargo such as tissues and organs. It is considered to be a hazardous substance for the purpose of transportation. Quilts or insulated pieces that are placed over or around the freight to act as a buffer in temperature variations and to maintain the temperature relatively constant. With today’s reefer equipment, monitoring temperatures inside the trailer is almost a given. Recorders note what happens enroute, and the data can be extracted if issues arise. However, in many cases, dispatchers become alert only after the load has gone sour and is rejected. It is far better if someone takes appropriate and timely measures, so that the load can be saved and arguments avoided. John suggests, “Since the support from governments takes years to happen, (infrastructure, etc.,) companies in the field should get together and invest their time and money in the development of better technologies in tracking as well as in creating infrastructure for the industry.”

Road Ahead The ongoing rise in the standards of living and economic specialisation will remain important drivers for years to come in the growing demand for perishable goods and the cold chain logistics supporting their transport. The nation has moved beyond basic grains and potatoes to high value fruits and vegetables. It is therefore safe to assume that with the current mood and development in technologies of reefer vehicles, the nation is ready to usher in an era of higher level of food security in the country.

86 CARGOCONNECT - DECEMBER 2015

“Continually Innovative”

FEATURE

WAREHOUSING:

An Investment Opportunity Gone are the days when warehousing in India was a synonym for basic four walled structures lacking inventory management or technology solutions. With the changing business dynamics and the growth of third party logistics in the sector, the growth story for the warehouses has begun, though it has miles to go. Roselin Kiro finds out how smart investment in the warehousing industry can provide an opportunity to investors who are willing to explore the sector

88 CARGOCONNECT - DECEMBER 2015

FEATURE Where to Invest?

ndia’s warehousing requirement is expected to grow at a CAGR of 9 per cent from 919 million square feet in 2014 to 1,439 million square feet By 2019, according to a report by a global property consultancy, Knight Frank. It further says that the government’s renewed focus on incentivising the manufacturing sector is a key to the growth of warehousing, adding that the logistics market will reap the benefits of this growth in the coming years. The additional demand for warehousing space per year will be around 104 million square feet till 2015 and will entail investments of about `15,000-16,000 crore every year. The investments will go towards land acquisition and cost of construction. Investors who plan to invest in this sector can get good returns in the range of 12 per cent to 20 per cent per annum, said the report.

The Current Scenario Today the Indian logistics industry is witnessing a boom in the warehousing sector, as warehousing companies are increasing their capacity, expanding their network and adapting new concepts to match with the international standards. Warehouses are an integral part of the supply chain and logistics industry. The Indian warehousing sector is progressively getting redefined from the traditional concept of ‘godown’ to modern day automated set-ups. The logistics sector is broadly classified into three areas – transportation, distribution and storage. But when it comes to agriculture which is the backbone of the Indian

90 CARGOCONNECT - DECEMBER 2015

There is a great need for organised warehousing with simplification of the existing tax structure coupled with technology and an efficient transportation system. economy, the agriculture supply chain in India suffers from inefficiencies leading to heavy losses of commodities due to lack of proper storages and transportation facilities. It is estimated that about 20 per cent of the food grains which include grains, fruits, vegetables, spices, etc., gets spoilt because of poor storage facilities. There is a huge gap in the quantity of agricultural produce and the availability of scientific management. The warehousing segment constitutes only 15 to 35 per cent of the total logistics cost.

A lot of improvements have been seen in the warehousing sector but it still has a long way to go. Good investment in infrastructure is one of the most important components of the warehousing sector. India needs to get the required infrastructure and policy support to make a mark in the global market. The supply chain needs to be streamlined with warehousing hubs. An efficient warehousing operation pivots critically on high quality supporting infrastructure that includes good national highway network, interstate and congestion-free city roads and seamless multimodal transportation solutions. The railways being the cheapest form of transport in India, better rail links can improve warehouse infrastructure. Modernisation of warehouses is another sector of investment which is an important factor with the advancement of technologies and trends. Modern warehousing forms an integral part of the supply chain where goods are stored not only for safekeeping, but several value-advance processes are also implemented to process inventories, thereby minimising obsolescence and reducing wastage. Investment in infrastructure, connectivity, smart tax structure, skilled manpower and involvement of proper publicprivate partnership are some of the factors which need to be managed carefully to keep up the win-win situation. Though a lot has been done by public sector agencies like Food Corporation of India, Central Warehousing Corporation and 17 State Warehousing Corporations which are concerned with building large scale storage and warehousing capacities in the country, a lot is still expected to be done in infrastructure and tax structures. There are several major logistics parks

Depiction of the demand for warehousing space in India from 2014-2019 (million sq ft)

Total warehousing space requirement

Manufacturing

2014 (E)

2019 (P)

631

939

CAGR*

Total additional space required from 2014-2019

Annual additional space required from 20142019

307

Consumption

115

EXIM**

211

386

13%

174

Total Warehousing

919

1439

520

104 Source: Construction World

FEATURE A n ef ficient warehousing operation pivots critically on high quality supporting infrastructure that includes good national highway network, interstate roads, congestion-free city roads and seamless multimodal transportation solution. and warehouses which have been developed and some are currently under development across major logistics hubs of Mumbai, Bengaluru, Chennai, Hyderabad and NCR, etc. Catering to industries such as agriculture, automotive, electronic, hardware and aerospace is under various phases of development across the country. Projects are being taken up on the construction of various raillinked and multimodal logistics parks and warehouses. About 861 acres of land has been identified as Free Trade Warehousing Zones (FTWZs) in India, which are visualised as global trading hubs in the international supply chain. Primarily governed by the Special Economic Zone (SEZ) Act 2005 and SEZ Rules 2006, 100 per cent foreign direct investment has been permitted into FTWZs. Sufficient storage capacity and strategic location of the warehouse enables efficient functioning of supply and distribution network and also provides strategic competitive advantages to the business. Proper material handling, storage conditions and timely movement of goods are necessary to keep up the quality of the stored product. The growth of the Indian warehousing sector is primarily driven by the industrial growth of the country. While the Indian

economy is predominantly driven by the service-based industry, manufacturing also acts as a key growth driver for economic activity. Both services and manufacturing have thus far been the key demand generators for warehousing space in India. However, the biggest challenge for manufacturers is the present Central Sales Tax structure which is forcing companies to locate warehouses in all the states they operate in, resulting in an inefficient supply chain, according to the report by Knight Frank. Introducing the goods and services tax (GST) will streamline the taxation pro-

The cost for constructing a warehouse based on built-up area ranges from `800-1,600 per sq ft for pre-engineered building (PEB) and `850-1,650 per sq ft for reinforced cement concrete (RCC). Detailed cost components for construction of a warehouse (`/sq ft on built-up area basis) are mentioned in the table below:

Cost Component

PEB

RCC

Structure

350-500

400-550

Plinth/ Flooring

300-450

Infrastructure (Sewage, Roads, Boundary Wall etc)

150-650

Total

800-1,600

850-1,650 Source: Construction World

92 CARGOCONNECT - DECEMBER 2015

cedure, creating an effective supply chain. The proposed GST is expected to create the need for large warehouses and logistics parks. It will be a complete game changer for the logistics industry. Though the government was unable to get the GST Bill converted into a law during this Budget Session, Finance Minister, Arun Jaitley, keeps his hopes high for the bill to be passed during the Monsoon Session of the Parliament.

Source of Funding In the last couple of years, there has been a considerable growth in investments through the Public Entity (PE) in logistics parks and warehouses in India. The warehouse sectorâ&#x20AC;&#x2122;s highly fragmented nature is said to attract PE funds which have played an important role in industry consolidation by focussing on aggregating smaller players and building scale through acquisitions. Warehouses, logistics parks and FTWZs are still in a nascent stage in India. Investors in these sectors have to realise the appropriate know-how from more mature markets. Investors in the warehousing sectors in India will have to assist players in streamlining operations, building business plans and

FEATURE

gaining technical knowledge and acquiring skilled manpower to become more competitive on the global platform.

Scientific Approach Poor infrastructure is the reason for the losses of commodities. However, lack of knowledge of management and maintenance of premises with inefficient scientific processes are the key reasons for the losses. Emphasis should be given on adopting innovative methods of scientific storage for managing warehouses. However, cut-throat competition and introduction of global best practices by certain companies are propelling the Indian businesses to rethink on the importance of warehousing processes and the resultant benefits of managing an efficient supply chain. Warehouses play a critical role in the process of supply chain management. However, the need to reduce the service response time and inventory cost has necessitated the progression of warehouses from storage point to distribution centres. Furthermore, the advent of technology has made it possible to operate warehouses more efficiently

94 CARGOCONNECT - DECEMBER 2015

Sufficient storage capacity and strategic location of the warehouse enables efficient functioning of supply and distribution network and also provides strategic competitive advantages to the business. Proper material handling, storage conditions and timely movement of goods are necessary to keep up the quality of the stored product. and achieve greater integration with the rest of the supply chain modules.

Sprouting Technology Warehouses in India have been facing various challenges, like supply chains are becoming more integrated and shorter; with globalised operations, customers are becoming more demanding and there is a rapid change in technology. In a market like India, the use of technology has been neglected by the industry. Most logistics and warehousing companies function in outdated technology and systems which are incapable of meeting current project requirements. Technology is set to be the key enabler of growth. India, which has just awakened to the tremendous potential of technology-driven innovation in this mushrooming sector, has a long way ahead to tap

the potential available. There is a great need for organised warehousing with simplification of the existing tax structure coupled with technology and efficient transportation system. The Indian warehousing sector can witness a paradigm shift to more modern optimised warehouses, with the support of the government and a foray of private players. With an expected return in the range of 12-20 per annum, the investments in areas that have better connectivity as well as affordable land rates can flourish. Therefore, with robust initiative by the government to boost the warehousing industry and skilled workforce, adequate material handling equipments and capabilities, onsite regulatory authorities, transportation hub network and implementation of GST will surely bring good days for the Indian warehousing sector.

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INTERVIEW

â&#x20AC;&#x153;Competitiveness is not about cost but about valueâ&#x20AC;? JWC Logistics Park, a venture of JWC Group, is a uniquely designed logistics park, spread over 17 acres of land and handling movement of over 5,000 TEUs per month. Kruti Jobanputra, Director, JWC Logistics Park Pvt Ltd in an interview with Joydeep Banik shares her views on the changing dynamics of logistics parks in the country and points out the innovations in terms of infrastructure and technology implementation, which gives JWC a competitive edge over others

96 CARGOCONNECT - DECEMBER 2015

Tell us about the background of your organisation.

CFS and ICDs form a key part of the logistics industry infrastructure. A CFS/ ICD can be defined as common user facility with public authority status, equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under customs control. Transshipment of cargo can also take place from such stations. The CFS and ICDs are among the most rapidly growing segments of the logistics industry in India. Increasing container traffic at ports needs the support infrastructure which can accommodate the traffic volumes of the containers. Growth in containerised cargo and opening up of container rail transport boosted CFSs and ICDs. Containerised cargo traffic is growing at 12-15 per cent CAGR in India and it has grown dynamically in recent years across all ports,

How are you incorporating advanced technology and IT solutions in JWC?

JWC has been a pioneer in the implementation of cutting edge technology in its day- to- day operations, be it RFID tags or state-of-the-art containerised movement tracking and invoicing system – JWC has implemented it all. Going forward, JWC’s IT platform is compatible to ERP and SAP, making it easily synchronous to today’s’ IT- enabled services platform.

JWC has a capacity of more than 80,000 TEUs p.a. and has warehousing capacity in excess of 4,00,000 sq ft. With its dedicated fleet of more than 80 trailers, JWC HAS NOW EMERGED AS A SUPPLY CHAIN PARTNER to most of its clients. with JNPT topping the list. CFS/ ICD are also working at a one-stop point for shippers for customs clearance, stuffing/de-stuffing, packaging, inspection, consolidation of cargo, etc. JWC Logistics Park Pvt Ltd (JWC) was conceptualised as a CFS. With emerging trends and changing market dynamics, JWC now boasts of being a leading 3PL and CFS operator in the Mumbai Port region. JWC has a capacity of more than 80,000 TEUs p.a. and warehousing capacity in excess of 4,00,000 sq ft. With its dedicated fleet of more than 80 trailers, JWC has now emerged as a supply chain partner to most of its clients by providing end-to-end logistics solutions.

Discuss the nature of your services and value-added services. How does JWC Logistics Park stand out from other LPs in the country?

Changing business dynamics have led to the re-modelling of logistics and warehousing services in India. From a mere combination of transportation and storage services, logistics is fast emerging as a strategic function involving end-toend solutions that improve efficiencies. JWC has answered this call by moulding its services to suit the ever changing requirements of EXIM business. The growth of organised industry sectors such as retail, automotive, manufacturing, pharma and agriculture in India is

expected to give rise to more integrated supply chains requiring better services, processes and storage facilities. JWC provides integrated solutions for all these sectors. Furthermore, in order to cater to the boom in logistics business on the roll out of GST by the Indian government, JWC is poised to play a major role in the growth of the logistics industry and its warehousing business.

JWC is committed to exploit the true potential of road transportation network in India. How do you justify this claim?

Competitiveness in the logistics industry is driven by service/infrastructure providers’ ability to deliver value to their clients. Competitiveness is not about cost but about value — recognition of this fundamental truism is central to any meaningful discussion on building or improving competitiveness in logistics in India. JWC’s endeavour in achieving value recognition and deliverance is based on; • Alignment of capacity with cargo flows • Presence of the appropriate scale and quality of warehousing infrastructure and services required to enable value-based pricing • Scalable capacity (and ability) for handling multi-modal interfaces • High value addition specific to the user industry, which stems from a weak understanding of the user’s supply chain • Appropriate level of automation • Value deliverance by measured “total” logistics costs by end users, thus creating value which can only be driven by cutting piecemeal logistics (warehousing, transport, handling costs)

DECEMBER 2015 - CARGOCONNECT 97

INTERVIEW

TVS Logistics Acquires DIESL: Win-Win Situation for All Stakeholders TVS Logistics Services Ltd, an ISO 9001:2008 certified organisation with an annual turnover of over US $ 7 billion is presently offering complete logistics solutions in warehousing, distribution, transportation and in-plant and automobile logistics. With the acquisition of Tata Groupâ&#x20AC;&#x2122;s Drive India Enterprise Solutions Limited (DIESL), the business of TVS Logistics aims to have a strong global footprint and achieve a mix between the auto and non-auto segments. S Ravichandran, ED, TVSLSL in an exclusive interview with Joydeep Banik discusses their expansion strategies and the possibilities emerging due to recent developments

98 CARGOCONNECT - DECEMBER 2015

Tell us about the genesis of your operations along with your priority and value-added services.

TVS Logistics Services Limited (TVSLSL) comes from the well-respected T VS Group which has a heritage of more than a hundred years. Its genesis was in the form of a business unit of TVS & Sons and in December 2004 it was established as a separate company. Historically, supply chain management has been the least concentrated part of any product life cycle. The cost of supply chain in India is approximately 13 per cent which is 4-6 per cent higher than that of the developed world. Hence, TVS decided to concentrate on that part of the supply chain where we believed we can add value to the customer to reduce his cost. The next step is to transform supply chain from a cost saving function to a strategic level that enables growth and innovation. We are an ISO 9001:2008 certified company with a global turnover now in excess of INR 4,000 crore, offering complete logistics solutions including warehousing, distribution, transpor-

INVESTORS AND EMPLOYEES WILL BENEFIT AS THE JOINT ENTITY GROWS IN INDIA and through the multitude of cross-selling opportunities given their unrivalled repertoire of capabilities. tation, freight forwarding, materials management, after market, material handling, and in- plant logistics support for automobile OEMs, auto parts suppliers and buyers.Over the last 10 years, TVSLSL has strategically acquired logistics domain leaders in various international geographies.

What attributes make your corporate identity unique?

T VSLSL is driven by the three core values of Professional Integrity, Cost

Optimisation and Service Delivery. This is called the TVS-way of doing business and is very customer- centric. These values, along with our relentless focus on value added solutions and operational excellence, have enabled us to retain our strong customer base year after year.

Elaborate on TVS Logistics’ acquisition of DIESL. Do you believe that this tie-up will be a game changer for the 3PL space?

With the expansion of its national footprint, DIESL has built a pan-India 3PL network with more than 200 warehouses and 7.4 million square feet of storage space. DIESL, already a strong, growing and profitable business, needed a strategic partner to realise its full potential by expanding into new areas like express and in-plant logistics. TVSLSL meanwhile, has seized every national and global opportunity to grow its business both organically as well as inorganically.Additionally, there are strong synergies between TVSLSL and DIESL – in the shared vision, values, infrastructure, people resources, complementary services, sector expertise and geographical spread. DIESL has business expertise in consumer durables, non-auto verticals and new geographies to TVSLSL, which make it a good investment opportunity for us. Other harmonising factors include our major geographical footprints DIESL in north and west India and TVS in south India. Besides this, DIESL with its large multi-party warehousing model and TVS’ exclusive warehousing model present excellent warehousing capabilities . Both companies also have a roster of marquee customers, superb talent and enjoy substantial mutual and client respect. The 3PL industry is likely to see strong growth over the near / medium term from the overall economic growth, the government’s initiative to further develop infrastructure, and new tax reform measures (such as introduction of the Foods and Services tax). Acquiring DIESL, therefore, meant fur ther enhancing value proposition to the clients of both companies across the supply chain in India

and is a definite game changer in the 3PL space. Arguably, the company can be best placed for exploiting post GST opportunities in the logistics space in India.

Who are the stakeholders to be benefitted due to this acquisition?

I think it is a win-win situation for all stakeholders. Investors and employees will benefit as the joint entity grows and gains significant scale in India and through the multitude of cross-selling opportunities given their unrivalled repertoire of capabilities. Customers will also benefit from the scale and a potential to provide a ‘onestop shop’ solution, besides the cost benefits of shared resources, technology and infrastructure. Suppliers and vendors who provide quality services to our companies have the advantage of large scale operations and more business growth.

What are the common values shared by TVS and Tata group?

Apart from the legacy and business goodwill of more than a century, both groups have a strong focus on Professional Integrity – a value which TVS holds above all others.

How do you plan to expand your service in the non-auto segment? Also tell us about your warehousing network expansion plans in near future.

Though DIESL and TVS LSL operate in the 3PL space in India, the customer base is uniquely different, which is one of the main drivers behind the acquisition. The TVS -DIESL combination is highly complementary with regards to focus sectors. DIESL has a strong presence in consumer-facing sectors like FMCG, consumer durables, retail, engineering, chemicals etc., while TVS predominately caters to auto segment giants in south and west India. Therefore, there are many opportunities for cross-deploying the capability as well as sharing the resources and consolidation. The companies can also realise cost synergies, especially through scale in warehousing, network costs, IT, etc.

DECEMBER 2015 - CARGOCONNECT 99

INTERVIEW

“There’s a scarcity of drivers in India” Being transporters, we are facing several hurdles like inadequate infrastructure, poor road conditions, high toll taxes and increasing turnaround time,” says Akash Bansal, Head Logistics, Om Logistics Ltd. In an interview with Ritika Arora Bhola, he stresses on the importance of technology, implementing and practicing Transport Safety Bill, scarcity of trained drivers and the projects in the pipeline

100 CARGOCONNECT - DECEMBER 2015

Please elaborate on the hurdles presently faced by the transport industry of India.

Being transporters, we face several hurdles like inadequate infrastructure, poor road conditions, high toll taxes and increasing turnaround time. We get stuck at interstate borders for many hours while transporting goods from one state to another. We have to take permits and permissions. Improvement is happening, but at a slow pace. We do have good roads too but we need to have better infrastructure at border alignments. We also need to get interstate permits abolished.

Please elaborate on the advanced technology being installed at highways or in trucks to improve safety and minimising cargo thefts.

We have GSM-based GPS tracking system in India. All our vehicles are GPS tracked. These GPS systems enable us to track the exact location of the truck. It helps us to know if the truck is fit to run on the road, so that we can go for a transshipment of the vehicle. I don’t know if CCTV cameras are already installed at the highways. But, yes, we have to be technology savvy. That will reduce our burden in terms of visibility in the entire supply chain.

Please comment on the present scenario of the Indian logistics as well as transport industry. Where do you see the graph moving in the coming years?

In India, there is hardly any difference between the logistics industry and the transpor t industr y. This difference should be mitigated. About 98 per cent of those in the logistics industry operate in the transport industry and this needs serious reform. I hope five years down the line there will be a consolidation wherein we will have a greater percentage of people from the logistics industry. Talking about the future prospect of the logistics industry, there is growth happening. Logistics is the backbone of any

manufacturing industry. Nothing can be accomplished without logistics being part of that particular section. We hope GST also comes soon as it will be a boost to both the manufacturing as well as the logistics industry. We will also be at ease with the hurdles we are facing now in terms of interstate borders, toll taxes and productivity in the entire value chain which is currently missing,

Do we have trained drivers in India? There’s a scarcity of drivers in India. We are talking about the economic growth, increasing vehicle capacities, but do we have drivers? Training should be made mandatory for the drivers and Transport Safety Bill has the provision of driver training. At Om Logistics, we have a

Being transporters, we face several hurdles like inadequate infrastructure, poor road conditions, high toll taxes and increasing turnaround time. WE GET STUCK AT INTERSTATE BORDERS FOR MANY HOURS WHILE TRANSPORTING GOODS FROM ONE STATE TO ANOTHER. because there is no system integration. I hope in the coming years, the logistics industry will grow like never before.

policy not to hire any driver who is not trained or doesn’t have a certificate. We have our own training schools where we train our drivers.

Do you think the government and private authorities are taking in- Please tell us about the proitiatives to improve the working jects in the pipeline. of the transport industry? We are trying to figure out how we can Yes, they are pushing hard to see that the infrastructure and GST challenges are being abolished. If the Transport Safety Bill is implemented and practiced, it makes a lot of sense. Also, lately, focus has been on the safety of drivers and trucks. The authorities are definitely working hard.

reduce the cost that we provide to our customers. We are also tr ying to be more time-sensitive when it comes to deliveries. We have plans to expand in SAARC countries such as Bangladesh and Nepal, and also in other countries like Singapore and Dubai.

DECEMBER 2015 - CARGOCONNECT 101

GUEST COLUMN

Supply Chain Challenges and Solutions By Dhananjay Prasad

“Challenges beget the vitality to treasure trove the avenues for furtherance and channels for innovations” 102 CARGOCONNECT - DECEMBER 2015

The concept of supply chain management is not new to the world. From attuned decisions and activities to competently assimilating suppliers, manufacturers, warehouses, transporters, retailers and customers for curtailing the system-wide cost, notwithstanding the customer service level requirement, is today’s contemporary definition of supply chain management with a sole desideratum of attaining sustainable development. The extremity has stretched from management of logistics functions to administration and coordination of movements in upstream and downstream linkages in the supply chain, considering the overture in industrial technology, heightened globalisation of demand and supply, colossal amelioration in information availability, generous capital venture and ingenious business design. Indian logistics sector is anticipated as an impending pool of opportunities with a growth rate of 15-20 per cent. The sector consumes 13 per cent of the country’s GDP compared with developed countries where this percentage is around 8-9 per cent , but hovers to mature with renovation in the transport infrastructure, ingression of e-commerce, brewing GST implementation and other dynamism. Chemical, metal, FMCG, cement and textile have been identified as major patrons for logistic revenue. The major challenge faced by the industry is an integration of the supply chain strategy with the corporate strategy along with information sharing. Another aspect which has been scarcely considered is the assimilation of forward and reverse activities in the supply chain. The situation has been aggravated with more fierce competition from foreign logistics companies which move to a global mindset. This also requires technology to keep pace with the demand for real time information. Inadequacies in infrastructure make the movement of raw material and finished goods very complex. The product has to encircle a number of intermediary points be-

fore reaching the end user, which requires certain modes of transportation in the value delivery process as a consequence of which there is handling, sorting and storage involved. This make the supply chain very complex and decreases the reliability of the whole chain. On the other hand, India’s taxation policy has aggrandised the complexity and the products are taxed twice: once by the central government and then by the respective state governments. Transaction taxes (import/entry, manufacture and sale of goods, provision/receipt of services) have a direct, tangible impact on the cost of goods or services. Implementation of GST is poised to be a game changer in supply chain optimisation through better services and faster turnaround times at lower cost, leading to the elimination of a redundant level of warehousing in the supply chain and better distribution opportunities. Companies can meet most of the challenges noted above with top management commitment, long term vision, focus on core strengths, development of effective supply chain management strategies and using IT as a key enabler. Other important factors which could be taken for consideration are development of reliable suppliers, information sharing with chain members and logistic synchronisation. Bustling on the conscientious approach, DTDC Supply Chain Solution extends its wings with holistic offering in 3PL and logistics with unceasing uphill work and has been able to secure a miraculous position in the Indian Logistic Industry. Standing up to all the demurs, DTDC is making its way to tour de force, embracing an advance IT support system and an accompanying highly effective IT team. DTDC Supply Chain Solutions believes in a high level of technological competency and collaborative innovations and constantly endeavour to scale up its capacity by adopting a highly responsive and flexible system for the most blossoming future in the sector. (The writer is the AVP: DTDC Supply Chain Solutions)

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Delhi : Rajesh +91 9313338121 Harish +91 9818200970 Ramesh +91 9310172933 Mumbai : Lotak + 91 9323736618 Amit Mopari +91 9323736434

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Loading Bay - Heart and Soul of a Warehouse By Samir Gandhi

The loading of goods needs a scientific approach to find solutions which may be quantified as a return on investments. The basic equipment at a loading bay comprises Dock Levelers, Sectional Overhead Doors and Dock Shelters. The choice of equipment depends on the weight, volume, quantity of goods, dimension of the courtyard, frequency of goods movement, type of vehicles and the temperature to be maintained within the facility.

Choosing the Right Equipment Equipment with adequate materials and finishing should be chosen.It should be painted with two components catalysed anti-rust and with two oven-dried components catalysed end-finished enamel, previously ecologically degreased at 100 C degrees, double phosphate, for destination on common environments as well as hot dip galvanised for very humid, salted or aggressive environments,stainless steel where fish, meat, milk is treated and antiburst where required.

The choice of equipment depends on the weight, volume, quantity of goods, dimension of the courtyard, frequency of goods movement, type of vehicles and the temperature to be maintained within the facility. 104 CARGOCONNECT - DECEMBER 2015

Adequate equipment is that which does not require maintenance, conforms to existing regulations and is CE certified. The Sectional Door, that for the deep cold is 80 mm thick, has a trapeze and reduced-width bottom panel that enters and seals the inside of the pit against special insulating parts. A horizontal insulating panel under the leveler pit insulates the tail-lift room (when existing). The best is obtained by the option “automatic return to rest position” of the Dock Leveler. In case of deep cold, the insulation can be increased by the use of Inflatable Dock Shelters, reaching the top of energy saving. For avoiding collisions to the rigid insulated panels of the Inflatable Dock Shelters, Vehicle Wheel

Guides are used. Also Dock-Houses can be supplied with the “Recessed Loading Bay” system, for “fresh” and “deep cold”. The loading bay remains with the Dock Leveler in rest position and the Sectional Overhead Door closed, until the vehicle is positioned. The driver drives back centering to the Dock Shelter and stops the vehicle the moment it gets in contact with the bumpers. The Sectional Overhead Door is then opened only when the vehicle is positioned, brakes applied and engines shut off.This eliminates the exit of hot air, intake of cold air (or the opposite in hot and inside conditioned places) and intake of exhausting gases in the warehouse. After the Sectional Overhead Door opens, the lip of the Dock Leveler connects to the truck bed for loading / unloading to take place. At the end of the loading/unloading, the Dock Leveler is put in the rest position and the Sectional Overhead Door is closed without moving the vehicle. The vehicle then departs at the end of the process.

Objective of Cost Reduction This can be achieved by granting operators better environmental conditions to lower absence due to illness.Material damage to goods should be prevented to avoid breaking the frozen food cold chain. The approach operations should be facilitated, space utilised to the maximum and waiting time for vehicles should be minimised. Operations can be hastened by remote controlling of the loading bay. (The writer is the Director, Gandhi Automations Pvt Ltd)

Global Hi-tech Logistics Infrastructure

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Available on Lease PROJECT FEATURES • Spread over 100 acres of land • Total warehousing capacity -- 14 lac sq ft • Built up facility – 6 lac sq ft • Construction in full swing – 1.5 lac sq ft • Ample truck and car parking area • Firefighting and fire prevention systems • Direct access to National Highway • Distance from Highway – 0.5 km • Distance from Airport – 7 km • Distance from MIHAN – 1 km • 24 x 7 operational hours • 24 x 7 CCTV monitoring • 24 Hrs common security • 24 Hr Sufficient light and water with drainage • High compound wall for safety • Infrastructure of international standards • 80 feet primary cemented road • 60 feet secondary tar road • Canteen in premises

Site:

Khasra No. 80, 81 & 82, Shivmadka, Village - Gumgaon Tahsil-Hingna, District-Nagpur (MS), India Office: M/S Sheikh Fida Ali Sultan Ali, Lohaoli, Itwari, Nagpur (MS) - 440002 Tel: 0712-2763079

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

Najmuddin Fidvi: +91-9373102959: najmuddin52@ gmail.com Shabbir Husain: +91-9373101873: shahidrules@yahoo.co.in Shabbir Poonawala: +91-7387095152 E-mail: shabbir@oclp.in www.orangecitylogisticspark.com & http://oclp.in

SUPPLY CHANGE

“Our food distribution model ensures improved shelf life” Logistics for Overall Growth Currently Yum! India has a store base of over 800 across three brands i.e. KFC, Pizza Hut and Taco Bell. We have been adding 100 to 150 stores year over year. Logistics is a critical factor in this growth, as we are expanding store base in tier II and III towns, ensuring end to end cold chain (supplier to stores) and supply continuity at optimal cost

Specific Supply Strategy

fulfilling our hunger, and making

Our food distribution model ensures improved shelf life, freshness and ease of execution. We have a two-pronged distribution model i.e. Direct to Store and Regional Distribution Centre to Store. We have organised our distribution model around the cluster and have developed regionalised vendors and created Distribution Centres (DCs) to ensure a smooth supply of products to these clusters.

our parties a success. Logistics is

Coordination

a big challenge here, because it

about the role of logistics and supply

Our transportation of food mater ia ls is complete ly integrated across the country with one transport company, t h a t e n s u r e s c o m ple t e visibility of stock movement from supplier to DC. We a lso leverage a com mon tech nolog y platfor m for material planning, order management and tracking supplier and stores and MIS reporting.

chain management for the overall

Management

growth of the organisation

We have the best i n class DC infrastructure with stringent Yum!

Celebrating in food outlets is easy and quick. Also, it does satisfy our taste buds but we rarely pause to think of those behind the scenes,

demands smooth supply of products and services ensuring fresh and healthy food products. Rajesh N Shetty, Director-Distribution, Yum! Restaurants (India) Pvt Ltd in an interview with Roselin Kiro explains

106 CARGOCONNECT - DECEMBER 2015

QA norms, 100 per cent cold chain compliance (end to end) and we continuously work towards reducing overall supply chain cost by network optimisation, inventory management, productivity enhancement across the value chain. This ensures customers get fresh and craveable food at best value.

USP • Wo r l d - c l a s s c o l d c h a i n infrastructure • Systems and processes • Trained manpower • Statutory compliance • In novat ive solut ions for transportation of temperature controlled products including fresh chilled category. • Reliable transportation, especially for part loads.

Outsourcing of Logistics • 100 per cent of our logistics is outsourced. • Except material planning, we have outsourced all activities to LSP . • We have a set of performance metrics agreed and signed off with LSP.

101, 1st Floor, Parvati Estate Premises, Sun Mill Compound, Off Tulsi Pipe Road, Lower Parel ( West ), Mumbai - 400 013, Maharashtra, INDIA. Tel: +91 22 6716 6000 / 6716 6060 Fax: +91 22 6716 6001 Email: info@impactfloors.co.in Website: www.impactfloors.co.in

“Success depends upon utilisation of strength of different agencies”

SUPPLY CHANGE

Role of Logistics for Overall Growth I am a mechanical engineer with techno commercial exposure and have been in the industry for 30 years now. I joined the production department as trainee engineer where I was required to train in vendor development. Since then, there was no choice of shifting from the SCM function. Logistics has played a major role in overall growth, with plenty of exposure made available by handling a wide role of business operations wh ic h for m t he bac kb one of the industry.

Unique Strategy for Better Supply of Products

Supply Chain Management is the backbone of any logistics company. Prashant

Bhatmule,

VP-SCM,

HSIL Limited in an interview with Roselin Kiro elaborates the innovative practices used by them for better supply of products for their overall growth

108 CARGOCONNECT - DECEMBER 2015

Any role calls for an individualistic approach to form a strategy to move ahead on the prescr ibed path. I have been ensuring through creative working, that monopoly of any supplier-be it small or be it large, is eliminated through my working domain. This has ensured competition among the suppliers and has given the best results and speed of service, too.

Smooth Coordination SCM has to play an important role in the domain of coordination. Coordination agencies vary from time to time, but success depends upon utilisation of ‘strength of different agencies.’ It is always essential to keep

minimum agencies in the supply chain. In order to get maximum leverage from the best of all agencies, it is always good to finalise the agencies ourself and try to use them in combination. I have learnt this mostly from my auto industry experience, where the agencies dealt with are many, but the billing happens through limited agencies only. This also helps to reduce paper work.

Managing Logistics Network and Supply Chain Management System Timely and damage-free delivery is the need of the hour. In fact, the expectation is ‘to know the delivery before the order is booked.’ It is very

LSP, WHICH RECEIVES THE MINIMUM ATTENTION, IS THE BACKBONE without which it is impossible to be on top in any industry.

CMY

SCM has to play an important role in the domain of coordination. Coordination agencies vary from time to time but SUCCESS DEPENDS UPON UTILISATION OF â&#x20AC;&#x2DC;STRENGTH OF DIFFERENT AGENCIES.â&#x20AC;&#x2122; easy. If you keep the customer updated on the whereabouts of the product, the satisfaction is achieved. Pre-defined service levels of logistics network partners, attached with a penalty clause, helps to provide the desired result. Additionally, we organise a competition among different service providers and an annual meet to share innovative measures that helps to keep all logistics network partners to strive for greater heights of success.

industry is rather difficult and packaging requires investment. It was essential to convince the management that packaging investment would result in damage-free delivery and provide satisfaction to the end customer. We have tried to develop the different types of packaging and invested in the same

Scope for LSPs LSP, which receives the minimum attention, is the backbone without which it is impossible to be on top in any industry. There is a vast scope for the various service providers to integrate and achieve success. LSP with multimodal transport has also become part of the business success. With e-com merce technology available, we are sure to find a sea change and huge growth potential in future.

M a n a g i n g B a c k- E n d Supply New terms are used nowadays but the crux of the matter is to use Kanban/JIT to have the best out of available resources. Always use the strength of each link in the SCM, and the result would be ultimate! It is also important to always be after the supplier to manage the proceeding, with a small penalty clause in place. Always urge co-partners to be on their toes to ensure timely availability.

Overcoming Supply Chain Problems Single piece delivery in the fragile product

110 CARGOCONNECT - DECEMBER 2015

Routes Involved in Supply Chain Process Supply chain process encompasses the pathway of input to output including the different links to be used for procurement/ production/ transportation/ delivery for highest customer satisfaction. All processes are part of the supply chain and of ultimate importance, be it the smallest act like data updation or the biggest act of producing the goods. Only a combination of all processes can deliver ultimate satisfaction.

Importance of Regional Logistics Centres for Multinationals Regional Logistics Centre (RLC) is the key to improve satisfaction of the end customer. Addition of RLC in the system buffers the shock of sudden increase in requirement or also varied requirements like small or bulk quantity lots. RLC plays an important role in the SCM and surely takes the lead if, and only if, a single process is followed â&#x20AC;&#x201C; either direct dispatch or distribution from RLC. A combination of both results merely in chaos with plenty of non value activities on the way. RLC helps not only the organisation, but also the end customer. With GST, it is assumed that the importance of RLC would further grow in meeting the goal of prompt delivery.

Steps to Improve Collaboration and Consolidation

and the ultimate goal was achieved smoothly. Similarly, the vendor base needs to be chosen selectively to really get the different strengths in various stages. This vendor selection is actually the key to success.

Significance of Multimodal Logistics in Supply Chain Process In order to use the ultimate, we need to use the combinations of the team of transport systems. Combination of air, road, cargo, etc., helps to keep cost under control and yields timely delivery.

As business grows, more and more business partners get involved into the system and hence, after some time, there is indeed a need for optimisation of resources, too. At times, I have done this based on different situations and this has helped to get better cost-effective solutions and also to have better control on the service provider. No doubt, this sometimes yields more pressure on resources but always gets multiple benefits. Be it a service provider or business partner, consolidation at periodic intervals is a must to have the resources organised and restricted to have minimum efforts for maximum results. Consolidation includes the use of multimodal transport, multiple sourcing procured through one source in assembled form, etc., for better control on quality of output.

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REPORT

Air Freight Markets Grow Slightly The International Air Transport Association (IATA) released data for global air freight markets showing very modest growth in September. Measured in Freight Ton Kilometers, air cargo volumes rose 1.0 per cent compared to the same month a year ago. This is a slight improvement on the August performance when volumes were broadly stable. The results varied widely by region. All regions reported capacity expansions ahead of growth in demand, taking the freight load factor down to the lowest level since 2009 (43.2 per cent). “Although slightly improved from August, the global trend is fragile, and the improvement is narrowly based. The 2.8 per cent growth reported by European carriers reflects positive trends in trade with Central and Eastern European economies as well as a general improvement in manufacturing in the Eurozone. But the largest air cargo region, Asia-Pacific, was only just in positive territory, held down by weak regional trade,” said Tony Tyler, IATA’s Director General and CEO.

Regional Analysis in Detail Asia-Pacific carriers saw a slight rise in FTKs of 0.3 per cent in September compared to September 2014, and capacity expanded 2.1 per cent. The contraction in emerging Asia trade appears to have bot-

112 CARGOCONNECT - DECEMBER 2015

tomed out, although China, Korea and Chinese Taipei, among other key economies, are suffering from poor trade growth. European carriers reported a rise in demand in September of 2.8 per cent compared to a year ago and capacity rose 7.7 per cent. The European performance looks more impressive considering that volumes for the year to date have been flat. Improvements in Eurozone manufacturing activity and in trade to/from Central/ Eastern Europe seem to be finally feeding through to support air freight demand. North American airlines experienced a decline of 3.3 per cent year-on-year and capacity grew 4.8 per cent. Despite the poor year-over-year result, volumes in September were up 0.8 per cent compared to August, indicating possibly that anticipated improvement in economic performance for the second half of the year may drive stronger air freight demand. Middle Eastern carriers saw demand expand by 7.5 per cent and capacity rise 12.6 per cent. Although once again the fastest growing region, the increase was 5.5 percentage points down on the average for the year to date. Major economies in the region have seen slowdowns in non-oil sectors, but growth rates remain robust

enough to sustain solid demand for air cargo. Latin American airlines reported a decline in demand of 6.4 per cent year-on-year, and capacity expanded 2.1 per cent. Worsening economic and political conditions in Brazil have led to regional trade activity falling 7 per cent between July and August. Air cargo demand is down 6.8 per cent for the year with no sign of improvement in the months to come. African carriers experienced growth in demand of 2.5 per cent, and capacity rose by 8.1per cent. Nigeria and South Africa, the largest economies in the region, have underperformed. Regional trade, however, has held up and generated increases in air freight volumes.

The Bottom Line The weakness in air cargo markets largely tracks anaemic growth in trade. The 12-nation Trans-Pacific Partnership (TPP) was agreed with the intent of promoting economic growth and prosperity by liberalising trade across participating economies. “Trade is the path to prosperity. We have high hopes that the TPP will deliver its promised benefits to participating economies with air transport—cargo and passenger—playing its role as one of the catalysts for growth,” said Tyler. Courtesy: IATA

NEWS

India, Bangladesh set to launch coastal shipping India and Bangladesh signed the standard operating procedure (SOP) to launch the ‘Agreement on Coastal Shipping’, which is expected to bring down the logistics costs of export-import cargo between the two countries. The pact was signed between the two countries in June 2015. The SOP has provisions that stipulate that the two neighbours shall render the same treatment to the other country’s vessels as it would have done to its national vessels used in international sea transportation, a Shipping Ministry release said. The two sides have also agreed upon the use of vessels of River Sea Vessel (RSV) category for Indo-Bangladesh coastal shipping.The two countries are also holding Shipping Secretary-level talks on issues relating to the memorandum of understanding on passenger and cruise vessel movement, discussion on the protocol to operationalise the MoU on use of Mongla and Chittagong ports, payment of transit fees and bank guarantee, dredging of rivers in the protocol route using Regional IDA Assistance of World Bank Assistance and various upcoming port projects in Bangladesh.

IIM projects Nagpur as logistics hub Within months of the inauguration of Indian Institute Management Nagpur (IIM-N), the city can look forward to reaping benefits from the prestigious institution. Two of its students are working on a project that is likely to project Nagpur as the best location for developing as a national logistics hub for e-commerce that is growing by leaps and bounds. “With the advent of e-commerce and business portals eager to supply goods to consumers anywhere, the geographical advantage of Nagpur will come into play and make it cheaper for logistics companies to move goods anywhere using the city as a hub,” said an enthused Divisional Commissioner Anoop Kumar. He is guiding IIM-N first year students Satyanarayana Rao and Prateek Agarwal who have started work on the project and would be submitting it shortly. Shivaji Shriram Dhawad is the coordinator. Once ready, the report would also be submitted to state industries department as well as the chief minister for necessary action. “With GST roll-out next year, such a hub here will be win-win for all. The disadvantage the city suffers because of long distances from any port, can now be made up by the service industry using the city as logistics hub. No wonder modern warehouses are fast coming up on the Wadi-Waddhamana patch and near Mouda on Bhandara Road. These blue-topped warehouses use modern techniques like thermoventilation and can be built faster,” said Kumar.

114 CARGOCONNECT - DECEMBER 2015

Logistics key to growth: Sitharaman Stating that logistics is the key to growth, Union minister of State for Commerce and Industry, N i r m a l a Sitharaman said that industrial corridors such as the VizagC h e n n a i Industrial Corridor (VCIC) will have a great impact on the logistics sector. Participating in the launch of the Vizag Profiles Limited (VPL) integral container freight station (CFS) at Kanithi in the city on Thursday, Sitharaman said the feasibility study of the VCIC by Asian Development Bank has been accepted and work has already started on the corridor. Pointing out that the Centre is fully dedicated to the development of AP, she said an international seafood trade fair is also being planned in Vizag in the near future. Meanwhile, speaking on the occasion, Vizag’s Principal Customs Commissioner C Rajendiran said that the overall customs revenue in Vizag had registered a growth of 58per cent in the first three months of the current fiscal. Vizag already has six container freight stations, another four are expected to come up soon.

FFFAI & Ministry of Commerce to organise INSTC Conference FFFAI recently submitted the Dry Run study report to the Ministry of Commerce & Industry. FFFAI will be organising a conference on December 22, 2015 with participation of stakeholders, inviting Chamber of Commerce, Forwarders, Shipping lines, Port, and Government officials from 13 countries member of the INSTC. This will help in the dissemination of information to the member countries of the developments on INSTC and also provide a B2B platform for the participants to connect. The successful activation of the corridor will help connect India to Russia within 16 to 21 days at competitive freight rates, hence leading to development of EXIM trade on INSTC Corridor. This may also eliminate the usage of reefer containers for commodities like onions, potatoes, various agro-commodities to export the supplies to Russia.

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NEWS

Amazon strengthens eastern region logistics E-commerce major Amazon India has set up a warehouse facility near here for faster delivery and disposal of orders for the eastern region. “We are continuously creating infrastructure. It is a gradual process,” Amazon India Director Operations, Akhil Saxena said today when asked whether business volume is the reason for the delay. “The centre will help in faster delivery and disposal of orders for this region. It will currently cater to orders arising out of the eastern and north eastern parts of the country,” he said. A fulfilment centre is a warehouse where sellers can stock their products and the complete logistics chain is managed by Amazon. Amazon charge sellers for putting up their products in the fulfilment centres but it is adequately compensated by high volume of business, company officials said. The eastern region fulfilment centre has come up at Srirampore, some 30 odd km off the city with two million sq feet of storing space.

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DuPont appoints Tyvek® Air Cargo Cover Distributor in Central Europe

DuPont Protection Technologies has confirmed its appointment of Budapest-based R-BAG Group as the official distributor for Tyvek® Air Cargo Covers in Central East Europe. R-BAG is responsible for the supply of the Tyvek® brand protective covers across this region together with the provision of customer support and service. R-BAG will continue to work closely with Andras Kovacs, Sales and Marketing Manager at DuPont, who looks after market development in this part of Europe. “We are very pleased to formally confirm our association with R-BAG whose appointment is instrumental in our mission of achieving a seamless global distribution network for Tyvek® Air Cargo Covers,” he says. R-BAG was appointed on the strength of its presence in Central Europe where it is active in all the main markets including Hungary, Poland, Romania and the Czech Republic. Sales growth is a key focus for R-BAG as DuPont strives to emulate the success it is enjoying in other markets with its class-leading Tyvek® product. “This appointment extends our sales capacity to embrace all the growth regions in Central East Europe and we are confident that the young, enthusiastic and dynamic team at R-BAG will maximise our opportunities,” adds Andras. Tyvek® Air Cargo Covers are used to provide thermal protection for temperature-sensitive products during the ground handling and air transportation phases of distribution. R-BAG is already working on cargo cover trials with a number of local customers that are flying temperature-sensitive products such as chocolate and perishables in and out of the region. Speaking on the R-BAG stand at the recent Air Cargo Europe 2015 trade show in Munich, Ferenc Kovacs, Owner of the R-BAG Group, commented; “R-BAG is very pleased to be working alongside DuPont, an organisation with a global reputation for research-based products and solutions. I am confident that our strong market connections and specialist logistics expertise will be a decisive factor in penetrating the key markets of Central East Europe.”

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NEWS

Qatar Airways Cargo launches India-Doha Pharma Express routes Qatar Airways Cargo recently started two new ‘Pharma Express’ routes from India to Doha dedicated to serve the pharmaceutical industry. A statement from the airline said that one of the routes will operate from Mumbai via Ahmedabad to Doha on Tuesdays and Fridays, while the other service will operate from Hyderabad to Doha on Wednesdays and Saturdays. These two additional routes have been added to the airlines’ network following the success of the Brussels-Basel-Doha Pharma Express route launched in January. Qatar Airways’ Chief Officer Cargo, Ulrich Ogiermann, said, “Till date, we are the only airline offering this dedicated service to the pharmaceutical industry. The Pharma Express flights will cater to the growing pharmaceutical industry in the region.” Qatar Airways Cargo is the only carrier in the Middle East to offer refrigerated or ‘reefer’ truck services for ramp transfers at its home hub. In a separate development, the airline plans to open a new multi-deck cargo facility by 2018 at Hamad International Airport.

Gannavaram may get cargo terminal A cargo terminal is likely to come up at Gannavaram. The visit of AAI Joint General Manager B Selvakumar has raised the hopes over elevation of the airport’s status. Exploring the project’s viability, Selvakumar sought feedback from officials of Air India, Spice Jet, True Jet and Air Costa too. According to information, AAI is looking to build 25 cargo terminals across the country in this fiscal. It is estimated that over 300 ton aqua products are being transported by road from Krishna, West Godavari and East Godavari districts to the cargo terminal at Visakhapatnam daily for export, for want of such a facility at Gannavaram. The chamber is hoping that the Gannavaram airport is granted international status.

IAG Cargo begins 787 flights to Delhi IAG cargo recently started the London-to-Delhi service as announced earlier in July this year using the British Airwaysoperated 787-9 aircrafts. IAG Cargo now offers customers a weekly lift of up to 924 tones for the Indian market, the carrier said. Each of the 787 aircrafts is equipped with airconditioning systems that can maintain precise temperature control, within one degree Celsius accuracy. IAG Cargo’s Constant Climate service now operates in several Indian stations, including Hyderabad, Chennai and Delhi, which are the nerve centres of India’s US$27 billion pharma market. lan Dorling, Global Head-Pharmaceuticals and Life Sciences, IAG Cargo said, “India’s pharma sector has been one of the major Indian success stories of the past decade.”

India partners Bollore Africa for pharma storage India has entered into a partnership with a logistics firm in Africa to allow pharmaceutical firms from the country to store their products shipped to that continent. Following the tie-up with Bollore Africa, India’s first in the pharmaceutical sector, the Pharmaceuticals Export Promotion Council (Pharmexcil) hopes a common warehousing facility in Nigeria will be operational by February 2016. The council, which has been trying to establish a common warehousing facility in Nigeria for the past two years, expects 10-15 Indian companies to be able to store drugs, vaccines, formulations and bulk drugs in the warehouse.

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NEWS

Uber introduces mobile freight brokering in North America The arrival of Uber for trucking or mobile-based freight brokering is ushering a new era in the North American trucking and freight logistics market and helping to overcome inefficiencies in trucking operations. In addition to reducing the empty miles travelled, mobile-based freight brokering technology will help lower operating costs, improve fuel efficiency, boost asset utilisation and enhance resource productivity. “For the North American trucking industry, mobile-based freight brokering provides the opportunity to enhance the productivity and efficiency of both shippers and carriers,” said Frost & Sullivan’s Automotive & Transportation analyst. He added, “Mobile based platforms also have the potential to minimise the carbon footprint through improved freight logistics and reduce driver shortage strain on the trucking industry.” Despite these benefits, traditional freight brokers in North America presently command 99 per cent of the market as they have already built a strong reputation and relationships with existing fleets. Mobile based freight brokers are strategising to grow their network by offering as much value as possible for free to customers on their apps.

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Elektrans adds third tanker to its fleet In its biggest acquisition to date, Elektrans Shipping Pvt Ltd, a full-service Indian shipping company, announced the acquisition of Distya Akula, a Suezmax crude oil tanker, coowned with Arya Industries, led by Pawan Arya and Puneet Arya. The joint company has so far invested US$40 million towards acquisition of vessels to its fleet. Distya Akula, Sanskrit for ‘Fortune Transcendental’, has a deadweight tonnage of 149,834 tones. It is the third tanker to join the fleet in the past one year, the previous ones being Nu-shi Nalini, a chemical tanker and Distya Pushti, a handysize oil tanker. Distya Akula, built by Mitsui Ichihara Engineering and Shipbuilding, Ichihara, Japan is 269 meters long drawing a draft of 17 meters. She has the capacity of carrying a full load of about 149,000 metric tones of oil cargoes equivalent to about 6,000 oil carrying road trucks of standard size. She has a crew complement of 24. The ship is flying the Indian flag. This acquisition puts the company in the distinguished league of large tonnage ship owners and operators in India. Commenting on the acquisition, Daniel Chopra, Managing Director, Elektrans Shipping Pvt Ltd said, “We have embarked on an aggressive acquisition plan to increase the ownership fleet size. Besides owning oil and gas tankers, we are watching the dry bulk segment, which holds promise. Such an expansion plan, especially in today’s tough market scenario, demands, in addition to the technical, commercial and human expertise, steadfast leadership and focus.”

Draft aviation policy fails to address structural woes The draft civil aviation policy seeks to provide significant impetus for regional connectivity but fails to address structural issues, including taxation of air turbine fuel, rating agency Ind-Ra said in a report today. While noting that the draft civil aviation policy’s success is contingent on the support of states, the agency said Maintenance, Repair and Overhaul (MRO) providers as well as air cargo players stand to benefit from it.The much-awaited policy, unveiled on October 30, is open for public comments till November 30. The report entails significant impetus for development of regional airports and provides incentives for airlines to operate on regional routes availing viability gap funding (VGF). However, it “fails to address structural issues such as air turbine fuel (ATF) taxation in the metros and provide clarity on the 5/20 rule for operating overseas,” it noted.

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NEWS

Sharjah Aviation selects NextGen Cargo Handling System

Lufthansa Cargo presents freighter for Cargo Human Care

Sharjah Aviation Services is implementing a brand new Next Generation Cargo Handling System (nGen-CMS) which will provide not only real-time shipment information, but also dramatically improve the cargo operations at Sharjah Airport. The state-of-the-art Warehouse and Cargo Management suite called ‘Cargo Flash nGenCMS’ from Cargo Flash which seamlessly covers all the business modules including operations, warehouse, revenue accounting, staff roster, workflow, doors management, etc., will replace Sharjah Airport’s legacy system and support the management and operations teams not only on the daily operations running, but also providing business intelligence (BI) and a whole array of valuable elements that will bring Sharjah and its airfreight industry closer to reaching its e-freight and operational excellence goals. The system will provide real-time information about cargo flows at any time of the day and improve facilities’ utilisation, while increasing the visibility and efficiency. “We selected Cargo Flash Infotech as our partner to install ‘nGen-CMS’ because it is the best product to meet our requirements”, Mohammad Al Zaghlawan, General Manager, Sharjah Aviation Services said in a statement.

A Lufthansa Cargo freighter is from now on flying around the world with the footprints of 24 children. The carrier has turned the MD-11F registered ‘D-ALCH’ into a flying ambassador for the aid organisation Cargo Human Care. The association runs an orphanage for around 120 children nearby the Kenyan capital and also supports a medical centre. German doctors are regularly flown on board the Lufthansa Cargo freighters to Nairobi, where they provide free treatment for those in need. In order to also offer a stable and safe environment for the orphans after they reach the age of majority, Cargo Human Care just this week opened a new residence for 18 to 24 year olds. More than 20 young women and men will live in the John Kaheni Residence, which is named after a resident of the Cargo Human Care institution who died of a heart condition at just 20 years of age. They have recently successfully completed school and are currently undertaking vocational training.

Emirates cargo operation takes off at new Dubai airport

ACP Worldwide appointed Air China GSA in SA

Empty desert surrounds the home of a new cargo operation for Emirates airlines near Dubai’s fledgling second airport.”What you see is not sand, but the land of opportunity,” said Henrik Ambak, SVP (Cargo),Emirates. With customs-free truck routes from Dubai’s main airport and its massive Jebel Ali shipping port, Emirates believes that its new SkyCentral cargo facility will attract business both at home and abroad. Emirates, along with Dubai’s rulers, are betting big on the growth of Al Maktoum International at Dubai World Central, which will eventually handle over 200 million passengers a year. Emirates recently took journalists on a tour of the SkyCentral cargo facility as part of the ongoing Dubai Airshow.

ACP Worldwide has been chosen as the cargo GSA across South Africa for Air China and will sell capacity on the airline’s first ever non-stop, direct flight between China and Africa. Services will operate from Johannesburg’s International Airport three times a week –Monday, Wednesday and Friday to Beijing, and will utilise a B777300ER aircraft. Business in South Africa will principally be generated from Johannesburg and Cape Town and ACP has already put a trucking network in place to allow cargo from Durban, Port Elizabeth and East London to be fed on to the flights. China is currently South Africa’s largest trade partner and there has already been considerable interest in direct cargo services between the two nations. “Air China has a very large network and we will be looking support not just cargo destined for Beijing but also to cities beyond, most notably Shanghai, Chengdu and Guangzhou,” said, Dawn Bailey, Country Manager, ACP Worldwide in a statement.

122 CARGOCONNECT - DECEMBER 2015

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NEWS

Over 5,000 km of road projects at risk: Report

Logistics companies hopeful on GST

Some 5,100 km of BOT road projects are in limbo, according to a study by rating agency, Crisil. These Build-Operate-Transfer (BOT) projects account for more than half of all the ‘under construction’ road projects. These are toxic projects whose financials have turned awry due to aggressive bidding and cost overruns caused by delays in land acquisition. The holding companies of these projects already have high levels of debt. “But the firms are not terminating them as they have spent some funds for construction of these projects,” explained. Sudip Sural, Senior Director, Crisil. More than half of all under-construction BOT road projects spanning 5,100 km and with a sanctioned debt of INR 45,900 crore are at high risk of not being completed, said Crisil.“The right of way is the primary reason for time and cost overruns and low overall progress of highway construction. Weak financials of sponsors and the inability to bring in equity as well as support for cost overruns are expected to aggravate matters,” the report stated.

With the beginning of the Winter Session of Parliament on Thursday, shares of logistics companies hogged the limelight as Prime Minister Narendra Modi on Wednesday called for a collective effort to make the two Houses function smoothly and ensure passage of important legislations, including the goods and services tax bill (GST).GST has been passed in the lower house of the Parliament, but has been blocked in the upper house where Modi’s nationalist coalition lacks a majority. Congress party on Wednesday said that it was open for discussions on GST bill over which it has “very genuine concerns”.

Road Ministry to set up safety authority The Ministry of Road Transport and Highways has moved a Cabinet note proposing a Road Safety Traffic Management Authority, which would have a dedicated funding mechanism to implement the road safety related steps in the country. The funding will be through one per cent of the Central Road Fund that accrues to the Ministry. India accounts for the largest number of road accident deaths globally. R Chandrasekaran, Secretary General, General Insurance Council, said that data from accident or driver records are not easily available that would enable insurance companies to come up with specific premium pricing policies that are specific to an area, a vehicle or a driver. Several experts recently pointed out the need to have accident site data collection in a more scientific basis. The Road Ministry has shared with various police stations a format that would help capture data in a standardised format. The need to have scientific investigation of crash sites so that appropriate road design changes can be made was another point on which the experts agreed.

124 CARGOCONNECT - DECEMBER 2015

Policy moves boost stocks of logistics, infra firms Shares of policy related sectors such as railways, logistics and infrastructure were in focus on November 26, after the Cabinet Committee on Economic Affairs took a slew of decisions, including a nod for investments on rail freight lines in three states and new steps to revive the infrastructure sector a day earlier.“These are steps in the right direction. By giving interest rate subvention, sectors such as automobiles, auto ancillary, textiles and chemicals should benefit,” said Vinay Khattar, Associate Director and Head of Research at Edelweiss.

Air India bags IATA IEnvA Certificate National Carrier Air India has become the first airline in India to get the IATA Environmental Assessment Certificate (IEnvA). The certificate was presented to Ashwani Lohani, Chairman and Managing Director,Air India by Amitabh Khosla, Country Director, IATA in Delhi today. Also present were Harpreet A De Singh, Head, Flight Safety of Air India and Vishal Dehia, Regional Manager, IATA. Receiving the certificate, Lohani said the IATA certification is proof of Air India’s commitment to environmental leadership in the aviation industry in India. The airline is committed to follow through the IEnvA process and embark on the process of certification for Stage 2 as well.

PROFILE

NECC Enters e-Commerce Delivery Space In a welcome move, the difficult terrain of the north east, which has so far received step motherly treatment by e-tailers, is set to enjoy the benefits and services of e- shopping like the rest of the country. With an average of 2,000 trucks a day and one million square feet warehousing space spread across the country at its disposal, logistics firm North Eastern Carrying Corporation Ltd (NECC) is tying up with top e-tailers such as Flipkart and Paytm to provide last-mile delivery services, especially to the north east where it has a strong presence. “North eastern region is a difficult terrain because of the infrastructure and connectivity issues. While delivery companies for e-tailers have been able to tap the top cities, they have a long way to go when it comes to the northeastern areas, a potentially important market for e-commerce companies,” said Sunil

Jain, Chief Managing Director, NECC. NECC currently handles logistics for companies such as Dabur India Ltd, Hindustan Unilever Ltd, GlaxoSmithKline Pharmaceuticals Ltd and Maruti Suzuki India Ltd. The logistics firm set up in 1968 has over 250 branches in India and in neighbouring Nepal and Bhutan.

The rapidly growing e-commerce sector has attracted many mainstream companies that are now pitted against the new-age and established ones like GoJavas, Delhivery, Ecom Express Pvt Ltd which use IT tools such as hand held devices for POD (proof of delivery), card on delivery, etc. To cope with the competition, NECC is tying up with website design firms for technology upgradation. The company also plans to hire 500 people across operations, technology and delivery divisions in a phased manner. To begin with, it plans to hire 80-100 people—mostly riders—and the rest operational and managerial level executives. “This should happen before March 2016,” said Jain. NECC posted a revenue of `530 crore for the financial year ending March 2015. It aims for an additional revenue of `200 crore from the e-commerce delivery segment in the next 24 months.

FORTHCOMING EVENTS Book your dates for the Warehousing Connect Conference, 2015 on December 10 and 11 at Pragati Maidan, New Delhi by CARGOCONNECT. The conference will be the first of its kind and will focus on the aspect of ‘Warehousing as an Integrated Part of the Supply Chain’. Gear up to participate in the ACAAI Convention scheduled to be held from December 16 to 19 in the HO Chi Minh City (Saigon), Vietnam. The India Cold Chain Show 2015 is scheduled to be held from December 16-18 at the Bombay Exhibition Centre, Goregaon (East), Mumbai. Book your dates for the Automotive Logistics Conference, 2015 to be held from December 8-10 at the Leela, Gurgaon. Get ready to participate in the India Logistics Expo 2016 which will be held from May 19-21, 2016, at the Bombay Exhibition Centre, Goregaon (East), Mumbai. Participate in the International Logistics Asia Exhibition, 2016 at the Mahatma Mandir, Convention and Exhibition Centre, Gandhinagar, Gujarat from January 21-23. The Frost & Sullivan Sustainability 4.0 Awards will be held on May 27, 2016 at the Hyatt Regency, Mumbai.

126 CARGOCONNECT - DECEMBER 2015

EVENTS

PHD organises Air Cargo Summit In the current scenario of major regulatory reforms and also keeping in view the growing investment potential of the Indian air cargo industry, PHD Chamber of Commerce recently organised ‘PHD Air Cargo Summit 2015 -Towards New Horizons’. Senior executives from the government, ambassadors, key aviation and logistics experts and other stakeholders attended the event and addressed the deliberations. Ashok Gajapathi Raju Pusapati, Hon’ble Minister of Civil Aviation, graced the occasion as the Chief Guest.

128 CARGOCONNECT - DECEMBER 2015

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EVENTS

ACCD Diwali Celebrations ACCD organised Deepawali celebrations on October 24, 2015 at Four Seasons. The occasion was graced by about 250 members and guests. Sufi Bollywood band ‘Raaga showcased their performance at the event. The main event was followed by dinner.

Basic Cargo Awareness Programme

‘Forklift Operator of the Year’

In keeping with the objective of the Ministry of Civil Aviation to create an awareness of a Skill Development Programme in India, a one-day ‘Basic Cargo Awareness Programme’ (BCAP) was inaugurated recently at the Training Centre of DCSC Cargo Terminal, Delhi Airport. In the inaugural training session, fifty participants from various companies attached to different Associations / Forums participated in the training programme.

Srinivasa N D from Toyota Kirloskar Motors bagged the title of “Forklift Operator of the Year 2015” following a tough competition at the Grand Finale, which witnessed the best operators of the country fighting it out in six live challenges. Srinivasa gave an outstanding performance adhering to the best safety & operating practices. Toyota Kirloskar took double honours by clinching the “Best Forklift Workforce of the Year 2015” title as well.

130 CARGOCONNECT - DECEMBER 2015

EVENTS

APM Pipavav launches Stack Rail Service

APM Terminals Pipavav (Gujarat Pipavav Port Ltd) one of western India’s fastest growing gateway port, has commenced a new weekly double stack rail service to the industrial centre in Faridabad in north India’s Haryana State, near New Delhi. The dedicated double stack operations, which can efficiently carry two containers placed one on top of another in specially designed rail cars, will be operated in association with Gateway Rail and NYK India. Known as “Sakura II”, the service will operate between Pipavav Port and ICD-Faridabad (Piyala)/ICD-Garhi Harsaru.

EITA India Ltd celebrates its 60th anniversary EITA India Ltd recently celebrated its 60th anniversary. The chief guest for the event was K K Kaul, DirectorSupply Chain, LG Electronics. There was a lively film presentation about the company’s rich and eventful history. East India Transport also used this occasion to launch its new branding and logo as well as announce the impending launch of its new website. The event also felicitated two very special employees who have been part of the company for over 50 years. The Managing Director, A K Lohia, an IIM graduate, who took over the reigns of the company in 2007, gave a heartfelt speech containing many insights about the challenges and opportunities that the much talked about logistics sector faces in the years ahead and what steps the company is taking in terms of future planning.

IATA Centre of Excellence for Independent Validators GVK Chhatrapati Shivaji International Airport (CSIA) in association with Cargo Service Centre (CSC) recently organised the ‘IATA Center of Excellence for Independent Validators (CEIV)’ workshop at Hilton Hotel, Mumbai. The event saw an august gathering of pharmaceuticals exporters and importers with participation from various airlines, freight forwarders, bonded trucking companies, IATA, ACAAI, BCHAA, OPPI and other stakeholders. The day-long workshop came to an end with a significant announcement from CSIA towards formation of a ‘Pharmaceutical Core Committee’.

DECEMBER 2015 - CARGOCONNECT 131

PEOPLE CONNECT

“I give my heart & soul to my work” From aviation to ICDs, CFSs and Railways, K U Thankachen, Managing Director, Central Railside Warehouse Company Ltd (CRWC) has been associated with varied sectors of the logistics industry for the past many years. He says the work is challenging and requires commitment and dedication. In a candid conversation with Ritika Arora Bhola he shares his experience in the industry, beliefs and values, interests and hobbies I joined CRWC as the MD in July, 2014. Therefore I would say, I have extensive experience of working with CFS, ICDs, Railways and multimodal logistics.

Biggest Challenge

Martin Roos Managing Director, DSV Air & Sea Pvt Ltd

Journey So Far I started my career with AAI, where I worked in the Air cargo division. Subsequently, I joined CONCOR in the year 1995. At that time, CONCOR was in the initial stages of development. I am lucky to have been part of that development and worked in various portfolios – marketing, operations and commercial, etc. I was posted as the Chief General Manager of Central Region based at Nagpur in the year 2010 looking after five terminals of CONCOR, namely, Nagpur, Raipur, Mandideep, Aurangabad and Bhusawal. Subsequently, I was nominated as the Chief Manager of CONCOR’s largest ICD terminal at Tughlakabad. It was a very challenging environment. I had the opportunity to attend a one year international management course at the International Centre for Promotion of Enterprises, Ljubljana, Slovenia in the year 2013.

132 CARGOCONNECT - DECEMBER 2015

I think managing CRWC is itself the biggest challenge. It is a relatively new company, barely eight years old, requiring lot of commitment and inputs from the top management. My focus has been on streamlining systems, bringing in professional skilled manpower, computerising the operations, expansion and diversification. We work with limited manpower. We have a young and committed team in place now, who can take the company forward. So far, our operations have been limited to the rail side warehouses. Out of 22 terminals allocated under the MoU with the Railways, 18 have been made operational. Railways have approved 10 other new terminals with temperature-controlled facilities. It is a huge challenge to plan and execute the new projects. Apart from this, we are also exploring opportunities in different areas like bulk silos for food grains & cement, handling of steel, automobiles, parcel traffic and cold chain.

Beliefs and Values Till date, I have done the tasks assigned to me with dedication and commitment. Honesty and integrity are values I treasure. I always try to excel in everything I do. As my role involves leading a team, I have tried to provide good, effective leadership. This is important for achieving success. Wherever I have worked, I have given my heart and soul to it.

Interest and Hobbies I love reading literature, listening to classical music, watching theatre shows, movies, art and culture. I also love travelling. I have travelled extensively. I like exploring new places, meeting new people and learning about different cultures.

Message for Aspirants Logistics industry is still an unorganised industry. With GST, e-commerce and new drivers coming in, we are expecting high growth. There are excellent opportunities for aspirants.