VIEWPOINT
PERFORMANCE ANXIETY? SO we are opening the doors for foreign investors! Finally, the decade-long pending decision has seen the light of day! As the Cabinet clears the FDI in multi-brand retail, India is ready to compete with global players! But the inertia in us is creating the dramatics around this decision, and with the political parties providing the usual entertainment around the issue, some of the traders are threatening to go on strike; even as the decision was met with a ‘fantastic’ from global players and ‘lauded’ by some Indian players! One question…why are we, as a country, hesitant to change and to compete? Is it performance anxiety? With this move slated to attract billions of dollars of FDI, with over 4 million jobs in the country and in logistics, where is even an iota of doubt about it not doing good to the trade and business? Not to mention the fact that it will shore up infrastructure such as cold chains, warehousing and logistics. And if there are doubts, just look around to satiate your insecurities. The experience in other countries, such as Indonesia, where despite opening up, organised retail accounted for a minuscule proportion of the industry. Besides, Commerce & Industry Minister Anand Sharma said that companies, such as IKEA, that were already sourcing large quantities of their products from India, would step up purchases once they opened stores in the country. Talking about international players, Bharti Walmart, a wholesale joint venture between the US retail giant and India’s Bharti Enterprises has been long waiting in the wings for this decision. The world’s largest retailer has termed India’s decision to allow 51 per cent FDI in multi-brand retail as a ‘first important step’ and said that it will study the finer details of the new policy to determine the impact on its ability to do business in India. Walmart, which has been waiting in line with other global retailers, like Carrefour and TESCO, to tap the growing and lucrative Indian market with a 1.2 billionstrong population, said it was ‘grateful’ that the Indian Government realised and appreciated the value that foreign retailers will bring to strengthen the country’s economy. Experts believe that such an exposure to the Indian market augurs well for the Indian organised retail industry (in the case of multi-brand retail) in view of setting-up and efficient management of warehousing and supply chain logistics operations. This, in turn, would not only ensure reduction in wastage (especially of farm produce), but also enable retailers to pass on the benefits to consumers in the form of lower product prices. Plus, retail sources more than 50 per cent of its products from within the country. Thus, new jobs will be created at the front end & back end; thereby having a positive impact on the regional economy. With better integration from farm to fork, reduction in supply chain time, costs & wastage prices will come down over a period. There will be more choice of products, better quality & lower prices. It is definitely a step in right direction. So, it’s no debating the fact that India is on the move and we have created the necessary regulatory framework. The new policy will positively impact the Indian market and its people and will also contribute towards India’s image as becoming one of the world’s fastest growing economies and a welcoming destination for international businesses. This will help bring down inflation, reduce wastage and improve our productivity. Just imagine what wonders it will do to our growth and prospects!
Archana Tiwari-Nayudu archana.nayudu@infomedia18.in
NOVEMBER 2011 • SMART LOGISTICS • 3
CONTENTS SPECIAL FOCUS: CONTAINER LOGISTICS
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India’s containerised transportation, driven by factors like rising levels of international trade, increasing investments in infrastructure by the government and through various public private partnerships, is poised for significant growth. The emergence of India as a manufacturing hub, privatisation of the port operations and demand from foreign nations to containerise commodities has created huge scope for containerisation in the Indian market. With the slew of initiatives taken by the government, India will soon become one of the major markets in this sector.
Facility Visit: DP World Kochi Helping India Leverage On The ICTT Advantage
‘Major Challenge Before Us Is The Cabotage Law’ KK Krishnadas, CEO, DP World Kochi
Trends In Container Logistics Riding High On The India Growth Story
Containerisation In India Exploring Prospects Bundled With Port Infrastructure Development
Container Designs Innovation With A Dash Of Technology
Case Study: Flexitanks Offering Secure Liquid Transportation
Dr Rakesh Sinha, COO – Global Supply Chain, Manufacturing & IT, Godrej Consumer Products
VIEWPOINT NEWS, VIEWS & ANALYSIS Latest Happenings In The World Of Logistics
NEWS ANALYSIS
Encashing The Nelp Opportunity Collaborating To Create Effective Partnerships
Outsourcing 3PL Providers Benchmarking The Best In Class
Truck Drivers An Organisation’s Ambassador?
42 44 45 48
AUTOMATION TRENDS
28 30 32 35 37 39 41
Image-based Barcode Readers Designed To Achieve Higher Read Rate
50
TIPS & TRICKS Eco-friendly Transportation Green Route To Reducing Carbon Footprint
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POLICIES & REGULATIONS Upcoming Rail Freight Policy A Lucrative Option Or A Roadblock?
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STRATEGY Foreign Investments In Logistics Taking India To A Progressive Phase
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Corrigendum
IN CONVERSATION WITH ‘We Aspire To Achieve Over 25 Per Cent Growth’
Offshore Oil & Gas Logistics 3PLs For Oil & Gas Companies
Cover Image by Prerna Sharma (Gateway Terminals of India)
Taking The Automated Route To Perfection
DECEMBER 2011
INSIGHTS & OUTLOOK
Growing Expanse Of Containerisation In India: Aiming The Arc Of Visibility
Container Handling Technologies
VOL. 02, NO. 09
22
In the November issue of Smart Logistics, the abbreviation of Drive India Enterprise Solutions Limited was incorrectly stated as DIESEL under the header ‘In Conversation With’. The correct abbreviation is DIESL.
ALSO IN THIS ISSUE 5 PRICE TRENDS 8
FDI In Multi-brand Retailing: Ringing In Opportunities For Logistics 14 Rapid Implementation Of SAFTA: Addu Declaration 16 – Enhancing Trade Prospects & Proposition Anupam Industries & Mitsubishi JV: 18 Lifting Up Port Equipment Prospects TECHNOLOGY & INNOVATIONS: Cutting-edge Solutions 20
PRODUCT UPDATE EVENT LIST EVENT REPORT SCLC Food SCM Summit & Awards: Honouring India’s Best In Food Logistics
PRODUCT & ADVERTISERS’ INDEX PRODUCT & ADVERTISERS’ INQUIRY FORM
21 58 61 63 64 65
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SAFEXPRESS LOGISTICS FACILITY AT INDORE SLATED TO CURB SCM INEFFICIENCIES SAFEXPRESS, India’s largest supply chain & logistics firm, recently launched the largest warehousing facility of central India at Indore. This ultra-modern Logistics Park is spread across more than a million square feet and is expected to trigger an economic revolution in the region. “This Logistics Park will help raise the standards of supply chain & logistics in this region to a very different level. As an industry leader, we feel that the onus of taking such path-breaking initiatives rests with us,” Pawan Jain, CMD, Safexpress, said at the launch function. “We have invested `85 crore in developing this facility at Indore. We expect the economy of Indore region to continue growing at a healthy rate in the years to come, and keeping that in mind we have made a significant investment here,” Jain elaborated. Announcing the launch of Safexpress Learning Center on this occasion, Jain said, “We have chosen Indore as the location for creating the Safexpress Learning Centre because we see this region develop into a major hub in times to come. This centre has residential facilities and is fully equipped with training rooms, modern
equipment and library. To begin with, we will be using it to augment the skills of our employees located all over India. Later, we may extend the centre’s services to other organisations.” Speaking on this occasion, Vineet Kanaujia, GM – Marketing, Safexpress,
With an area of 11,50,000 sqft, the facility at Indore is central India’s largest warehousing facility
said, “With an area of 11,50,000 sqft, this is central India’s largest warehousing facility. This facility will contribute heavily in the economic growth and development of this region. Located strategically at Agra-Bombay Road on National Highway 3, the setup will fulfill the warehousing needs of companies located in and around Indore. Our Logistics Park will enable us to provide clients with cutting-edge transshipment and 3PL services.”
MERCURIO PALLIA TO LAUNCH ‘TRUCK-ON-TRUCK’ CONCEPT IN INDIA MERCURIO Pallia Logistics has plans in place to invest around `69 crore to launch a first-of-its-kind ‘truck-on-truck’ transport concept and manufacture specialised railway wagons for automotive transportation. Mercurio Pallia Logistics is a joint venture company between Gruppo Mercurio SpA of Italy and Pallia Transport of India. The company plans to manufacture specialised trailers and trucks at its newly established, state-of-the-art manufacturing facility at Rewari, Haryana. The trailer that would be manufactured at the plant would not only be used for scaling up the company’s fleet, but would also be
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exported to various countries in the Asia-Pacific region. Vipul Nanda, CMD, Mercurio Pallia, said, “Trends have changed over the years and now it is more of a volume-game, where the focus is on doing as much work as possible. The new facility would help us deliver a new generation of trailers, which can help our customers save on the cost of delivery and maintenance.” The company also plans to manufacture special wagons for railways in India to carry automotives (especially cars), all across India. “Once GST becomes applicable, we would also look at the possibility of using the Railways for transportation,” he pointed out.
L O G I S T I C S
ARSHIYA RAIL INFRASTRUCTURE WINS STERLITE INDUSTRIES’ CONTRACT ARSHIYA Rail Infrastructure, a subsidiary of Arshiya International, has recently won a tender for movement of 24,000 MT of copper concentrate for Sterlite Industries (India), a Vedanta Group company and one of the largest non-ferrous metals and mining company. The movement of copper concentrate will be from Khetri, Rajasthan, to the Copper Smelter Unit of SIIL, located at Tuticorin, Tamil Nadu, over a period of six months. Arshiya Rail was the winner among five other bidders for the deal including service providers from coastal shipping. As part of the services, Arshiya Rail will be providing an end-to-end solution to Sterlite for this movement, which also includes first and last mile transportation and handling. This movement will further strengthen Arshiya Rail Infrastructure’s already strong presence in the southern region for the evacuation of finished products. This contract for Arshiya Rail Infrastructure will be its second big win from the Vedanta Group, adding to the evacuation operations it has been servicing Vedanta’s aluminium plant in Jharsuguda, Orissa, from February, 2009 onwards. Commenting on the tender win Sajal Mittra, CEO, Arshiya Rail Infrastructure, said, “Arshiya Rail Infrastructure has always endeavoured to provide customised services as per the unique and specific needs of companies looking at optimising rail as an efficient and primary mode of transportation across India. While this is a big win for us, this is only the first phase of Arshiya Rail Infrastructure’s endeavour to partner with the Indian Railways and revolutionise rail movement in India.”
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FIRST EVER CSCMP ANNUAL CONFERENCE TO BE HELD IN MUMBAI IN JUNE, 2012 AIMED at boosting supply chain and logistics efficiency, the first ever Council of Supply Chain Management Professionals (CSCMP) annual conference is being scheduled in Mumbai between June 1 and 2, 2012. The event will feature speakers from around the world who will be presenting a global perspective on creative approaches to supply chain profitability. Elaborating on the same, Anshuman Neil Basu, Executive Director Regional, CSCMP, informed, “The supply chain and logistics conference would be of a quality and scale, which India has not seen before. We expect regional delegates and international experts to debate on futuristic topics. The will be a premier event and a must for all supply chain leaders. We are honoured to be
We have recently launched our groundbreaking new certification programme, SCProTM, which will enable Indian professionals to elevate their mastery of the latest logistics and SCM knowledge, theory and best practices, to the highest level possible. RICK BLASGEN, PRESIDENT & CEO, CSCMP hosting this first-ever conference in India. The quality and format will largely be similar to what we witness at CSCMP’s Global Annual Conference.” The goals of the India CSCMP regional office are to expand awareness of CSCMP and its value to SCM professionals working in the region. The staff will also be developing educational and training programmes, hosting conferences, workshops & other events and creating networking opportunities to meet the needs of the Indian supply chain management community.
DHL INDIA BERTHS LARGEST SELF PROPELLED BARGE AT PARADIP PORT THE Industrial Projects team of DHL Global Forwarding India recently completed shipping of six heavy lift packages ranging between 155 MT and 850 MT. Three of these were in excess of 800 MT. The unique challenges of this shipment saw DHL roll-on the packages at Ulsan, South Korea and shipped the packages by a self propelled ro-ro barge all the way up to Paradip on behalf of Larsen & Toubro (L&T) – India’s largest manufacturer of refinery equipment in India. Shipping the packages was a challenge due to administrative and operational constraints at Paradip Port. “Despite various constraints and hurdles such as bad weather, heavy shipment, complex technicalities, the DHL team ensured that the shipment reached the port on time — uncontaminated and unpolluted. It set a record by berthing the largest
The self propelled barge at Paradip Port
self propelled barge at Paradip port,” said Christoph Remund, CEO, DHL Global Forwarding India. Speaking about the record breaking task, Gopinath Phargade, AGM – Logistics, L&T stated, “This was a very complex operation performed to perfection. We are very grateful to DHL and its team which had the skills, technical knowledge, expertise, manpower and, more than anything, the courage to take up the challenge, and live up to it.”
L O G I S T I C S
BELGIUM TO COOPERATE WITH INDIA FOR PORT SECTOR DEVELOPMENT BELGIUM, one of the leading maritime nations in the world, is cooperating with the Indian Shipping Ministry for developing the port sector in India to make India one of the leading maritime powers in the world. Belgian delegation led by Kris Peeters, Minister-President, Flemish Government, recently called on Shipping Minister GK Vasan, in Chennai to take stock of the various cooperation arrangements between the Flemish Government and India and work on the way forward for future course of action. Recalling the age-old relations between India and Belgium, Vasan said, “The relationship started in 1723, with the mooring of the first ship of the Ostend Company at Benquabra in the then undivided Bengal. The Belgian merchants received concessions and settlement rights from the Nawab of Murshidabad in 1730. Since that time, trade relations started between the two countries and have been thriving for close to three centuries.” As India and Belgium have strong trade relationships, there are ample possibilities for Belgium and India to work together on port development projects among other areas of cooperation. India and Belgium have complementary characteristics in the field of port development. The minister said that India has 13 major ports and 176 notified non-major ports along its 7,517-km coastline where 324,982,000 tonne of cargo handled during April to October in the current financial year. There are several port agreements between Indian ports and the Belgian ports, under which expert training programmes are organised at Antwerp/ Flanders Port Training Centre (APEC training) to train Indian maritime officials.
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SHIPPING MINISTRY TO CLOSELY MONITOR PIRACY INCIDENTS ONE of the main and most serious threats to shipping is in the form of piracy off the coast of Somalia. A large area of the Arabian Sea has been affected by this threat, which has, in turn, scaled up the cost of freight carried through this critical shipping corridor. The Shipping Ministry is closely monitoring incidents of piracy through the Director General of Shipping, in close coordination with the Navy, Defence and External Affairs ministries. The government has also issued guidelines on providing armed guards on board merchant ships as a measure to deter pirate attacks, stated Union Shipping Minister GK Vasan at the international seminar on ‘Towards Sustainable Shipping’ organised by the Institute of Chartered Shipbrokers recently held in Chennai. Regarding the government’s efforts towards handling shipping accidents the minister said, “While shipping is considered to be an eco-friendly mode of transport as compared to road and rail, there is further scope for improvement in controlling noxious emissions while ships are at sea and
in port.” “The government has put in place a legal framework to handle shipping accidents by acceding to two international conventions, i.e., the ‘Wreck Removal Convention’ and the ‘Protocol to the Convention on Limited Liability for Maritime Claims’. We will also be acceding to the ‘Convention on Civil Liability for Bunker Oil Pollution Damage’ and the ‘Convention for the Control of Harmful Anti-fouling System on Ships’ very soon. These initiatives will provide a strong legal framework to claim compensation in case of oil spills, ship wrecks and other accidents,” the minister added. About the government’s approach on safety measures he said that the Indian Government accords the highest priority to safety at ports. All the major ports have already been directed to ensure safe handling and disposal of hazardous goods. Accordingly, instructions have been issued to all major ports by the Ministry of Shipping to scrupulously follow the International Maritime Dangerous Goods Code adopted by the International Maritime Organization.
INDIA’S TRADE DEFICIT HITS FOUR-YEAR HIGH INDIA had a trade deficit of $19.6 billion in October, the highest in four years, as the pace of export growth slackened amid a slowdown in major global markets. The trade gap was estimated at $93.7 billion during the April-October period, the first seven months of fiscal 2011-12, according to the Commerce Ministry. “Balance of trade is something to be very worried about because at this rate, it is going to breach the $150 billionmark in fiscal 2011-12 as compared with about $105 billion the previous year,” a ministry official said. India’s exports in October increased 10.8 per cent to $19.9 billion on a yearon-year basis, the lowest growth rate
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in two years. Imports for the month increased 21.7 per cent to $39.5 billion from a year earlier. Total exports from April through October were estimated at $179.8 billion, up 46 per cent from the same period last fiscal year. Overall imports for the seven-month period rose 31 per cent year-over-year to $273.5 billion. “The sectors, which heavily depend on the European markets, have been hit hard. Clearly, that is where the export growth has contracted,” the official said. India, one of the world’s fast-growing economies, exported a record $246 billion worth of goods in fiscal 2010-11 ended March 31, and has set an export target of $450 billion by fiscal 2013-14.
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DHL BRINGS GURUKUL TO SOUTH INDIA DHL recently launched its third operations simulation centre, Gurukul, in Bengaluru – the other two being set up in Mumbai and Delhi. The training centre is aimed at developing the skills of blue-collar workers by imparting them consistent and standardised training on several aspects of warehouse operations that include critical subjects such as safety, health and environment at their warehouses across the country. Increasingly, in India, a large number of industries are integrating logistics requirements into global supply chains. The key to managing these supply chains effectively are well-trained, professional and skilled employees. “This initiative will set a new benchmark in service delivery for our customers in south India. We realise professional employees need to be fully equipped with appropriate skill sets to meet customer expectations to provide world-class service,” said Vikas Anand, COO, DHL Supply Chain India. This training will not only be a part of the employee induction programme at the grassroot level, but will also assist in developing its existing workforce to encourage and promote their talent for further growth within the organisation. The training module has been adapted to suit local requirements and will also be delivered in Hindi for the blue-collar employees. Additionally, the training is imparted by internally certified trainers in a simulated environment, which provides employees the feel of a full-fledged state-of-the-art modern warehouse. An interesting combination of classroom coaching and practical assessment will form a part of the curriculum. Employees will be trained on various aspects of warehouse operations, inventory management, hazard awareness and security.
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DP WORLD KOCHI WITNESSES THE COMMENCEMENT OF THE FIRST WEEKLY MAINLINE SERVICE TO EUROPE
INDIA, CHINA TO ACHIEVE TRADE OF US$100 BILLION BY 2015
achieving many new milestones with THE International Container the help of its partners. The support Transshipment Terminal (ICTT), from Cochin Port Trust by way of Kochi, recently announced that the marine costs comparable to other NEMO/EAX Service will now make a regional hubs, as well as CONCORS weekly call at ICTT, thus making it the commitment to connect the terminal first weekly service vessel connecting with frequent services to & from the Kochi directly to Europe. MV Lahore Express, Hong Kong flag vessel of length 260 metre berthed at ICTT, with an exchange of 550 TEU. The vessel will make service calls to the major base ports in Europe such Genoa, Tilbury, Hamburg, Rotterdam and Le Havre. “This is a very proud occasion for us at DP World, as the commencement The vessel will make service calls to the major base ports in Europe such Genoa, Tilbury, Hamburg, Rotterdam and Le Havre. of the NEMO/EAX Service from ICTT will hinterland, is positioning ICTT as a offer the trade in this region faster strong propeller to India’s growth in the transit and reduced supply chain coming years. Krishnadas added, “It is cost. This is also recognition for our our associations and our partners that technological advancements at ICTT have helped us achieve this success and and our commitment to emerge as we would like to take this opportunity one of the most important ports for to thank them. We also would like to the subcontinent region,” noted KK thank the trade community in Kochi Krishnadas, CEO, DP World Kochi. who trust in our abilities and are The ICTT with its crucial location confident in our delivery.” in the subcontinent has embarked on
THE Union Minister for Commerce, Industry and Textiles Shri Anand Sharma has expressed confidence that India and China are on course to achieve the bilateral trade target of US$100 billion by 2015. Trade between India and China has seen exponential growth in the last few years. As per the trade statistics of DGCI&S the total trade volume has gone up from US$2.3 billion in 2000-01 to US$59.62 billion in 2010-11 (April-March). The minister recently met the Governor of Xinjiang province of China Nur Baki. However, the Union Minister raised the issue of Indian concern for the trade deficit. Trade deficit for the Indian side has increased from US$9.1 billion in 2006-07 to US$20.8 billion in 2010-11. A balanced trade is needed for longterm, sustainable and harmonious development of economic cooperation between the two countries. The Union Minister said that the area of drugs and pharmaceuticals is an important segment of our efforts to diversify our bilateral trade basket. Both sides need to work aggressively towards removing administrative bottlenecks and overly restrictive regulatory measures, in order to boost development of all-round cooperation in this area. The Union Minister also highlighted renewable energy where the Chinese Government has fixed a target of 100 GW by 2020, as another area with great potential for export from Indian side. Both the leaders agreed that an Indian delegation should visit Xinjiang province for exploring the possibilities of promoting Indian products in handicrafts, handloom and films. Both the ministers also witnessed the signing of MoU between Government of Gujarat and TBEA (India).
CONTAINER TRAFFIC GROWS AT MAJOR ASIAN GATEWAYS BOX throughput at leading Asian gateways grew in October despite the economic uncertainties that plague key European and US markets. Throughput at Hong Kong’s container terminals rose 8.1 per cent year-overyear to 2 million TEUs last month. Traffic at the terminals rose 5.7 per cent from September. Container throughput at the transshipment port in the first 10 months of the year was 20.3 TEUs, up 3.6 per cent on the same period of 2010, according to figures from the Hong Kong Marine Department. Regional transshipment rival Singapore
saw October container throughput rise by more than 7 per cent year-overyear to 2.6 millions TEUs. Traffic last month was 8.3 per cent higher than in September this year, said Singapore Maritime and Port Authority. The port of Chongqing, located in China’s booming interior, saw volume at its river piers rise by 13.8 per cent in the first three quarters of the year to 188,000 TEUs. The port of Haikou, in China’s southern island province of Hainan, reported that in the first ten months it had handled 610,000 TEU, almost equal to the annual total recorded in 2010.
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DTDC CMD SUBHASISH CHAKRABORTY AWARDED ENTREPRENEUR OF THE YEAR AWARD SUBHASISH Chakraborty, CMD, DTDC Courier & Cargo won the Entrepreneur of the Year Award in the Consumer Business category at the recently held Entrepreneur India Awards 2011. This award ceremony was organised by Franchise India towards recognising the efforts of those individuals who have contributed significantly towards the growth of entrepreneurship in India. NASSCOM Emerge Forum and Entrepreneur India Advisors were the knowledge partners for the event. On receiving this prestigious award, Chakraborty, said, “The initiative taken by Franchise India in awarding the entrepreneurs in various fields is very encouraging to both young and budding entrepreneurs as well as the established entrepreneurs. We, at DTDC, are elated on the achievement and the recognition bestowed upon us for our contribution to the industry in order to ‘make life easy’ for the consumers.” “Recognition from such a highly
prestigious institute helps organisations to increase their franchise network by giving entrepreneurial opportunities to thousands,” he added. The awards ceremony was a part of Entrepreneur India 2011, a two-day national conference, which was organised to serve as a platform for the young and aspiring entrepreneurs, to get a better understanding of entrepreneurship, innovation and how to bring out the creative potential in them. Commenting on Entrepreneur India Awards 2011, Gaurav Marya, President, Franchise India Holdings, said, “Individuals like Subhasish Chakraborty, with their passion and out-of-the-box thinking, have changed the way entrepreneurship is perceived in our country. Through these awards, we want to recognise and felicitate these entrepreneurs and give them their due recognition. Hopefully, others will be inspired by them to take that one requisite step towards making their entrepreneurial dreams come true.”
DAMCO WINS ‘SUPPLY CHAIN BEST PARTNERSHIP’ AWARD AT SCM LOGISTICS EXCELLENCE AWARDS ONE of the world’s leading providers of freight forwarding and supply chain management solutions, Damco has been recently honoured with ‘Supply Chain Best Partnership Award’ at the SCM Logistics Excellence Awards held in conjunction with the 7th Annual SCM Logistics World Conference. Damco won the award for outstanding contributions in supply chain partnerships. The SCM Logistics World Conference, held at Singapore, brought together more than 500 executives in the supply chain and logistics industry. The delegates of the conference and supply chain practitioners around the world cast their votes in a global voting system. The organisations were voted on their track record in assisting clients to reduce supply chain and logistics cost
12 • SMART LOGISTICS • DECEMBER 2011
and develop an integrated supply chain. They were also assessed on service level performance in terms of credibility, reliability and provision of end-toend supply chain solutions & services. Quantifiable results that demonstrated success in developing mutually beneficial partnerships to strengthen the client’s commercial objectives were also taken into consideration. “We are very proud to receive this award,” said Martin Thaysen, Global Chief Commercial Officer, Damco. “We are working to put the customer in the centre of all our activities, and this shows we are on the right track. The key is to constantly improve services. Another good indicator is that our 2011 customer satisfaction survey shows increased customer satisfaction for the 4th consecutive year.”
L O G I S T I C S
DIESL TO INCREASE FOCUS ON REVERSE LOGISTICS TATA Group’s Logistics Arm, Drive India Enterprise Solutions (DIESL) is planning to increase its focus on reverse logistics across India. Reverse logistics aims at the backward flow of materials from customer to supplier with the goals of maximising value from the returned item or minimising the total reverse logistics cost. Reverse logistics is a growing arena and DIESL has made early inroads across sectors like telecom, consumer durables, project logistics. Commenting on the initiative, Ajay Chopra, CEO, DIESL, said, “Reverse logistics can be defined as the process of moving end products from their typical final destination for the purpose of capturing value or proper disposal. We have recently increased our warehousing capacity substantially to 5.5 million sqft alongside our huge investment in technology. Our partnership with international after sales company QSL in 2009 has equipped us with an early mover advantage in the arena.” Adding further, Chopra, highlighted, “DIESL has been devising reverse logistics solutions in order to complement the supply chain services which the organisation is offering to its esteemed customers. A standalone reverse logistics service as an added service offering cannot be undermined if DIESL sees a business value for the same. Undertaking reverse logistics also gels well with DIESL’s thrust on environmental initiatives while undertaking its business operations.” Currently, DIESL caters to many clients in across industries like in telecom (TTSL, TTML, VIOM, Haier, WYNN, Alcatel-Lucent, NSN Unitech and GTL Infrastructure), FMCD (Voltas), retail industry (Croma and Landmark), IT Peripherals (TCS).
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ALLCARGO LOGISTICS PARTNERS WITH CONCOR TO ANNOUNCE OPENING OF ALLCARGO LOGISTICS PARK CATERING to the growing demand for integrated logistics solutions, Allcargo Logistics, in a joint venture with the Container Corporation of India (CCI), has recently announced the opening of Allcargo Logistics Park — a new advanced Inland Container Depot (ICD) strategically located in the heart of Dadri, Uttar Pradesh. Allcargo Logistics Park’s location has been strategically chosen keeping Dadri’s proximity to Delhi, the National Capital, the region’s superior connectivity by road and rail to the rest of India and the growing industrial and manufacturing hubs in the region. The new ICD offers supreme ICD facilities and infrastructure with a 41,264 square metre built up area, 21,000 square metre paved yard and 5,160 square metre covered warehouse. In addition, the facility has a 75,000 TEUs handling capacity per annum apart from providing superior quality, ultra-modern amenities like three reach stackers – each with 45 tonne loading capacity – six forklifts with 10 tonne to three tonne handling capacities, 100 tonne electronic weighbridge and two high-mast lighting columns.
Commenting on the development, Shashi Kiran Shetty, CMD, Allcargo Logistics, said, “Logistics has become a critical component for economic success in today’s global scenario. We are pleased to partner with a renowned company like CCI to cater to the growing requirements of integrated logistics services of manufacturers and traders for efficient supply chain management through this facility.” “To start with, Allcargo along with CCI has made a joint investment of `190 million in this initiative. We trust Allcargo Logistics Park to provide unparalleled infrastructure and flexibility to meet the growing customer demands across the country and the region. By offering first class facilities combined with highly skilled and experienced staff and comprehensive service offerings, we are reiterating our commitment to delivering and supporting high quality integrated logistics solutions to our customers” Shetty added. The new ICD ensures smooth movement of containers through efficient deployment of cargo handling equipment and reliable warehousing processes.
JAPANESE SHIP ORDERS RISE FOR FIRST TIME IN SIX MONTHS JAPANESE export ship orders grew for the first time in six months in October on a year-on-year basis, rising a strong 26.5 per cent to 854,570 gross tonne, according to the Japan Ship Exporters’ Association. The October gross tonnage represents a 3.5-fold increase from September. It is unclear whether the October growth is a sign of the beginning of a long-awaited recovery in Japanese export ship orders or just a temporary blip. Japanese shipbuilders received orders for 21 export ships – 20 bulk carriers and one general cargo vessel – in October. The 21 ships total 398,120 compensated gross tonne. In the first seven months of fiscal 2011, which started in April, Japanese export ship orders totalled 3,937,972 gross tonne, down 48.2 per cent from the same period last year. Japanese shipbuilders received orders for 107 export ships – 100 bulk carriers, five general cargo vessels and two marine resource research vessels – during the April-October period. The 107 ships total 1,925,868 compensated gross tonne. Kazuaki Kama, Chairman, Shipbuilders’ Association of Japan, recently said at a press conference that the current situation surrounding the Japanese shipbuilding industry remains difficult, largely because the yen is value at record high levels.
L O G I S T I C S
LUFTHANSA CARGO SEES GROWTH IN 2012 THE air freight industry will grow again next year and even though there are signs of a slowdown, it will not be as bad as in 2009, a Lufthansa Cargo executive said. “It will be a difficult year, but we forecast something like a three per cent growth for the air freight industry,” Andreas Otto, Chief – Cargo Sales, Lufthansa, said at an event recently. “We might see zero growth in the first quarter or first half, but the second half should be better. We do not see a recession,” he added. Otto said that Lufthansa Cargo was prepared to take out capacity where needed at short notice should the downturn be sharper than expected. “We cut capacity by between 20-25 per cent from midDecember to mid-January because of the holiday season and we could take that up to 30 per cent,” he said, adding that the group was not yet talking about long-term grounding of planes by parking them in the desert, as it had done during the 2009 downturn. After a good start to 2011, the Eurozone debt crisis, the earthquake in Japan and slowing growth in China have all hit the cargo industry. “We are not where we thought we would be after the first few months, but we’re happy. We are around five per cent behind in recent weeks, but the peak season in Germany has been good and is making up for China,” Otto said, adding that the group had shifted some of its flights to Europe and North America to avoid the intense competition in China. When asked about its struggling Jade Cargo joint venture with Shenzen Airlines, Otto said all options were open for the unit, but Lufthansa hoped to reach a conclusion with the other shareholders on its capitalisation by the end of the year.
DECEMBER 2011 • SMART LOGISTICS • 13
NEWS ANALYSIS FDI IN MULTI-BRAND RETAILING
RINGING IN OPPORTUNITIES FOR LOGISTICS
Illustration By Sanjay Dalvi
The Union Cabinet on November 24, 2011 allowed 51 per cent foreign direct investment (FDI) in multi-brand retail and 100 per cent FDI in single-brand retail. Though appreciated by many, it also received flak from some political parties. Going by the long-term perspetive, this decision is really going to mark an era of transformation for logistics & supply chain domain. NISHI RATH
FOREIGN direct investment (FDI) has come as a ray of hope for many in the segments of retail, supply chain and logistics. According to experts, at least 50 per cent of the investment would be in back end infrastructure like cold storage, packaging and logistics and a boom in the retail sector will continue to provide momentum to the logistics industry.
THE POSITIVE SIDE The positive feedback and experience in telecom, automobile and insurance sectors, clearly showcases the success of the FDI policy. Elaborating further on the same, Govind Shrikhande, MD, Shoppers Stop, says, “I am confident that the new FDI policy will surely bring forth benefits to not only customers, but also the economy and infrastructure in the country at large. Customers will get large assortment of
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higher quality goods and merchandise at reasonable prices. This will enable the upgradation of post-harvest, cold chain infrastructure, bring technology and management know-how, remove structural inefficiencies in the supply chain and benefit consumers in terms of cost and quality.” He also emphasised that large investments in infrastructure would lead to a rise in farm productivity, manufacturing, food processing and cold storage; thereby cutting down on wastage, growth in employment, exports and gross domestic product (GDP). The much-awaited policy would also incentivise local producers to scale-up their production that would, in turn, create a multiplier effect on employment and income generation in various sectors. Commenting on the same, Krishna Shete, Head – Business Development,
Radhakrishna Foodland, says, “It is a step in the right direction and it is one of the best global practices. As food safety is one of the major issues today, this policy will be very helpful if applied properly. But yes, only FDI will not help, the policies also matter.” Speaking about the opportunities, Shete added, “No doubt, many big players will enter the country now, which means that much more opportunities are in store for us. We are fully prepared to take on the challenges as required.”
FDI INVESTMENT IN BACK END INFRASTRUCTURE The FDI policy, if rolled out in phases and with proper checks & balances, will directly impact both multi-brand outlets and small retailers with a balanced approach. “FDI will not affect the small retailers, as at least 50 per cent
of total FDI being invested in back end infrastructure will include investment on processing, manufacturing, distribution, design improvement, quality control, packaging, warehouses, storage, logistics and other related infrastructure,” Shrikhande opines. Complementing Shrikhande’s opinion, Goldie Dhama, Associate
service quality will improve, keeping in mind the customers concern for food safety these days.”
THE BURGEONING RETAIL MARKET Currently, the retail market size is estimated at around US$350 bn of which the organised retail penetration in the retail market is at approximately
The new FDI policy will surely bring forth benefits to not only customers, but also the economy and infrastructure in the country at large. GOVIND SHRIKHANDE, MD, SHOPPERS STOP Director – Regulatory Services, PwC, explains, “It will result in increased investment in back end (supply chain, cold storage) infrastructure and will help in reducing the wastage of food produce by 30-40 per cent from farm to fork. Technology transfer to Indian companies will enable best practices in crop management and food safety and hygiene, thereby improving the quality of food products across the board. This, together with the back end infrastructure development, will help farmers maximise their earnings and value.” “This will bring about a spiralling growth in the industry and will significantly contribute to the development of the Indian economy,” says Vineet Agarwal, Joint MD, Transport Corporation of India, adding, “The most significant will be the creation of back end infrastructure from a very low base across farm level pack houses for horticulture and agriculture products, establishment of cold chains at all levels from mandis to retailers, large-scale warehousing and refrigerated transportation.” Adding to this, Sriram Venkateswaran, Director – Supply Chain & QA, McDonald’s India, comments, “The implementation of the FDI policy will be of major help to the supply chain and logistics industry as it will bring in a lot of improvement at the back end infrastructure. The
eight per cent. This means that there is a huge opportunity for growth. At present, the retail sector contributes around 14 per cent to the GDP, which has been growing at a steady pace of 8.6 per cent over the last 3-4 years. With an estimated compound annual growth rate (CAGR) growth rate of 15-20 per cent, the contribution to GDP will increase the benefits of allowing FDI in multi-brand retail trading. The boom in the retail sector has been giving and will continue to give an impetus to the logistics sector. Big retail chains are already following the global model of outsourcing their logistics activities to service providers in order to manage complex supply chains and focus on their core business. The success in the competitive and dynamic retail sector depends on achieving an efficient logistics and supply chain, which could be provided by professional logistics service providers, as they offer best practices and expertise to manage a ready flow of goods and services. The policy will further allow multi-brand foreign retailers to set up shop in cities with a population of over 10 lakh, which according to the 2011 census, is prevailing in 55 cities. The big retail chains can now move beyond the metros to smaller cities and thus enhance the networks. This would lead to the creation of better distribution networks, ideally through
a hub & spoke system. Agarwal adds, “TCI has a pan India presence and moves 2.5 per cent of India’s GDP and covers 99.45 per cent of the GDP by area coverage. With our current footprint of 9.1 mnsqft of warehousing space, TCI has the expertise and competence to partner with retailers in their quest for growth from start-up levels. We also plan to activate our business plans with respect to cold chain warehouses to supplement our refrigerated transportation backbone.” Over a period of time, TCI has developed an expertise in handling and removing these shrinkages completely from the retail supply chain to run it in the most efficient manner. The company has created very strong infrastructure of
How FDI will help the logistics industry? • It will generate around 4-5 million jobs in the logistics sector • It will help develop logistics and cold storage chains all over the country • It will encourage domestic logistics enterprises to enter the high-end market in order to expand the quantity and quality of logistics jobs • More domestic logistics enterprises entering the market will facilitate exchange of talent. warehouse and transportation network connecting suppliers, manufacturers, distributors and retailers with a realtime visibility to all the stakeholders through complete IT linkages. The much-awaited decision will now see many global players entering India. But according to experts, the actual impact of FDI in front end retail will be felt after a year or two. Whether the FDI policy will meet the expectations in the stipulated time frame, only time will tell! nisi.rath@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 15
NEWS ANALYSIS RAPID IMPLEMENTATION OF SAFTA
ADDU DECLARATION – ENHANCING TRADE PROSPECTS & PROPOSITION At the recently concluded summit in Maldives for SAARC countries, all the members came up with the Addu Declaration, which advocates rapid and effective implementation of SAFTA in the member regions and further calls for the reduction of non-trade barriers and duties in the traded goods among the member states of the association. The move is expected to offer a big boost to the miniscule trade share among the associated members, as the intraSAARC trade remains one of the lowest among all the major regional groups. ARINDAM GHOSH
THE South Asian Association for Regional Cooperation (SAARC) was formed with an aim to promote trade and investment among the nations of the South Asian countries. However, ever since the formation of the body in 1985, intra-regional trade among the SAARC countries has not reached the desired level. In fact, the SAARC countries have not been able to reap the expected benefits of such a regional economic amalgamation. Among the SAARC countries, the trade is around five per cent of its total trade as compared to above 50 per
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cent in East Asia, about 20 per cent in Latin America and about 10 per cent in Sub-Saharan Africa where the trade
related infrastructure is even behind in the SAARC countries. SAARC countries have one-fifth of the global
India’s Trade With SAARC Countries
2006-07
2007-08
India’s Total % Share of SAARC Countries
126.41 5.12
163.13 5.91
India’s Total % Share of SAARC Countries
185.74 0.81
251.65 0.84
Source: DGCI&S
(Value in US$ Billion) 2009-10 2010-11 2008-09 2009-10 (April(AprilSept) Sept) Exports 185.30 178.75 80.95 105.35 4.62 4.69 4.58 4.55 Imports 303.70 288.37 128.13 161.45 0.60 0.57 0.58 0.56
population, but only contributes three per cent of global output and two per cent of world exports. The intra-regional trade in South Asia is only 0.8 per cent of the GDP — a fraction of East Asia’s nearly 27 per cent of GDP. The agreement on South Asian Free Trade Area (SAFTA) was signed during the 12th SAARC Summit held at Islamabad in January 2004. The agreement came into force from January 2006 and prescribed the adoption of a Tariff Liberalisation Programme (TLP) in a phased manner for all the nations. Under the programme, all the member states would reduce their tariffs to 0-5 per cent within 10 years of the agreement coming into force. This TLP would cover all tariff lines barring those items that each member country would place in the Sensitive List. The agreement was to develop trade and strengthen economic ties among the states. Further, it would ensure freer movement of goods among them. The 17th edition of the SAARC Summit held in Maldives saw all the member countries participating for a common cause — faster implementation of SAFTA fuelling faster economic development in the region.
ROLE OF TRADE IN SAARC SAARC members include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. India is the fastest growing country among all the SAARC member nations and slowly & steadily, the country is emerging as a global hub for manufacturing various industries like automobiles, etc. Further, the country’s trade with South Asian countries has doubled within five years from $7 billion in 2005-06 to $15 billion in 2010-11. Given such a scenario, India can play a major role in enhancing the regional trade in the SAARC region. Some of the major areas of economic and business co-operation include — the services sector, energy & power,
tourism and trade & logistics. India is the dominant trading partner when it comes to countries like Afghanistan, Bangladesh, Nepal and Sri Lanka, which has led to concerns among other South Asian countries about trade sustainability. However, India must make every effort to minimise tariff and non-tariff barriers and source goods from its neighbours. Sri Lanka is India’s largest trading partner country in the SAARC region and the bilateral trade between the two countries has grown four times in the last nine years increasing from US$658 million in 2000 to US$2,719 million in 2009. As a union, all the countries of the association suffer from severe shortage of gas. They need to jointly devise a strategy and develop infrastructure like pipelines, which would enable the entire South Asian region to access natural gas. This would help deal with the region’s energy security crunch.
NEED FOR LOGISTICS PARKS & HUBS The summit adopted the ‘Addu Declaration’, which lays emphasis on rapid effective implementation of the SAFTA Agreement, reduction in the number of items from the Sensitive Lists and the issue of non-tariff barriers among the member states. In a statement made in the recently held SAARC summit, Prime Minister Dr Manmohan Singh said that India has decided to reduce the Sensitive List under the SAFTA Agreement from 480 tariff lines to 25 tariff lines. Zero basic customs duty access would be given for all items removed with immediate effect. The step will come as a major boon for all the member countries who can now do better business in India. All the countries need to jointly develop and set up logistical hubs and parks at various important locations in the region — a crucial move for the region to support the increased level of trade. These parks and hubs can facilitate the flow of trade across the region and would greatly reduce
the costs of doing business. Also, the highly specialised multi-modal logistics zones should be able to connect the key regional locations.
INDIA NEEDS TO SHOULDER RESPONSIBILITY One of the major objectives for forming SAARC was to accelerate the process of economic and social development in member countries. Gradually, trade promotion policies and agreements were actively adopted. However, when it comes to doing business in the region, there are wide disparities within the SAARC member countries. For instance, Maldives is highly dependent on the external sector, while Pakistan is the least open country in the entire SAARC region. The beginning of the SAARC traderelated activities was slow to begin with. However, with the implementation of SAFTA, the trade activities flourished at a rapid pace. Now, with the quicker implementation of SAFTA, logistics parks or hubs need to be developed at various important locations. This, in turn, would support and play an important role in facilitating the increasing levels of trade. If all the countries and governments work together, identify all the common areas of concern and devise a strategy based on mutual discussion and trust, they can jointly work towards tackling those challenges and overcoming them in a manner that is beneficial for all the nations. All the countries need to accelerate the process of trade in the region and the private sector also needs to join in with the government and play a proactive role in generating business by leveraging on the economic benefits of each of the member countries. However, for SAARC countries to benefit economically, India needs to play a bigger role, as it is the only country connecting the land mass of almost all the member regions. arindam.ghosh@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 17
NEWS ANALYSIS ANUPAM INDUSTRIES & MITSUBISHI JV
LIFTING UP PORT EQUIPMENT PROSPECTS Eyeing the growth in the port equipment sector, Mitsubishi and Anupam Industries have joined hands. This joint venture is said to give a boost to the industry considering the reputation and experience both the companies have. Analysing the impact of this joint venture on the port equipment and material handling segment… NISHI RATH
sales service.” “The shipment cost is ship unloaders. The joint venture is THE formation of Anupam-MHI a substantial part the overall selling expected to start operations by the Industries may take the port equipment cost of the port crane. Port cranes mid-2012 and will target an annual industry in India to a new high. need to be supplied fully erected for production of 60 units.” Banking on the decades of experience which one needs a seafront and a jetty. that Mitsubishi Heavy Industries Being in India, we are going to be (MHI) has, Anupam Industries has INVESTMENTS MADE a cost-effective manufacturer as our joined hands with them to venture into The joint venture will invest `Rs280 final erection and assembly facility is a new territory – the port cranes and crore to set up two units at Tarapur situated on the seafront near Mundra material handling equipment market. and Mundra in Gujarat. “We will Port and Special Economic Zone infuse an equity capital of `188 crore A year ago, MHI had entered into (MPSEZ). We also have a load out with Anupam’s share being 51 per cent an agreement to licence its crane and and Mitsubishi’s share being material handling equipment 49 per cent. The rest will technology for large-scale be funded through debt,” ports, including container Patel explains, adding that, cranes to Anupam Industries. the newly formed company Commenting on the joint is targeting a revenue of venture, Kanji Obata, Chairman, `800 crore in the next Anupam-MHI Industries, said, couple of years. Talking “The joint venture purely targets about the new company’s the fast growing Indian market. goals, Patel says, “Some The market for port cranes and (L-R) Shreya Patel, Director, Anupam-MHI Industries; Mehul Patel, CEO, of our major competitors material handling equipment Anupam-MHI Industries; Kanji Obata, Chairman, Anupam-MHI Industries; are mainly based in Korea, comes to around US$300 Seiji Minami, Director, Anupam-MHI Industries & Seiichiro Kon, Director, Japan and Germany. But million in India. As this is Anupam-MHI Industries addressing the audience jetty for roll on/roll off facility for the with the expertise of Mitsubishi and one of the fastest growing economies, completely erected and commissioned our decades of experience, we hope to we hope to get a fair share here.” The equipment on to the barges/vessels cater to the growing demand in the global market size of the product is for onward dispatch to customers,” he domestic & overseas markets.” Apart around US$4 billion, Obata added. further elaborates. from this, the new company will generate employment for 2,000 people. BENEFITS OF JOINT VENTURE In India, the port sector is rapidly ORDERS BAGGED “Asia is the most important market growing. Holistically, the port sector for us and the segment of port cranes According to industry sources, Anupam across the globe has indicated marginal and equipment market is expected to Industries is already a very well known growth in terms of expansion and new grow significantly in India, the Middle name in the material handling segment projects getting clearances from the East and in Asian countries and Latin and collaborating with the Japanese concerned authorities. As a result, the America,” concludes Obata. giant has created hope of growth for requirement for port equipment will many in the industry. Interestingly, the In a nutshell, the joint venture is also increase gradually. Elaborating on joint venture has already bagged two all set to help the port sector gain how the joint venture will help the orders. Expatiating on the same, Patel access to a world-class product at an port equipment sector, Mehul Patel of says, “We have orders from Jawaharlal attractive price combined with prompt Anupam Industries, who will serve as Nehru Port Trust (JNPT) worth after sales service. This seafront facility the CEO of the new company, said, `100 crore for three ship-to-shore would be the first and only of its kind “In India, we have the advantage of container handling cranes (RMQC) in India and one of the very few in the providing cost-effective advanced and another order worth `300 crore world, claim Anupam-MHI Industries port cranes, including prompt afterfrom Krishnapatnam Port for 10 officials.
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CUTTING-EDGE SOLUTIONS TECHNOLOGY & INNOVATIONS
Total Visibility Counters Blind Spots In Supply Chain reveals great, undiscovered potential AS supply chains continue to grow USPs complex, organisations are finding • Total Visibility is fast, easy to it increasingly difficult to answer implement and offers centralised even the simplest of questions about in-transit tracking their shipments, beginning with, • It provides better fraud detection, ‘Where are my orders?’ Traditional compliance management, cost transportation management management and planning. systems provide limited visibility into a company’s overall shipment shipment data, including the volume — a blind spot that can transportation management system, cost companies millions of dollars and extending access to all supply chain in high freight costs, shipping lane partners, it helps companies achieve a inefficiency, slow response to shipping comprehensive view of every shipment disruptions and undetected fraud. Until they have paid for – no matter where it now, addressing this challenge proved is coming from or going to, anywhere difficult and costly, with expensive in the world – with drill-down detail custom integration often being the on each shipment and no manual effort only recourse. required to aggregate the data. Total Visibility is a packaged “While many solution providers technology layer that aggregates and claim to deliver visibility, the reality is normalises a company’s shipping that most organisations often have no activity, irrespective of who their way of determining how much they are suppliers and carriers are or how many spending on shipping or which partners transportation management systems, are performing the best, or where enterprise resource planning systems, opportunities lie to eliminate fraud and freight pay or audit vendors they have. waste. Total Visibility delivers on the By placing this integration layer unfulfilled promises of visibility and alongside every system that contains
in shipping data,” said Trevor Read, President, Agistix. Most supply chain partners are not technologists and their systems are designed to move goods, not to support cross-platform aggregation & business intelligence. By contrast, Total Visibility is a cross-platform, cloud-based software-as-a-service (SaaS) layer that is highly secure and open; and thus accessible to the parties involved in a company’s shipments. If there is a problem, Total Visibility generates automatic alerts, thereby empowering companies to take proactive steps to keep their shipment moving forward, and to notify recipients of any delays so that they can plan accordingly. Beyond simply increasing productivity and reducing costs, it can also transform supply chain technology into a flexible, strategic tool for optimising shipping lanes, moving high-value goods more efficiently and forming deeper partnerships.
4S VisiLog: Collaborative Web Portal For Integrated SCM With GPS workflows. GPS-enabled 4S USPs Soft (4S), a global leader
FOUR offering software solutions for the logistics and transportation industry, has recently launched GPS-enabled 4S VisiLog. The launch of this new feature integrates GPS benefits like truck movement reporting to the logistics control visibility mechanism of 4S VisiLog. GPS-enabled 4S VisiLog uses global positioning system tracking devices, which communicate with GPS satellites, to obtain real-time event information regarding the location of the shipment in transit. This new feature will help link business partners, associates, service providers and customers, right from the origin to the destination. It is designed to provide automated alerts along with visibility across the supply chain managed by
VisiLog would be the business’ • Real-time automatic truck location & command and control centre for trucking to manage shipments global logistics operations. • Identification of fleet inefficiencies & Speaking on the new offering, underused trucks in the fleet Rakesh Kumar Munigala, VP & Head – Product Design and • Reduced fuel cost & increased Marketing, Four Soft, said, productivity “This technological innovation, which has now become available Clients will be able to check the with our 4S VisiLog application, real-time shipment location through enables manufacturers and shippers to truck positioning information. The have real-time visibility status of their system will automatically send out shipment. It will enable manufacturers alerts on change in route plans (if and logistics service providers to have there is deviation from the actual route greater level of control over their assets plan already laid out), over speed, during transit. The value we bring in is temperature deviation for perishable that we integrate the real-time physical goods, idle time, fuel consumption movement status of goods to logistics & pilferage and excessive stoppage. control mechanisms like milestone Moreover, it will enable the plotting of monitoring, workflow and alerting.” truck path for specific time interval.
DECEMBER 2011 • SMART LOGISTICS • 19
Cutting-edge solutions, continued
Telogis Fleet 9 Offers Customers A Unique Fleet Management Experience Fleet 9 supports a variety of vehicle TELOGIS, the platform for location and equipment types and integrates intelligence, recently introduced Telogis seamlessly with Telogis Route, Telogis Fleet 9, the industry’s most reliable and Progression and Telogis Mobile to scalable fleet management software. provide strategic and dynamic routing, Telogis’ Software-as-a-Service (SaaS) real-time work order management, fleet management system drives rapid telematics and mobile integration on a return on investment for fleets of all single platform. “The next generation sizes through improved productivity of Telogis Fleet is designed to give and operational streamlining. Telogis the user a completely unique fleet Fleet 9 provides businesses with new management experience that best configurable reporting and alerting aligns with their business needs. options designed to allow the fleet Other applications on the market manager to tailor the system to provide more rigid reporting and suit their specific needs, as well alerting mechanisms that leave the as advanced asset utilisation and security capabilities that ensure the productivity and protection of USPs high-value assets. Telogis’ next generation of fleet These new elements build on a management software gives fleet platform that already offers a wide managers and business owners range of tools to better manage a greater flexibility in configuring reports company’s mobile assets, including to fit the exact needs of their industry, real-time traffic and weather, size and type of fleet. It features fuel card management, advanced expanded functionality and scalability compliance reporting, extensive for monitoring high-value asset vehicle histories and personnel utilisation, theft and misuse. management functions. Telogis
organisation confined to the functions that the system offers. With Telogis Fleet 9, we are putting that power into the user’s hands by providing tools that allow easy and fast customisation, and offer visually relevant information and data,” said Sean McCormick, Product Manager, Telogis. Telogis Fleet 9 features new configurable reporting functions and settings designed to tailor the system to each unique business model. It also benefits from the new advanced features of Telogis Asset, including assetspecific alerts and reporting functions that provide greater visibility of how each asset is being used in the field. Users have the ability to view all assets in a single view, customise data by asset type and integrate that information into larger fleet-wide reports — an important feature in large, mixed fleets (trucks & heavy equipment). Additionally, advanced loss prevention and utilisation monitoring tools protect assets from theft and misuse.
3iS Fleetvision Ensures 100% Fleet Visibility visibility of third-party vehicles’ movements, transport plans and the ability to set and monitor KPIs. The software is Isotrak’s third-party integration tool and is unique to the business. It is governed by the fleet operator to ensure confidentiality and security of information. 3iS Fleetvision does not require users to invest in Isotrak tracking hardware. It includes a new global positioning system (GPS) management module that will accept data feeds from a wide range of alternative GPS USPs hardware. It allows 3PLs, haulage operators, Also, the system interfaces suppliers and customers to enter into with external transport deeper and more fruitful business management systems, including relationships thus taking advantage of products from Paragon Routing, spare transport capacity, but only with Ortec and Enterprise Software. minimal administration and total This places a low barrier to privacy. entry for companies seeking ISOTRAK is a forerunner within the tracking and telematics sector. Traditionally, fleet operators have only had visibility of their own fleet and the ability to monitor key performance indicators (KPIs) set against their own vehicles. Isotrak recognises that many companies use third-party hauliers or contractors alongside their own taskforce, which is why 3iS Fleetvision has been developed to allow customer
20 • SMART LOGISTICS • DECEMBER 2011
to start enjoying the benefits of 3iS Fleetvision ‘club’ membership. Jon Hannah, Product Manager, Isotrak, said, “The Development and Project Teams have worked extremely hard this year to take the vision of 3iS Fleetvision off the page and into real transport operations.” In addition, customers, who have seen the benefits of our offering and have got involved in the project, are on the cusp of using the software and seeing tangible benefits through improved software visibility. We have shown the desire to listen to our customers, as the committee is event driven by and for them. I am delighted to now be seeing the benefits,” Hannah added. Collated by Prerna Sharma prerna.sharma@infomedia18.in
PRICE TRENDS ROAD FREIGHT INDEX CHART FOR NOVEMBER 2011 IRFI TREND FOR NOVEMBER 2011 The RFI stood at 175 points for the month of November 2011, which is the same in comparison to the corresponding period last year.
ZONAL FREIGHT TRENDS The overall freight rates have increased slightly by 1.64% as compared to the previous month. The freight rates from Delhi have registered the highest increase of 4.29%, whereas Ex-Chennai rates have registered the highest decrease of 1.50% as compared to last month. The Ex-Delhi freight rates are high due to the shortage of vehicles to the southern region because of increased agricultural produce in the north and movements due to the festive season.
COMMERCIAL VEHICLES DOMESTIC SALES
TRENDS FOR NOVEMBER (Y-o-Y) 171
172 175
175
168
2007-08
2008-09
2009-10
2010-11
The overall commercial vehicles segment Index trend for five years registered a growth of 17.95% during April-October 2011, as compared to the same period last year. While medium & heavy commercial vehicles (M&HCVs) registered a growth of 8.19%, light commercial vehicles grew at 26.64%. However, in the month of October 2011 over October 2010, the growth in sales of the overall CV segment was 18.53%.
2011-12
FORECAST FOR DECEMBER 2011 The RFI in November 2010 over November 2009 had registered an increase of 3 points. It is expected to increase marginally in the upcoming months due to the onset of the agricultural season as well as a general increase in other inputs like tyre prices, toll charges, driver wages, etc.
Indian Road Freight Index (IRFI), a service introduced by Transport Corporation of India (TCI), is an index of weighted average lorry freight rates across various routes, calculated based on the route density and the dynamic freight rates of routes across the country. Knowledge Partner: Transport Corporation of India (TCI); website: www.tcil.com; e-mail: irfi@tcil.com
DECEMBER 2011 • SMART LOGISTICS • 21
IN CONVERSATION WITH DR RAKESH SINHA
WE ASPIRE TO ACHIEVE
OVER
PER CENT
GROWTH
“The optimism that tomorrow would be better than today; and what is it that I can do today to make tomorrow better is what keeps me going,” avers Dr Rakesh Sinha, COO – Global Supply Chain, Manufacturing & IT, Godrej Consumer Products, in a tête-à-tête with Sumedha Mahorey. Excerpts…
22 • SMART LOGISTICS • DECEMBER 2011
YOUR EXPERIENCES WITH GODREJ I have been with Godrej for more than 31 years. During this time, I have worked in several functions with probably the maximum job rotations. Apart from manufacturing, projects & logistics, I have headed corporate functions like strategic planning for about nine years and IT & Marketing for 10 years.
YOUR DRIVING FORCE The business has been doing well, but it can always do better. This is what motivates us at Godrej. We are the fastest growing fast moving consumer goods (FMCG) company in India and have ranked among the top three consistently over the last 10 years. But being among the top three FMCG companies does not mean that we should stop pursuing further growth. On an average, we have been growing at 21 per cent as compared to the average FMCG growth rate of 10 per cent. Our aspiration is to achieve more than 25 per cent growth. The optimism that tomorrow would be better than today; and what is it that I can do today to make tomorrow better is what keeps me going.
MOST CHALLENGING PROJECT The most challenging project is always the most rewarding and the most interesting. Adopting the replenishment philosophy in the entire supply chain around six years back was one of the major changes we have brought about. This change was based on the theory of constraints. The major challenge that we had to face while making this change was changing the mindset of employees towards replenishment. This was indeed not an easy task, but, over a period of time, we are getting it right and we are still improving on it. Despite this, we are probably the most advanced in the Indian FMCG space.
PLANS IN PLACE TO MANAGE PEAK LOAD FACTOR We have to deal with festive seasons
almost 5-6 times a year and so now we are used to managing such demand peaks. In fact, the way we manage the non-peak season period is more remarkable. If the demand for a product picks up due to any reason, we manage it just like we do during the peak season. Our replenishment is fully geared up to manage any ups and downs in demand in any geography.
REACHING THE LAST MILE IN TOUGH CONDITIONS We had moved to the super stockist and sub-stockist network back in 1998-99 and have been perfecting it over the last 12 years. It was only about three years ago that we initiated a major drive to increase our footprint by reaching out to all the towns, including the smallest of towns, of the country. We established distribution to the sub-stockist level and also established sub-stockists in many large villages. Currently, our sub-stockist network extends to urban towns and many large villages. From there, we service other villages through vans. We also have distributors in most of the unreachable areas. We supply small stocks to these distributors, who then distribute it to retail outlets. Also, there are many disruptions in supply in these regions due to natural circumstances. To overcome this, we maintain higher stocks at these points so that the retailer can continue to carry all the stocks. Additionally, while increasing the safety stock at the distributor’s end, we also try to ensure that distributors do not run out of stock.
New entrants as well as those aiming to enter this industry should implement the bottom-up approach in looking at actual facts and figures, what is moving from where and what has not moved...getting into the actual data is extremely important to get insights into this industry.
UP,
CLOSE &
PERSONAL Your educational background I did my graduation in Mechanical Engineering from IT BHU and post graduation from NITIE. After my post graduation, while working with Godrej, I have also done ICWA and CFA. Later, in 1990s, I did a PhD in supply chain management. Things you look for as and when you enter a deal The deal should be beneficial for consumers. The deal will be sustainable only if it gives better value to consumers, otherwise it would break off in sometime. Godrej and other parties involved should also benefit from the deal. In this way, there can be three beneficiaries from one deal. Inspiring writers I like Ayn Rand as an author. I also read many religious books. Besides, I am interested in physics; books by late Stephen Hawkins interest me.
REPLENISHMENT MODEL AND GODREJ’S SUCCESS The underlying philosophy of the replenishment model is that it is completely consumer driven. The items we supply, produce and the raw materials we buy today are completely dependent on what the consumers have bought yesterday. So, if there is any change in the consumer trend in any product or geography, then we produce more of it and buy the necessary material to manufacture it. Similarly, if the demand is sluggish, we manufacture less of the product and buy lesser raw materials to manufacture it. Basically, the replenishment model refers to adjusting the manufacturing, procurement and the finished goods
DECEMBER 2011 • SMART LOGISTICS • 23
In conversation with, continued
logistics with the changing behaviour pattern of consumers, which we capture on a daily basis for retail purchases. Thanks to the replenishment model, the real cost incurred has come down. This has been achieved because of several cost reduction initiatives taken up at Godrej. Also, as the volumes go up, natural economies of scale can be achieved in the supply chain.
WAREHOUSING MANAGEMENT PRINCIPLES AT GODREJ At Godrej, we use the 5S principles. We seek to ensure that the actual cost incurred matches the book stocks. This is achieved by periodically taking into account the physical inventory to ensure that what we have in inventory is actually mentioned in the books. When it comes to warehousing, a critical factor is to ensure that the products are stacked in the right way. We have restrictions on stacking of most of the products. But sometimes
24 • SMART LOGISTICS • DECEMBER 2011
the godown keepers try to violate it, especially when there is a heavy inflow of trucks while the outgoing is less. I see a lot of companies flounder here and ultimately, it results in damaged products being delivered to the consumer.
PLANS IN PLACE FOR GST We have been geared up for the Goods and Service Tax (GST) since over six months. We are ready to change the routing of products for manufacturing up to the consumer. I believe that GST would be a clear enabler for the industry as ultimately, the consumer will win.
YOUR ADVICE TO NEW ENTRANTS IN THE INDUSTRY Always stick to the basic principles. There are times when people try to deviate from the principles claiming that the situation is exceptional. But then, exceptions keep recurring and
so, it is better to stick to the basic principles. Secondly, new entrants as well as those aiming to enter this industry should implement the bottomup approach in looking at actual facts and figures, what is moving from where and what has not moved...getting into the actual data is extremely important to get insights into this industry. You cannot only have the top-end view of what is happening in the supply chain unless you know what is happening at the lowest level.
YOUR MESSAGE TO COMPETITORS I hope everybody gets wiser and patient because that is how consumers will ultimately benefit from it. If the competition is inefficient, it will help us in the short run, but that is not what we want...we want them to become efficient so that there is fair competition in the marketplace. sumedha.mahorey@infomedia18.in
Image by Prerna Sharma (Gateway Terminals of India)
GROWING EXPANSE OF CONTAINERISATION IN INDIA SPECIAL FOCUS
AIMING THE
ARC OF VISIBILITY
India’s containerised transportation, driven by factors like rising levels of international trade, increasing investments in infrastructure by the government and through various public private partnerships, is poised for significant growth. The emergence of India as a manufacturing hub, privatisation of the port operations and demand from foreign nations to containerise commodities has created huge scope for containerisation in the Indian market. With the slew of initiatives taken by the government, India will soon become one of the major markets in this segment. ARINDAM GHOSH
WITH a greater share of trade moving towards finished goods requiring containerisation, the container traffic in the country is experiencing impressive growth. Complemented by well-equipped internal container depots (ICDs), containerisation is gradually replacing less efficient forms of moving cargo within India. “India currently carries approximately three billion MT of cargo. This is expected to grow to approximately six billion MT by 2020,” said Pawanexh Kohli, Head – Solutions & Transitions, Arshiya International, during a recently held logistics event. According to statistics, sea traffic carries 95 per cent of India’s exports by volume and 70 per cent in terms of value. Indian merchandise export and import has registered double-digit growth last year. The country’s 12 major ports and 176 non-major ports handle 95 per cent by volume and 70 per cent by value of EXIM trade. The total traffic handled by all the ports in 2011-11 was 894.35 MMT. Jawaharlal
Nehru Port Trust (JNPT), India’s largest container port, has handled 64.30 million tonne of total cargo during the financial year 2010-2011, as against 60.76 million tonne of cargo handled in the previous year in 201011. According to research papers from IIM-A, containerised cargo represents about 30 per cent by value of India’s external trade. “This proportion is likely to grow as containerisation increasingly penetrates into the general
Sachin Johri, Senior MD, IDFC Project Equity, adding that there was a planned expenditure of `22,500 billion between 2010 and 2020.
CONTAINERISATION IN INDIA Although India has witnessed tremendous growth in the throughput volumes of containers since the last 5-7 years, the main reason that it has not seen explosive growth, as in the case of countries like China, Brazil and other
This mode of cargo movement becomes important during the current phase of India’s growth as appropriate transportation costs, timely delivery and the quality of services are essential elements to calculate and assess the competitiveness of products for the global markets. Additionally, containerised movement within India helps reduce theft, spoilage and other losses. KEJAS SHAH, DIRECTOR, ORBIT CONTAINER SERVICES cargo trade and increases its share from the current 68 per cent to nearer international levels of around 75-80 per cent. Additionally, the logistics spend tripled from `450 billion in 2003 to `1,350 billion in 2011,” says
BRIC nations, is the evolving issues related to port congestions, inadequate container handling equipment and bureaucratic machinery that keep the international carriers away. These structural inefficiencies
DECEMBER 2011 • SMART LOGISTICS • 25
Growing expanse of containerisation in India, continued
An interplay of initiatives by policymakers and private stakeholders will create a robust platform for growth in the container sector in the approaching decade Ports
• • • •
Rail
• •
Coastal/IWT
• •
Policy should provide adequate focus on ensuring certainty on investor return Integrated policy-making between road, rail and shipping will help address connectivity concerns proactively Expedited clarity on port regulation, especially with relation to tariff and the role of TAMP Corporatisation of major ports and faster award of port projects to private investors Rail freight sector needs supportive policy that can help this essential industry tide over a bumpy beginning Recent policy changes affecting carriage of some domestic cargo threatens to derail the rail investment programme and dilute investor interest Adequate policy focus be given to promote development of coastal shipping and inland waterways and related infrastructure in private hands Fiscal and operational SOPs to bridge the viability gap in the initial stages
increase the operating costs, which are estimated at 13 per cent of the GDP, as compared to 7-8 per cent for the developed world. Commenting on the importance of containerisation for India, Kejas Shah, Director, Orbit Container Services, said, “For India, to sustain its growth rate after liberalisation – including international trade and largely the domestic trade – inter-modal transportation is the most suitable and convenient means to ensure a seamless logistics chain. This mode of cargo movement becomes important during the current phase of India’s growth as appropriate transportation costs, timely delivery and the quality of services are essential elements to calculate and assess the competitiveness of products for the global markets. Additionally, containerised movement within India helps reduce theft, spoilage and other losses.” To increase its competitiveness, the Indian ports infrastructure, which is far behind world standards, needs to improve fast. Congestion at major ports can depress port performance and impede containerisation growth unless sufficient port capacity is created. Furthermore, the absence of a hub port in India results in a significant share of containers leaving an Indian port, going through a feeder with transshipment and mainline movement and, as a result, causing additional
26 • SMART LOGISTICS • DECEMBER 2011
delay. This causes a delay of 40-50 hours as containers are transshipped through ports such as Colombo, Singapore and Dubai.
CHALLENGES PRESENT In today’s scenario, international trade is considered very crucial for any economy. Globally, India is one of the fastest growing economies and a growing player in international trade. However, the country’s container volume is estimated to be 15 million
Growth of containerisation in India • 1977: Because of the in-built fear to embrace containerisation, only ‘container-oriented’ ships were ordered. The size was 404 TEUs. India had about 12 such ships by 1981. • 1993: Money was not spent on new container ships. The old container ships were ‘jumboised’ from 404 TEUs capacity to 750 TEUs capacity in Korea. • 1993: India’s first cellular container ship of 1,757 TEUs is delivered. For the next 10 years, India had only three container ships of this size; others were less than 500 TEUs in capacity. • 2008: India acquires two containerships having a capacity of 4,000 TEUs — the world’s biggest, at this time, is 15,100 TEUs.
TEUs in 2015. The primary challenges for containerisation in India are the poor infrastructure and cumbersome set of rules for the transportation of containers inland. Another speaker at the logistics event, Sumeet Nadkar, CEO & MD, Kale Logistics Solutions, highlighted some challenges under the infrastructure. According to Kale: - India currently trails other markets, such as China, on key efficiency parameters - Inefficiency constraints physical transport infrastructure and complexities in customs clearance & cargo management processes continue to rule. - A large number of small to medium-sized players, which are slow to adopt technologies like enterprise systems and electronic data interchange (EDI), hamper the pace of other industry players. - The predominant use of legacy modes of communication for information exchange translates into cumbersome and time-consuming processes, thereby resulting in delays. In addition, the tax structure in the country is not uniform as there is no standard procedure when it comes to a country’s tax structure. Various states have different tax structures. Further, “outdated regulations implemented more than 35 years ago impede India in its growth”, said Shah. Further elaborating on the challenges, Shah added, “The barriers to enter into the containerisation business range from moderate to medium. This requires higher initial capital expenditures, although trade liberalisation has led to capacity creation through investment in dedicated rail freight corridor and cargo handling in ports. Developing Container Freight Station (CFS)/Inland Container Depot (ICD) clusters and deregulation of rail container haulage will benefit shipping liners, container terminal operators and haulage service providers.”
BEST PRACTICES IN CONTAINERISATION AS per the available data, the containerised exports from Asia are expected to rise to 64 per cent in 2015, from 55 per cent of the world total in 2002. However, if proper steps and practices are adopted, then India can turn out to be a major player operating in the containerisation sector from the continent. For a country like India, it is set to witness a resurgence in container logistics across multiple modes including shipping, ports, road, rail and coastal, with various initiatives being taken by the government. The following best practices could be adopted to poularise containerisation in India: Educate the manufacturers and distributors Commenting on the best practices that can be adopted to popularise the concept of containerisation in India, Shah encapsulated his suggestions and said, “To popularise the concept of containerisation in India, first manufacturers and distributors in the chain must be educated about the advantages that containerisation brings. Containerisation can be viewed as a server between the supplier and the end user. Once the advantages of using containers are evident to the general public, the adoption rate will gradually increase.” Government initiatives The government needs to take up various initiatives towards popularising the concept. There has to be an adoption of a uniform tax regime in the country. “The tax structure in
FUTURE PROSPECTS Growth in container trade is ultimately driven by economic growth. So, if India’s growth is expected to continue at eight per cent per year, then container growth from historical numbers can easily exceed 12 per cent per year. Additionally, private rail operators and coastal shipping will pick up momentum with the development of minor ports such as Mundra, Pipavav and Vallarpadam. Although containerisation is a mature business in the western world, containerisation in India will be in the growth stage for at least 5-10 years. The World Bank ranks India 47 in logistics efficiency. However, Luxman Radhakrishnan, Chairman, JNPT, is highly optimistic about the growth of containerisation in India. To promote this, he has made the following suggestions:
India is being evolved. After the introduction of value added tax, the industry has started developing. Yet there is a lot of scope for further rationalisation,” Luxman Radhakrishnan, Chairman, Jawaharlal Nehru Port Trust (JNPT) said at a logistics event. The regulators need to work towards tackling this challenge. Investments Investments need to be made from both the public as well as the private sectors. Funds need to be pumped in to develop better infrastructure and expand the communication capabilities. This, in turn, would fasten the process of rapid containerisation in the country. In 2000, India had 2.2 million TEUs passing through it; and currently double capacity of this is being handled and managed at a single port in the country today. But the presence of better infrastructure will take this growth momentum forward. Effective solution providers Logistics solution providers, especially those functioning in the container logistics segment, need to come up with new and innovative solutions that can offer efficient supply chain management as well as ensure higher efficiency, so that companies are prompted to use containers. As solution and technology providers, they need to come up with technologies that are cost-efficient and enhance productivity.
Growth of Container Traffic Year
Traffic Growth (In Million TEUs) Y-O-Y (In%) 2006-07 5.541 20.12 2007-08 6.710 21.10 2008-09 6.588 -1.85 2009-10 6.891 4.60 2010-11 7.537 9.37 Among the top 100 container ports of the world, JNPT ranked 25 in 2010. In 2005, JNPT ranked 30.
- Infrastructure in India is poised for good growth. The government is looking forward to developing this sector by bringing in investments through private players. - Public private partnership is being construed as the best avenue for mobilising resources for the development of infrastructure and bringing in efficiency in project management.
- Warehousing facilities are developing in the country. The new tax regime would be beneficial for the growth of warehouses. - The key for reducing this cost would be consolidating services, encouraging multimodal transport, rationalising the tax structure, reducing inventory costs through bringing efficient ways of management and investing in strategic areas like infrastructure, training, and implementation of IT, etc. Given the country’s growing market for containerisation coupled with the initiatives taken by the government to make the country more accessible to the international market, India will soon become one of the major markets in the sector. arindam.ghosh@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 27
FACILITY VISIT DP WORLD, KOCHI
HELPING
INDIA LEVERAGE Image by Akmal Rahman B
ON THE ICTT ADVANTAGE
The competitiveness of a commercial port is generally determined by its geographic location, physical characteristics and its relationship with land-side transportation systems and urban centres. While these factors remain important, ports like DP World, Kochi, have embarked on achieving many new milestones. The company has integrated and balanced a number of dynamic marketplace processes, including globalisation, containerisation and modern logistics as one of the most important ports for the subcontinent region. A visit to the immaculate expanse of its Kochi premises has only cemented this fact... AKMAL RAHMAN B
DP World, one of the largest global container terminal operators has set up International Container Transshipment Terminal (ICTT), a state-of-the-art container terminal, at Vallarpadam near Kochi. DP World has signed a concession agreement with the Cochin Port Trust on a build-operate-and-transfer (BOT) model, for a period of 30 years. Well equipped with infrastructure facilities, such as road and rail connections, this terminal is expected to redefine logistics infrastructure in India by substantially bringing down the freight cost of India’s international trade. The construction of ICTT has been planned in three phases. The first phase has a quay length of 600 metre and a design capacity of 1 million TEUs. In the second phase, DP World will develop an additional 300 metre of quay length with a capacity of 1.5 million TEUs; while in the final phase, the terminal will have a capacity
28 • SMART LOGISTICS • DECEMBER 2011
of 3 million TEUs. Being one of the global transshipment hubs supported by a hinterland that extends across the country, ICTT has a captive volume of more than 8 million TEUs.
DP WORLD: A CLASS APART DP World, engaged in container handling, operates more than 60 terminals across six continents. In India, its portfolio stretches across ports in Cochin, Mundra, Nhava Sheva, Chennai and Visakhapatnam. DP World supports close to 48 per cent of India’s 8 million TEUs containers contribution to global trade. Being India’s first operators in private container terminals over the years, DP World has developed a network and gained in-depth understanding of India’s business dynamics of container trade. DP World aims to enhance supply chain efficiency by effectively managing container, bulk and other terminal cargo.
LOCATIONAL ADVANTAGE ICTT’s strongest advantage over other transshipment hubs in the region is the right location, which offers costeffective reach to the markets in India as well as proximity to major global sea routes — an enabling factor that could revolutionise the future of global trade. The subcontinent region investments are made strategically across all major gateways along the west and east coasts, from Mundra, Cochin and Nhava Sheva in the west, up to Chennai and Visakhapatnam in the east coasts. Some of the advantages the Cochin Port offers are a natural harbour with limited tidal variation and a 14.5 m draft adequate to service the largest ships afloat today. Additionally, its proximity to the east-west trade routes offers the shortest deviation from both the Suez and the Middle East routes. Located 11 nautical miles off the Middle East trade route and 76 nautical miles off the Suez route,
Kochi’s proximity to these trade routes makes the terminal a lucrative hub for vessels operating on this route. In addition, a dedicated four-lane highway connecting the major national highways, direct rail connectivity to the terminal and excellent coastal connectivity to all the ports in the country offer multimodal options to the trade using ICTT. Furthermore, barging operations using the wide inland waterway network of Kerala significantly reduces time and cost for local businesses.
CAPACITY, EQUIPMENT AND FACILITIES In the first phase, ICTT has 2,700 ground slots, which will be scaled up to 15,000 ground slots on completion of the project. The terminal has a capacity to accommodate over 100 trailers at the documentation centre (pre gate) and 40 in main ISPS area. The terminal is well constructed and has enhanced supporting infrastructure such as the four-lane national highway that connects the terminal to National Highways 17 & 47. It is also supported with a new 8 km-long electrified rail link that can handle 15 trains a day. In its first phase, the terminal has installed four ZPMC super post panamax quay cranes, which have an outreach of 56 m and back reach of 15 m; its lifting height below and above the wharf is 23 m and 40 m, respectively. It also has two Gottwald MHC cranes that have a reach of 50 m with a lifting height below and above wharf of 12 m and 40 m, respectively. For flexible handling solutions, it has two reach stackers with the capacity of 45T, 15 rubber tyre gantry cranes and one empty container handler.
well-protected firewall, latest computer hardware and software systems, control every aspect of port operations, which help improve the efficiency and optimise productivity for better customer satisfaction. The terminal has successfully commissioned Navis SPARCS/ Express, internationally reputed application software for container terminal operation, which optimises productivity by managing and maintaining terminal business transactions, data processing and accurately recording & invoicing all transactions and services. The entire container yard is covered by radio frequency. Apart from this, it has implemented an Oracle Financials and Payroll package. The payroll module takes care of the organisation’s payroll computation.
SKILL DEVELOPMENT For generations, Kochi has been the ideal location for international trade and commerce. The ancient port of Muziris, which dates back to 1st century BC, stands evidence to the history of international trade in Kochi. And with the commencement of ICTT, Kochi is poised to become India’s gateway to international markets, in spite of competition from other transshipment ports in the region. It has also established an excellent VHF communication system in the terminal for smooth operations. In a nutshell, ICTT is committed to harness IT systems in order to make the terminal at par with international standards.
BEST PRACTICES IT INFRASTRUCTURE IT leverages substantial operational advantages for ICTT. The terminal’s state-of-the-art IT infrastructure, technology and support have been specifically tailored to facilitate the smooth flow of traffic and transaction. Its advanced computer network with
based on criteria like outbound carrier, port of discharge container weight & commodity, thus avoiding re-handling in yards, which, in turn, increases efficiency. Differential global positioning systems (DGPS) installed on all rubber tyred gantry cranes assists their movement in the yard. Using auto steering in the yard reduces the workload of operators, by automatically identifying the container positions in the yard, thus increasing efficiency. Also, there are radio data terminals installed on all containers handling equipment to send & receive work instructions from the central system and update the container information in real time; handheld terminals are used for updating discharge & load moves on the vessel, thereby maintaining high levels of visibility during operations.
The container movements inside the terminal are well planned. The containers are dispatched and monitored from a control centre on a real-time basis. Yard planning (expert decking) using Navis SPARCS gives every container’s real time location. This allows stacking of containers
DP World puts a lot of emphasis on training its workforce both technically as well as in enhancing their management skills. Based on the training need, training programmes are organised internally through the DP World Institute or are outsourced. DP World has also adopted a set of standards known as Fatal Risk Standards (FRS) for the management of safety. These standards reflect our core values, which promote zero harm to people. As we believe that safety is everyone’s responsibility, these standards are implemented by our employees led by the heads of various departments.
PROMISING PROSPECTS In 2010, DP World handled nearly 50 million TEUs across its portfolio from the Americas to Asia. With a pipeline of expansion and development, projects in key growth markets – including India, China and the Middle East – the terminal’s capacity is expected to rise to around 95 million TEU by 2020, in line with market demand. akmal.rahman@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 29
Image by Akmal Rahman B
SPECIAL FOCUS OPINIONS & MORE
MAJOR CHALLENGE BEFORE US IS THE CABOTAGE LAW “With ICTT being positioned as the only transshipment terminal in India, unless there is a relaxation in the cabotage law that allows foreign vessels to carry EXIM cargo between ports in India, the terminal will not be able to perform as a true transshipment hub,” says KK Krishnadas, CEO, DP World Kochi, during an interaction with Akmal Rahman B. Excerpts… SIGNIFICANCE OF CONTAINERISATION Container shipping can reduce our dependency on fossil fuels and more energy-efficient cargo handling operations with lower energy bills will help reduce our carbon footprint. But for this, we need to focus more on optimally utilsing our vast coastline as well as the huge network of inland waterways. This would not only lower logistics cost, but would also reduce fuel consumption apart from decongesting our already congested roads.
MARKET DRIVERS AND RESTRAINTS The market driver is undoubtedly
30 • SMART LOGISTICS • DECEMBER 2011
the growth of manufacturing in India. The country is witnessing a year-on-year (yoy) growth of 18-20 per cent in containerisation. With a current throughput of approximately nine million TEUs across all ports in India, this figure is set to double in the next five years. However, inadequate infrastructure would be a major constraint to cater to this growing demand.
providing handling, storage, customs examination, etc., thus ensuring that all the containers entering the terminal are ready for export. As far as imports are concerned, the containers can be moved to a CFS or an ICD, thereby decongesting the terminal and ensuring that it handles the maximum throughput.
KEY ROLE OF ICDs & CFS
One of the main challenges being faced by International Container Transshipment Terminal (ICTT) today is the cabotage law. With ICTT being
Container freight stations (CFS) and inland container depots (ICD) complement the facilities at the port by
CHALLENGES & OPPORTUNITIES FOR ICTT
positioned as the only transshipment terminal in India, unless there is a relaxation in the cabotage law that allows foreign vessels to carry EXIM cargo between ports in India, the terminal will not be able to perform as a true transshipment hub. Shipping lines will find it difficult to shift their hub from ports like Colombo, which have no constraints when handling Indian containers. Apart from that, infrastructure remains one of key challenges that India faces, and, at DP World, we constantly strive to address these issues. For example, when the government relaxed the norms pertaining to private sector participation in railways, DP World invested in a Category 1 licence to operate freight trains. Also, the objective of setting up Container Rail Road Services (CRRS) was mainly to address the infrastructure issues being faced by customers. We, at DP World, review any opportunity that arises if
we believe that it will add value to the customer.
CATERING TO VARIED DEMANDS Getting greater reliability for lower total cost is one the major concerns of customers and DP World is very much focussed on the same. In fact, India’s first ICTT is one of the examples of DP World’s interest in customer demand. ICTT will provide its customers with better logistics costs by offering direct mainline services from Kochi, which will enable them to eliminate unwanted transportation and transshipment costs to base ports.
BEST PRACTICES ADOPTED All container movements inside the terminal are planned, dispatched and monitored from a control centre on a real-time basis. Yard planning (expert decking) using Navis SPARCS gives every container’s real time location. This allows stacking of containers
based on criteria like outbound carrier, port of discharge container weight & commodity, thus avoiding re-handling in yards, which, in turn, increases efficiency. Differential global positioning systems (DGPS) installed on all real-time gross settlement (RTGS) assists the movement of rubber tyred gantry cranes. Using auto steering in the yard reduces the workload of operators, which automatically identifies the container positions in the yard, thus increasing efficiency. Also, we have radio data terminals installed on all container handling equipment to send & receive work instructions from the system and update real-time container information; handheld terminals are used for updating discharge & load moves on the vessel, thereby maintaining high levels of visibility during operations. akmal.rahman@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 31
SPECIAL FOCUS TRENDS IN CONTAINER LOGISTICS
RIDING HIGH ON THE INDIA GROWTH STORY As investment, integration and innovation in container logistics become the central focus for the future of transport in India, the trends that this sector is witnessing are growing varied and manifold. With multiple emerging opportunities that lie in increasing trade and supportive infrastructure development activities, these trends are slated to change the dynamics of the container logistics business in India. SUMEDHA MAHOREY
WITH the container traffic in India – riding on a growing manufacturing industry – slated to double to 16 million TEUs by 2016 and quadruple to at least 30 million TEUs within the next decade, the container logistics industry has woken up to newfound opportunities in the Indian market. Also, with rapid growth being witnessed in India’s trade with Asia, the backdrop of the Indian container industry has changed to a growth rate 2-3 times higher than that of the US and Europe. In these circumstances, the business trends that this sector is
32 • SMART LOGISTICS • DECEMBER 2011
witnessing are strong and are positively riding on government measures to create a robust maritime infrastructure, increase the pace of execution of these projects as well as industry activities to smoothen the traffic issues.
CONTAINER LOGISTICS: THE INDIA STORY The container logistics business in India started in the 70s as against the 60s in developed countries. The pace of containerisation was slow initially due to inadequate infrastructure facilities, but gained momentum in the
In India, the container logistics business is viewed in two individual but related industries viz. container transport infrastructure and container logistics services. late 80s. As a result, there is low level of containerisation in India — nearly 45 per cent as against around 80 per cent of the general cargo in developed countries. Even today, India is not in the top 25 liner shipping routes in terms of total
Geographical Split Of Container Volumes: Historical & Forecast 2015
720 Mn TEUS
2011
280 Mn TEUS 0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Asia
Europe
North America
Latin America
Africa
The share of Asia in global container trade has been growing at a significant case. From 52% currently, it is expected to grow to 62% in 2015
Source:Transport Intelligence, WTO Source:UNESCAP Container Traffic Forecast, KPMG Analysis
TEU capacity of the vessels deployed for direct shipping services. Also, this industry faces tough competition due to high levels of transshipment of containers at nearby ports of Colombo, Singapore and Klang. But in the present market scenario, while dealing with late entry challenges, the Indian container logistics industry is growing fast riding on global trends of increasing vessel sizes to achieve economies of scale; horizontal integration among lines (consortia/strategic alliances) for cost reduction & improvement in capacity utilisation; lines emerging as total logistics service providers, including functions of terminal operations; increasing importance of IT infrastructure; interconnection of port users and ports for streamlining of information flow; increased emphasis on value-added services; growing awareness of global maritime security initiatives and requirement of coordinated efforts for the same.
TREND ANALYSIS The container logistics business is posting emerging trends that are displacing the current market paradigms and creating unforeseen market opportunities. In India, the container logistics business is viewed in two individual but related industries, viz., container transport infrastructure and container logistics services. There are definitive trends that are shaping each of these two industries in a significant way. According to Manish Saigal, Executive Director and National Industry Head – Transportation &
Logistics, KPMG, the share of Asia in global container trade has been growing at a significant rate. From the current 52 per cent, it is expected to grow to 62 per cent in 2015. The south gateway port market is growing at the fastest rate in India. With significant long-term capacity addition plans, only marginal new capacity is likely to be available in the short term, thereby causing intermittent congestion at Chennai and volume displacement in favour of International Container Transshipment Terminal (ICTT) and Ennore/Katupalli. India’s container traffic growth on the northwest corridor is expected to be met by sufficient port capacity additions at least until 2015. However, congestion in traditional ports, like JNPT, will push the volumes in favour of newer ports like Mundra and Pipavav. Eastern ports are likely to continue to outperform western ports in terms of the container traffic growth rate. Wide, flexible and end-to-end capability will thus, take precedence over narrow modal or cargo type focus. With these geographical trends, the business dynamics of this sector are slated to change. Being positioned as a strong specialised high-end container logistics service provider can be a key differentiating factor for logistics players in this field, especially with EXIM logistics players predicted to enter the domestic arena and vice-versa to create global delivery capabilities. At present, deal activity in the container services segment is dominated by strategic mergers and acquisitions (M&As) – both inbound
and outbound – mainly as large freight forwarders expand their presence in key markets. With this, the opportunity to enter different regional markets has increased with strategic partnerships in place. Also, deals in the core infrastructure space, such as port or rail infrastructure, has slowed down owing to perceived softness in the public private partnership (PPP) framework and issues such as project delays, litigation and tariff control, etc. Adding to this, freight forwarding has emerged as an essential service, especially in emerging markets. Other emerging opportunities that are coming in with the growth of the container business include: • Control over cargo offering opportunities to enter into other integrated businesses profitably • Indian domestic market causing significant import-driven trade growth, which allow entry into domestic logistics • Freight forwarding is a game of scale and a high growth, fragmented market like India is an ideal ground for consolidation • Given the perceived lack of good
UICK TAKE • The pace of containerisation was slow initially due to inadequate infrastructure facilities, but gained momentum in the late 80s. • As a result, there is low level of containerisation in India — nearly 45 per cent as against around 80 per cent of the general cargo in developed countries. • Even today, India is not in the top 25 liner shipping routes in terms of total TEU capacity of the vessels deployed for direct shipping services.
DECEMBER 2011 • SMART LOGISTICS • 33
Trends in container logistics, continued
corporate governance, there will be a premium for well managed businesses with clean books and good controls. As per Saigal, on the container infrastructure side, business trends include a significant demand chasing already choked capacity especially evident in ports, road and rail infrastructure and India’s rapidly rising trade with the rest of Asia forcing gradual but significant infrastructural focus on the east coast of India. On the container focussed logistics services side, it is evident that companies, which are able to quickly build scale in this fragmented market, shall have a greater chance of success. In this regard,
be the key shapers of the container logistics segment over the next decade have started showing their effect on the Indian market. These include the following: • As intra-Asia trade gains prominence, the eastern ports are likely to continue to outperform the western ports in terms of container traffic growth rate • Being positioned as a specialised high-end niche cargo focussed container logistics service provider can be a key differentiator and wide, flexible and end-to-end capability will take precedence over the narrow modal focus • EXIM logistics players will enter
Container Traffic: Historical And Projections 18000
0.54 0.53
16000 0.51
15,372 0.52
0.51
14000 0.50 0.49
‘000 TEUs
12000 0.48
14,011
0.49
0.50 12,077
0.48
10000 8000
0.46
0.48
10,494
0.46
9189 7618 7871
6000 4000
0.54
0.52
0.46
8130
6248 4010 4525
0.44
5168
0.42
2000 0
0.40 2004 2005 2006 2007
2008 2009 2010 2011
Container Traffic
the development of scale refers to expansion in the domestic market apart from development of a global footprint as well as a focus on service innovation, especially in the markets of the future, viz., Asia and Africa — organically or through M&As. Besides, parcel sizes of large shippers are expected to increase significantly. This is increasingly prompting service users to reduce the number of suppliers to a few capable ones, which offer multi-modal and well integrated logistics solutions.
TREND FORECASTING Some of the key trends that can
34 • SMART LOGISTICS • DECEMBER 2011
2012 2013 2014
2015
Containerisation Level
the domestic arena and vice-versa to create global 3PL delivery capabilities • Private Equity (PE), M&As in container business will continue to be on the rise after 60 deals in 2006-YTD 2011; M&As to be further driven by consolidation-driven value creation in the forwarding segment. According to Kejas Shah, Director, Orbit Container Services, throughout 2010 and 2011, the demand has been strong as the containers were in short supply. However, since the last 40 days, due to uncertainty in the western
With rapid growth being witnessed in India’s trade with Asia, the backdrop of the Indian container industry has changed to a growth rate 2-3 times higher than that of the US and Europe. world, the demand for container equipment has slowed down and intraAsia, which accounts for 38 per cent of the movement, has also tapered due to the slowdown in China. The prediction for next year is that the market demand for containerisation should pick up after the Chinese New Year. With increase in the container logistics industry, supportive infrastructure also needs to be upgraded. According to S Hajara, Chairman & MD, Shipping Corporation of India, to satisfy the growing demands of trade, upgradation of port infrastructure in terms of longer berth lengths, wider ship turning circle, deeper access channels/drafts will be required. Also, the scope for additional tonnage to maintain schedules needs to be created. With some key industries/sectors expected to grow at very healthy rates and the manufacturing sector targeting a 12 per cent growth rate, there is a need for coordinated development in ports to avoid disparities in port throughput capabilities at opposite ends of the supply chain.
A LUCRATIVE OUTLOOK With the increasing trend towards global outsourcing of manufacturing and India’s potential to become a true global manufacturing hub, the container logistics business in India is slated to rise to new highs in the next five years. In this context, the trends that the segment is witnessing will decide the future shape and direction of the Indian container logistics industry. sumedha.mahorey@infomedia18.in
Image by Prerna Sharma (Gateway Terminals of India)
CONTAINERISATION IN INDIA SPECIAL FOCUS
EXPLORING PROSPECTS BUNDLED WITH PORT
INFRASTRUCTURE DEVELOPMENT With the government aiming to create world-class port infrastructure in India, the opportunities for new and attractive locations for the development of container freight stations has grown manifold. Amid this scenario, booming trade relations with Asian countries are adding new chapters to the containerisation growth story. And with the containerisation business in India gaining ground, the industry is all set to reap the opportunities that lie beneath the growth of port infrastructure in India. SUMEDHA MAHOREY
THE container traffic at all Indian ports has increased at a compound annual growth rate (CAGR) of 13.95 per cent during the period 2000-01 to 2010-11 including a CAGR of 11.81 per cent for major ports. During these periods, containerised cargo has gone up from 2.47 million TEUs to 9.11 million TEUs. Efficiently handling this increased traffic are new ports like Ennore, Hazira, Vallarpadam, Dhamra and Pipavav, which are emerging as
attractive locations for the development of container freight stations (CFS). These CFS’ are helping the industry tackle the new container traffic growth figures posted this season.
INCREASING TRADE AND IMPACT ON CONTAINERISATION With the growth of external trade with Asia and other countries being faster than the growth of the gross domestic product (GDP), strong trends in
the growth rates of container trade are expected to continue in future as well. And with continued strong trends in the growth of GDP and the need of the industry for value-added services, the possibilities of growth in container traffic in the domestic sector are immense. As a result of the acceleration of growth of the Indian economy, global trade traffic at Indian ports in terms of export and import activities has been rising concurrently.
DECEMBER 2011 • SMART LOGISTICS • 35
Containerisation in India, continued
With all this and more expected to occur, supportive infrastructure in the form of logistics parks and large cargo hubs will be the requirement of the industry in the near future. But what does this mean to the container logistics business? At present, India’s container volume is estimated at 15 million TEUs by 2015. This increased traffic will result into congestion at traditional ports in the west & south, thereby displacing volumes in favour of newer ports. These newer ports will thus become the new hotbeds of growth for the container logistics business. Minor as well as new ports are already registering huge growth and profits as compared to traditional ports like JNPT — the reason behind the same remaining less option for expansion and easing of traffic congestion. With the development of new ports and the emergence of non-major ports as the major calling ports, the container logistics business in India will grow at an even faster rate. According Mantrana Maritime Advisory, in 2009-10, representing 1/3rd of the total port traffic handled by all the Indian ports, the non-major ports’ cumulative cargo traffic was close to 289 mnT as compared to about 87 mnT in 200001 and 137 mnT in 2005-06. The share of cargo handled by these nonmajor ports has increased from 10.9 per cent in 2000-01 to 34 per cent in 2009-10. It is also believed that the major portion of the growth in cargo traffic witnessed by all the ports in India came from these non-major ports mostly in Gujarat. Non-major ports in Gujarat accounted for a majority of the nonmajor port traffic. A large share of non-major port traffic comes from captive ports owned by various industries, such as Reliance in Sikka, Essar in Hazira and Ispat in Dharamtar; others are mostly private ports. The substantial rise of non-major port traffic in a short span of time could be attributed to better location, higher
36 • SMART LOGISTICS • DECEMBER 2011
productivity, faster turnaround time, better connectivity, etc. Most of the non-major ports have been planned keeping the latest shipping trends in mind. Hence, they score over most of the major ports, which were planned and commissioned several decades ago. Major ports have also undertaken aggressive expansion plans to suffice the need for more space arising out of increasing container traffic. These plans are to undertake capacity augmentation in various forms, such as dredging, development of new berths on a public private partnership basis, acquisition of new equipment, improvement of connectivity, etc. These infrastructure developments will, in turn, intensify the flow of goods due to smoothening of processes and services, thereby leading to increased container traffic. However, the shifting of volume towards non-major ports is quite evident. Capt Arun Karkare, Director, Sai Techno Consultants, avers, “Nonmajor ports are generating more profits as compared to major ports, like JNPT because of their accessibility, connectivity to global trade routes and less turnaround time.”
REASONS BEHIND INCREASING CONTAINER VOLUMES The growing volume of container trade and containerised cargo directly indicates the economic growth of the country. In India, container trade has more than doubled during the last decade. However, the port volume for containers has increased more than the trade itself. The reasons for that is the more logical movement of containerised cargo through more accessible nonmajor ports. With the GDP of western nations growing at a slower pace than the Asian markets, India has gained from the losses that western developed countries had incurred. Thus, even though India handles a major share of the global container trade, it still lags behind Hong Kong and Colombo. As India aims to become the global manufacturing hub, overseas companies
are now looking at the country as a low-cost and skilled manufacturing base. This has acted as a huge credit for the growth of containerisation in India. Also, renewed focus on India has brought with it new definitions of the mother and feeder vessels to carry increased loads. The second reason for high growth in container trade has been the inclusion of break bulk cargo. So, gradually, the percentage share of break bulk cargo in the total trade is falling and most of these break bulk cargoes are being converted into containerised cargoes for convenience, faster movement and door-to-door delivery. As per Mantrana Maritime Advisory, this trend is likely to continue in the future and will lead to an increase in the number of container ships & containerised cargoes, thus resulting in containers with larger volumes. Also, India has a higher share in imports rather than in exports. With the government and industries focussed on making India the global manufacturing hub, owing to upcoming SEZs and other economic benefits to manufacturers, several new manufacturing units are likely to be commissioned in India. This could lead to a rise in the export-driven container volumes in India.
ABSORBING POSITIVITY With the Indian containerisation business gaining ground due to the overall growth of the economy, the future for this industry is bright. With trade volumes picking up, ordering & commissioning of bigger ships and reducing costs of end-to-end logistics, containerisation in India is bound to grow. With right infrastructure development in the form of berths, ports as well as container handling facilities, the containerisation business will witness stronger trends in the future. What remains to be seen is whether the government is able to sustain this inertia in a positive light. sumedha.mahorey@infomedia18.in
CONTAINER HANDLING TECHNOLOGIES SPECIAL FOCUS
TAKING THE AUTOMATED ROUTE TO PERFECTION Constant growth in container traffic and the associated threat of cargo handling gridlock are driving the development of automated solutions for terminal handling. This, in turn, initiates the smooth flow of containers at ports and container terminals. Here’s featuring some of the latest technologies in container handling… SUMEDHA MAHOREY
MOORMASTER Innovator: Cavotec Description: MoorMaster is a vacuum-based automated mooring technology that eliminates the need for conventional mooring lines. Remote controlled vacuum pads recessed in, or mounted on, the quayside, moors and releases vessels in seconds. The technology dramatically improves safety and operational efficiency, and also enables ports to make infrastructure savings. It has performed more than 40,000 mooring operations at ferry, bulk handling, Ro-Ro, container and lock applications around the world.
RTG SOLUTIONS Innovator: ABB Description: ABB’s green RTG System provides 30 per cent fuel savings. The RTG crane control system’s design is based on seamless integration of controllers, drives, an information management system and low voltage equipment. The control system consists of three control network levels, which greatly reduces structural complexity. The hardware and software of the RTG crane control system features the modular design concept, which in addition to maintaining the basic functionality of the crane, enhances the overall integration level by facilitating the addition of new functions to the system in response to the new developments, needs and changes in the industry.
AUTOMATED STACKING CRANES Innovator: Gottwald Description: Automated horizontal transport of containers and heavy loads in terminals and industry can be achieved by using automated stacking cranes. The reliability of the overall concept is based on the successful application of AGV technology to hundreds of vehicles already in use in ports and the fleet management and navigation software developed in-house. To date, no other manufacturer has installed a comparable AGV system in such locations. The advantage points include latches on the lifting platforms to ensure that the containers are held securely in place; wind and long rope fields on the quay crane are less of a problem to quay crane operators as the guides and positioning markers help to place the containers quickly, safely and accurately onto the vehicle; soundproof diesel-electric drives with speed-regulated diesel engines minimise fuel consumption and exhaust emissions. Additionally, sensors on the lift AGVs enable them to enter the passive rack with utmost precision while avoiding collisions.
DGPS ON RTGs Innovator: DP World Kochi Description: To enhance its operational excellence by technological advancements, DP World, Kochi, has introduced differential global positioning system (DGPS) on its rubber tyred gantries (RTGs) at the International Container Transshipment Terminal. This system enables automatic tracking of containers each time it is handled by an RTG, thereby making tracking of containers in the terminal operating system more effective and precise. Any container lifted from the container stack/truck and placed on truck/stack is updated into the system automatically. The DGPS system will aid DP World’s effort to increase operational efficiency and provide top of the line service to its customers. The DGPS System works with the guidance of geo-positional satellites moving around the equator, which track the satellite antenna installed on the crane and a stationary reference antenna installed on a building in proximity. Both these features help improve operational efficiency, accuracy of location & safety and save operator’s time & effort.
DECEMBER 2011 • SMART LOGISTICS • 37
Container handling technologies, continued
CARGOMOVER Innovator: Siemens Transportation AG Description: CargoMover is a redesigned, self-propelled, automated flatbed rail freight car with a payload of up to 60 tonne. The current design uses a low-emission, low-noise diesel motor. Siemens suggests that seven alternative traction systems, such as electric motors and even emission-free fuel cell motors can be applied as well. The vehicle is fully automated, controlled by the central computer and directed by wireless communication. The path of the vehicle is pre-programmed. The algorithm that supports the system controls and manages interactions between the CargoMover and other vehicles along the way, so that higher priority passenger and freight services on a given corridor are not blocked or delayed. This type of control leads to better utilisation of the capacity available in the rail network. The system provides for high level of safety through a combination of electronic interlocking system controlled from the main control office that monitors the movement of each vehicle in the network. The CargoMover also features pioneering sensor technology mounted on the vehicle itself that substitutes for the driver’s eyes and hands.
AUTO-GO Innovator: Titan Global Technologies Description: Auto-GO is a unique freight monorail concept that utilises linear induction motors. It is an overhead cargo container handling system for moving containers from port to other inland intermodal facilities and vice-versa. The system consists of overhead guide rail and shuttles that carry containers. Auto-GO shuttles are fully automated using linear induction magnetic propulsion. Features: The advantages of this technology include no interaction with surface traffic and therefore, no accidents or delays in shipment due to surface traffic conditions; reduced cargo handling; improved security due to the cargo being high above the ground; economic efficiencies achieved through reduced operating and handling labour costs, since the system is fully automated, reduced waiting in traffic and reduced administrative cost; ability to operate in nearly any weather conditions.
CONTAINER COLLATING MACHINE Innovator: Morrison Container Handling Solutions Description: Morrison Container Handling Solutions’ container collating machine uses exclusive technology to collate containers one up, one down, back to front and in an alternating pattern, thus resulting in a tight package. Designed by Morrison’s skilled engineering team, this machine uses less packaging material and produces packages that fit in a much more compact space. With a smaller physical and environmental footprint for containers packaged with this system, the savings in materials and space lead to cost reductions, less wastage and greater production efficiencies.
STACKING CRANE AUTOMATION Innovator: Kalmar Automation Description: Automatic stacking cranes (ASCs) are rail mounted cranes used for yard stacking and in-stack transportation of containers in the stocking area. The storage capacity is very high, thereby resulting in effective land usage. Housekeeping can be done effectively during off peak hours, thus maximising throughput during peak hours. ASC systems are operated unmanned and supervision is required to monitor the operational process and handle the remote control systems used for example loading and unloading road trucks. The ASC system is the optimal solution for large terminals. It reduces overall operating costs and increases the utilisation rate of equipment. It also offers high stacking density with low labour usage and is designed for 24/7 operation.
H16.00-22.00XM-12EC RANGE Innovator: Hyster Description: The Hyster H16.00-22.00XM-12EC range has the ability to stack 9’6” containers 7-high (2 on 5) and 8’6” containers 8 high (2 on 6). This technology allows operators of container yards to maximise both, the available space and productivity; thereby increasing the speed of the handling operations and keeping operating costs down. For extra flexibility, The Hyster ReachStacker, featuring extendable boom, represents a more flexible solution, which enables container yard operators to stack laden containers up to 3-deep. The ReachStacker, in addition to container handling applications, is also adaptable to intermodal handling, thanks to extendable legs, thus enabling the machine to ‘pick’ trailers, for example, from railway carriages on the second rail.
38 • SMART LOGISTICS • DECEMBER 2011
CONTAINER DESIGNS SPECIAL FOCUS
INNOVATION WITH A DASH OF TECHNOLOGY Containers have come a long way in terms of innovation and technology. Manufacturers have not only started using new technologies, but have also taken the green route; there are innovations in containers, which not only check carbon emissions, but also consume less electricity and cut down on transportation costs. Presenting unique container designs that are slated to transform the scope of containerisation across the globe… NISHI RATH
SOLID PLASTIC DIVIDER SHEET FOR THE RIGID CONTAINER INDUSTRY Innovator: Rehrig Pacific Company Description: This new divider sheet works seamlessly in automated systems by matching the required specifications for coefficient of friction, stiffness, flatness and elasticity. They are designed specially for the metal container industry and are ideal replacements for fibre or corrugated sheets. Features: These reusable tier sheets can be customised to meet the requirements and are available in a number of standard and FDA compliant colours. In addition, they also offer customised printing to add logos or product specifications. These sheets do not absorb moisture that can harbour bacteria & other contaminants and can be cleaned or disinfected to deliver product protection. They can be reused for immediate cost savings. These sustainable products are made using 100 per cent recyclable proprietary copolymer polypropylene.
COLLAPSIBLE CONTAINER Innovator: Container Essentials LLC Description: The Cobra Collapsible Bulk Container system is designed for all recyclables; including paper, metal and plastics. The heavy duty injection moulded Cobra containers hold up to 2,500 lbs of scrap recyclables and then collapse flat for easy storage & return shipment. “The new Cobra Collapsible Bulk Containers collapse flat and stack after use for maximum efficiency and savings on return freight,” said Steve Phelps, President, Container Essentials, adding, “The heavy duty construction combined with the innovative collapsible design provides customers with a lasting product that will boost productivity.” Features: Other features of the Cobra Collapsible Bulk Container system are its steel corners and runners, four-way forklift access, and reinforced base & legs for maximum durability. Innovator: Cargoshell Description: Several modifications have been made to the design ever since the container was launched in June 2009, the most radical of which has been replacing its rolling door with a conventional hinge system. Features: The container is made of composite materials, which is almost 25 per cent lighter than conventional steel containers. These have roll-up doors and would allow containers to be stacked near each other and thus save space. The use of these containers will save fuel as lesser power will be required to carry it. It will also help reduce carbon dioxide (CO2) emissions. The composite material ensures that the containers do not corrode and protects the cargo from fungi and other microorganisms, which eliminates the need for using toxic paints. The containers have better insulation properties in comparison to conventional steel containers. Additionally, unlike steel containers, composite containers do not interfere with global positioning system (GPS) signals and transmitters. Moreover, composite containers can be easily fitted with tracking and monitoring devices.
DECEMBER 2011 • SMART LOGISTICS • 39
Container designs, continued
FOLDING CONTAINER Innovator: Staxxon Description: The vertical folding container solution addresses the cost and inefficiencies that arise in moving empty intermodal containers. The company’s patented technology is utilised in steel containers that fold from left to right. These containers not only reduce operational costs, they also help reduce the size of a shipper’s carbon footprint. The reduced number of moves and lifts of empty containers will result in minimal electricity consumption by the trucks at the terminal and result in fewer trucks moving through the terminal gate.
REEFER CONTAINERS FOR SEAFOOD TRANSPORTATION Innovator: Klinge Corporation Description: The Blast Freezer Model CBU-30 is especially designed for transporting high-value types of fish, such as yellowfin tuna, and is designed to freeze loads to an ultra-low temperature directly after being caught. The system also functions equally well for pre-frozen cargo. Features: Blast freezing yellowfin tuna and other high-value fish to an ultra-low temperature of -60ºC (-76ºF) substantially reduces transportation costs, as the fish can be transported by a container ship rather than being air freighted. The unit’s evaporator fan is designed to press the air through the load to ensure even temperature throughout the load. In addition, the blast freezer is fitted with a special thawing module, which features a series of probes that monitor the thawing process by transmitting real-time temperatures to a microprocessor that is then analysed. The microprocessor calculates the rate of temperature rise in the cargo and adjusts the temperature to provide the thaw rate without surpassing the predetermined core and surface temperatures. Applications: The shelf-life is increased when tuna is frozen to -60ºC (-76ºF) and thawed in a controlled environment, at the time of customer selection.
ALL COMPOSITE SEA FREIGHT CONTAINER FOR MARINE INDUSTRY Innovator: Gold River Productions, Inc. Description: Gold River’s technologies and fibre-reinforced thermoplastic sheets are thermo-fused to a honeycomb or insulated foam core to create a superior lightweight, highly impact resistant and very durable sandwich panel. Using custom-designed, high-speed panel manufacturing processes, the company is able to manufacture sea freight containers using all-composite materials that are up to 60 per cent lighter than those being currently used. Features: No volatile organic compounds are emitted during the process. Besides, the containers are recyclable. Since the panels are made using thermoplastic rather than steel, they also have the ability to enhance border security imaging, screening and detection processes.
NEW AIR FREIGHT CONTAINER FOR PHARMA PRODUCTS Innovator: Cool Containers Description: PharmaPort 360 provides better protection and monitoring to temperature-sensitive pharmaceuticals, vaccines and biologics. It safeguards healthcare shipments in the supply chain by enabling near real-time monitoring and maintaining product temperatures in extreme outside conditions. It is designed with input from both the life sciences and transportation. Features: PharmaPort 360 keeps strict temperatures using heating and cooling storage technology, thereby allowing it to tolerate a wider range of extreme ambient temperature changes. It also sustains its protective temperature range for more than 100 hours, which allows healthcare products to travel farther to reach the markets. The container’s temperature control and monitoring systems are powered by an AC rechargeable battery and do not need dry ice.
40 • SMART LOGISTICS • DECEMBER 2011
FLEXITANKS SPECIAL FOCUS
OFFERING SECURE LIQUID TRANSPORTATION Sun Logistics, along with a handful of firms, introduced ‘flexitanks’ in the market. Despite the multiple benefits that it offered users, the industry was wary of using it fearing loss of cargo apart from being sceptical of whether it would withstand the vagaries of sea, rail or road transportation. Convinced by the value and applicability of the product, Sun Logistics implemented measures such as educating potential customers and holding trials in the plants of Indian exporters to demonstrate its capacity and strength. These efforts have helped the product earn customers’ confidence. TRADITIONALLY, liquid cargo has been carried in tank containers. The introduction of tank containers in the mid-1980s had helped the market move from transportation of liquids in bulk or in drums packed in dry containers. This has helped in achieving unitisation of liquid cargo and has offered efficiency through an elimination of the need for drums as well as ease of multi-modal distribution. Recently, Sun Logistics, a specialist liquid logistics service provider (LSP), pioneered, together with a handful of firms, to introduce ‘flexitanks’ in the market. Flexitanks represent a significant innovation over existing methods. A flexitank is a costeffective, single use, biodegradable packaging, which is placed inside a container converting it into a tank for carrying liquid cargo such as non hazardous chemicals, wines or juices.
COMPLICATIONS INVOLVED The complication was that in spite of the significant benefits offered by flexitanks, the industry was reluctant to accept it since it represented a step change from traditional carriage methods, thus potentially depriving this innovative product of the time it takes to gain a foothold in a new market and worst still, possibly depriving the market of the innovation itself. The concerns of customers could be summed up under the following three heads: • General reluctance towards change • Flexible packaging, hence the fear of ‘losing’ the cargo • Whether flexitanks can survive the vagaries of a sea voyage or transportation by road or rail, especially in the context of the state of infrastructure in India.
RESOLUTIONS ARRIVED AT Surprised by the reaction, but convinced by the value and applicability of the innovation in the context of its customers in India, Sun Logistics took it upon itself to change the customers’ mindset into accepting the flexitanks using the following measures: • Sun Logistics initiated an educational programme to educate potential customers about the uses of flexitanks. Samples of bags were specially developed and handed over to customers to check the compatibility of their products with the construction materials. Meetings were held with customers to explain to them the savings they can expect by transportating in flexitanks. Trials were held in the plants of Indian exporters to demonstrate the capacity and strength of the product to them. Customers were educated about the pumps to be used, the correct filling temperatures and proper installation of the flexibags. • Insurance was made available to all customers for loss of cargo, including those made on thirdparty claims against any leakages due to manufacturing defects. • The continuous R&D carried out helped develop a product that was compatible to the Indian climatic and infrastructural conditions. For this, the factors that were looked into included: - All leakages were investigated for cause and tests were carried out to double check the compatibility of products with construction materials - An understanding of the international requirements in manufacturing of flexitanks and
adding to the product the Indian requirements to attain the most optimum product - Impact tests were conducted at TUV Germany twice to study the impact and force on flexitanks during their voyage at sea. Impact test were performed at Transportation Technology Centre, Inc., Association of American Railroads (TTCI AAR) USA, for testing the withstanding force of 2G.
OUTCOME AND IMPACT The impact of the measures undertaken by Sun Logistics resulted in customer trials which, in turn, helped further build customer confidence. This, in turn, meant significant cost and operational advantages for these customers. For instance, in a standard 20 feet container, flexitanks increases the carriage capacity by over 50 per cent as compared to the use of drums. Besides, the purchase price and disposal costs of a flexitank are 30-40 per cent lower than those of drums for the same volume of freight. Also, flexitanks obviate the need for cleaning, which is mandatory in the case of tank containers. In addition, balanced return loads, often crucial to the commercial viability of tank container movements, is not a factor for flexitanks. One of the softer outcomes of this case is the learning that it may often not be enough to introduce an innovation in the marketplace with the assumption that its advantages will automatically lead to its acceptance. Courtesy: KPMG India and Supply Chain Leadership Council.
DECEMBER 2011 • SMART LOGISTICS • 41
INSIGHTS & OUTLOOK OFFSHORE OIL & GAS LOGISTICS
ENCASHING THE
NELP OPPORTUNITY With India’s energy demands set to increase fourfold, the offshore oil and gas (O&G) sector has got encouraging support from the Indian Government, directly impacting the offshore O&G logistics segment. With offshore exploration & production activities gaining ground, logistics service providers are witnessing huge growth prospects. SUMEDHA MAHOREY
PRESENTLY, the offshore oil and gas (O&G) sector accounts for 67 per cent of India’s total crude oil production. The offshore fields at Mumbai High, Rava, Gulf of Cambay and others produce about 23 million tonne of crude oil per annum. Offshore oil reserve basins in India are located on the east and west coasts. On the west coast, the major fields are in Mumbai High, Gulf of Cambay & Kutch, while Cauvery Offshore, Krishna-Godavari (KG) Offshore (deep & shallow), Mahanadi and Andaman are on the east coast. The other offshore discoveries have been made by ONGC in its deepwater KG Block with three fresh discoveries in April 2010. Essar Oil recently made an offshore discovery of 2.7 million barrels of oil in Gujarat’s Mehsana block. Another recent discovery was made by Gujarat State Petroleum Corporation (GSPC) with reserves of 3.6 TCF in its Deendayal block in the KG basin.
OPPORTUNITIES THAT LIE WITHIN If the Integrated Energy Policy of the Planning Commission, Government
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of India, is any indication, then the country’s energy demand is set to grow four-fold from 433 MTOE to around 1,856 MTOE by 2032. However, India has to depend on the foreign inflow of oil to meet the ever-rising demand. In order to facilitate offshore O&G exploration and to encourage offshore drilling, the Centre has come up with a phased auction of seabed plots to both private and public players. Termed as the New Exploration Licencing Policy (NELP), this policy has, so far, awarded 235 exploration blocks from NELP I to NELP VIII rounds. Thanks to NELP, 50 per cent of India’s sedimentary basin area is under offshore exploration. This has resulted in an increase of hydrocarbon reserves equivalent to 600 million metric tonne. As part of the NELP programme, firms are encouraged, via incentives, like tax exemptions on imports, low to moderate royalty rates, concessions for deepwater blocks, etc., to explore in deep seabeds. Foreign direct investment (FDI) in exploration (including offshore), refining (private sector only) and retailing of petroleum
products, has been allowed up to 100 per cent. Gradually, the Indian oil sector is moving from a subsidy and price-controlled environment to a free market, and along the way, paving the way for initiatives in offshore logistics.
AT THE HEART OF ALL MATTERS Offshore O&G logistics is a critical function in this industry. Explaining its role, Vinay Sharma, MD, OWASCO Offshore, elaborates, “O&G’s success and failure depends on the logistics service provider. In O&G, time is costlier than dollars on two accounts. Firstly, safety, because when we are working in the offshore environment, there is limited space on the rigs and we are working at 3,000 mt water depth, nearly 50-60 nautical miles away from the shore. Secondly, the drilling process is very costly. One rig working in the offshore will cost around $0.5 million a day including the rent of the rig and the peripheral services. So, the losses could be huge. Thus, it is all about right planning, right people, right methods and right systems.”
Explaining the intricacies of the hierarchical standing of an offshore O&G logistics service provider, Sharma highlights, “There are three layers of functions during the exploration & production (E&P) activity in the O&G sector. The first top layer belongs to operators like ONGC, Reliance, etc. These are the operators who have been assigned blocks for E&P. This becomes the first circle. The second circle belongs to the service providers, followed by providers like us providing services to these companies in the second circle. We, on the third circle, take care of the complete offshore groundwork.” He adds, “If a rig has to operate, 90-95 per cent of the material equipment, consumables and returnable is sourced from outside. The first step here is freight forwarding of major requirements from all over the world. Subsequently, after custom clearances and trucking, the material goes to the rig as per the requirement. After the job is completed, these materials are brought back to the store base. The rented material or capital goods are then returned. Thus, it is a full chain of services provided by logistics service providers, like us.”
CHALLENGES GALORE Experience, technical know-how, skill set and right manpower are some of the biggest challenges underlining the Indian offshore O&G logistics business. Sharma elaborates, “The biggest challenge in the Indian market is that there are very few players who have got hands-on experience. Though there are companies providing services, they are providing services merely because there is nobody else. Internationally, there are companies who are big, experienced and who are looking at multiple locations all over the world. Another issue is that the skill set required in O&G needs to be raised. This will bring about a safe working culture – an utmost necessity in the O&G sector; then follows improvement in productivity, time
and cost savings. New companies are entering this sector, but there is still a lack of educational or training institutes in this domain.” Also, as compared to the global markets, Indian offshore O&G logistics service providers are poorly equipped. Technology penetration in this segment is very low.
INCREASING DEMAND In the Indian offshore O&G business, the transportation needs are going up by the day. Some of the specialised offshore vessels contain sophisticated equipment and machinery on board. While working in harsh environments, machinery incur extensive wear and tear, which lead to increase in breakdown and subsequently, increase in operation & maintenance costs. Anchor Handling Tug (AHT), Anchor Handling Tug Supply (AHTS), Platform Supply Vessel (PSV) and Multipurpose Supply Vessel (MSV) constitute nearly 90 per cent of the 190+ supply vessels presently servicing the Indian offshore rigs. AHTS occupies a little over 50 per cent of the total lot. Of these, nearly 3/4th of the vessels are foreign registered. Offshore vessels like PSVs provide essential supplies to offshore drilling rigs, including fresh water, fuel, food, machinery, etc. PSVs also support production platforms. Offshore vessels like the AHT also do the job of towing and anchoring the drilling rigs. In addition, some vessels perform the job of transporting personnel and emergency & rescue services. With the widespread realisation that deepwater & ultra-deepwater is the way to go, AHTs and small-sized AHTS’, which serve jack ups and which are used in shallow-water E&P activities, will eventually be replaced by high-spec AHTS and PSVs. And the rising industry demand would make sure that the transition is made sooner. With the demand for offshore logistics services bound to increase, the demand for these specialised vessels is bound to go up. Offshore vessels,
whose demand has increased the most has become mthe multipurpose supply vessels due to its ability to multitask. These vessels reduce the total number of vessels needed to complete an offshore job.
PROMISING YET CHALLENGING The offshore O&G logistics business has hit a jackpot with NELP round IX. Sharma elaborates, “In India, the logistics of O&G is governed by NELP. NELP IX round has already taken place but the actual work of E&P has happened only up to NELP V. Work related to NELP rounds VI, VII and VIII is still in progress. Also, the number of operators has increased after NELP V. So, many activities are anticipated, which will create opportunities for service providers in the logistics part of this sector. Operators who have been allotted blocks under NELP have given commitment to the Indian Government that they will undertake a pre-specified amount of drilling. In offshore, a single well can cost anything between $20-40 million, depending on the depth of the water. To protect its interests, the Indian Government has taken a bank guarantee from these operators. If these operators do not initiate the activities, the government plans to encash the bank guarantee and ban the operator from future bidding processes. Thus, to protect their bank guarantee, they will have to initiate the drilling process. This means that these operators will have to initiate exploration, which implies business for logistics service providers in the near future.” With support from the government and the increasing energy demands, the offshore O&G logistics business is slated to witness a golden period in the next decade. Only the lucrative potential at the end of the pipeline needs to be tapped into amid all the challenges. sumedha.mahorey@infomedia18.in Inputs from Mantrana Maritime Advisory
DECEMBER 2011 • SMART LOGISTICS • 43
INSIGHTS & OUTLOOK 3PLs FOR OIL & GAS COMPANIES
C
LLAB
RATING
TO CREATE EFFECTIVE PARTNERSHIPS Third-party logistics (3PL) service providers play a key role in ensuring the smooth functioning of a supply chain and enhancing its efficiency. Hence, selecting the right 3PL service provider is a vital task for a company. However, when it comes to oil & gas companies, ensuring the right 3PL service provider to collaborate with becomes all the more critical as transporting petroleum products requires utmost care. These handy tips will help you partner with the right 3PL... NISHI RATH
THE petroleum industry plays a significant role in the economic development of a country. The very nature of the petroleum industry calls for extra attention from the supply chain domain, especially the third-party logistics (3PL) providers. Companies dealing in this niche vertical therefore need to be very careful while selecting a 3PL provider. Here are some of the factors that the oil & gas companies should keep in mind before finalising on a logistics service provider: Dedicated fleet for products Different petroleum products have different chemical properties and using the same carriers might lead to the adulteration of products. Hence, there is a need for a dedicated fleet of carriers for each of the petroleum products. Reputation Petroleum products are essential and scarce. Hence, they need to be transported through reliable means. Carelessness in terms of selecting the 3PL provider might lead to pilferage and theft among other abnormal transit losses. Technology Over the years, technology has grown to become a crucial parameter while selecting a 3PL service provider. Companies now prefer to choose 3PL service providers that offer advanced technological solutions. This not only
44 • SMART LOGISTICS • DECEMBER 2011
enables efficient operations, but also provides customers better returns. Past experience As is the case in every industry, here too, an experienced player is in a better position to bag more business than others. A good past record and experience in dealing with the same product are factors that oil & gas companies take into consideration. Apart from this, a 3PL service provider will also stand to gain if it has indepth understanding of the oil & gas markets. Skilled manpower Before finalising on a 3PL provider, skilled manpower, which focusses on the non-management segment, is another important factor that an oil & gas company looks for. If the workforce has prior experience in dealing with the same industry type, it adds to the pros of selecting the logistics provider. Geographical factors Geographical factors play a key role in determining the preferred mode of transport, viz., through land, air and sea. Land transportation is always the preferred choice, wherever possible, as it involves lower costs. Besides, a more transparent system with direct connections between the source and the destination facilitates the transportation of small and frequently transported consignments.
Communication Proper communication is very important between the company and the 3PL service provider. A 3PL provider should see to it that there is no lack of involvement, which may hamper the transfer of information to and fro. Time management Time-sensitive strategies have become one of the main aspects of supply chain management these days. Hence, the 3PL service provider should focus on using the routes which would transport the products in the least possible time.
PROMISING PROSPECTS AHEAD Opting for a 3PL provider not only saves time, but is also a cheaper option, as companies do not have to take care of the maintenance of the transport vehicles and the management can look after other things in the interim. Major players seem to have understood this fact. Moreover, with India growing as one of the emerging economies, various businesses are expanding, which, in turn, is generating ample opportunities for 3PL players to enter the market and offer cost-effective logistics solutions. nisi.rath@infomedia18.in With inputs from Vishal Srivastav, Deputy Manager, CARE Research
Illustration By Sanjay Dalvi
OUTSOURCING BEST PRACTICES INSIGHTS & OUTLOOK
The need to contain supply chain costs to remain competitive while managing the uncertainty of today’s economic conditions has provided companies an opportunity to re-examine the option of outsourcing various supply chain functions. In a bid to manage these, companies have turned to third-party logistics (3PL) providers to perform these logistics functions. Summarising how a company can consider the outsourcing option and learn about overall best practices… act as an extension of the company. capabilities of emerging logistics service A recent Chief Supply Chain Officer There is, however, one question that providers (LSPs). These are not just (CSCO) survey of 191 enterprises still remains — what are the business the typical shipping companies that revealed that nearly half of the drivers and key evaluation criteria handle the physical flow of goods, but respondent companies planned to that supply chain professionals and value-add partners that can manage the increase their usage of third-party executives look for when partnering entire fulfilment process (goods, as well logistics (3PL) services over the next with an LSP? The top five business as provide critical data for visibility), 12 to 24 months as part of their drivers uncovered during a recent manage global trade requirements and supply chain transformation plans. survey of 123 logistics executives The fluctuations in supply & reveal that most of the companies demand and shifting trade lanes 67% Total cost of ownership of 54% the relationship are driven by a ‘change in business’ continue to put pressures on 38% (the last four items in Figure 1). today’s organisations to deliver Geographic requirements 45% To manage that change, they are value to their customers without 29% first, and foremost, concerned impacting costs. These pressures, Customer / channel 46% requirements about ‘the cost of ownership’ of combined with the rising costs 19% Corporate mandate any relationship that they explore. of transportation and fulfillment, 12% Up to 67 per cent of companies place an increasing impetus on Best-in-Class 14% Vertical market are concerned with the total cost being able to find newer ways to All Others 5% requirements of ownership, including the cost manage the supply chain. 0% 25% 50% 75% of transition and support that One area that companies are Percent of respondents n=123 outsourcing decision invokes. leveraging more on is the new Source: Aberdeen Group, September 2011 If you consider the pressures geographic reach and operational Figure 1: Key business drivers for outsourcing processes
DECEMBER 2011 • SMART LOGISTICS • 45
Outsourcing best practices, continued
best in class indicating that new facing today’s logistics executives, 59% Increasing supply chain channel/customer requirements as shown in Figure 2, with 38% complexity were their key drivers. respect to managing their supply 50% Overall cost of managing A majority of best in class chains, it is not surprising that 33% our supply chain companies (over 52 per cent up to 59 per cent have begun to 32% Rising logistics costs 36% from Figure 3) have managed investigate process outsourcing as to make domestic transportation an option to manage the growing 18% International commerce / 36% guidance presence and warehousing central to their complexity and increasing their supply chain competency. When overseas volume due to business Best-in-Class 9% Warehouses are All Others 9% running out of space combined, less than one-third of globalisation. 0% 25% 50% 75% the best in class are outsourcing When combining the driving Percent of respondents n=123 both of these two key processes pressures of today’s global Source: Aberdeen Group, September 2011 of their internal supply chain competition and the fluctuating Figure 2: Top business pressures driving outsourcing behaviour strategy. costs associated with managing Indeed, most of the respondents transactional support to full-blown the supply chain, it is clear that have created an internal core managed services, which offer today’s companies that have not been proactive competency and competitive advantage company more options and flexibility in enhancing their processes and have in these traditional areas. The rapid for using outsourced services in their thus been forced to make a change. growth in international business and the supply chain. This strategic approach However, based on the survey’s subsequent issues that come with doing is reflected in the performance of the findings, it is clear that outsourcing business across different countries have best in class. is not an ‘all-or-nothing’ strategy – it forced many organisations to partner can be applied to isolated segments in more expansive and collaborative of the overall business whether by a BEST IN CLASS STRATEGIES ways with strategic partners in order Working with LSPs to achieve corporate to maintain growth while managing goals requires a combination of strategic Evaluating business growth costs. Here, all classes of companies are actions, organisational capabilities and strategies and internal & currently outsourcing trade compliance, enabling technologies. Transferring a external competencies with international freight forwarding or problem to an LSP is not sufficient to internal organisational goals consolidation services. For example, guarantee cost savings or performance can be critical steps for deciding in dealing with transportation and improvements. Companies that are what LSPs to continue to utlise logistics, many companies have begun performing at higher levels are creating and what relationships should no to outsource tactical and transactional value through relationships with their longer fall within the strategic activities such as load planning and LSPs and clearly understanding the goals. consolidation, tender-track-pay and balance between in-house activities capacity planning; but have chosen to and outsourced processes, and how maintain internal operations around channel, product, or region, or a type of strengths & weaknesses of internal or strategic activities such as procurement logistics challenge. It is also true that it external groups can be better utilised. and contracting, carrier strategy & bid is not the answer to every supply chain Because of the flexibility and options execution. The best in class again lead issue or every aspect of the business. available for outsourcing logistics the way in outsourcing in these areas. Today’s logistics executives are looking processes, many of today’s best in class The best in class companies to balance the value of outsourcing leaders have taken a strategic approach clearly see outsourcing as a strategic strategic processes with growing core to deal with the growing complexity of value-add to their business and not an competencies within the organisation. today’s global supply chains. When it ‘all-or-nothing’ strategy. They also tend LSPs today can go from driving a comes to outsourcing, companies are to view outsourcing on an inclusive single process to managing a particular first, and foremost, concerned with basis when they consider options for geography or channel all the way to an cost as indicated in Figure 1. But cost investment, restructuring or supply enterprise-wide decision. Focussing on only becomes important if the LSP chain transformation. things in an enterprise-wide fashion being dealt with can handle the specific helps bring consistency across divisions requirements of a business. Anywhere and provide strategic supply chain from 35-45 per cent of companies REQUIRED ACTIONS services in order to improve overall indicated that ‘geographic reasons’ Whether a company is trying to move business performance. The services were the main driver for outsourcing its performance in transportation and technologies available range from strategies, with up to 46 per cent of the management from laggard to industry
46 • SMART LOGISTICS • DECEMBER 2011
companies have automation tools average, or industry average to Customs brokerage for 78% to conduct score carding analysis best in class, the following actions trade compliance 56% (42 per cent) and so, they need will help spur the necessary 74% International freight 52% forwarding to increase the level of shipment performance approvals: 66% Consolidation / sharing so that these tools can be Laggard steps to success 47% de-consolidation services put to use. The lack of real-time • Embrace overall logistics visibility: 56% Warehousing or crossdocking services 46% data can result in service failures. Around 58 per cent of laggards 52% Complete transportation Best in class steps to success utilise a manual or homegrown 42% management Incorporate LSP criteria into your solution for supply chain 34% Best-in-Class Lead logistics provider 25% All Others / 4PL services long-range strategic growth plans: visibility. The best in class, at 100% 0% 25% 50% 75% Geographic drivers (72 per cent) 71 per cent, are 1.8 times more Percent of respondents n=123 and new business/customer likely to have visibility and Source: Aberdeen Group, September 2011 channels (48 per cent) are the then respond to these events Figure 3: Best in class outsourcing strategies top two reasons that best in near real-time. Whether it is class respondents are evaluating Industry average steps to success transportation or warehousing, outsourcing as an option. To respond • Continuously update strategic business responsiveness is critical in today’s quickly and efficiently to business goals and reevaluate LSP strategies: supply chain. Working to get opportunities in this economy, Nearly 32 per cent of industry control of transportation or logistics companies should rank internal average companies indicated plans cost and service requirements are competencies with the competencies to reduce the number of LSPs they the end goals. However, it is first of LSPs and other parties to arrive at utilise. This may be the right thing important to get visibility and a proper balance to meet the specific to do. However, the best in class are measure compliance. Only then needs of their business region by region expecting to expand the numbers and can today’s collaborative technology and product by product. If you want to currently have an average of three tools be applied to optimise cost remain best in class, you will need to relationships already. Evaluating and identify short & long-term continuously review your strategy and business growth strategies and improvements. improve your LSP relationship. internal & external competencies • Supply chain outsourcing must be a Expand the use of technology in core competency proficiency: Despite collaborating with LSPs: Around the fact that 29 per cent of laggard The best in class companies see 77 per cent of the best in class are companies were less than pleased outsourcing as a strategic valueutilising WMS solutions. So the base with their LSP’s ability to provide add to their business and not an infrastructure is in place. However, ‘all-or-nothing’ strategy. They and maintain visibility to key data also tend to view outsourcing visibility across these applications and that they lack, it remains true that on an inclusive basis when they into LSP blind spots is less automated. they lack such visibility themselves. consider options for investment Nearly, 52 per cent of best in class They are reporting only a range & supply chain transformation. respondents still rely on manual supply from 7-17 per cent levels on key chain visibility tools and less than visibility metrics to their own 30 per cent utilise EDI capabilities with internal organisational goals internal operations. Overall, one in within the supply chain. Creating can be critical steps for deciding five laggard companies also indicated integration to manage complex what LSPs to continue to utlise and plans to increase the number of processes through logistics partners can what relationships should no longer LSPs they utilise. Creating effective create efficiencies to help continue to fall within the strategic goals. communication and collaboration drive performance without increasing • Understand the value of visibility: processes is critical to the success of costs. In order to drive efficiency in the Only 24 per cent of industry average any outsourcing strategy. The LSP utilisation of LSPs as well as internal respondents have adequate visibility relationship must be a seamless operations, companies must continue into inventory within the warehouse extension of internal practices. to leverage on technology investments or in transit (32 per cent), regardless Without visibility and proficiency in to drive collaboration and visibility in of whether the operation is managed managing your partner and without order to continue to drive out cost internally or through an LSP. This core competency/proficiency, the efficiencies. is partly due to the fact that only laggard company cannot expect to 26 per cent of the industry average improve the on time and complete is sharing shipping schedules with delivery metric beyond the 84 per Bob Heaney, Senior Research Analyst – these partners. Industry average cent level. Supply Chain Management, Aberdeen Group
DECEMBER 2011 • SMART LOGISTICS • 47
INSIGHTS & OUTLOOK TRUCK DRIVERS
AN ORGANISATION’S
AMBASSADOR? Truck drivers can become valuable assets of logistics firms. However, for this, organisations need to implement certain initiatives that would motivate and work in the welfare of its truck drivers. They need to understand that a content and motivated driver is an organisation’s brand ambassador. And if authorities of the organisation succeed in building a sense of belonging to the organisation in the driver, he would portray the organisation in a positive light, which would, in turn, prove profitable for an organisation. “SIR, meri maa bimaar hai, mujhe gaon jaana hai, Dus din ki chutti chahiye,” pleaded one of the drivers in my team. I recollected that this is the third time in the last six months that he was quoting the same reason for taking leave. While earlier, I got a bit emotional about the reason and had approved his leave, this time round, I was a bit tough on him. I disapproved his leave and asked him to go for a seven-day trip from Mumbai to Delhi and back. He proceeded for his trip with tears in his eyes (which I felt was a part of his pretence). I was happy with my not being emotionally used, this time. However, hours later, I came to know from other drivers that he lost his mother. Drivers are well known for their unreliable behaviour during the course of their duty. They often grab the limelight for reasons like… - Stealing fuel, tools, tyres and stocks transported and selling it for money - Making false claims on
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route expenses - Drinking alcohol, sleeping on the way, and thus, delaying the deliveries - Fleeing with the money, which is given to them for meeting their expenses while in transit. While all of the above may be true in isolated cases, it is very important to see the other side of the coin as well.
WHAT DO DRIVERS DO? Drivers transport products from the source, i.e., from where it is available, to the consumption point, i.e., to where it is required, which is precisely the definition of logistics. A driver is expected to carry huge amount of stocks in a highly invested asset, viz., a truck, and be responsible for them. He is therefore, expected to: - Make an error-free delivery to the destination - Complete transit formalities at check posts, octroi posts, etc. - Maintain the truck - Keep the base office fully updated
about the happenings during transit. During my 20-year-long career in logistics, I have closely dealt with workforce, including 200 drivers running a fleet of 150 trucks. I must acknowledge that the above expectations can be met by not just keeping a control on them, but by converting your drivers into one of the best assets that you can have. Some of the critical things, that one can do to convert drivers into a highly productive resource and the best spokespersons for the brand they worked for, include: Clarity on their remuneration Most drivers in the country are paid a lump sum, as their salary has no structure. Therefore, their salary does not include components like provident fund (PF), insurance, perks, etc. While this seems like a lucrative offer for drivers, considering that he does not have any deductions in the form of PF, etc., what he does not realise is that he ends up losing in the long run. It is, therefore, important to apprise every
driver about why components like PF are important for him, and how he can stand to benefit from it. Additionally, he should be aware of the prevailing minimum wages so that he would know if he is paid on par with other drivers or is being exploited. Sense of belonging to the organisation This is one of the most important things that an organisation should work on. Drivers are always on the go and do not get to be a part of the events organised by the organisation. Hence, their schedules should be prepared in such a way that each one of them is able to attend at least a couple of such events every year. What could also help truck drivers develop a sense of belonging to an organisation are giving them attractive and comfortable uniforms, offering them a structured salary slip, making them go through an impartial performance measurement system, providing assistance to their families (in children’s education and medical needs), negotiating with banks on the interest rates offered to drivers seeking loans, etc. Apart from that, drivers also need to be equipped with the necessary tools – including basic mechanical tools for first aid of the truck when needed, a torch, first aid box with live first aid medicines, fire extinguisher, mobile phone/ communication system, forms and stationery for necessary recording and reporting, identity card, emergency contact details, etc. – which can help them execute their responsibilities better. Acknowledge their operational challenges The manager is the first point contact for drivers. Hence, it is critical for a manager to understand the following challenges that a driver has to face while in transit even though the organisation cannot do much about it. • Poor quality of food available along the highways • Insufficient toilet facilities along the route
• Unsafe highways and traffic jams • Family emergencies when the driver is away • Moral/physical/financial support to the driver in case of an accident • Harassment from traffic police, local goons, etc. while in transit. While some financial aid and moral support can be provided from office, nothing much can be done in most of the cases. Hence, it is important that the challenges are recognised by the organisation. Discipline In addition, it is critical that he is also equipped and controlled by operational processes & protocols. Drivers should have a set of disciplines to be followed in their operational area. These would include: • Speed limits while driving • Cash handling and settlement of route expenses • Communication protocols while driving (in-transit reporting) • Emergency/crisis management protocol • Fuel efficiency (mileage per litre of fuel) expectations • Mandatory checks of driver – before and after a trip. After interacting with drivers, I have been able to understand a little more about the organisations they work for. And, of course, the drivers’ feedback is largely dependent on how they are treated within the organisation. The following are some of the benefits that an organisation should expect from their motivated team of drivers: Brand respect A satisfied driver, who knows that his organisation will do everything to benefit him and his family, would always talk highly about the organisation he works for. He will be loyal to the brand and will always do things to promote his organisation. He will ensure the upkeep of his truck and himself, knowing well that these factors reflect the organisation. Customer service A driver is aware of what the customers
expect from the organisation he works for. He ensures that necessary care is taken to maintain the product’s integrity apart from ensuring that in-transit compliances are completely done to avoid known risks. Hence, he works in the interest of the organisation’s customers as well. Social respect A satisfied driver is always proud to talk about his employer and the benefits that he enjoys among the people in his social circle. This not only helps an organisation attain social respect, but it also helps the organisation when it needs to recruit personnel. Cost & risk control A driver will always work in the organisation’s interest. He will take good care of the truck and will ensure that undue costs pertaining to the maintenance of the truck are avoided by carrying out timely preventive maintenance, avoiding in-transit toll/cess, etc., because of which the organisation stands to benefit.
INTANGIBLE BENEFITS There are many more intangible benefits that an organisation can gain from a satisfied set of drivers. But here, it is important to note that managing a team of drivers is different from managing a team of labourers. Unlike drivers, labourers are within a geographical location and work in defined physical boundaries under adequate visual supervision and control. Drivers, on the other hand, are not under any visual control or supervision and are assumed caretakers of a costly asset, i.e., a truck, and customer inventory. A satisfied and motivated driver is always your brand ambassador. He spreads a lot of positivity about the organisation among competitors and customers, which, in turn, would help an organisation grow even more prosperous. Sunil Nair, Director, ImpelPro SCM Solutions. Email: sunil@impelpro.in
DECEMBER 2011 • SMART LOGISTICS • 49
AUTOMATION TRENDS IMAGE-BASED BARCODE READERS
DESIGNED TO ACHIEVE
HIGHER READ RATE The high volume and frequency of orders placed over the Internet combined with a multitude of available products from retailers make automated scanning at logistics centres more important than ever. In such a scenario, a new generation of image-based readers is poised to revolutionise the market by offering sufficient speed at a price point equal to or lower than that of laser-based alternatives. Analysing the current state of barcode scanning applications, investigating the potential for improvement and focussing on the most common applications performed by distribution centres today...
THE logistics barcode scanning market breaks down into three segments. At the entry level, a mix of conventional area array imagers and laser scanners read codes on slow moving or stationary objects. At the high end of the scale, fixed line scan image-based systems handle high-speed, multi-sided barcode tunnel applications. Situated between these two extremes is an entire range of applications that currently rely on an increasingly challenged generation of laser-based scanners. Retail distribution centres require meticulous stock control, which includes careful management of purchasing, shipping and warehouse inventory. Laser systems provide high read rates with good-quality printed barcodes when labels are undamaged, but they have difficulty reading codes under less than ideal conditions. Image-based readers can provide improved read rates, but their cost and complexity have limited their use to high-volume distribution centres... until now.
DECODING LASER SCANNERS A laser scanner reads a barcode by measuring the size of printed modules using light reflected from the code. One of the method’s most potent advantages is its simplicity. Its popularity stems from the fact that it is easy to set up,
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connect & aim, and can read codes fast enough to accommodate high speeds. These systems also achieve a large scanning area and working range. Excellent vendor-supplied service and support ensure that the equipment’s performance will always meet published specifications. Unfortunately, the laser method itself tends to limit the read rate, i.e., the percentage of codes that a scanner reads correctly. Printed barcode quality can vary dramatically depending on
Area array image-based readers offer better uptime because laser scanners use motors and other mechanical mechanisms to ‘move’ the laser spot across the code. These moving parts wear out over time, thereby limiting the system’s useful life.
or specular reflections or damage to the portion of the code being scanned may dramatically reduce the scanner’s ability to read the code successfully. Some laser scanners attempt to solve this issue by stitching multiple scan lines together to reconstruct a damaged code. This method works well in some cases, but not when the damage is severe. An unread code requires diverting the package to a manual station where an operator either directs the package to its destination, or replaces the defective barcode, and resends the package back through the sorting system. This failed condition increases the labour & material costs and reduces the efficiency of sorting equipment because packages are handled more than once. Rework means increased overhead and lost margins.
COPING WITH LIMITATIONS the amount that the package has handled, the printing technology, label geometry, point of origin and a host of other factors. A laser scanner may fail to read poorly printed codes. Insufficient contrast, for example, may not provide enough difference between a printed and unprinted module to permit an accurate read. Because a laser scanner attempts to decipher the code along a single laser line, light
To cope with these limitations, the logistics industry has designed special labels that maximise read rates and equipment specifically optimised to handle high numbers of no reads. Nevertheless, with rapid growth, distribution centres must handle escalating package volumes, an increasing number of sources & destinations and a greater package mix, all of which exacerbate the need for
better efficiency and higher read rates. Distribution centres that struggle with no reads can upgrade to line scan-type, image-based readers. Line scan readers assemble a high-resolution image of a package surface containing a code one line at a time as it passes, analysing that image to locate and interpret a valid code regardless of its orientation or its placement on the package. Image-based barcode reading systems offer several advantages over the laser-based variety. First, because a picture is worth a thousand scans, image-based readers begin with more information about the barcode. This advantage allows them to successfully read codes degraded by damage, orientation or distortion. To compensate for damage to the code or light reflections from the package, the analysis software can reconstruct the data of interest from any legible portion of the image. Image-based systems can also store images for later retrieval and analysis. Archiving this information helps a distribution facility to determine the root cause for any unread barcodes and implement corrective actions, thereby reducing the number of subsequent misreads and improving process efficiency. For example, consider a distribution facility that achieves read rates of only 98 per cent. Reviewing the images of unread packages might reveal that package handling issues caused half of the no reads. With this information, supervisors can modify the operators’ procedures for loading packages onto the sorting conveyor and thereby improve the read rates to 99 per cent. The resulting reduction in the number of packages that the system must reread following a failure reduces the number of packages manually sorted by hundreds, or even thousands, per day. Despite their advantages, however, significant barriers remain that prevent the widespread adoption of line scan image-based systems. The systems are bulky, expensive, hard to set up
and difficult to maintain. Calibration during setup becomes critical to the method’s success because the movement of the object under the camera must be synchronised with the system’s image acquisition activities. Any aberration in that movement, an unexpected bump or vibration, for example, will cause distortion, which will compromise the resulting image and subsequently, the effective read rate.
REVOLUTION IN LOGISTICS SCANNING Distribution centres face a difficult choice. They can select laser scanners for an easy-to-use affordable system that offers limited reading capability and no data for process improvement. Alternatively, they can choose an expensive and complex line scan image-based system. A far better choice would be a system that combines the performance of image-based equipment
artifacts. Historically, however, area scan image-based readers could not keep pace with the speeds required by package conveyors and could not handle the package size variations seen in logistics applications. However, several advances in the technology have enabled area scan readers to overcome these limitations. In a conventional image-based reader, the imager, analog-to-digital (A/D) converter and image processor all exist as discrete components interconnected via narrow communication buses. This configuration typically permits a maximum image acquisition speed of only 60 frames per second (fps). In one innovation – called Vision System on a Chip (VSoC) – the components all reside on a single piece of silicon. As a consequence, VSoC technology can acquire and analyse images at up to 1,000 fps and process them in real
Figure 1 indicates how varying the electric field strength can make the originally convex liquid boundary flat or even concave
with the cost and ease of use of laser scanners. But what would it take to build such a reader? Conceptually, a high-speed, area array, image-based reader could provide the solution. Area array imagers, like digital cameras, capture an entire image in a single snapshot. By taking snapshots, area scan eliminates the need for precise encoder input or very bright, always-on illumination. Also, area scan technology is not susceptible to distortion or other undesirable image
time, so the reader can adapt to wide variations in package size. Also, fundamental to this new generation of area scan image-based readers is a new autofocus implementation based on the liquid lens technology. Liquid lenses focus much more quickly and with greater range than the mechanical variety can – with no moving parts. Modelled on the way the human eye changes focus, the lens contains two immiscible liquids with different refractive indices – a conductor like water and a non-
DECEMBER 2011 • SMART LOGISTICS • 51
Image-based barcode readers, continued
conductor such as oil. As Figure 1 shows, applying an electric field to the lens changes the surface tension at the boundary between the two liquids, which alters the curvature at the boundary and therefore, the focal length of the lens. Varying the electric field strength can make the originally convex liquid boundary flat or even concave. Therefore, the position of a package on a conveyor need no longer compromise on either throughput or read accuracy. Also, liquid lens technology simplifies installation, setup and maintenance by allowing focal length adjustment without the need for anyone to touch the lens.
MAKING THE TRANSITION Area array image-based scanners and laser scanners are easier to install and set up than line scan systems. However, area array imagers offer additional setup advantages over lasers. For example, when setting up a laser scanner to maximise read rates, users cannot see the image that the scanner is attempting to read. They have difficulty determining if the scanner is positioned optimally, especially in omnidirectional applications where the rotational position of the code is unknown. During operation, laser scanners provide no information to help the user determine why a read was unsuccessful. Data from the scanner indicates only the number of packages
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that were not read successfully, which makes attempts to respond reflect pure guesswork rather than data-driven corrective action. On the other hand, an image-based system can display the scanner image on a monitor or industrial display in real time. As the user sets the system up, the display shows exactly what the scanner sees, thus ensuring that the images will be in focus and that the image will include all codes on any package that comes down the conveyor. Both initial setup and later adjustments to improve the scanner’s read rate require little specialised knowledge, which minimise setup and maintenance time. As a result, image-based readers are easier to maintain and support than laser scanners. Vendors provide support, of course, but with easy review of ‘no read’ images, users can
Area array imagers, like digital cameras, capture an entire image in a single snapshot. By taking snapshots, area scan eliminates the need for precise encoder input or very bright, always-on illumination. quickly and easily identify & rectify problems and support the systems themselves with little training. Or, they can provide most of the support themselves and call the vendor only when necessary. The convenience of not needing to schedule, wait for and pay for vendor-supplied service can significantly reduce downtime and accompanying costs. Area array imagebased readers also offer better uptime because laser scanners use motors and other mechanical mechanisms to ‘move’ the laser spot across the code. These moving parts wear out over time, thereby limiting the system’s useful life. In contrast, area array image-
based readers contain no moving parts, typically resulting in a useful life that is 2-3 times longer than that of laser scanners.
PREPARING FOR THE FUTURE The continued consolidation of distribution operations will strain the capacity of reader systems, while the diversity of sources and destinations continues to escalate. Most companies are struggling to reduce capital costs. They want to invest for the long term. They do not want the equipment that they buy to become obsolete prematurely. In this environment, image-based systems’ longer life represents a considerable advantage. Another future trend in the logistics industry is the introduction of two-dimensional (2D) codes like Data Matrix. Vertical industries such as pharmaceutical will be required to start using these codes for unit level serialisation to combat drug counterfeiting within the supply chain. Although not yet as ubiquitous as the old faithful barcodes, the amount of information that 2D codes can store makes them very attractive for a wide range of applications. Image-based scanners are required to read these symbologies. Perhaps most important, as large retailers and Internet fulfilment centres consider capital equipment purchases to add capacity or increase throughput, raising barcode read rates by just one per cent can significantly shorten payback schedules and increase returns on investment. Capital equipment acquisitions that improve read rates – such as this new generation of high-speed area array image-based readers – enjoy short payback times that can be measured in months, not years. The future certainly belongs to the area scan image-based technology. Didier Lacorix, Senior VP – Marketing, Sales and Services, Cognex Inc. Email: Didier.lacorix@cognex.com
ECO-FRIENDLY TRANSPORTATION TIPS & TRICKS
GREEN ROUTE TO REDUCING
CARBON FOOTPRINT Road transportation is one of the areas that contributes the most to carbon emissions. Vehicles used for the transportation of goods leave behind harmful carbon footprints, which if not checked, in time, will have catastrophic consequences on the environment. Here’s presenting eight ways to tackle this crisis… NISHI RATH
THERE have been instances where companies lose out to their competitors for flouting environment-friendly norms. Going green has become the mantra today and transport – one of the main reasons for carbon emissions – has become a threat. To curb this, transportation and logistics sectors have been looking at ways to improve efficiency and simultaneously reduce their carbon footprints. Aiming to tame carbon emissions, here are eight tips to help transport companies cut down on their carbon footprints… Replacing commercial diesel vehicles with small gas-based or electric vans is an efficient way to reduce carbon dioxide emissions. Additionally, using electric vans helps cut down on fuel expenses and also reduces congestion.
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Using alternative renewal fuels like E85 and biodiesel can reduce greenhouse gas emissions from vehicles. E85 is a fuel blend containing 85 per cent ethanol that can be used in certain vehicles called Flex Fuel Vehicles (FFVs). FFVs can be fuelled with either E85 or traditional gasoline. Diesel vehicles, on the other hand, can be filled up with a biodiesel blend such as B5 – a fuel blend containing five per cent biodiesel, which is a renewable fuel made from agricultural resources, such as vegetable oils.
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Using the reverse logistics method is one of the most convenient ways to cut down on carbon footprints. Reverse logistics includes remanufacturing, refurbishment, recycling, reuse and asset recovery. The reverse logistics method helps companies cut down on inefficient returns processes that result in unnecessary transportation moves and thus help reduce carbon emissions. Additionally, bringing together common destinations will also reduce the amount of travel required for goods distribution. This can be done by using common carriers that can combine loads rather than using company fleets. Another thing to be kept in mind is the delivery time. Avoiding delivery during the peak hours will not only take less time, but will also reduce carbon emissions.
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Idling in congested traffic or running the engine to keep the inside of the transport vehicle warm or cool while resting not only consumes fuel, but also emits harmful carbon emissions. Reducing the optional idling can be targeted with new technologies that reduce fuel consumption. It is one of the simplest ways to cut down on carbon footprints if properly followed.
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Reducing total freight transport by cutting down on product volumes & unnecessary packaging and relying on more local products will directly help reduce carbon footprints. Many factors affect the fuel economy of a vehicle and the level of carbon footprints it leaves behind. Drivers should go easy on the brakes and gas pedal and also avoid hard accelerations as much as possible. If the transport vehicle has a removable roof rack, which is not being used, it can be taken off to improve the fuel economy. A well-maintained vehicle is not only fuel-efficient, but also emits less amounts of greenhouse gases. Additionally, it is very important to check and regularly replace the air filter. Regularly checking the tyre pressure of the vehicle is another important factor. Correctly inflated tyres are safer and last longer, an under inflated tyre can increase carbon footprints by as much as three per cent. An under or over inflated tyre will wear out easily and is also more susceptible to failing. The best time to check the tyre pressure is when it is cool outside or in the morning after the vehicle has not been driven. Faulty wheel alignment will also slow down the rolling resistance of the vehicle, thereby increasing carbon emissions and wearing out tyres faster. DECEMBER 2011 • SMART LOGISTICS • 53
POLICIES & REGULATIONS UPCOMING RAIL FREIGHT POLICY
A LUCRATIVE OPTION OR A ROADBLOCK? Freight operations contribute to over 60 per cent of the Indian Railways revenue. As a result, the loss-making Indian Railways is considering giving its freight model a makeover by introducing a new rail freight policy. While they debate on implementing the new freight policy, we take a look at the pros and cons of the same… NISHI RATH
he Indian Railways plans to introduce a new freight policy, according to which, ‘companies will pay freight charges based on their profitability’. The policy, if implemented, might help the loss making Railways to some extent and may also benefit some start ups, but it might not be a positive sign for the already established companies. Additionally, industry experts are of the view that this initiative will not help much in the long run.
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“But in the domestic segment, differential rates are applicable based on the commodity being carried,” says Sajal Mittra, CEO, Arshiya Rail Infrastructure, adding, “These rates are made applicable through various rate circulars issued by the Ministry of Railways from time to time. Over and above the haulage charges for loaded movements, CTOs pay Indian Railways haulage for empty movements, terminal access charges, stabling charges, brake van charges, development surcharge, demurrage and wharfage among others.”
THE CURRENT SCENARIO Presently, the Indian Railways has a different pricing policy for its customers and for container train operators (CTOs). The rates for customers are based on the goods tariff rate and are on a commodity-wise tonne per kilometre basis. However, the charges applicable to CTOs are on a per container basis depending on the weight slabs, irrespective of the type of cargo being carried in the EXIM segment.
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IMPACT ON FREIGHT EARNING Nonetheless, Indian Railways authorities are looking forward to implementing the new freight policy.
The Indian Railways faced the highest-ever loss of `14,977 crore in the financial year 2009-10. Figures for the financial year 201011 are yet to be announced and are estimated to be up by a few more thousand crore.
For this, the ministry is currently studying the books of major public and private firms to ascertain their profitability in the last few years, which would form the basis for different slabs within a particular freight category. Changes in the freight model are being considered necessary, as freight operations contribute to over 60 per cent of Indian Railways’ revenue. Mitra believes, “This would be of great help to some players & customers in the industry, particularly those who are in the startup phase where the cost of operations is high, mainly due to the underutilisation of assets or non recovery of fixed overheads. However, this may not hold true in the case where such policies are made applicable to established companies. Moreover, this type of policy may also lead to the lack of a level playing field in the industry and may result in subsidising underperformance.” Currently, coal and iron ore are the major contributors to railway freight earnings. It can also be said
frames a pricing policy that would give road transportation tough competition. This, they feel, would help the Railways regain some of the traffic that they had lost out over the years. Industry experts are of the view that such a policy would also be difficult to implement, as it would involve large amounts of clarifications and procedures. For example, to determine the eligibility of a company based on profitability, “how would you
that once the differential freight tariff is implemented, it would have a direct impact on the companies in these sectors. But industry experts feel that such a change in the policy might not be helpful in the long run. Elaborating further, Mittra opines, “The basis for any haulage pricing should be purely based on the input costs, including expenses incurred towards fuel & electricity, manpower and track maintenance among others, and competition. Today, the biggest competitor of rail is undoubtedly the roads. Hence, while framing haulage charges, one has to frame the rates based on the prevailing market rates and the rates being offered by the competitor.”
Present freight policy • The rates for customers are based on the goods tariff rate and are on a commodity-wise tonne/kilometre basis. • Charges applicable to CTOs are based on a per container basis. It depends on the weight slabs, irrespective of the kind of cargo being carried in the EXIM segment. • In the domestic segment, the rates vary as per the commodity being carried. • Apart from the haulage charges, CTOs pay haulage for empty movements, terminal access charges, stabling charges, brake van charges, development surcharge, demurrage and wharfage. The new freight plan The Indian Railways are debating on a new freight policy, according to which companies will have to pay freight charges based on their profitability. determine profitability? Will it be in comparison to an industry benchmark? Who will determine the benchmark? What documents will be used to determine the profitability? Who and how will the documents be verified?”, Mittra asks, while stating that these are some of the factors that might crop up during the implementation of the new policy.
ACT
THE NEW POLICY, IF IMPLEMENTED, MAY DEMORALISE THE BETTER PERFORMING COMPANIES OR OPERATORS, AS THEY WOULD HAVE TO SHARE A HIGHER BURDEN OF COSTS IN COMPARISON TO THE UNDERPERFORMING COMPANIES OR OPERATORS. MARKETING POLICY Apart from the new freight policy, the Indian Railways is also taking into consideration a marketing policy to divert the goods traffic from roads to rail. However, the industry feels that it would be better if the Indian Railways
indirectly finance the unabsorbed costs of underperforming companies or operators. Also, while the policy, if implemented, will help small and underperforming companies, it has been observed in the past that subsidies are good if they are used as a one-off instrument to release pressure from the industry. However, repeated or prolonged usage of such measures will always have negative effects in
In addition, the new policy, if implemented, may demoralise the better performing companies or operators, as they would have to share a higher burden of costs in comparison to the underperforming companies or operators. These subsidies may
the long run. Also, considering the Railways financial condition, it is not feasible for it to offer any more subsidies. Moreover, if the idea is to charge higher tariffs from existing customers and companies who have high profitability, then this will further erode the market share of rail in India as these customers will have no choice but to move to road transportation to meet their logistics requirements.
ON A LOSS-MAKING SPREE? The Indian Railways faced the highest-ever loss of `14,977 crore in the financial year 2009-10. Figures for the financial year 2010-11 are yet to be announced and are estimated to be up by a few more thousand crore. In such a scenario, Indian Railways needs to tread cautiously and draft the new freight policy in such a manner that it helps generate business opportunities for the Indian Railways. nisi.rath@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 55
STRATEGY FOREIGN INVESTMENTS IN LOGISTICS
TAKING INDIA TO A PROGRESSIVE PHASE India spends about 13-14 per cent of its GDP on logistics, due to its diverse geography, inefficiencies in the SCM and non existence of modernised logistics-related infrastructure. However, given the country’s high growth rate, coupled with the steady rise in India’s trade levels, there has been an increase in outsourcing of logistics solutions apart from improvements in supply chain mechanisms. This has played a crucial role in not only making logistics one of the fastest growing sectors, but also one of the most lucrative avenues for foreign players to invest in. ARINDAM GHOSH
VALUED at US$110 billion, the Indian logistics sector is expected to touch the US$200 billion figure by 2020 — a factor which highlights the huge potential that the market has to offer to its investors and existing investors who are planning to build and expand on their existing capacities. Presently, Indian companies outsource about 52 per cent of logistics services and solutions. Many companies are also increasingly outsourcing thirdparty logistics (3PL) business models with an aim to reduce costs and make their services more efficient. About 76 per cent of the Indian logistics sector is primarily handled and managed by the unorganised service providers. Primarily dominated by small and medium-sized service providers, the
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Indian logistics industry is highly fragmented with major players possessing a small market share. The road transportation service provider segment is completely dominated by small trucking companies and individual truckers. Transport companies having fleets below five trucks account for over two-thirds of the total trucks owned and operated in India & make up for 80 per cent of revenues. Similarly, there are a large number of smalland medium-sized participants in the warehousing segments. Meanwhile, the air cargo segment has been evolving rapidly in India over the past few years; it has overtaken the ocean freight and rail freight markets by expanding at nearly 19 per cent in the last three years, as against 10.3 per
cent growth registered by ocean freight and 9.2 per cent by railways.
FDI IN INDIAN LOGISTICS INDUSTRY Around 70 per cent of the globally leading companies are operating in India through various procedures, which include joint ventures, opening the Indian arm of the company, acquisitions, etc. Investments into the Indian logistics industry can be made through two routes: The automatic route: Under this mode, foreign investors do not require any approval from the country’s central bank, Reserve Bank of India (RBI), or the Government of India. For instance, the ports and harbours segment, the storage and warehousing segment,
transport & transport support services, etc. The government route: Herein, foreign companies need to take an approval from the government-run Foreign Investment Promotion Board (FIPB) for carrying out any activity in the industry. FIPB offers a single window clearance for proposals pertaining to foreign direct investment (FDI) in the country that are not allowed access through the automatic route. For example, courier services for carrying parcels, packages and other items, which do not come within the ambit of the Indian Post Office Act, 1898. However, in most segments, 100 per cent FDI is allowed. Further, in sectors like cold chains, the government is taking various initiatives to promote foreign investments in the country, which include tax incentives and breaks. The introduction of Direct Tax Code (DTC) is expected to offer a huge boost to the industry.
GROWTH DRIVERS The main drivers fuelling growth include rapidly rising levels of the manufacturing and retail sectors, increasing international trade, infrastructure and tax related initiatives by the Government of India. However, some of the major reasons, which have played a crucial role in the development of the logistics industry, include: Rise in the level of services The foreign and multinational players are primarily the users of the services offered. As major domestic companies realise the importance of outsourcing their basic logistics operations, the demand for this service is expected to grow at a compound annual growth rate (CAGR) of 21.9 per cent to reach $3556.7 million in 2012. According to a Frost and Sullivan report, “Indian subsidiaries of multinational companies in these sectors took cue from their parent companies and began to outsource a share of their logistics functions to these specialist service providers.”
Emerging investment themes for foreign investment Potential updates 1 Storage-based Plays (e.g. FTWZs, CFS/ICD, air cargo centres, bulk terminals)
Potential risks
• Collateralised investment (capital safety) • Long-term attractiveness and growth story • Capital-intensive, high-entry barrier • Strong regulatory drivers
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• Better customer pricing and margins • Strong differentiation for LSPs • High ‘hockey stick’ growth potential due to large demand-supply gap • Potential to invest in companies 3 with long and good performance Transportation Plays track records (e.g. coastal logistics, rail-linked logistics, project • Opportunity to bring about fundamental market shifts and logistics, LTL trucking) realise improved profits • Flexibility to combine asset light and asset heavy models selectively • Opportunity to invest in 4 established and long-running Captive Spin-off/ businesses Bolt-on Plays • Captive volume potential (e.g. auto logistics, • Potentially large businesses (ticket retail logistics) size barrier) • Potential to augment capability gaps with smaller bolt on or roll-up acquisitions • Significant opportunity to 5 participate in the Indian Greenfield Infrastructure infrastructure story – over US$1bn Plays investment opportunity over the (e.g. ports, roads) next 5 years • Large demand-supply gap could imply high asset utilisation and returns Industry-focussed Plays (e.g. 3PL/4PL reverse logistics, cold chain)
• Short-term asset utilisation and realisations • Potential asset price fluctuations • Underdeveloped exit options • High dependence on regulatory interface • Cyclicality risk of user industries • Targets likely to be small in size
• Potentially long gestation periods • Turning profitable and further expanding margins could be challenging
• Arms length captive relationships may be difficult to (re)establish • Potentially not geared towards profit • Organisation capabilities may be more geared towards execution rather than business development • Longer gestation projects • Approval and clearance process potentially lengthy and multi-layered • Foreign companies do not enjoy incentives offered to Indian consortiums/bidders Source: KPMG Analysis
Distribution and logistics The industry has become aware of the importance of distribution and logistics. To survive in the market, companies are trying to make their presence more prominent. For this, companies are taking various steps to bring in innovative techniques, which will help them grow. Further, the providers of these logistics services are also developing various strategies, which can improve efficiencies and as well as reduce time. This awareness is also bringing in more technological improvements and IT-related infrastructure in the sector.
GROWTH ENABLER The Indian logistics industry has various segments based on which foreign investors need to devise innovative strategies and business models. With companies, especially in the automotive, retail and FMCG sectors, increasingly opting to outsource their logistic requirements to specialised service providers, the Indian logistics industry is poised for significant growth in the years to come. Foreign investors will play a key role in taking the Indian logistics industry forward and making it more competitive globally. arindam.ghosh@infomedia18.in
DECEMBER 2011 • SMART LOGISTICS • 57
PRODUCT UPDATE
This section gives information about products, equipment and services available in the market. If you know what you want. . . refer to Product Index on Page 64 to find it quickly
GRABBING CRANES
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arco manufactures and offers special types of grabbing cranes that are suitable for ceramic and other industries to handle various raw materials. These grabbing cranes can lift up to 3 tons capacity in one single scoop. Cranes that can handle loaded grab of desired capacity are also offered. In addition, all types of fl ameproof and explosion-proof cranes to gas groups I, IIA, IIB and IIC as per IS:2148 are also available. Inherent motors, brakes, limit switches and electrical control panels are certified by CMRS, Dhanbad. Non-sparking track wheels are manufactured from non-ferrous materials. These types of cranes are especially suitable for petrochemical plants, oil refi neries and mining. Aarco - Kolkata - West Bengal Tel: 033-237 9736, Fax: 033-2253431 Email: guptarun@123india.com
GANTRY CRANES
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riends Engineering Works offers gantry cranes for handling blocks at processing base. Rational structure is of the box construction is adequately designed and reinforced by stiffening ribs to take care of all types of loadings. Th is is connected by cross beams. Unbraced legs are hinged near the leg beam attachment. The complete structure is mounted on four wheel base each having two double rimmed steel wheels provided with flexible bushing to take care of any misalignment. Top beam is fi rmly fi xed or heavily fabricated steel bracket. The crab carriage is in steel section. It comprises of special crane duty motor connected to heavy-duty speed reducers and is coupled up to a grooved steel drum. Electromagnetic brakes/ hydro-thruster brakes are used to control the smooth lifting of weight. The block is equipped with a forged steel forked revolving hook. Wire rope is of 6 x 37 constructions. Friends Engineering Works - Udaipur - Rajasthan Tel: 0294-2492200, Fax: 0294-2492201, Mob: 09829042424 Email: info@friendseng.com, Website: www.friendseng.com
CRANES & MATERIAL HANDLING EQUIPMENT
V
M Engineers manufactures and offers various material handling equipment, especially EOT cranes, HOT cranes and special purpose cranes, such as grabbing cranes, goliath cranes, cantilever cranes, under slung cranes, hot metal handling cranes, jib cranes, hand-operated cranes, general58 • SMART LOGISTICS • DECEMBER 2011
purpose cranes, etc. These cranes are designed as per the Indian standard specifications applicable to the cranes, such as IS:807 code of practice for design, manufacture, erection and testing of cranes and hoists; IS:3177 code of practice for design of overhead travelling cranes and gantry cranes other than steel mill cranes; and IS:4137 code of practice for design of steel mill cranes. Double girder cranes are classified as class I, class II, class III and class IV as per old classifications; and M3, M5, M7 and M8 as per new classifications. These are available in capacities from 1 ton to 100 tons. Various essential spares of Federal WMI, Fafeco, Mukand and other make cranes, such as gears and pinions of different types of gear boxes, wheels, brake drums, shoes, liners for brakes, wire ropes and other electrical spares required for EOT cranes are offered at very competitive prices (claims the company). V M Engineers - Dist Thane - Maharashtra Tel: 0251-2620265, Fax: 0251-2620266, Mob: 09702002725 Email: sales@vmecranes.com
MINING DUMPERS
T
S Technologies offers a wide range of mining dumpers that are available in 1 MT capacity. The range commonly caters to the needs of construction and engineering industries and fi nds applications in various areas. These products are known for their durability, reliability and optimum performance. Features include: capacity of 2 MT; power supply at 25 HP Mahindra twin cylinder with auto start & watercooled engine; tyre size at 700 x 15-4 nos; head light: two head lights, provided hood & two nos tail lamps; and battery: Exide make, 12 V, 88 A. TS Technologies - Bengaluru - Karnataka Tel: 080-4147 5452, Fax: 080-4169 5254, Mob: 09379735152 Email: tstbangalore@yahoo.co.in
MOBILE ELEVATING WORK PLATFORMS
T
iger mobile elevating work platforms offered by Ferro Foundries can contribute greatly to improve workers safety, reduction in labour cost, eliminate the need of expensive and time consuming scaffolds and ladders. These platforms are being used for overhead electrical maintenance, welding, painting, steam and oil pipeline repairs and aircondition ducting in all types of industries. The equipment is
tailor made to suit customers’ requirements. Available in both mobile and stationery, the work platforms help operators to lift or transfer loads from floor-to-floor, loading to vehicles or unloading and also for doing maintenance work conveniently at any working height. The equipment can be moved up or down and stopped at any intermediary position. Hydraulic cylinders are fitted with excess flow check valve to allow safe descent in the event of hydraulic failure. The platform is covered with anti-slip plywood for the safety of the operator.
operations. Simultaneously, employee absences due to sickness are decreased. The lifts have been designed as modular systems using aluminum and high-quality stainless steel. For eg, when there is a choice of wheelbase widths, pillar heights, platforms and forks, plus many options for height and width extensions. Even in tight spaces, the lifts’ four rugged castor make them extremely maneuverable. The mobile loading lifts can be pushed right up to the storage shelves, thus allowing the goods to be moved smoothly onto the stable platform. They are operated and pushed by means of an ergonomically designed, height-adjustable handle.
Ferro Foundries Pvt Ltd - Mysore - Karnataka Tel: 0821- 2402376, Fax: 0821-2402052 Email: info@ferrotiger.com, Website: www.ferrotiger.com
Expresso Deutschland Transportgerate GmbH - Kassel - Germany Tel: +49-561-95910, Fax: +49-561-9591138 Email: expressoinfo@jlu.de, Website: www.expresso.de
MOBILE LOADING LIFTS
E
xpresso Deutschland Transportgerate offers mobile loading lifts (model Lift&Drive) that are lightweight, battery-operated lifters ideal whenever parcels, equipment and other goods must be raised and transported. These lifts perform strenuous tasks by raising the load to the required height, thus greatly reducing potential accident hazards. Th is speeds up and optimises all loading and stacking
Vol. 02 | Issue 06 | SEPTEMBER 2011
STORAGE & HANDLING SYSTEMS
D
ivakaran Storage & Handling Systems offers storage and handling systems that include multi-range pallet racking systems, mobile storage systems (compactors), heavy-duty racks, multi-tier slotted angle storage systems, cable trays, etc. Multi-range pallet racking is used for heavy-duty
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DECEMBER 2011 • SMART LOGISTICS • 59
Product update, continued
storage. Conventional pallet racking is universal systems for direct access to each pallet allowing easy stock control adaptable for any height to all load types both in terms of weight and volume. The mobile storage systems (compactors) glide on a steel track and consist of mobile base units onto which different shelving options can be assembled. Flexible heavy-duty racking is ideal for manual storage of medium-sized goods. They allow optimal storage when dealing with numerous articles in small or variable amounts, and when their rotation is of a fluctuating nature. These systems are easy to assemble the main components are assembled by interlocking beams by clipping together. Multi-tier slotted angle racking systems are designed for warehouses where goods are stored and removed manually from the shelves. These systems also make optimal use of warehouse height, as the higher level can be accessed manually or via gangways located between shelves. The number of walkways is determined by the height of the shelves, bearing in mind that the recommended height varies from 2.20 to 3.0 m.
ELECTRIC CHAIN HOISTS
D
avid Round Inc offers electric chain hoists that are designed using the latest technology, resulting in high quality, low headroom, and full-featured hoists. These chain hoists provide reliable daily performance in both routine and severe workplace environments. Some of the technical specifications of the electric chain hoists include: capacities from 1/8 tons to 5 tons; reconnectible voltage 208-200/460-3-60 for both single & dual speed hoists; control voltage 110 V (optional 24 V & 48 V); duty cycle: single speed 60 min & dual speed 30/10 min; classification: ASME H4, ISO M5 or M4, FEM 2M or 1Am; and ratings: hoist IP55 & pendant IP65. David Round, Inc - Ohio - USA Tel: +1-330-6561600, Fax: +1-330-6561601 Email: info@davidround.com, Website: www.davidround.com
The information published in this section is as per the details furnished by the respective manufacturer/distributor. In any case, it does not represent the views of
Divakaran Storage & Handling Systems Pvt Ltd Umbergaon - Gujarat Tel: 0260-256 2103, Fax: 0260-256 2189 Email: info@divakaran.in
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60 • SMART LOGISTICS • DECEMBER 2011
TRADE SHOW TRACKER EVENT LIST
NATIONAL
ABROAD
23-24 JANUARY 2012
10-11 JANUARY 2012
16-18 JANUARY 2012
ASIA MANUFACTURING SUPPLY CHAIN SUMMIT Focus: Manufacturing & SCM Where: Taj Lands End, Mumbai Tele: 022 26395102 / 9224122146 E-mail: suparna@kamikaze.co.in
SUPPLY CHAIN AND LOGISTICS SUMMIT ASIA 2012 Focus: Logistics & SCM Where: The Ritz-Carlton, Singapore Tel: +44 (0)20 7202 7690 E-mail: magdalena.musial@wtgevents.com Web: www.sclasiasummit.com
JUMP START 2012 Focus: Transportation, railroad, trucking Where: Renaissance Concourse Hotel, Atlanta, Georgia Tel: 800.845.8090 x 5802 E-mail: astankosky@smc3.com Web: www.smc3.com/smc3/jumpstart2012/ index.htm
NATIONAL
ABROAD
1-3 FEBRUARY 2012
6-7 FEBRUARY 2012
9-10 FEBRUARY 2012
AIR CARGO INDIA 2012 Focus: Logistics & air cargo market Where: Bombay Exhibition Centre, Mumbai Tel: (91+22) 2757 0550/2757 5055 E-mail: events@stattimes.com/aci@ stattimes.com Web: www.stattimes.com/aci2012
MILITARY LOGISTICS INDIA 2012 Focus: Defence supply chain Where: Manekshaw Centre, Delhi Cantonment, New Delhi Tel: +44 (0)1753 727011 E-mail: jb@shephard.co.uk
5TH INTERMODAL ASIA 2012 Focus: Container port and terminal operations Where: Intercontinental Melbourne The Rialto, Australia Tel: +60 87 426 022; Fax: +60 87 426 223 E-mail: enquiries@transportevents.com
NATIONAL
ABROAD
14-18 MARCH 2012
13-15 MARCH 2012
29-30 MARCH 2012
INDIA AVIATION 2012 Focus: Aviation industry Where: Begumpet Airport, Hyderabad Tel: 011 32910417 Fax: 011 23359734 E-mail: indiaaviation@ficci.com
TOC CONTAINER SUPPLY CHAIN ASIA 2012 Focus: Shipping and container cargo Where: Hong Kong Convention and Exhibition Centre (HKCEC) Tel: +852 2582 8888 E-mail: info@hkcec.com Web: www.hkcec.com.hk
6TH INDIAN OCEAN PORTS & LOGISTICS Focus: Ports & logistics Where: Le Meridien, Mauritius Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: enquiries@transportevents.com
DECEMBER 2011 • SMART LOGISTICS • 61
Trade show tracker, continued
NATIONAL
ABROAD
12-14 APRIL 2012
26-28 APRIL 2012
26-27 APRIL 2012
AERODROME INDIA 2012 Focus: Airport infrastructure, operations, security & connectivity Where: Bombay Exhibition Centre (BEC), Mumbai Tel: 80-25547169 Fax: 80-25542258
INDIA MATERIAL HANDLING & LOGISTICS SHOW 2012 Focus: Material handling solutions Where: India Expo Centre, Greater Noida Tel: 9999164925 E-mail: mayank@manchcommunications.com Web: www.indiawarehousingshow.com
7TH SOUTHERN ASIA PORTS, LOGISTICS & SHIPPING 2012 Focus: Container ports and terminal operations Where: Cinnamon Grand Colombo, Sri Lanka Tel: +60 87 426 022 Fax: +60 87 426 223 E-mail: enquiries@transportevents.com
ABROAD 6-9 MAY 2012
18 MAY 2012
23-24 MAY 2012
WERC ATLANTA 2012 Focus: Logistics Where: Atlanta Marriott Marquis, Atlanta, Georgia Tel: 281.746.0449 E-mail: cpilbeam@werc.org
5TH GLOBAL LOGISTICS & SCM SUMMIT Focus: SCM Where: UAE Tel: +971 4 3318855 Mob: +971 50 7453002 E-mail: admin@sclgme.org
LOGICHEM Focus: Petrochem logistics Where: Grosvenor House Hotel, Dubai Tel: +44 (0)20 7368 9354 E-mail: paulo.godinho@wbr.co.uk
ABROAD 3-5 JUNE 2012
12-14 JUNE 2012
26-28 JUNE 2012
THE LOGISTICS & SUPPLY CHAIN FORUM Focus: Logistics & SCM Where: Doral Resort & Spa, Miami, FL Tele: +1 212 651 8700 E-mail: logisticsus@richmondevents.com
TOC CONTAINER SUPPLY CHAIN: EUROPE 2012 Focus: Containerisation Where: Antwerp Expo Tel: +44 (0)20 7017 7019 Fax: +44 (0)20 7017 4987 E-mail: paul.holloway@toc-events.com
LOGICHEM ASIA Focus: Chemical logistics & SCM Where: Singapore Tele: + 65 6408 9205 Fax: + 65 6822 7370 E-mail: anna.ju@wbresearch.com
62 • SMART LOGISTICS • DECEMBER 2011
SCLC FOOD SCM SUMMIT & AWARDS EVENT REPORT
HONOURING INDIA’S BEST IN FOOD LOGISTICS Applauding the painstaking efforts and brainstorming on the best practices in food supply chain was the highlight of the second edition of ‘India Food Retail & Supply Chain and Agro Logistics: Summit and Awards’. The event, with Smart Logistics as its media partner, saw the meeting of minds who deliberated & discussed crucial issues faced by LSPs and shared strategies to root out supply chain inefficiencies. A report… NISHI RATH
saw the likes of Ramesh RISE in incomes, changing Srinivas, Partner, KPMG lifestyles, urbanisation and and Anshuman Singh, CEO, easy availability along with fast Future Supply Chains bring changing demographics are only out the scope and vibrancy some of the reasons fuelling of this industry, establish the the exponential growth in food contours and imperatives of retail. The fast growth leads this growth, indicate hurdles to operational and logistical and challenges and broad brush challenges. Highlighting the the actions that are needed to exponential growth in food ensure sustainability. retail was the ‘India Food Retail (L-R) Anand Ramanathan, Associate Director — Management Consulting, Stretching cold chains beyond & Supply Chain and Agro KPMG; Devendra Chawla, President — Food & FMCG, Future Group; Vivek Karwanyun, GM — Supply Chain, Bunge; Dheeraj Gupta, MD, Jumbo King; the home bridge - generating Logistics: Summit and Awards’. Purvin Patel, CEO, Radhakrishna Foodland; Pawanesh Kohli, Business acceptance Organised by Supply Chain Strategy & Management Solutions, Arshiya International; Vineet Jain, Head — Distribution, YUM!, during a panel discussion This session saw people Leadership Council (SCLC), therefore the shelf life of a product like Girish Deshpande, GM, RK the event was held in Mumbai on decreases. A customer would not like Foodland; Sameer Varma, Head November 25, 2011. to take home a packet of biscuit that – Business Development, Cold Star; The event saw presentations & case is a month old. Here comes the need Sandeep Sharma, VP – Supply Chain, studies on various topics related to for a proper logistics facility.” Sriram Barista, discuss the opportunities and the food supply chain and comprised Venkateswaran, Director – Supply challenges with respect to cold chain of various sessions and interactive Chain & QA, McDonald’s India, maintenance in India. The discussion discussions. It also focussed on some adds, “Our customer expects great was in a bid to generate greater of the key trends that are shaping the food at great price and quality, which acceptance of professional cold supply world. Talking about the need for a forms the core of a supply chain.” chain management. proper logistics facility, Jagadeesh Panel discussion Kunchey, Head – Logistics, ITC, says, “Today a customer is very SESSIONS AT A GLANCE… In this hands-on session, experts from cautious about what he consumes, YUM, RK Foodland, Future Group, SCM powered food retail This session JumboKing Foods, Bunge and Arshiya International discussed the economics SCLC partnered with KPMG to conceptualise these awards. Nominations were invited across the of outsourcing as well as focus on the industry and participants were invited to nominate their companies for one or more categories new dynamics that are transforming the by writing, besides other information, a 750-word note on ‘why they believe that they should way 3PLs and service users approach win a category’ based on the judging criteria for that category formulated by KPMG. outsourcing decisions and relationships. Category Food Supply Chain Manager Of The Year (Manufacturer) Food Supply Chain Manager Of The Year (QSR) Food Supply Chain Manager Of The Year (Retailer) Cold Chain Service Provider Of The Year Innovator Of The Year (Packaging) Innovator Of The Year (Supply Chain) Tech Enabling Company Of The Year Agro Logistics Service Provider Of The Year Food SCM Newsmaker Of The Year
Winner Ferrero India McDonald’s Food Bazaar/Hypercity Cold Star Logistics Dabur Marico/PepsiCo AgroTech Foods Knit Green YUM Restaurant
READY TO TAKE ON CHALLENGES As the event came to an end, the participants were ready to take on the challenges that they have been facing. According to the industry experts present there, the innovative ideas discussed during the sessions will help them bring in many changes in the food retail and supply chain sector.
DECEMBER 2011 • SMART LOGISTICS • 63
PRODUCT & ADVERTISERS’ INDEX
To know more about the products & advertisements featured in this magazine, write to us at b2b@infomedia18.in or call us on 022-3003 4640, and we will send your inquiries to the companies directly to help you source better. Products
Pg No
Products
Pg No
Asia Manufacturing Supply Chain Summit ................................. FIC
Mining dumpers...............................................................................58
Cable racks .......................................................................................24
Mobile elevating work platforms .....................................................58
Cable trays........................................................................................31
Mobile loading lifts ..........................................................................59
Container transporters .....................................................................64 Cranes & material handling equipment ..........................................58
Plastic storage systems .....................................................................24 Poly pallets .......................................................................................31
Electric chain hoists .........................................................................60 Prefabricated industrial sheds ..........................................................24 EngineeringExpo exhibitions ....................................................6, BIC Exhibitions ................................................................................6, BIC Gantry cranes ...................................................................................58
Racks ..........................................................................................24, 31 Slotted angle racks .....................................................................24, 31
Grabbing cranes ...............................................................................58
Storage & handling systems ............................................................60
Heavy-duty racks .............................................................................31
Super market racks ...........................................................................31
Logistics services ........................................................................ 5, BC
Warehouses.........................................................................................4
Pg No
Advertiser
Tel. No.
Website
BIC
Engineering Expo
T: +91-09819552270
E: engexpo@infomedia18.in
W: www.engg-expo.com
6
FADA
T: +91-11-23320095
E: fada@airtelmail.in
W: www.fadaweb.com
FIC
Kamikaze B2B Media
T: +91-9833226990
E: aboli@kamikaze.co.in
W: www.asiamscsummit.com
24
Kelson Steel Products Pvt Ltd
T: +91-9313379570
E: kelsonsteel@gmail.com
W: www.kelsonsteels.com
64
Majha Transport Pvt Ltd
T: +91-11-26366926
E: gagan@majha.in
W: www.majha.in
31
Pilco Storage Systems Pvt Ltd
T: +91-11-27121705
E: sales@pilcoonline.com
W: www.pilcoonline.com
5, BC
Safexpress Private Limited
T: +1800-113-113
E: suyash.srivastava@safexpress.com
W: www.safexpress.com
4
Vijay Logistics Pvt Ltd
T: +91-2135-675000
E: info@vijaylogistics.com
W: www.vijaylogistics.com Our consistent advertisers
COC = Cover-on-Cover, FIC = Front Inside Cover, BIC = Back Inside Cover, BC = Back Cover
64 • SMART LOGISTICS • DECEMBER 2011
Use this form for free additional Information on advertisements published in this issue. We will send your inquiries to the advertisers and ask them to send you the details or contact you directly.
HOW TO USE THIS FORM: • Please tick against the box of advertiser(s) you are interested in: • Mention specific product/service you need, against the advertiser’s name • Complete all the details on this form. • Tear the form & mail it to us. (It is a prepaid mail) Tel.: +91-22-3003 4640 • Fax: +91-22-3003 4499
E-mail: b2b@infomedia18.in PRODUCT INQUIRY FORM Asia Manufacturing Supply Chain Summit
Mining dumpers
Cable racks
Mobile elevating work platforms
Cable trays
First Fold Here
Mobile loading lifts
Container transporters
Plastic storage systems
Cranes & material handling equipment
Poly pallets
Electric chain hoists Prefabricated industrial sheds EngineeringExpo exhibitions Racks
Exhibitions
Slotted angle racks
Gantry cranes
Storage & handling systems
Grabbing cranes Heavy-duty racks
Super market racks
Logistics services
Warehouses
Second Fold Here ADVERTISERS’ INQUIRY FORM Majha Transport Pvt Ltd
FADA
Pilco Storage Systems Pvt Ltd
Kamikaze B2B Media
Safexpress Private Limited
Kelson Steel Products Pvt Ltd
Vijay Logistics Pvt Ltd
Engineering Expo
Third Fold Here
GLUE
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City:
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12 / 2011
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