Lt march 2012 pdf by Raj Misra

COVER STORY

REPORT DELOITTE

TECHNOLOGY FLEET MANAGEMENT

LogisticsTimes www.logisticstimes.net

NTC:

Taking New Routes ODC major from m South, Namakkal Transport ransport Carriers, has set et afoot a major churning g process which entails assuming a new identity. tity. The success of the he past has emboldened ned the company to venture out in new directions... ections...

INTERVIEW ANIL ARORA

July 2010 NDIA'S LOGISTICS MOSTTIMES VALUED LOGISTICS MAGAZINE

March 2012

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Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 2: Issue No.11 * March 2012 Editor in Chief

Raj Misra rajmisra@logisticstimes.net

Editor

Ritwik Sinha ritwik@logisticstimes.net

Sub Editor Photographer Design Consultant Designer Circulation & Distribution Legal Advisor

Neha Richariya Anil Baral S. Athar Hussain Kausar Syed

COVER STORY

NTC: Taking New Routes

Kamruddin SaiďŹ Rakesh Garg

Our Bureau Mumbai Rahul Kumar rahul@logisticstimes.net Bangalore

B Shekhar shekhar@logisticstimes.net N Raju

Chennai

raju@logisticstimes.net Sudhir Kumar

Hyderabad

sudhir@logisticstimes.net

Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Management

Marketing & Sales Outthink Strategies Ph: 65177214, 26412476, 9818097385 Email: sales@logisticstimes.net Printer & Publisher Deepa Misra for

E-77, West Vinod Nagar, Delhi -110092 Tel: +91 11 22478538-39, Fax: +91 11 22471764, Mumbai: +91 9322811550 Printed at Personal Graphics & Advertiser Pvt. Ltd. Y -22, Okhla Industrial Area-II, New Delhi-110020

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News Briefs

Product

Events

16 REPORT

Present situation and way forward

42 TRAINING & EDUCATION

The Missing Link

21 INTERVIEW

Anil Arora

TECHNOLOGY

Real Time Logistics Management

EDIT NOTE

New directions for ODC ‘Nibunar’

he credit for the cover story presented in this edition clearly goes to a close industry friend from Bangalore. Four-five months back while sharing a hot cuppa in a South Indian restaurant in Delhi, I casually asked him to name some of the most promising companies (purely home grown) in logistics space from down south. He thought for a while to furnish his list but at the end of it, he strongly recommended Namakkal Transport Carriers as the major rising star. “Not many realise, they are probably the biggest ODC player in the country building everything from the scratch in last 15 years. They have a commendable fleet size with a significant chunk occupied by Volvo trailers – considered to be most expensive in the business. And the icing on the cake is: it’s a company with a strong human face,” was his summing statement. The statement had enough substance to trigger my interest and what followed was gathering dope from other sources and touching base with the senior officials of Namakkal Transport Carriers in past three months which ultimately culminated in a visit to their headquarters in Chennai last month. The two day whistle stop tour also included site visiting of their service centers outside Chennai as well as their service center in Namakkal and also their unique driving training center which has recently been set up. At the end of it, I can safely conclude that getting a chance to understand Namakkal Transport Carriers from close quarters has been quite an experience. My singular observation is that this company which was set up by four friends in 1997 with a seed capital of a mere Rs 5 lakh ( they are expecting around Rs 450 crore turnover in fiscal 2011-12) is probably at the end of its first growth curve. At a very early stage of their journey they had taken the risk of developing expertise in ODC ( a space where only a handful of players are there since capital expenditure is high and there is hardly any validity of that much touted asset light mantra ) and that daunting move seems to have finally accrued rich dividends to them. Talk to any senior official of the company and ask him to define the journey and the broad underlined statement is that “it’s an assiduously built company.” After having established as ODC ‘nibunar’ (a Tamil word meaning specialist), the company has just commenced its second innings with that larger objective of becoming an end-to-end logistics players. Those preliminary moves have been made in certain verticals with a decisive tilt towards developing international strength. Not to forget, many of the future plans are in strong synergy with its ODC expertise. The company today is also no longer promoters driven water tight entity – there are sufficient professional quotients. The company is soon going to set afoot a major backward integration drive which would be followed by institutional funding or testing of waters at Dalal Street. To sum it up, a company this is clearly in a transitional mode and is taking new directions probably exemplifying the immense growth opportunities in the Indian logistics space.

Waiting for your feedback. Ritwik Sinha ritwik@logisticstimes.net LOGISTICS TIMES August 2011

NEWS BRIEFS

New Air Cargo Policy

The Ministry of Civil Aviation is considering formulation of a separate air cargo policy. This was divulged by Civil aviation minister Ajit Singh in a recent meeting with senior officials of industry association ASSOCHAM. The officials had met Ajit Singh to urge him to push for separate budgetary allocation and land for developing airports across the country. According to a release by Assocham, Ajit Singh assured that the government is working on a new policy which will propel India among top five aviation markets in the world by providing access to safe and affordable air services with a strong regulatory

framework and world-class infrastructure facilities. He also stated that the ministry of civil aviation will also consider the proposal to work out a separate air cargo policy as 200 freighter aircraft will be required in the next 20 years to meet the industry’s demand. During the meeting, ASSOCHAM presented an action plan which among other things advocates upgrading infrastructure, attracting domestic investments and easing norms on foreign direct investments so that the sector can grow annually by eight per cent and raise freight traffic from 23.5 lakh tonnes now to 70 lakh tonnes in the next ten years. According to Assocham release, “To achieve India’s standing as a global trans-shipment hub, there is a need for simplification of procedures like 100 per cent electronic approvals. There should be inter-linkages with airlines, airport operations and air freight stations, customs, banks, clearing house agents and other allied agencies for greater mobility of processes. Land should be demarcated for air cargo villages at airports or nearby regions.” ASSOCHAM further maintained that air freight stations should be established in hinterlands to decongest warehouse and offset limitations of space. They should have facilities for palletisation, customs examination and X-ray screening. There should be cargo facilities at tier II and III cities as alternate growth centres. Furthermore, the industry chamber also advised creation of an Air Cargo Promotional Board for further organised growth and deployment of air cargo hubs across the country.

exports for the months Over 20 percent growth India’s of April 2011 - February 2012 have registered a growth of 21.4 percent, at US $ 267.4 billion. Interacting with media recently, Rahul Khullar, Commerce Secretary, informed that during the same period the imports were US $ 434.2 billion with a growth of 29.4 percent and balance of trade stood at US $ (-)166.8 billion, during the same period. Khullar also informed that India’s exports in February 2012 were US $ 24.6 billion with 4.3 percent growth and imports stood at US $ 39.8 bn with growth of 20.6 percent balance of trade for the

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month of February 2012 stood at (-) 15.2 billion US $. During April-February 2012, the sectors which did exceptionally well in exports are: engineering, (US $ 54.5 billion) which registered the growth of 20.9%; petroleum & oil products, 46% (US $ 53 billion); Gems & Jewellery registered the growth of 28.8% (US $ 40.6 billion); drugs and pharmaceuticals 11.4% (US $ 11.4 billion ); leather 20.4% (US $ 4.1 billion) cotton yarn and fabric made-up 18.5% (US $ 6.1 billion); electronics, 3.5% (US $ 8 billion); and readymade garments, 19% (US $ 12.1 billion).

Action against over-loading

According to a Ministry of Road Transport and Highways recent release, the ministry has urged National Highways Authority of India ( NHAI) to install weighing machines and other necessary equipments near key toll plaza’s on a pilot basis to curb the practice of overloading and take stringent measures to curb overloading. NHAI has proposed to constitute a technical committee to review the provision of Model Concession Agreement, User Fee Rules-2008 and Weight Enforcement Stations at a convenient location approx 1-2 Km before on either sides of the toll plazas. Overloading badly damages the precious road infrastructure, incurring huge expenses on the exchequer to maintain the

roads and is one of the major causes for increasing number of road accidents as per reports. As per Section 114 of the Motor Vehicles Act 1988, in case a vehicle is found to be overloaded, the excess load needs to be off-loaded at the cost of the driver/ owner of the vehicle in addition to penalty and compounding fee before allowing the vehicle to proceed further. Road transport being a state subject, the responsibility for curbing the overloading of vehicles primarily rests with the State Governments. However, realizing the seriousness of the problem, the Ministry of Road Transport & Highways has been emphasizing States/UTs from time to time for strict enforcement of the provisions of law to check the menace of overloading. Last year, Secretary Ministry of Road Transport & Highways had sent a letter to all the Chief Secretaries of State Governments/UT Administration requesting them to instruct the enforcement authorities to check the practice of overloading and send “Action Taken Report”. In response, 25 State/UT Governments namely Arunachal Pradesh, Andhra Pradesh, Delhi, Bihar, Chandigarh, Goa, Dadra & Nagar Haveli, Daman & Diu, Chhatisgarh, Jharkhand, Himarchal Pradesh, Karnataka, Maharashtra, Mehalaya, Madhya Praesh, Manipur, Mizoram, Odihsa, Punjab, Rajasthan, Tripura, Gujara, Uttarakhand and Uttar Pradesh have reported initiating action for curbing overloading in their respective states. The overloading issue was also discussed in National Transport Development Policy Committee (NTDPC) meeting held on December,2011. It was deliberated that National Highways, being 2% of the total roads, carry 80% of the cargo being plied, either destination to destination or partially. Therefore, NHAI should take strict action against truckers overloading on National Highways which may prove a deterrent measure.

DTDC enters China market

DTDC, India’s leading express courier company, has now entered in Chinese market by forging a joint venture alliance. in China. With this, DTDC will have presence in 16 countries through various arrangements such as 100% subsidiaries, joint ventures and International Master Franchises. The JV in China will be 60% owned by DTDC and 40% by its Chinese Partner Air Dragon Freight (Beijing) Co Ltd. In the recent past, the bilateral trade between the two countries

has soared exceptionally and it is expected to touch US$ 100 billion in the medium run. Many Indian companies are setting up their sourcing offices in China while others are setting up manufacturing bases in China. Similarly Chinese companies are setting up large presence in India and growing their sales in telecommunications, consumer electronics, hardware, machinery parts, gift items etc. To serve this growing trade between the two countries, DTDC decided to set up strong and long-term presence in China through a JV arrangement. “China will play a very important role in the overall international business growth of DTDC”, commented Subhasish Chakraborty, CMD of DTDC. “Entering Chinese market is a key component of our global strategy to create the DTDC International Network”, Suresh Bansal, Director and head of International Business added. Presently, DTDC China Limited will operate from three locations: Shanghai, Beijing and Guangzhou and will offer its door-to-door Premier Express Services as well as Air and Sea Freight services. DTDC China has already received a license from the Chinese government to start freight services.

LOGISTICS TIMES March 2012

NEWS BRIEFS

Bulk terminal at Kandla Adani Ports and Special Economic Zone (APSEZ), India’s largest private multi-port operator and part of the Adani Group, has received the letter of intent from the Kandla Port Trust, a Government of India body, to set up a dry bulk terminal at the Kandla Port on build, operate and transfer basis. According to a recent company release, the company had emerged as the highest bidder on revenue share basis and has been awarded the concession in a highly competitive bidding scenario. The dry bulk terminal will be off Tekra near Tuna outside Kandla Creek at the Kandla port which is India’s number one port by volumes. The construction of the new bulk terminal will begin after signing of the concession agreement with the Kandla Port Trust. “We are extremely pleased to partner the Government of India and the Kandla Port Trust and would like to thank them for their faith and confidence in the Adani Group’s execution and operating capabilities for setting up world class ports. The Kandla Port’s strategic location will be an important factor in attracting cargo from the north-west hinterland and will assist Adani Ports to cross cargo handling volumes of 200 million tonnes by 2020,” said Rajeeva Sinha, Wholetime director APSEZ.

Adani Ports is now the only private port infrastructure company to operate and construct ports and terminals across six locations in India – Mundra, Dahej and Hazira in Gujarat, Marmugao in Goa and Visakhapatinam where it has recently begun construction of a coal import terminal. The Mundra port is the fourth largest commercial and considered to be top most private port in India.

6th rank for FedEx in FORTUNE’s list

FedEx Corp has once again found a berth in the top ten most admired companies in the world list published by FORTUNE magazine. The annual “World’s Most Admired Companies” report released recently listed FedEx at the sixth rank, up two positions from the organization’s rank in 2011. The survey measures nine attributes related to financial performance and corporate reputation.

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“The commitment and dedication of the 290,000 FedEx team members around the world has once again earned FedEx the honor of being included on the FORTUNE Most Admired Companies list,” said Frederick W. Smith, chairman, president and chief executive officer, FedEx Corp. “FedEx prides itself in being a responsible employer, caring neighbor and steadfastly committed to excellent customer service and we credit these attributes in allowing us this recognition.” Since 2001, FedEx has ranked among the top 20 in the FORTUNE Most Admired Companies list. FedEx also earned accolades for its reputation and culture among numerous regional rankings throughout the world. Most recently, the Great Place to Work Institute named FedEx Express as one of the top five global companies to work for in its inaugural ranking of the World’s Best Multinational Workplaces. FedEx was selected for the recognition from among the 350 multinational companies in 45 countries that were included in Great Place to Work lists from around the world in 2010 and 2011.

NEWS BRIEFS

Capacity cut on Asia – Europe trade

Oversupply of container vessels operating on the Asia – Europe trade lane has pushed Maersk Line’s container freight rates to unsustainably low levels. In order to rationalise its service, Maersk Line is removing 9% of its vessel capacity currently operating on the Asia – Europe trade. “With this adjustment we are able to reduce our Asia – Europe capacity and improve vessel utilisation without giving up any market share we have gained over the past two years. We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability,” Maersk Line CEO, Søren Skou was quoted as saying in a recent company release. The 9% capacity reduction will be facilitated by a vessel sharing agreement with the French container shipping line, CMA-CGM. With this agreement, Maersk Line is able to remove 9% of its

vessel capacity while still maintaining full and competitive coverage for its customers. In addition, the cooperation helps Maersk Line cut the cost of serving West Mediterranean markets, enabling Maersk Line to deploy its own vessels to areas where they are most needed as well as pursue further slow-steaming. A January report from shipping analyst, Alphaliner, predicted Europe – Far East container traffic growth would slow to 1.5% in 2012 from an estimated 2.8% in 2011, due to a weakening economic outlook in Europe. The industry container vessel fleet, by contrast, is set to grow by 8.3% in 2012. “The Asia – Europe trade remains the world’s busiest trade lane, however the supply of vessels currently operating on this trade simply outweighs the demand. We are therefore rationalising our service by taking out vessel capacity and thereby reducing costs,” says Vincent Clerc, Chief Product and Yield Officer for Maersk Line. Where commercially appropriate, Maersk Line will also consider additional opportunities to reduce capacity, including redelivery of time charter tonnage, the use of lay-ups and slow-steaming. Additionally and in line with previous guidance, Maersk Line will not declare the option for the last ten Triple-E vessels. LOGISTICS TIMES March 2012

NEWS BRIEFS

SMART Energy Solution CEVA Logistics recently announced the global unveiling of its latest SMART Solution: SMART Energy, which will be rolled out to customers during 2012. The solution is designed to address the challenges that energy organizations are facing in an increasingly complex marketplace, and to provide them with competitive advantage through impeccable supply chain management and execution, greater visibility and cost efficiencies. SMART Energy is part of CEVA’s SMART Solutions suite; a set of proven, replicable and integrated logistics services for global organizations. These solutions are based on best practices for a variety of sectors and are a key part of CEVA’s commitment to continuous improvement and innovation, and support its drive to continue to offer market-leading, efficient supply chain solutions to its customers. According to a company release, by combining CEVA’s shared sector knowledge and best practices into SMART Energy customers can be confident of a robust service solution that puts Compliance and HSE (Health, Safety and Environment) at the heart of their supply chain. SMART Energy will provide customers with consolidated, integrated logistics; seamlessly covering all areas of the supply chain from supplier to end user, purchase order issue to final on-site delivery, and return and repair. By minimizing supply chain disruption, ensuring on time delivery to strict KPIs, and eliminating waste through its LEAN program, CEVA will be able to deliver significant cost savings for Energy customers.

Marcelo Franceschetti, CEVA’s Senior Vice President, Global Energy Sector said: “SMART Energy’s purpose is to meet the demands of the modern Energy organization, with the aim of providing them with increased visibility of often complex, international supply chains, as well as contributing to lower inventory levels and total logistics cost. Our well-established integrated Freight Management network and Control Towers deliver accurate, timely information which will allow customers to respond faster to rig downtime. The combination of our experience in the sector and the application of global best practices will make SMART Energy a powerful tool in managing the supply chain.” The solution is based on CEVA’s proprietary MatrixTM suite of supply chain systems, meaning all stakeholders will enjoy near realtime visibility of their materials, at all stages of the supply chain. The Matrix™ system integrates transportation, inventory management, order fulfillment, financial settlement and e-commerce applications to provide customers visibility and control.

Schiphol rewards quieter freighters AirBridgeCargo is the first freighter operator this year to enjoy reduced airport charges at Amsterdam Airport Schiphol, benefitting from Schiphol’s newlyintroduced Cargo Sustainability Incentive Programme (CSIP). AirBridgeCargo began operating its brand new, latestgeneration B747-8F aircraft into Schiphol on February 4th, replacing previous generation B747-400 freighters. In LOGISTICS TIMES March 2012

comparison with the B747-400, airport charges for using this new type of aircraft in 2012 are 20% lower. Schiphol Airport stimulates the use of quieter aircraft. The airport’s CSIP rewards any carrier that substitutes MCC3 type aircraft (such as the B747-200F) with quieter aircraft in categories A, B or C (such as the B777F, MD11F and the B7478F), operated between 0600-2300. Schiphol’s CSIP joins the airport’s two other carrier incentive schemes. Under Schiphol’s Freighter Reward Programme, introduced in 2008, freighter operators can profit from a reward per destination for their first year of operating either new or additional year-round services. Says Schiphol Cargo Senior VP, Enno Osinga: “Schiphol is fully ready for the new and larger B747-8F. We particularly welcome this aircraft type, as it combines larger capacity with lower noise levels and improved fuel efficiency.”

NEWS BRIEFS

Damco on a strong wicket Global logistics and freight forwarding company Damco recently released 2011 results which demonstrate continued strong growth towards becoming a major player in the global logistics industry. Damco’s Earnings Before Interest and Tax (EBIT) improved by 29% in 2011, rising from USD 75 million in 2010 to USD 97 million. Productivity improvements lowered the overhead expense ratio and drove the EBIT return on sales from 2.8% to 3.5%. Return on invested capital (ROIC) rose from 22% to 26% for the year. Total revenue grew to USD 2.8 bn from USD 2.7 bn in 2010, with reduced freight rates masking the strong increase in underlying business. “We are pleased to have delivered such strong results, despite the softening market in the second half of the year. Taking our market leading expertise in Retail and Lifestyle to other industry sectors is clearly resonating with customers”, commented Rolf HabbenJansen, CEO of Damco. The traditional annual Q3 peaks in Europe and North America did not materialize due to weakened consumer confidence resulting from US budgetary concerns and the Eurozone crisis. Europe and North America posted lower results in 2011 compared to the prior year. However, the ongoing focus on accelerating Damco’s expansion in growth markets led to improved results across key parts of South and Southeast Asia, Africa and Latin America. “More than 60% of our employees are in growth markets and the strength of our business in places like China, India, Vietnam, Indonesia and Africa allows us to challenge and win against even our largest competitors, which puts us in a good position when growth in Europe and the US slows”, Damco CEO Rolf HabbenJansen said.

Sieg is new ocean frieght chief International logistics professional Martin Sieg, a long time ocean freight expert, has taken responsibility for ocean freight at Damco. Effective January 1st 2012, Martin Sieg has moved to a position as Global Head of Ocean Freight with overall responsibility of the more than 600,000 TEU (2011) of ocean freight that Damco manages every year. In spite of a very volatile market with an unclear direction on freight volumes, capacities and rates, Martin Sieg is very excited to take charge of making ocean freight count at Damco. “The role of ocean transport as a substantial part of the ever growing worldwide trading will grow further. As one of the leading worldwide providers for logistical solutions we will not only follow this development but outperform it by growing above the market”, Martin Sieg said.

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REPORT

Present situation and way forward On the occasion of Supply Chain Excellence Award organised by Indian Chamber of Commerce last month in Delhi, noted global research and consultancy firm Deloitte released a study paper titled: ‘ Logistics Sector - Present Situation and Way Forward.’ The report strongly underlines the major bottlenecks for the logistics businesses in the country. Excerpts from the report: The logistics sector in India has today become an area of priority. One prime reason for the same stems from the reason that years of high growth in the Indian economy have resulted in a significant rise in the volume of freight traffic moved. This large volume of traffic has provided for growth opportunities in all facets of logistics including transportation, warehousing, freight forwarding, express cargo delivery, container services, shipping services etc. The growth path has also meant that increase demand is being placed on the sector to provide the solutions required for supporting future growth. Going forward it will not be wrong to say that the strength of the logistics sector is likely to be one of the key determinant of the pace of future

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growth of the economy. Various estimates put the market size of the logistics sector in India to be between USD 90-125 billion. Given that the Indian economy has grown to over USD 1.73 trillion these estimates may already be well below the actual size of the industry. Sources also estimate that the industry employs over 45 million people and is growing at the rate of 15% with sub-sector growing at even 30-40% per annum. Due to its current growth and its future growth potential the Indian logistics sector is viewed as one of the most attractive in the world. The Emerging Market Survey, 2011 conducted by Transport Intelligence highlights India’s attractiveness as a strong growth area for logistics in the future. The survey found that nearly half of its respondents agreed that India would emerge as a major logistics hub in the future. Also India’s rapid growth and market size were the key factors for global players looking at opportunities in the region. Despite holding promise the logistics sector in India remains mired in several complexities which have the potential of holding it back. These include significant inefficiencies in transportation, poor condition of storage infrastructure, a complex tax structure, low rate of technology adoption and poor skills of the logistics professionals. The key challenges for the sector are highlighted in the following section.

Challenges faced by the Logistics industry in India Transportation related challenges In India road has become the predominant mode of transportation of freight cargo. Estimate of the modal movement of cargo highlights that In India nearly 61% of the cargo is moved by road, 30% by rail and rest by

airway, pipelines and inland waterways. This is as compared to a 37% share of road in the USA and 22% in China. It is recognized that movement of long haul bulk traffic by road is less efficient than by rail. But road is still preferred over rail because: Important rail networks are oversaturated: There has been little investment in track infrastructure since independence. While route kilometer has grown only at a CAGR of 3%, track kilometer, incorporating additional lines on existing routes, has not fared much better growing at a low CAGR of 6.6%. During the same period freight and passenger traffic has grown at a CAGR of nearly 54%. This has led to most high density corridors becoming over saturated. Rail freight tariffs are high: Indian Railways follows a policy of subsidizing passenger tariff by freight tariff. This has resulted in a sharply rising trend in railway freight rate over LOGISTICS TIMES March 2012

REPORT

the years compared to an almost stagnant passenger tariff rate. The result of this has been that Indian rail freight rates have already become one of the highest in the world, with freight rates in India being nearly 4 times that in United States. If truck overloading is also taken into account then rail freight rates work out to be higher than road freight in many instances. Transit times are long and uncertain: Freight traffic is frequently subordinated to passenger traffic on the railway network. This results in a freight train taking as much as 6-8 days for a journey of 2000 kilometers. Also there is no guarantee provided on the transit time for freight trains. Rail terminal quality is poor: Most rail terminals (goods shed) used for loading/unloading of freight are antiquated. They also suffer from issues of access and evacuation of traffic. Less flexibility in carrying different types of products: Special wagons are not easily available for carrying specialized products. For example special types of steel required for automobile production have to be carried by trucks as the existing wagons do not offer the kind of protection that these high value products require. While customers are allowed to request for new wagon designs the process of getting these wagon designs approved by railways is cumbersome. Railway carriage not easy for industries which cannot provide

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full train loads: Railways have a preference for customers who can provide full train load as unlike in some other countries, railways in India no longer run mixed trains which can carry different types of cargo. Operational efficiency is cited as the major reason for the same. While containerized rail movement can provide for freight movement for industries with smaller rake loads domestic container movement has not taken off in a big way- with one of the issues being a lower priority being accorded to container trains on the railway network. Road network coverage: Freight movement in India is dependent on National Highways. While National Highways constitute only about 2% of the road network of India they carry nearly 40% of the total traffic. As a result most of these highways are severely congested- resulting in freight travelling only a third of the distance compared to developed countries. Poor road quality: The road quality in India, on the National Highways as well and other roads, is improving but is still poor in many locations. Estimates suggest that motorable roads are still less than 10% of the total road network. Large stretches of National Highways are also two laned in many stretches reducing their capacity to handle large traffic loads. Expressway network will take time to develop: In many developed countries expressways have been developed to facilitate high speed freight movement through linking of important cities, ports and industrial centers. In India the expressway network is still largely at a planning stage with a target of development of around 15,000 kilometers of expressways only by the end of the 13th plan period. ownership there is fierce competition amongst operators leading to truck owners resorting to overloading to recover investments. Also due to the limited investment capacity of these operators technology in terms of better vehicles (average age of trucks in India is over 10 years), tracking, safety etc. has been slow to percolate.

Multiple check points: Trucks in India have to pass through multiple check points in their journey. Trucks have to stop at state borders, for payment of toll taxes, for RTO inspections, Octroi etc. An estimate of the time taken at the check points shows that in a journey of 2150 kilometers between Kolkata and Mumbai a truck had to stop for as much as 32 hours at various checkpoints on 26 different locations.1 In addition to roads and railways which carry the bulk of freight traffic in India other modes of freight carriage also suffer from their own issues. The ports sector in India suffers from several issues: High turnaround times: Data from Indian Ports Association shows that ports in India suffer from high turnaround times for ships. JNPT, which is the premier port in India, has more than 2 times the turnaround time of Colombo and Singapore ports because of congestion on berths and slow evacuation of cargo which are unloaded at the berths.

Inadequate depth at ports: The depth at many ports in India is not enough and dredging tenders take a long time in getting awarded. As a result with the existing depths many ports are not able to attract very large vessels. Costal shipping has not taken off: Costal shipping in India is hampered by inadequate port and land side infrastructure which hampers large scale use of it for freight movement.

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REPORT

Finally Air cargo has also not taken off significantly in India. With increased volumes of cargo major airports are getting congested resulting in long waiting time. The waiting time for exports in India is 50 hours compared to a World average of 12 hours while the waiting time for Imports in India is 182 hours compared to a World average of 24 hours. Also the airfreight sector suffers from high fuel costs and tariffs as well as several manpower issues. While it is difficult to set up a facility, at the same time, the existing facilities themselves are plagued with several issues: Many of the older facilities today are located within city boundaries restricting day movement of trucks The approach roads to the facilities are poor making evacuation of cargo difficult Most facilities have issues of inadequate parking, lack of available land for expansion, paving etc. State of warehousing is poor: Various estimates put warehousing costs to be between 20-25% of the total logistics cost. Despite this the state of warehousing in India is largely dismal. On the warehousing front 80-85% of warehouses are traditional with sizes of less than 10,000 square feet. Most of these warehouses are not leak proof, equipped with security systems, racking facilities and other facilities. Majority of the operators of these warehouses are also small to mid-sized entrepreneurs with limited investment capacity. The only really large warehousing owners are government agencies including Central Warehousing Corporation and State Warehousing Corporations, but the focus of a significant majority of the government warehouses is food grain storage. Not only are the existing warehouses of poor quality, there are also not enough of them. This is because land availability for warehousing at an appropriate place and at an appropriate price is a concern. The magnitude of the problem in this regard was highlighted in a recent CII conference on warehousing where it was highlighted that Delhi alone has a deficit of 9000 acres of land for development of warehousing facilities! State of cold storages is poor: Despite the significant requirement of cold storages from the retail sector, pharmaceutical and chemical sector and the farm sector, where it is estimated that upto 40% of the fruits and vegetables grown in India gets wasted, the sector needs to grow much faster to meet the needs. Estimates on cold chain facilities in India put the number of cold storages at around 5400 with a capacity of 24 million metric tons. However nearly 60% of these facilities are meant for storage of potato crop. Also with the poor electricity condition in the country the cost of operating such facilities is very high. With government intervention and various sops the situation is slowly improving but many challenges remain. Multimodal Logistics parks yet to take off: With emerging requirements of integrated logistics, provision of transportation hub, value addition etc. large logistics parks were sought to be developed. However as with other areas LOGISTICS TIMES March 2012

the number of such facilities continues to remain much less than the requirement. Consolidation of large land parcels is a significant issue hampering their development. Other issues include the lack of recognition of the concept of logistics park by state government thereby obtaining permission for setting up one cumbersome. Tax structure related challenges A complicated tax regime is in place which places several challenges on the logistics industry. Payment of multiple state and central taxes results in: Considerable loss of time in transit for road freight in order to pay such taxes Fragmentation of warehousing space especially for low margin products thereby providing a disincentive to create large integrated warehousing spaces A uniform tax structure to be introduced through the GST is being highlighted as a panacea for the existing situation. If implemented in spirit GST will enable logistics services to be provided without consideration for tax boundaries. However while the introduction of GST looks fairly certain several companies have already started raising doubts about the final shape the bill will take, given the deep divisions between several state governments and the central government on the issue. Technology and Skills related challenges The logistics industry is also hampered by low rates of technology adoption and poor skill levels. On the technology front the industry now seems to be paying serious attention with use of RFID, vehicle tracking technologies, warehouse management systems etc. However while acceptance is perhaps not an issue any more, the marriage between IT and domain requirement needs to be resolved. Automation in processes is still only in its infancy. Further progress is dependent on a certain level of standardization which is made more difficult by the high level of fragmentation in the industry. This is a drawback that needs to be tackled early. In addition to technology-related issues the skill levels of in the logistics industry also require to be upgraded urgently. As of now courses focusing on logistics industry remain few and far between. Also logistics industry is still not looked at as the industry of choice for young graduates thereby making hiring of quality professional manpower challenging. On the ground level too there are challenges. A recent study has found that a variety of skills are required in the sector. These include technology skills, driving skills including safety procedures, industry understanding and multioperations skills. The present state of affairs is illustrated by example of truck driver in India, who is a critical point of contact for the logistics company with its customers where the truck drivers today find it difficult to accurately record delivery records, understand delivery documents, negotiate for return business, handle queries etc. Courtesy: India Chamber of Commerce

“We are looking for stronger presence in North-West Corridor”

LOGISTICS TIMES March 2012

INTERVIEW

Delhi-based MJ Logistics is considered to be one of the front ranking warehousing player in North India. Eredene Capital infused $20 MN in MJ in 2008 for a majority equity stake while the original promoter Anil Arora (designated as MD) holds the managerial mantle with a minority equity stake. In a candid conversation with Ritwik Sinha, Arora narrates the journey of the company since early 90’s and the kind of growth it seeks in the medium run. Excerpts from the interview: Let me begin with a very simple point. Give me a sense of the journey of this company since its incpetion. I entered in this business by default. That was in early 1990’s. We as a business family were in the business of brickKilnsand we had to shut that business because of shift in the market focus from Quality to Quantity. Before it was shut down, I had joined that business and was given the charge of the transportation department. We had ten trucks then which used to ferry our own bricks and I had to manage that fleet. And the experience taught me a lot in terms of understanding the basics of fleet management and delivery requirements, So I could say that was my first initiation into the world of Logistics .Due to the foresight of our father of buying and developing Land for Brick kilns against leasing it, we had a lot of land. This was on the eastern periphery of Delhi, right next to UP border where most of the cargo used to transit in and out of Delhi. In north India, it is still the biggest trasnportation hub. We saw a good opportunity to offer storage facility LOGISTICS TIMES March 2012

as there were a lot of big companies which wanted better infrastructure in that area. And that prompted us to look at warehouse segment. We were very fortunate to get some very good clients in the early phase. For next ten years, I was solely devoted to build this business and we raised about a million square feet space in the area giving it on rent to top Indian and MNC firms. The Mandoli warehousing complex is an important logistics landmark in the Delhi market today. Because of our initiation, there are a lot of new warehousing units in that area now. But initiatlly the things were difficult. I still remember it used to take us from six months to a year to convince a client to actually move in. But today the situation is that there is almost a waiting period if some client wants to expand. Alongwith this, around 1995 I floated a company called MJ Warehousing Pvt. Ltd. And we started doing C&F and transportation businesses. Phillips was our first client (it had already become our warehousing client) and was ready to give us business to manage. So we got into stock management and transportation –

in fact, practically we grabbed whatever business we could garner from our inhouse clients. 3PL was just gathering steam at that time. As more MNCs moved in the country, things started improving on 3PL front especially since late 1990s. This reflected on us as well. We got a very big contract from Coca Cola and managed their one way packages (can and Pet) across north India for four years. We grew from being a single location company to managing pure 3PL, hiring warehouses, trucks, delivering goods, etc. After 1998, we professionalised more and got in more people and started managing some major accounts like Godrej, MICO, Kirloskar, etc. Our strategy was to tap the companies which figured in top five list of their respective segments. They knew their business very well and they had a stable operational style. By 2005, we had a gamut of about six to eight clients and we used to provide all kinds of logistics services. That is where I realised that the rental business as it stands requires less of intellectual input and 3PL is the way to grow.

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What does MJ stand for? Its basically my father’s and grandfather’s first name. It’s a tradition in the family, we pick up first two letters from the head of previous two generations. The way MJ Logistics exists today, I am the only family member in the company. Rest comprises hard core professionals. I have equity in the company but majority is with London based private equity firm Eredene Capital. From 2005-06, we were putting up our long-term business plans. Around the beginning of 2007, we floated our business plans for funding and by the year end, we received capital infusion from Eredene. And that was a big landmark. Ever since then what we have

no upside in the long run. But I was fairly conﬁdent that things would work. As you are saying, you took painstaking efforts for over a decade in buidling this business. What then necessiated you to offer majority stake to a PE firm and took on the managerial mantle? Capital infusion for the future growth was the sole issue? Capital infusion was certainly one of the considerations. As a family, we had gone through a lot of upheavels. We were uprooted from Pakistan, operated a business for forty years and then had to shut it down. So the family thought

It is such a capital intensive business to raise a warehouse and cold storage, in some way or the other the ideal route is the institutional support. The choice for us was: to own a small piece of big pie or big piece of a small pie. And I opted for the former. been doing is primarily raising the bar in terms of infrastructure and service. In 1990’s you moved into warehousing and other allied businesses since the family was looking for other options. But that must have been a spell when things would not have been looking too promising for these businesses. Did you ever had those moments of self-doubts? No. And that is because I could see the importance of this business consistently growing within the clients’ sphere. Around mid-90s, big companies had started talking about supply chain. I had this realisation that sooner or later every company will have it as a separate division and every company will focus on lean inventories, faster movements, etc. Yes, potshots were taken at me that I am doing minion’s business with a limited or

process was if the warehousing business has stabilised itself, let us not leverage it and create unnecessary risk for the family. So capital was the central issue. The other thing is: it is such a capital intensive business to raise a warehouse and cold storage, in some way or the other the ideal route is the institutional support. The choice for us was: to own a small piece of big pie or big piece of a small pie. And I opted for the former. But are you comfortable with the idea that the baby which was nurtured by you is now owned by somebody else? As long as I have full management control, it doen’t matter to me. Rather it’s a good thing in a way that I am answerable to a pragmatic ﬁnancial institution .it does acts as an anchor, where you can go back to and indulge in retrospective view of your actions.

How would you explain your present operational scale? We are presently only operating in north. We have one owned location and plenty of rented locations. Ideally, we would like to have two more owned locations in other regions. And about three or four more rented locations. I would say we have about a million square feet footprint which we manage and 2,00,000 is what we own. In terms of scale, I would say a million square feet which we own. And more than two million square feet which we manage. Eredene’s entry, what difference has their arrival really made in terms of upgradation, enhancement of operational scale, etc? I was running this business for nearly 15 years before Eredene came into the picture. Biggest milestones which we have achieved after their capital infusion is creating the state-of-the-art Palwal Logistics Center. You can call it a product of 15 years of our frustration. Early 2000 when I started interacting with overseas players and whenever there was a foreign gentleman visiting from our client side, he would just come and disparigingly say – “this is the warehouse?” Thankfully, Palwal is now operational for two years and whosoever comes now compliment us for setting up an ultra modern unit which is at par with world standards. You have been propagating Logistics Center concept. Would you please explain what it is all about? It is a simple concept. When you have a large warehouse, you equip it with mechanisation to the extent it is possible and commercially viable. Your entire focus is on turnaround time of your trucks, materials, inflows and outflows rather than just a good structure . This is the typical difference between a warehouse and a logistics center. A logistics center first looks at the activities it plans to do than design a building and improvise on that to actually deliver benchmark turnaround time of stock and vehicles. Your handling practices are standardised. LOGISTICS TIMES March 2012

INTERVIEW

Most of the logistics center outside India are palletised and so is our unit. Your Palwal unit is certainly your biggest signpost today. Do you have plans to establish more such units in North India? Currently, we have additional land in Palwal where we can build three lakh square feet over and above the existing base of two lakh square feet. We want to build it up and fully populate it. Plus we want to mirror the concept across west and build similar capacities – particularly Mumbai-Pune belt. If we can raise the investmens required, then we might go into South India as well. I remember you mentioning earlier during a casual conversation that you would like to have a hub and spoke structure for your warehousing units. Is it finding any expression in your business today in North India? Right now, its not working out because GST is not in place though we had put up our plans in 2007-08. Hub and spoke model primarily works like this: in a region you have a hub and two or more spokes so that your fast moving SKUs you keep on spokes and the hub and you replinsh the spokes on a daily basis to service the market ahead which is also done on a half day basis. You are able to cover a region through these hub and spokes between 12 to 24 hours as every order that you receive gets serviced and delivered. Today, we are trying to make best of the situation (of course, GST is not under our control). We are saying that one hub we have in North India. We will have another in West India. We will link the two hubs and when GST comes, small set ups would be created which we would call spokes in B-class towns or the places which are within 300-500 kms perimeter of the hub. Have you identified the locations for spokes in North India? Yes, we have. But we are waiting for GST to actually show us a true shape. LOGISTICS TIMES March 2012

There are a lot of players in the warehousing segment keeping their expansion plans on hold because of uncertainity related with GST. How long you are going to wait for it? If you ask me, its out of my mind right now. That is why we are going ahead with the regional hubbing plans rather than hub and spoke model in one region. If it comes up, we would quickly put up spokes through leasing model. If we go back to 2008 before the downturn came in, every company and every client of ours was saying that we are going for 2x or 3x growth in next 3-5 years and we were actually thinking of setting up

operators like you? This assumption is not excatly incorrect. This was a trend at a time when a lot of warehousing capacity was raised when these retail chains came into the play and they were giving signals left, right and center and people were madly putting up warehouses. That lead to the creation of excess capacity. And at that point of time, rates used to get negotiated. That is the typical difference between an asset provider and a service provider. Today as a service provider, our revenues are linked with turnarounds and clients volume and hedged contractually against increases in wages and other input costs. So if we have invested more in a mechanised

If you ask me, GST is out of my mind right now. That is why we are going ahead with the regional hubbing plans rather than hub and spoke model in one region. If GST is implemented, we would quickly put up spokes through leasing model. infrastructure for that kind of booming scenario. But it didn’t happen. The good part of the downturn was if there were 200 companies wanting to enter logistics business, only 20 got left. So today the companies which you see in business are the ones whohave steely nerves and have higher degree of ﬂexibility and commitment. Even today GST to my mind would be an injection booster to our plans. But then there is Plan B ready if GST does not happen. I find many companies which have set up modern warehousing units like the one you have in Palwal complaining that clients are failing to understand that pricing points of their facilities would not be same as the rag tag units which go in the name of warehousing. Is it emerging as a serious concern for

and high-quality setup and we are able to do a better throughput, we need to be compensated for extra investment. Other thing is you have to look for right clients who are ready to pay you for efﬁciency rather than just space or stand alone service. Discerning clients would not object paying more for good services if you can show them the beneﬁts. What’s that medium term target you are looking at? Where would you like to see this company at the end of 2015? Our present turnover is Rs 30 crores. We would like to achieve a turnover range between Rs 150-200 crore. Geographical expansion is high on agenda. We need to serve our clients in other regions as well. Stronger presence in north-western corridor is a must since 70 percent of consumption is happening here.

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LOGISTICS TIMES March 2012

PRODUCT

COVER STORY

LOGISTICS TIMES March 2012

NTC: Taking New Routes ODC major from South, Namakkal Transport Carriers, has set afoot a major churning process which entails assuming a new identity. The success of the past has emboldened the company to venture out in new directions emanating from logistics intersection. Ritwik Sinha reports from Chennai and Namakkalâ&#x20AC;Ś LOGISTICS TIMES March 2012

COVER STORY

hey might be carrying some of the most bulky consignments on the Indian roads. But unlike that typical hurlyburly disposition of the transportation business, what strikes you at once is their unrufﬂed attitude and cool composure. Meet their senior functionaries in Chennai headquarters at Linghi Chetty street or visit their expansive and also state-of-the-art service centers just outside Chennai and Namakkal, and what would become noticeable is a strong sense of orderliness. Very quitely but meticulously, they seem to have mastered the art of piloting those 400-600 tonner consignments which are branded as Over Dimensional Cargo (ODC) activity – a segment which does not have too many players in the country to boast of. “Not everybody’s cup of tea,” anybody in the logistics business will tell you that. But with Namakkal Transport Carriers, there is a slight twist in the tale and that is the critical differentiator for them in fact.

LOGISTICS TIMES March 2012

Unlike other known ODC players in the country who moved to the bulk after putting up other verticals, Namakkal Transport Carriers (named after the place in Tamil Nadu which is popularly known as transportation capital of India) chose to become ODC ‘Nibunar’ (Tamil word for Specialist) during the early stages of its evolution. And today, as the company officials claim, it has the largest ODC fleet in the country and probably it is the largest player in this segment. Testimonial to the fact that ‘appearances can be deceptive’ and, therefore, no point in buying that cool composure and relaxed mien of NTC officials. ‘Fire in the belly’ syndrome is much in play which has taken the company from a ` 5 lakh seed capital investment point in 1997 to the expected ` 450 crore topline by the end of this fiscal. It has been quite a journey for Namakkal Trasnport Carriers for last one and a half decades wherein difficult choices have been made but backed up by grit and

determination, the windfall has come in no small measures. Esepcially in last ﬁve years pushing the company to the point where it is toying with the idea of venturing into new sub-lanes integrated with logistics highway. No, there is no desire to dilute the weightage of those bulky ODC operations. The idea rather is to grow new verticals and take new directions. In fact, the basic building blocks of other line of services are already in place, those preliminary steps have already been set afoot. And based on the subtle promoter- professional quotient now, the company is eager to enter into what could be probably called ‘the most exciting and most challenging spell of its journey’ in next two-three years. A spell wherein the company is targetting to emerge in a new avatar and in ﬁnancial terms, attain just the double mark over and above the existing base. Difficult Choice It was a very low key beginning for the

company in 1997 when K Chandramohan (now CMD of the group), Raaja Sundaram (Director-Finance), N Thillaiarasan (Director) and JC S Muthusamy (Director Fleet & Maintenance) – all of them with sound rootings in the transport business (two of them are from Namakkal) had joined hands putting in a seed capital of `5 lakh to ﬂoat the company. After dabbling with the plain, vanilla transport offerings during the initial phase of establishment, a critical call was made around 2000 – to focus on Over Dimesnional Cargo (ODC). Even today the segment is not lucrative for many given its high capital expenditure dimension and lack of operational precision. But for the original promoters the desire was to create a differentiator so that the company can stand out. Recalls Chandramohan, “When NTC was started, an organization which can handle ODC consignments in a professional manner was the need of the hour and we simply chose to be one. Yes. It was a tough call where capital expenditure is always on the higher side.

From a short-term perspective,it is a high investment and high-risk proposition. However, we still wanted to focus on ODC with a long –term perspective and excel in the ODC segment” (refer to his interview). High capital expenditure is the foundation of ODC business since operators need to own the heavy trailers to attain a higher degree of performance precision and, therefore, asset light model has no validity in this line of business. So once a decision was made to foray in the unchartered territory of ODC, Namakkal Trasnport Carriers during the early part of last decade had to start building its fleet by buying trailers. The financial help came from Sundaram Finance and the company bought two second hand trailers to commence the operations. According to Raaja Sundaram, a major reason for company’s success has been the kind of rapport it has enjoyed with banks and other lending agencies. And, therefore, barring a brief intial phase hurdle, the fleet expansion exercise of the company

has been hardly troublesome. “Initially, we had the support of Sundaram Finance. In this arena, if you have good financial track record of bank repayments, you will get the loans. Moreover, we had started accumulating good orders thanks to the painstaking marketing efforts of Chandramohan. And those orders became the basis for generating funds. We did face slight problem on the finance generation front intially. But from second year onwards, it has never been that difficult.” Raaja underlines that the growth trajectory for ODC venture moved into a high 35-40 percent trajectory since 2002 which has helped the company to grow to the present day size. And how could the present day size of Namakkal Transport Carriers be defined? According to Raaja the company’s turnover has consistently galloped (almost close to 100 percent) in last five years - from ` 23 crore in 2006 to ` 45 crore in 2007 and then ` 70 crore and Rs 130 crore in the next two years followed by ` 211 at the end of fiscal 2010-11. The concluding fiscal of 2011-12 has again seen topline swelling nearly double in size with the company expecting to get close to ` 450 crore. And how does this rapid fire growth resulted in corresponding strengthening of fleet? N Thillaiarasan responds, “We have a present fleet size of 520 trailers and since 2008, we have been adding an average of 50-60 trailers per year. Given the growth pace of this company, this fleet size will well reach close to 800 in next two years. In addition, we have 285 hydraulic axels (mostly 36 tonnes) and we have ordered 88 new axels (new generation 45 tonnes) for which delivery will begin in April. No other ODC operator in the country has such a large fleet size.” The icing on the cake is: of the 500 odd trailers, over 100 are the Volvo vehicles which make the company the largest buyer of these expensive trailers among ODC players in the country. But that was the wheels strength. Eager to expand its wings beyond ODC or even creating a better infrastructural support for ODC, the company has quite a sizeable number of units on ground – LOGISTICS TIMES March 2012

} COVER STORY

`1000 cr topline is the target

}

41 year old K Chandramohan is credited with spearheading and scripting Namakkal Transport Carriers’ success story. And after having established a firm toehold in ODC segment, the young CMD of the company now wants to push the company in next growth orbit wherein there would be plenty of action in new chosen logistics domains. In a candid conversation with Logistics Times, he underlines the near to medium run targets of the group: To begin with, briefly please take me through to the journey of your company since its inception. How would you explain the milestones of your company? Namakkal in Tamil Nadu, India, is a place playing a pivotal role in the country’s surface transportation industry. As a native of NamakkaQA District, even as a school student, I had developed a passion for the automobile industry, which later made me to start Namakkal Transport Carriers in 1997 which was later incorporated in 2001. It had started with just a single vehicle but today NTC is one of the largest fleet owner in the country and is a multi-national, multimillion business conglomerate. The NTC Group today comprises of many entities in allied and diversified field of activities and has won many awards including prestigious APOLLO CV award 2010 for emerging transporter in Niche segment and CEAT India Road Transportation LOGISTICS TIMES March 2012

Award 2011 in TWO CATEGORIES namely, Personnel Management and Customer Experience. The important milestones which we have achieved are: expansion of transportation business all over India; establishment of service centres for maintenance of vehicles; establishment of own facility for designing and manufacturing of trailers; obtaining ISO certiﬁcations – ISO 9001: 2008, ISO 14001:2004 and OHSAS 18001: 2007; commencement of NTC Logistics; commencement of NTC Shipping; opening of ofﬁces in Malaysia and Singapore; commencement of NTC College of Transport Education and commencement of Namakkal Institute of Driver Training & Research. Going by the version of other key functionaries, it was during the early stages of the company that a conscious decision was taken to primarily focus on ODC segment. But it must have been a

tough call during that time. What really propelled this decision? This afterall is a segment where capital expenditure is on a higher side. In India, the transportation industry is still in a developing stage. Specialized vehicles for carrying huge ODC consignments are in great demand even today. When NTC was started, an organization which can handle ODC consignments in a professional manner was the need of the hour and we simply chose to be one. Yes. It was a tough call where capital expenditure is always on the higher side. From a short-term perspective, it is a high investment and high-risk proposition. However, we still wanted to focus on ODC with a long –term perspective and excel in the ODC segment. Are you in a position today to call yourself the biggest ODC operator in the country? With a variety of vehicles such as Hydraulic Axles (imported and

indigenous), Telescopic/mechanical trailers, Pullers and Prime Movers, NTC is well equipped to handle consignments weighing up to even 1000 tonnes. With this massive fleet strength majority of the wind mill components in the country (which are essentially ODCs) are transported by NTC. Apart from this, huge equipment for power projects (such as generators, transformers, boilers, etc.) are also handled by NTC. Given this, not only ourselves, but the market and our customers also are of the firm opinion that NTC is arguably the biggest ODC operator in the country today. You claim to have registered a 100 percent year-on-year growth in last three years. What would you attribute for such a dream run kind of spell? Since 2008, economy has not been exactly moving in full steam. The password for success in a service industry is the “quality of service”. Understanding the customer needs, customization and up-gradation of vehicles to suit specific requirements of customers, ability to provide end-to-end logistics solution to the customers and more importantly the unstinted support of all our customers, have all contributed to this dream-run, even during a slow down. Windmill segment seems to have been your show stopper for last ten years. But do you have this suspicion that it might reach to a saturation point soon in terms of accruals to your kitty? India is by and large a power-starving country and many of her states are facing acute power shortage. The overall power generation is far less than the consumption and the gap is widening. The governments both at the centre and states are taking various steps to address this issue by generating more power with particular emphasis on generation of green power. Since windmills are major producer/contributor of green power, we do not foresee a saturation point in the near future in transportation of wind mill components. You have planned to integrate

your transport business with NTC logistics with the latter being allowed to become the flagship entity. What is the rationale behind this move? We have, over a period of time, earned reputation in the field of surface transportation. In ODC segment we are doing remarkably well. Most of our ODC consignments are Wind mill components which are manufactured overseas and imported into India. From the customer perspective, to have two service providers for the same consignment – one to handle it in the sea and the other to handle on surface - is not only a costly air but also it makes the planning affair partt difficult. They will have to play the rolee of a coordinator between the two vice providers. By having the one service vice provider who can handle the service nsignment through-out will be less consignment mbersome and cost effective. From our cumbersome iness perspective, it is an additional business nue of business for us adding to the avenue top and bottom lines of the organization. like surface transportation which is Unlike entially confined to India, logistics is essentially ter placed to get a global recognition better andd so, we wanted to capitalize on the me. This is the rationale behind merger same. of our transport business with logistics iness. business. cause of high capital expenditure, Because u seem to have loans on a higher you e on your balance sheet. Does it side rry you? worry rdly any business of this magnitude Hardly un on own funds. As the business is run ws, the need for funds also grows grows, – more so in our industry which callss for high capital expenditure. nsidering the market potential Considering andd the company’s capabilities and wth opportunities, as far as growth rowings are concerned, I would borrowings say, it is a calculated risk . ere are indications that the There mpany would soon take company an IPO route or even go for me minor dilution of stake some in favour of PE investment. hat is propelling you to What nk of these options? think

While the IPO route is still in initial stages, we feel it would help the company to mobilize the required funds for expansion of the existing business and venture into new avenues resulting in value addition to the stakeholders. What is that larger picture you have in your mind say by the end of 2015 – in terms of scale of operations, projected topline, investments, fleet size, the headcount and the possible contribution of ODC and non-ODC services? It is our aim to grow into a `1000 crore group by 2015 with a ﬂeet strength of more than 1000 vehicles. The head count will be in line with the requirement and growth of the business. The approximate ODC and non-ODC split would be 40% and 60% respectively. The country has dime a dozen 3 P L

LOGISTICS TIMES March 2012

COVER STORY

players. In that scenario, what would be the crucial differentator of NTC logistics as you turn it into a flagship entity? In all the fields there will be big and small players. Competition will always be there. Our skill lies in how different we are in our approach and how do we perform and deliver. In this aspect, NTC, with its expertise and infrastructure has an edge over competition and is in a position to perform much better than competition, in a cost effective manner resulting in benefits to the customers. You are largely viewed as an ODC major rooted in South India. Don’t you have pan-Indian ambitions? We already have more than 36 branches all over India and have plans to open more as the need arises. So, it is wrong to conclude that we are an ODC major only in South. We do have Pan India presence. You also seem to be interested in expanding your wings internationally. Please share some details on that. After consolidating our position in India, we have expanded our operations abroad. We have already opened offices in Malaysia and Singapore and will soon mark our presence in Srilanka, Middle East, Far East and Europe. The company has firmed up a joint venture with a well reputed multinational logistics company which will enable NTC to operate in more than 100 countries and consolidate its position as one of the fastest growing Indian logistics company in the international arena. The company, as I learnt has four promoters and in last couple of years you also seem to have made a serious effort to bring in professionals from outside. But many companies in logistics space have found it difficult to manage this kind of unit. How would you respond to it? We did not feel any difficulty here. NTC had brought professionals from various industries and with the knowledge and experience of each of them, the business has been steadily growing. Sharing of LOGISTICS TIMES March 2012

experience by professionals from various industries has resulted in enormous beneﬁts to the company. You seem to be running an unit which goes that extra mile in taking care of drivers. Can I get a sense of what all you are doing on this front which you could dub as the critical differentiator? Transport industry was described as the back bone of the country by the late Prime Minister Mrs.Indira Gandhi. In our opinion, drivers are the back bone of transport industry. They are the key persons and play a vital role in the success of the organization. Equipments worth several crores are handled by them and they are the ones who are directly responsible for on time and good condition delivery to the customers. In short, the reputation of the company lies in the hands of the drivers and given their importance, we call them as “Captains” and not drivers. They face lot of challenges en-route. Some times, they won’t get good food and drinking water. They have to be away from their family for days together. In spite of being so important, and facing so much of problems, they do not get proper recognition in the society and their lifestyles leave much to be desired. NTC, having realized the need to improve their standard of living, has taken many initiatives and sincerely hope, those initiatives will adequately take care of them and will be helpful in creating

sense of belonging among them. Finally, the skill set development school at Namakal – what are the larger plans you have? First of all, it is not a school. It is an institute. Driving of sophisticated, specially designed heavy axles require special skills. But, unfortunately in our country today, we do not have many qualiﬁed and skilled drivers to handle this kind of special carriages. In our constant endeavour to upgrade our service levels and to deliver the best to the customers, and also as a service to the transport industry, we have established in Namakkal, NTC College of Transport Education and Namakkal Institute of Driver Training and Research. Both these institutions will jointly focus in offering necessary education and training to aspiring candidates In all aspects of driving, including, safe-driving, defensive driving, accident-free driving, crisis handling, logistics handling & management etc. As part of its activities, the institute will conduct refresher courses and long duration courses (one year) for heavy vehicle drivers to make them industry-ready including for ODC segment. The aim of the institutions is to create drivers with multi-skill sets. It is our wish to make the profession of a Driver so attractive that even an engineer wants to pursue professional driving course in our institutions and turns out to be a driver-cum-engineer.

COVER STORY

Raaja Sundaram Director, Finance

Many PE firms are knocking at our doors and we are weighing all our options. The management in principle has given green signal to IPO proposition.

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starting from South India to other zones in the country. “Throughout India, we have 12 warehousing units- out of this six are in South, two in west and rest in North. In South, we have it in Tuticorian, Chennai, Namakkal, Selam, Coimbatore, Kandla, Mundra, Mumbai, New Delhi. On a cumulative basis, we have over 200 acres of land parcel all over the country for warehousing needs,” informs R Swaminathan, President, NTC Logistics. Apart from this, there is a slew of service centers for company’s own ﬂeet. “We have service centers in Chennai, Namakkal, Trichy, Kandla, Kolhapur and Baroda. Presently we are strengthening our service centers in Baroda and Kolhapur,” Executive Director Ajit Menon adds. Plus, there are service line pieces like freight forwarding, custom clearance and crane supply which are the new constituents of the grand design of the company. Not to forget, the international aspirations which the company has begun nurturing. Windfall from windmills Windmill segment has clearly been the show stopper for the company if one closely examines its growth pattern of last one decade. In fact, a major reason for that early days decision to focus LOGISTICS TIMES March 2012

N Thillaiarasan Director

We have 520 trailors and 285 hydraulic axels. No other ODC operator in the country has such a large fleet as we have.

on ODC was the anticipation by K Chandramohan and his team that windmill segment would snowball into a big ticket opportunity with prime concentration in the south. “Even then, we had realised that the governments both at the Centre and States will be taking various steps to address the demand-supply gap issue by provisioning for more power generation with particular emphasis on generation of green power. Our assumption was bang on the target.” Windmill and power turbines have clearly been the catalysts for the company and according to Menon, the company is taking care of about 70 percent of ODC movement for the sector. “We have all the big names with us.” According to Raaja Sundaram, of the projected ` 450 crore topline this year ( `350 crore from ODC and transportation business and remaining from logistis services), about 70 percent contribution from ODC would be from the windmill sector. The figure itself reflects the predominant position of business from windmill segment for the company. “Windmills are certainly most difficult assignment given their size but that is wherein our USP lies. Over the years, we have developed such a mechanism with

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adequate IT support and precise route survey modality that all the big windmill players find value in our services. In this segment, we have grown to the extent that we now deal with only big clients. Look at the volume. In last year’s fourth quarter alone, we handled 322 machines (mostly windmill and power turbines),” points out Jayasimman S, Head (Wind Division). “I can emphatically say that we have the best route survey data base among all ODC players in the country. Something which is so critical in moving those 400-600 tonner consignments,” Menon underlines. From the company’s perspective, windmill/power turbine story is slated to remain robust for quite some time. “It can easily accrue us a ` 500 crore annual figure in next two-three years. And the good news is we have begun getting more businesses from West and North regions where these sectors are finding new concentration.” Going by Jayasimman’s version, windmill would contrinue to remain one of the major pillars of the company if not being a show stopper for a long time and for this, the company has its plans ready to offer more points of engagement for its customers. “The scope is still tremendous. We are getting

R Swaminathan President NTC Logistics

Ajit Menon Executive Director

Our focus to set up a stronger base in Gujarat primarily evolves from customer requirement. Major concentration for energy is now shifting to Maharastra, Gujarat and Rajasthan.

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into cranes and then we will get into creating base infrastructure development for windfarms. So our basic idea is to get into 4PL kind of offerings for windmill segment,” he explains. The New Avatar Pay heed to this comment to understand the sense of new directions and new routes which the company has decided to take. “Between 2003 to 2008, we were creating the basic platform for our ODC business. You can say at that time we were putting all our eggs in one basket. But now diversification is our top priority,” S Ranganathan, President, Namakkal Transport Carriers asserts. Yes, diversification - that too of a swift nature seems to be the mantra all across the operational chain of the company today. And the biggest signpost of this critical change would be the backward integration of the flagship entity Namakkal Transport Carriers with NTC Logistics. “NTC Logistics would be the flagship brand and a formal announcement is expected within a couple of months,” Swaminathan informs. Talk to Ajit Menon and he would explain that diversification has been the central idea which topman Chandramohan has been nurturing for quite sometime and under his guidance, steps have been set afoot to achieve that objective. “Chandramohan’s

NTC Logistics would be the flagship brand and a formal announcement is expected within a couple of months.

idea is clear. Without diluting ODC significance, we want to move into new areas like frieght forwarding and custom clearance on a larger scale. Though there are many in the market who claim to be providing end-to-end solutions, we know the glaring gaps. And we want to become a 3PL player in the real sense of the term. In fact, the pressure is coming from our existing customers.” The subtle induction of professional quotient in the management value chain is also a pointer that the company seriously intends to professionalise to attain its diversification goals. Interestingly, some of the inducted professionals had been dealing with the company from the other side of the fence – customers. Ajit Menon, for instance was the supply chain head of Vestas Wind Technology for eight years and Ranganathan has been a former Volvo man. Swaminathan who has the onus of taking NTC Logistics to new highs comes with a 20 year plus experience in Gulf which includes a long stint with global logistics major DHL as well. Jayasimman too is an old Gulf hand with experience in setting up an industrial unit in Kuwait from the scratch. However, the experiment of bringing in professionals in a typical close knitted promoters unit has often backfired in Indian logistics space. So does it worry Chandramohan? Here is how he dismisses this assumption,

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“We did not feel any difficulty here. NTC had brought professionals from various industries and with the knowledge and experience of each of them, the business has been steadily growing. Sharing of experience by professionals from various industries has resulted in enormous benefits to the company.” Swaminathan shares the details of what all have been initiated which mark the diversification drive of the company to assume the end-to-end solution provider identity tag. Apart from freight forwarding (21 branches of the company are taking care of international frieght forwarding presently) and custom clerance, the company is keen to develop strength in break bulk movement ( the company claims to have crossed 300,000 cubic meters last year)both outside and within the country, air freight, etc. the company already has developed warehousing facility inside Kandla Port and plans have been firmed up to set up a state-of-the-art CHA facility in Chennai covering Kattupalli and Chennai ports. Additionally, the company is also looking at big ticket opportunities in NVOCC segment. “We are entering into NOVCC sector in a big way something which we are slectively doing in far-east. Now we are also extending NVOCC (non-vesel operative common containers – that is we own the container but does not move the LOGISTICS TIMES March 2012

COVER STORY

Holding steering hands tightly

f you are meeting the unknown (yes, before this cover them as ‘Captains’ and not drivers,” Chandramohan story exercise I had not met anybody from NTC), an underlines. obvious activity you indulge in is to gather feedback Meet JC S Muthusamy, Director (Fleet and Maintenance) from those who know that unknown. And a striking at NTC’s Namakkal Service Center and he will provide common string I noticed during this dope collection you details on the operational module which is heavily exercise on NTC was the high praise the observers or tilted in favour of keeping the strong flock of around peers from the industry showered on the company on 1500 drivers in fine fettle. Muthusamy, one of the four the issue of man management especially of those who directors of the company, holds the fort at Namakkal are often looked upon as the last or rather lost point of where the service center acts as the fulcrum of all fleet operational value chain of Indian logistics business – the and drivers’ related activities. “We have a well structured drivers community. Yes, it is no secret to anybody that fleet management department which ensures that drivers drivers of freight vehicles operate under most trying of problems are heard and swiftly acted upon. Interaction circumstances and their welfare is a thought which hardly of the senior functionaries here with drivers happen on a cross the mind of majority of operators – shedding profuse daily basis and we have a sound counseling mechanism to de-stress them. We have a control room which stays tears in seminars and conferences notwithstanding. “NTC is not only the best pay master to the drivers in touch with drivers who are out on the roads. We have community, they have the most supportive regime a lead trainer in our ranks who have joined us after being closely associated with Volvo wherein best care is taken of them. in Gulf for 25 years. And on the nonNot merely in words but in real sense,” operational side, we ensure adequate a close industry friend had summed up insurance coverage for all our drivers,” company’s way of dealing with drivers he explains. “We have initiated a lot of before I visited Chennai and Namakkal. welfare activities for drivers community. And getting the chance to look at Medical facilities and counseling are company’s affairs from close quarters all part of our culture,” adds Menon. only somewhat reinforced that feeling NTC is now setting up a toll free with senior officials of the company counseling cell manned by retired strongly asserting that caring drivers cops where drivers on the move can is an integral constituent of NTC’s immediately report if they come across DNA. “ Drivers play a vital role in any administrative hurdle – a common the success of the organization. Given sore issue on the Indian roads. the nature of our business, equipments Meanwhile, NTC has worth several crores also initiated something (often running into in its stronghold three digit figure) are Namakkal which is handled by them and much talked about they are the ones who these days. Setting are directly responsible up of NTC School of for on time and good Transport Education condition delivery. In and Namakkal Institute short, the reputation of Driver Training and of the company lies Research (the first in the hands of the batch is currently being drivers and given their S Muthusamy tutored) is being viewed importance, we call Director, Fleet & Maintenance

We have a well structured fleet management department which ensures that drivers problems are heard and swiftly acted upon. Interaction of the senior functionaries here with drivers happen on a daily basis.

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LOGISTICS TIMES March 2012

COVER STORY

N Ramaswamy as company’s attempt to ensure that its future requirements of drivers and other logistics professionals would be met from within and then the institute would play the larger role of preparing skilled manpower for the industry in future. Visiting this institute set up on a 10,000 square meter rented space was an experience in itself with N Ramaswamy, Principal (a retired senior official from Central Institute of Road Transport, Pune) explaining the highlights. “Right now you can call it a token beginning. We have a batch of 40 students and there are 14 staff members. Our training part is broadly splitted into 40 percent theoretical and 60 percent practical. Since many of these students may get employment in north or west India, we also have a Hindi teacher in our faculty. Next year, we are expecting a batch of 250 students spread across our all courses and given the growing popularity of this institute, our target is to have 3000 students in next three years. ”Going ahead, NTC has planned to create a large scaled campus littered with training tracks for which it has already acquired land. “Right now this initiative could broadly be seen as a CSR initiative from our side. But going ahead, it could well turn out into a commercial stream altogether. Some companies are showing interest in partnering this skill set development initiative,” Menon informs Meanwhile, the surprise package for me while observing that batch of 40 students was the presence of S Ramya,

LOGISTICS TIMES March 2012

the only female student in the group. With Ramaswamy acting as interpreter, 22 year old Ramya told her story in Tamil which can be summed up as: her father was a transporter who passed away in late 1990s, her brothers shifted to agriculture but she is determined to get back to her late father’s profession. “When you come back next time, you will notice more female students. Transportation is the DNA of Namakkal,” Ramaswamy assures. And this is a fact which NTC probably understands too well while pursuing its larger objective to contribute its bit in preparing future manpower for the industry with this unique institute.

Between 2003 to 2008, we were creating the basic platform for our ODC business. At S Ranganathan that time we were putting all our eggs in President Namakkal one basket. But now Transport Carriers diversification is our top priority.

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vessels) division in India. Right now our strength has already crossed 400 TEUs. In three years period, it might be crossing 2000 TEUs,” he underlines. Growing on both domestic as well international turfs are part of that big ticket design and modalities are being chalked out to strengthen NTC’s identity beyond Indian shores. “After consolidating our position in India, we are expanding our operations abroad. We have already opened offices in Malaysia and Singapore and will soon mark our presence in Srilanka, Middle East, Far East and Europe. The company has firmed up a joint venture with a well reputed multinational logistics company (Spanish firm VGS) which will enable NTC to operate in more than 100 countries and consolidate its position as one of the fastest growing Indian logistics company in the international arena,” explains Chandramohan. When it comes to focus on new growth centres within the country, strengthening its existing base particularly in Gujarat is also a vital cog in NTC’s near to medium run plans and Menon explains the rationale. “Our focus to set up a stronger base in Gujarat primarily evolves from customer requirement. Infrastructure players like L&T are setting up huge manufacturing base there. The wind industry is dwindling in Tamil Nadu and major concentration is now shifting to Maharastra, Gujarat and Rajasthan. Manufacturing base of wind turbine producers are also coming up in Gujarat. So its aligned with our customer

Jayasimman S Head Wind Division

In last year’s fourth quarter alone, we handled 322 machines (mostly windmill and power turbines)

movement. We have set up warehouses there and we are also putting up a large size service center.” The sum total of donning this new avatar as Chandramohan explains would result in touching that magical four-digit crore topline number. Not in a distant future but could well just happen in next three years. “It is our aim to grow into a `1000 crore group by 2015 with a fleet strength of more than 1000 vehicles. The approximate ODC and non-ODC split would be 40% and 60% respectively.” The medium run vision statement clearly underlines that while ODC would continue to remain a strong pillar, logistics divisions would have to outpace the bulk business. That too quite significantly given their small base of ` 100 crore topline contribution as estimated for this year. Financial Equation By virtue of being bound to a model where there is no place for light asset mehcanism, the capital expenditure of the company is on a higher side. According to Raaja Sundaram, the company presently has a loan or debt component of nearly ` 170 crore on its balance sheet. And rapid fire expansion plans for next three years (which involves nearly doubling the fleet size) would make it mandatory for the company to cough up more funds. But Chandramohan maintains that debt component is not a reason for worry. “Hardly any business of this magnitude is run on own funds. As the business

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grows, the need for funds also grows – more so in our industry which calls for high capital expenditure. Considering the market potential and the company’s capabilities and growth opportunities, as far as borrowings are concerned, I would say, we have taken calculated risks.” Raaja Sundaram, however, strongly indicates that there would be serious financial consolidation in the next fiscal. “In last two years, we have made investments to the tune of over ` 100 crore. But from next financial year (2012-13), we would be squeezing investment channel. From our own, we would be investing ` 75 crore in next three years,” he says. That naturally abegs the question: where from the company will fund its immediate capital requirement for doubling its fleet and making fast moves in new logistics domain? The answer lies in seeking PE fund or going for IPO or a combo of both. “Many PE firms are knocking at our doors and we are weighing all our options. The management in principal has given green signal to IPO proposition. But there are possibilites that we may opt for a minor dilution of stake in favour of a PE firm later this year and then go for IPO sometime next year,” Raaja explains adding that equity dilution in favour of PE would not exceed 10 percent limit. Quite clearly the emergence of NTC Logistics story would have many interesting sub-plots as has been its journey since 1997 which ultimately drove it in the front ranking league in the ODC segment. LOGISTICS TIMES March 2012

TRAINING & EDUCATION

The Missing Link Logistics Skills and Talent

Ashish Mendiratta

Director ThinkLink Learning

Logistics is a lifeline of a country’s economy as the two major sectors i.e. industrial and agriculture directly depend on the logistics infrastructure of the country. The logistics spend varies from sector to sector but can be as high as 2030% of the total cost for the industrial commodities and 50% to 70% for agricultural produce.

The “non-existent” talent pool A lot has been said and written about the talent pool in the logistics sector in India. Numerous reports and whitepapers have been published on the current skill gaps in this domain. National Skills Development Corporation (NSDC) has laid out a special focus on logistics skills development under a Public-Private-Partnership (PPP) program. The logistics companies have begun to feel the pinch of the skills gap but yet they have not come forward to take stock of skills short in supply in the medium and long term. The Logistics Sector Skill Council for India, the starting point for preparing the roadmap for addressing the gap, is yet to be put in place. “Skills for Logistics” – an initiative of UK- is a good example for how skills and productivity needs of logistics sector can be addressed. The council has developed the inventory of skills and competencies, called the Professional Development Stairway, mapped to various levels ranging from the blue collar to the leadership roles. The Stairway also lays down the training needed for career progression at each step. Last year, the council decided to set up national logistics skills academy with government funding. The vocational training framework in India is largely driven by the ITIs (Industrial Training Institutes) and ITCs (Industrial Training Centres), covering skills ranging from electrician, welder, mason, carpentry, painting, and catering, etc. However, logistics skills have not found its place in the current setup because of its quasi-technical nature. NSDC has estimated a need for 17-20 million logistics professionals by year 2022. The job roles ranging from drivers to individuals with specialized skills, such as, handling hazardous materials and cold chain are expected to be in high demand. However, there is no educational framework or LOGISTICS TIMES March 2012

adequate infrastructure to support this requirement. NSDC is largely a funding agency to support the skills development programs under PPP, without expertise in defining the education framework. The issue that needs to be addressed on the supply side is the lack of attractiveness of logistics as a career of choice. The logistics sector is believed to be labour intensive, lower paying and having more difficult working conditions compared to the other sectors such as sales, hospitality, IT etc. The lack of awareness about logistics as a career at the school and college level, and fewer institutions offering logistics courses in comparison to other professions are the key reasons for not being able to attract the right talent. In the past, not many logistics companies invested on training the employees requiring specialized skills. Most people in this sector have acquired these skills on the job through experience over time. There has not been a concerted effort to develop these employees and help them move up the career ladder. The scenario has changed at a fast pace in the recent years. While cheap manpower is becoming a thing of the past, companies have started focusing on automation and efficiency that require people trained in logistics skills. It has been one of the prime reasons for the crying need for the skilled manpower in logistics. Also the entrance of multinationals in the logistics sector and emergence of organized retail has acted as catalysts in generating the demand. Bridging the Logistics Skills Gap in India

This problem of the widening gap between the demand and supply of skilled manpower in logistics requires a multipronged approach. 1. Building Awareness: The logistics sector is wrongly considered as a non-glamorous occupation. However, people with aptitude and flair for this field have found tremendous opportunities for career advancement. In order to build awareness, the industry, education providers and professional logistics organizations need to conduct seminars in colleges, road shows, workshops and events to popularize logistics as career of choice. Conducting career fairs at a regular frequency focused on the logistics sector and participated by the logistics companies and education providers would go a long way to build awareness. 2. Sector Skills Council: Establishing a Sector Skills Council to develop the inventory of logistics skills mapped to various job roles is the first step towards developing the skills development framework. Defining

the competencies and career roadmap would help in laying down standards of education. NSDC has been actively seeking the participation of the logistics sector to form and contribute to the sector skills council. 3. Education and Training Standards: Developing standards would ensure consistency and quality of education and training aligned to the needs of the industry. NSDC can play an important role by bringing together the logistics players, NCVT (National Council for Vocational Training), UGC (University Grants Commission) and private training providers for development of standards of curriculum, content, trainers and accreditation. 4. Creating Training Infrastructure: Setting vocational skills centres for logistics requires substantial investment for placing the equipment e.g. forklifts, reach trucks, cranes, conveyors, simulators, RFID and barcode scanners, and creating a real life working environment for hands on training. Also these centres need to be strategically located not only closer to the logistics hubs but also to those locations where a large mobilisation of people is feasible as well. Funding supported by NSDC and VCs to the private training providers as well as extending the role of ITIs / ITCs to include logistics skills in

their curriculum would help achieve this objective. On the non-vocational side of logistics, UGC may introduce logistics as a specialization at graduate and postgraduate level across various universities. The private education providers, specialized in the logistics sector, can play a role of delivering these courses at the college level as well as driving placement of qualifying students in the industry. The training and education framework should not be limited only to provide employment to the fresh students, but also to the entire career cycle of people employed in this sector for their career advancement. This shall be done by creating an industry approved flexible framework of multi-tiered qualifications and continuous learning programs. 5. Employment: Matching the availability of skilled

LOGISTICS TIMES March 2012

TRAINING & EDUCATION

resources and demand is as important as creating the training & education framework. Backing it up with the appropriate employment opportunities and career development is important for its success. A nodal agency to build a network of employers, staffing service providers and training providers, using online portal and skills registry would be a big step towards ensuring suitable employment for the trained students. 6. Technology: In order to scale up the training effort at a much faster pace as well as maintain consistency of delivery standard, the use of communication technology such as VSAT, Webex, e-Learning must be explored actively by the private education providers as well as government run institutes. 7. Funding: Last but not the least, availability of funding such initiatives at a large scale is the key enabler. Though NSDC is the key source as far as funding the vocational skills are concerned, however, a holistic approach towards the entire spectrum of

NSDC has estimated a need for 17-20 million logistics professionals by year 2022. The job roles ranging from drivers to individuals with specialized skills, such as, handling hazardous materials and cold chain are expected to be in high demand. job roles needs to applied. The education providers who can service the skill gaps at all levels, including vocational as well as white-collar jobs, are the ones who would be able to scale up this effort much faster and have a successful business proposition. Therefore, the private VC and PE funds with interests and mandate in the education space need to come forward and participate in the development of one of the fastest growing sectors.

Given the skill gap in this sector and business potential, we foresee many players jumping into the logistics education and training space. It will be a good development for the sector; however, the quality of education in the absence of any standard framework may be a big concern. We expect that the logistics players, reputed education providers and government accreditation agencies will come forward and take this initiative beyond the fragmented solution to this problem.

FORM IV Satement about ownership and other particulars about magazine Logistics Times 1. Palce of Publication

: DELHI

5. Editor's Name

: Mr Raj Misra

2. Periodicity of its publication

: MONTHLY

Nationality

: Indian

3. Printers name

: Mr Madan Pokhriyal

Address

: A-301,

Nationality

: Indian

Address

: M/s Personal Graphics &

Neelpadam

Kunj,

Opp Dabur, Vaishali, Ghaziabad 6. Names and addresses of individuals who own the newspaper and parteners

Advertiser Pvt. Ltd.

or shareholdres holding. More than one percent of the total capital.

Y-22, Ph-II, Okhla Industrial

(i). Ms Deepa Misra, E-77, West Vinod Nagar, Delhi-11009

Area, New Delhi-20

(ii). Mr Raj Misra, A-301, Neelpadam Kunj, Opp Dabur, Vaishali,

4. Publisher's Name

: Ms Deepa Misra

Ghaziabad

Nationality

: Indian

I Deepa Misra hereby declare that the particulars given above are true to the

Address

: M/S Aksharganga Pvt. Ltd.

best of my knowledge and belief.

E-77, West Vinod Nagar, Delhi-110092

LOGISTICS TIMES March 2012

Date: 25.02.2012

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Real Time Logistics Management Third party logistics companies are under increasing pressure to maintain on time deliveries, reduce inventory levels, reduce ‘in transit shrinkage’ and deliver the right product at the right place and at the right time. And this pressure comes from who else than retailers who are competing Prof. Akhil Chandra, fiercely in the market place Institute of Logistics & to make the product on their Aviation Management shelves always available to avoid the much dreaded ‘stock out’ condition. Further in the cold chain management scenario, maintaining timings are still

more crucial as every product has an expiry date like medicines and edible items and once the expiry dates are over due to delays in transportation, there is a huge loss to all participating partners in the value chain in terms of capital investments, credibility and survival in the cut throat environment in which retailers and all the the value chain partners are operating. After the advent of e-commerce, there has been a dramatic increase in the use of internet for retail business transactions and so has the pressure on third party logistics gone up to supply the products in rapid time to customers. The customer places an order over the internet and wants the products delivered at his doorstep. Any variability or inconsistency in being able to deliver on time can not only irreparably damage the retailer brand equity, but also often can result in cancellations. Well, the technology has a solution to all these problems. A real time logistics information system based on four technologies

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TECHNOLOGY

viz , GPS, GPRS, RFID and internet makes the life simpler to logistics companies providing an end to end tracking of all the assets being moved from manufacturers to warehouses/ distribution centers to retailers. How it is achieved? 1. Assets are tagged with the help of RFID (Radio frequency identification) tags. An on line inventory for the assets within the truck can be taken with help of a sensor and RFID transceiver mounted inside the truck. The trigger to RFID transceiver and the sensor to scan the RFID tags is provided by opening and closure of the gate of the container/vehicle. An inventory created upon door closure at each delivery location of the vehicle is compared to the last prior inventory, and differences identified by the comparison are matched against a list of cargo units scheduled for removal at that delivery location. Any mismatch identifies cargo units incorrectly handled at that delivery location in time for corrections to be made. This information can be sent to central control center over a GSM or GPRS wireless network. as shown in the diagram. After acquiring the valuable data by the control center, commands can be transmitted through the same route through which data was acquired. The commands could be to raise or lower the temperature inside the reefer containers, trigger alarms, stop engines, change directions or send personal messages. 2. The asset tracking is done through GPS (Global positioning system) devices mounted in the mobile van. The GPS enabled Track transceiver collects critical data such as location, speed and vehicle and driver information. in terms of longitude and latitude with help of the signals received from the GPS satellites and such information collected is sent to central computer system through the GPRS (general packet Radio Service ) with the help of medium provided by mobile communication towers in a wireless manner. 3. By combining GPS information with advanced software applications , managers and dispatchers can see current locations and routes of mobile resources on an online map, find out when a vehicle travels across a defined perimeter ,view reports on activities such as number of stops, time at LOGISTICS TIMES March 2012

each stop, speed, idling time, routes traveled, miles traveled and trailer door open or close. The movements of these vehicles can be tracked on a Google Map on a laptop/PDA or a mobile phone with help of the web interface based on the location information thus collected in terms of latitudes and longitudes measured and transmitted through GPRS as explained above. Advantage of the web interface is that such tracking can be supervised from any location wherever internet service is available. The customer can, at any time, login through internet, using her order number and view the status of vehicle during transit on the Google map with its expected time of delivery. A combination of onboard alarms, sensors, wireless monitoring and tracking offers the best available means to respond to cargo theft and security threats while also providing asset management capabilities. If you’re in the business of transporting high value or high risk cargo, knowing the location of every bag, package, box or pallet is an important business driver, reducing the number of lost or misplaced packages. This improves better inventory control supporting just-in-time deliveries and ultimately, better customer service. Access to mission critical data quickly and wirelessly may mean the difference between profit and loss for your company. Such solutions open a new world of fleet management that gives the transporter companies the tools to monitor the status and whereabouts of trucks, delivery vans, heavy equipment, leased vehicles and marine vessels. You get a solution that offers a robust communications and position-tracking platform that supports a more productive fleet – whether it’s to improve billable miles or tractor to trailer ratios.

Types of vehicle tracking Devices Several types of Vehicle Tracking devices exist. Typically they are classified as “Passive” and “Active”. “Passive” devices store GPS location, speed, heading and sometimes a trigger event such as key on/off, door open/closed. Once the vehicle returns to a predetermined point, the device is

removed and the data downloaded to a computer for evaluation. Passive systems include auto download type that transfer data via wireless download. “Active” devices also collect the same information but usually transmit the data in real-time via cellular or satellite networks to a computer or data center for evaluation.

Minimize losses due to theft or spoilage with onboard sensors that notify you immediately when your assets may become compromised. Optimize asset use through visibility and control supported by real-time position mapping of mobile assets. Remotely manage temperature

Business benefits of Vehicle tracking system Increased fleet productivity due to enhanced visibility in the supply process Details like speed of the vehicle, no. of stops, route taken etc. aid in better employee management and more focused shrinkage management Hands-on information on position and status of deliveries assist in better fleet management Waste elimination Reduced return trips as customer can schedule with the help of exact time of delivery made available to him The additional facility made available to the customer increases his confidence with the retailer and therefore opens doors to further business thus improving customer metrics by providing your customer with accurate status and location updates. Reward drivers who keep idling and out of route miles to a minimum

Conclusion Such real time logistics management system provide logistics manager with complete transparency into their assets and operations, improving fleet performance and reducing costs, On demand access to time- and location-sensitive data, minimizes delays, protects assets and enhances customer service. Further they provide critical security and location information with monitoring, control and reporting capability. Solutions have the capability offering the powerful combination of onboard deterrence and immobilization in addition to instant notification and location monitoring. It effectively reduces risk while also allowing fleet managers to more efficiently operate their fleets..In order to succeed in today’s global marketplace, companies must be aware of these trends and develop a logistics management strategy that capitalizes on the best-of-breed technology solutions. Only then, can they meet customer’s demands and be well prepared for the future.

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Global CSR Awards At a glittering ceremony in Mumbai last month, Blue Dart Express Limited, South Asia’s premier courier and integrated express package distribution Company and part of the DHL Group presented the inaugural Global CSR Awards. The awards recognized corporate social responsibility (CSR) champions across various industries and were part of the ﬁrst World CSR Day. Union Minister of Corporate Affairs, Dr. M. Veerappa Moily was the Chief Guest at this event held at the Taj Lands End, Mumbai. The World CSR Day/Global CSR Awards were in conjunction with DHL’s ﬁrst Corporate Responsibility Day in India and comprised of two panel discussions – ‘CSR: The Way Forward’ and ‘Public-Private Partnership for a Greener Planet’. Designed to foster discussion and awareness of corporate responsibility within the private sector, the panel discussions were well attended by customers and leaders in both the government as well as the business community. Chaired by Dr. Bhaskar Chatterjee, Director General & CEO, Indian Institute of Corporate Affairs, the panel included Malcolm Monteiro, SVP & Area Director - South Asia, DHL Express and other esteemed corporate leaders.

LOGISTICS LOGIST STICS TIMES March 2012

Master Brand Award

Future Supply Chains was honoured with the prestigious ‘Master Brand Award’ from CMO Council, USA and CMO Asia in a glittering ceremony recently held in Mumbai, at Taj Lands’ End, Mumbai, on February 14, 2012. In the same ceremony, Anshuman Singh, MD & CEO, Future Supply Chains also picked up the ‘Retail Icons of the Year’ citation. Master Brand Award is conferred upon those brands that appeal to a large set of consumers from premium to mass while constantly keeping in mind a consumer centric approach. Key parameters such as thorough research, market data and consumer centric approach were extensively used while deciding and ﬁnalizing the winner of the Master Brand Award.

Future Supply Chain hosts senior supply chain professionals from US On February 20, 2012 top executives at Future Supply Chain Solutions Ltd. hosted a visit from Georgia Tech’s Executive Master’s in International Logistics & Supply Chain Strategy (EMIL-SCS), to discuss Future Group’s retail logistics challenges and innovations in India. The visitors included vicepresidents, directors and senior managers at companies such as Dell, Tiffany & Co., L’Oréal, UPS, etc., from the U.S., Canada, Thailand and Venezuela, The meeting was part of the EMIL-SCS program’s Asia residence, an intensive two-week tour of Asia, including meetings with industry leaders in India, Thailand, Hong Kong and China. Dr. Vande Vate, EMILSCS founder and Executive Director, says the Georgia Tech group is “honored to have the opportunity to meet and share ideas with such distinguished leaders and innovators as the team of Future Supply Chain Solutions Ltd.”

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First Flight’s MARATHON For the ﬁfth year in a row, India’s leading courier company First Flight organised its annual marathon event in Mumbai on 12th February at Bandra Kurla Complex. About 600 employees of the event particiapted in the event which also saw presence of some celebrities. The event was also graced by top bureaucrats from the state. The race began and ended at the city park located at BKC which was followed by prize distribution ceremony.

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Private Port of the year Pri ar Adani Ports and Special Economic Zone has won third time in a row the Gateway Awards of Excellence Ports & Shipping pping in the category. On the right is Capt Sandeep Mehta ,CEO - Container Business, Adani Ports and Special Economic Private Port catego conomic Zone receiving Private Port of the Year 2012 from K. Mohandas, Secretary - Ministry of Shipping at the Gateway Awards rds of Excellence Ports & Shipping 2012 in i New Delhi. The award was given in recognition of the excellence achieved in comprehensive hensive development facilities and highest levels of satisfaction among ports customers. of port infrastructure, facil

Inventory Man Management anagement Workshop

ThinkLink Learning organized a two day workshop onâ&#x20AC;&#x2122; The Essentials of Inventory Managementâ&#x20AC;&#x2122; under ThinkLink Supply Chain Development Series on 17-18 Feb at The Vivanta by Taj, New Delhi. Senior supply chain professionals from companies across sectors like Mahindra, Everest Industries, Ultra Tech, Nokia, Apollo Tyres PepsiCo, Parekh Integrated Services,etc. attended the workshop. The workshop focused on using Inventory Management as a strategic tool to optimize cost and service and the participants were encouraged to work on real life business cases. The workshop was highly interactive and had all the necessary ingredients i.e. case studies, exercises, videos, games, group working to make it a holistic learning experience.

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EVENTS

Logistics Talent Hunt 2012 To address the serious mismatch between requirement and availability of talent in logistics business, Delhi- based T2P Consultants in association with Chartered Institute of Logistics & Transport (CILT) – India has announced organizing Logistics Talent Hunt-2012, International Conference & Awards on 07th April 2012. The curtain raiser ceremony for the Logistics Talent Hunt-2012, International Conference & Awards was organised on 17th February’ 2012. On the ocassion, Directors of T2P Consultants and Secretary General CILT-India gave the complete detail about the Logistics Talent Hunt-2012, International Conference & Awards. In this program, management students (in form of different teams) will participate to prepare the projects on a host of topics related to logistics industry. More then 100 teams from various business management institute teaching Logistics and Supply Chain are expected to submit their project paper for jury’s evaluation. Winning teams will give their presentation on projects at the Logistics Talent Hunt2012, International Conference & Awards on 7th April; 2012 at Crown Plaza, Delhi. The awards would be broadly given in these categoriesis: Potential logistician award, Strategic/Visionary level awards, Functional level awards, Logistics achievers award, Logistics Missionaries award and Best Individual idea award.

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RNI No. DELENG/2011/39329

Regd No.: DL(E)-20/5380/2011-13