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LogisticsTimes www.logisticstimes.net

IN THE NEWS MAHINDRA LOGISTICS

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INTERVIEW

NDIA'S MOST VALUED LOGISTICS MAGAZINE

May 2014

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ANNIVERSARY ISSUE

Developing RHTP standards is a must

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Devdip Purkayastha President, CHEP India

Quite a JOURNEY!

Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 5: Issue No.1 * May 2014 Raj Misra

Editor in Chief

rajmisra@logisticstimes.net

ANNIVERSARY ISSUE

Ritwik Sinha

Editor

ritwik@logisticstimes.net

GM (Marketing)

Rajiv Sharma

Sub Editor

Neha Richariya

Photographer

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Designer

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Circulation & Distribution

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Legal Advisor

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Our Bureau Mumbai

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Chennai

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Sudhir Kumar sudhir@logisticstimes.net Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Pawanexh Kohli CEO/Chief Advisor, NCCD Samir Srivastava Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Management Ramesh Kumar Member, National Committee on Supply Chain & Logistics, Govt. of India

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38 BEST OF LOGISTICS TIMES Edit Note

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Guest Column

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Human Resource

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IN THE NEWS Mahindra Logistics’ PE deal

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REPORT Automobile Industry

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INTERVIEW

Devdip Purkayastha

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EVENT NCCD CONCLAVE

EDIT NOTE

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A Milestone?

For the first time in past four years, I do have some serious apprehension while presenting this edition to our readers. The rankling point is: this issue might be broadly perceived as the by-product of some strong self congratulatory sentiment at our end. But given the occasion, I guess our readers would be charitable enough to grant us some self- indulgence. Believe me, surviving in a market place which has been besieged with low sentiments in last couple of years has not been easy for us as well and the clear proof is the fact that some of the other logistics and supply chains publications boasting of better pedigree than us have quit the scene in the recent past.

Four years is not too long a period to say that you know all even if you are positioned in a niche domain. But this is not too short a period either to remain bereft of the understanding of broader churnings happening around you. In that sense, we have cherished every moment of producing this magazine every month since May 2010. In our own limited wisdom, we have made a sincere attempt to bring in the mainstream seriousness in our content presentation- be it the corporate cover stories, interviews of senior industry representatives, thematic editions on relevant issues , reports by leading research firms, big debate series, etc. We have equally been blessed with the periodic contribution of some of the brightest minds in the fray who took the trouble of writing some of the most incisive stories (broadly of the big idea genre) on different issues. This has been absolutely chimed to one of the basic dogma that we follow: the publication, among other things, should also serve as a knowledge platform for the industry.

Call it a coincidence but our anniversary issue comes at a time when the country is set to witness a change in the guard at the centre. And there is a larger expectation that among the first things, the new government would tend to urgently do away with the policy paralysis of last two-three years. The wheels of the economy would be pushed to move faster, market sentiments would surge again and new opportunities would greet all of us. Needless to say, logistics and supply chain sector which is struggling to get beyond its evolution mark, is also slated to find that much-desired new impetus.

For us, it would mean enhancing our engagement with the industry and the market by further defining our content presentation not only through this publication but also by creating new mediums. Having been around for four years now, I can assure you that we are committed to take our role to the next level.

Waiting for your response Ritwik Sinha ritwik@logisticstimes.net

LOGISTICS TIMES August 2011

NEWS BRIEFS

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High expectations from new government

The level of expectations from the new government set to take office this month has risen to an all-time high, never seen in the last two decades from India Inc which is setting different sets of agenda for the new Prime Minister – from revival of economic growth to fixing inflation and bringing down interest rates and unemployment within few months of taking over, an ASSOCHAM CEO survey has indicated.

“The expectation level is soaring by the day among different segments of the economy- stock markets, industry, trade, multilateral institutions and foreign investors. Heads of the diplomatic missions are also pinning their excessive hopes on the next government as they would like to reinforce their economic ties with India……

“However, there are risks of highly built up expectations.

Any deviations in the election results, contrary to expectations can be very harmful because that can lead to a knee-jerk reaction,” the ASSOCHAM survey report cautioned.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM) surveyed nearly 450 CEOs engaged in different sectors such as manufacturing, finance, real estates, banking and IT in the month of March. The survey was conducted in Delhi, Mumbai, Bangalore, Ahemdabad, Cochin, Kolkata, Hyderabad, Chandigarh, Dehradun covering all the large, medium and small enterprises.

Though they retained their optimism about India receiving a decisive, strong and stable government, as LOGISTICS TIMES May 2014

many as 67 per cent of the corporate heads agreed the expectations are excessive, at least on the delivery front.

“The run-up in the stock markets in the last few months is another pointer to a huge level of expectations….Our survey shows that at least in the last 20 years, there was never such level of expectations from a new government,” ASSOCHAM Secretary General D S Rawat said.

The survey showed that the expectation level was spread across major sectors of the industry in particular but the maximum optimism was seen among those engaged in financial services, banking real estate and consumer goods.

As many as 54 per cent of the respondents in the survey said though issues like inflation and revival of economic growth will take long, they still expect some major morale-boosting announcements from the new regime in New Delhi in terms of reforms that will promise ease of doing business, unclogging of infrastructure projects stuck for environmental clearances.

However, the ASSOCHAM own assessment indicates that with the possibility of El Nino and consequent deficient rainfall in the coming Monsoon season, the issue of food inflation and its impact on the interest rates will remain among the most important for the new Finance Minister, Agriculture Minister and the Prime Minister.

The consumer inflation which has become more of a benchmark for the RBI , has remained excessively high for a number of food items of common-man, who is also expecting some big time steps from the new government. For the common-man, the inflation stays one of the most important issues at the ballot boxes.

For instance the March CPI inflation for fruits was 17.19 per cent and vegetables 16.80 per cent, milk and milk products – 11 per cent, cereals and products 9.61 per cent, egg , fish and meat – 9.54 per cent.

While the prices of items like sugar, oils and fats and to some extent pulses have remained subdued, the Monsoon deficiency will exert pressure even on them…

“No sooner the new government takes office, the most important economic indicator requiring immediate action will be inflation. If it rides on a popularity chart, as is expected, attending to this issue would become of paramount importance,” the ASSOCHAM paper said.

NEWS BRIEFS

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FedEx reports successful integration FedEx has announced the successful integration of its acquired AFL and UFL businesses in India.

Since the acquisition in 2011, FedEx has focused on strengthening its domestic transportation and supply chain capabilities to meet the demands of Indian businesses. FedEx now offers end-to-end logistics solutions, including international and domestic air express services, domestic ground services, warehousing and supply chain management.

According to a company release, with the integration complete, FedEx has expanded its service coverage from 4,000 postal codes to over 19,000 in India; strengthened its ground transportation service as it now has a fleet of over 1,000 trucks connecting cities and towns across India; increased its office and hub space capacity from 300,000 to over a million square feet and added inventory management services via more than 900,000 square feet of warehousing space across the country.

“In a little over a decade, India is expected to have as many as 18 mega-demand cities with a GDP surpassing $20 billion. The internet is also propelling small towns such as Guntur in Andhra Pradesh or Choryasi in Gujarat, into the league of top rural hubs for eCommerce in India. This is why we have expanded our

network to over 90% of India’s manufacturing GDP, thereby providing seamless access to Indian businesses with diverse logistics needs,” said David Canavan, vice president, Operations, FedEx Express India.

The release further underlines that industries with complex supply chain requirements (particularly hi-tech, retail, medical equipment or consumer durables) will gain a competitive advantage by using FedEx domestic ground and supply chain services.

LOGISTICS TIMES May 2014

NEWS BRIEFS

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Air France-KLM adds capacity The Air France-KLM group recently announced enhancing capacity in its cargo business in India by increasing the number of weekly freighter flights from Chennai and Mumbai by one and two, respectively, to Amsterdam and beyond.

The full freighter services from Mumbai have doubled from two to four from 1 April, while those from Chennai have gone up from three to four. “Air France, KLM and Martinair Cargo are doing this primarily in response to the needs of the pharmaceutical and healthcare industry,” the group’s vice-president (Asia and Middle East) Christophe Boucher told reporters in New Delhi last month. “Brazil and India are among the fastest growing ‘pharmerging’ groups, along with China, Mexico, Turkey, Korea and Russia,” he said, adding that this group is expected to account for almost three quarters of world market growth. He said the India flights would originate from Hong Kong, making

them “a good and profitable combination” of cargo destinations. “We expect to see a good first quarter as we are offering the right rates for the right mix of cargo, not just pharma products.”

The full freighter service would complement Air France-KLM’s belly cargo capacity on passenger flights, Boucher said.

Dedicated Cargo Route to Delhi

Qatar Airways Cargo has started operating its weekly freighter service to Delhi from early this month. The first flight from Doha arrived at Delhi’s Indira Gandhi International Airport on 4 May. “India is a highly important market for Qatar Airways Cargo,” said Qatar Airways Chief Officer Cargo, Ulrich Ogiermann. “After the launch of our service to Hyderabad in April, we are delighted to start our scheduled freighter service to Delhi this month.”

“Delhi has one of India’s largest and fastest growing retail industries. On top of that, it is an important commercial capital in Asia,” he added.

Delhi International Airport CEO, I.Prabhakara Rao, said: “At Delhi Airport, we have taken a series of steps to boost cargo traffic, which has resulted in an LOGISTICS TIMES May 2014

11% growth in tonnage and helped us cross the 600,000 tonne mark in 2013-14. But there is still a significant opportunity to grow the cargo business in the coming years. This is why we welcome the arrival of world-class air freight operators like Qatar Airways Cargo, as a key component in our strategy for developing Delhi airport as a major air freight hub in India and beyond.”

Major industrial sectors in Delhi include the health sector, electric and electronic goods, gems and jewelry, textiles and leather, factory machinery, consumer goods, and metallurgy. Pharmaceutical products will also be a major export from Delhi on the Qatar Airways Cargo freighters.

Qatar Airways Cargo will operate the weekly service between Doha and Delhi, using the Airbus A330 freighter, alongside the two daily passenger flights that Qatar Airways already operates.

Qatar Airways Cargo recently strengthened its product portfolio with the launch in January 2014 of two new premium services that optimise the transportation of time and temperature-sensitive goods, including highvalue pharmaceutical products and perishables. The new services, QR Pharma and QR Fresh, add to the company’s substantial range of cargo services and further enhance its capacity and flexibility to effectively move sensitive commodities in line with the highest world-class standards.

Blue Dart sales at Rs 1,932.51 crores

Blue Dart recently declared its financial results for the year ended March 31, 2014, at its board meeting held in Mumbai.

The company has reported Rs 124.40 crores profit after tax for the year ended March 31, 2014. Income from operations for the year ended March 31, 2014 stood at

Rs 1,932.51 crores.

Anil Khanna, Managing Director, Blue Dart said, “Inspite of the strong headwinds faced by the Indian economy and high cost pressures, Blue Dart has performed reasonably well on all fronts and capitalized on its Quality, Consistency, Reliability, Passion and Commitment. We look back with great pride at the efforts our teams have put in to remain a Provider, Investment and Employer of Choice”.

During the year ended March 31, 2014, Blue Dart handled over 126.40 million domestic shipments, 0.91 million international shipments and over 513,474 tonnes of documents and parcels across the nation and 220 countries worldwide.

Consolidated Net Profit up 83% Domestic LSP major, Gati recently declared its quarterly and annual financial results for the year ended 31st March 2014. According to a company release, in Q3FY’14, Gati’s consolidated net profit stood at Rs 13.8 crore as against Rs 7.5 crore in the corresponding quarter previous year.

The total consolidated turnover stood at Rs 386.5 crore for Q3FY’14 compared to Rs 321.7 crore in the same period of last fiscal. In FY’14, the consolidated turnover of the company (9 months) stood at Rs. 1, 127.1 crore and net profit was Rs 28.3 crore.

The release further highlights that for the quarter ended March 31st 2014, GATI-KWE revenues were up 23% at Rs 272.2 crore from Rs 220.6 crore in the corresponding quarter of last year. Gati Kausar, the cold chain division, clocked a turnover of Rs 11.2 crore compared to Rs 11.6 crore in the same period last year.

Commenting on the company’s quarterly performance, Mahendra Agarwal, Founder & CEO, Gati said, “Gati has continued to be resilient to the economic slowdown due to high operational efficiency, specialised

service offerings, aggressive stance on new business development and time-definite delivery services. Our foray in the e-commerce segment and innovation by offering value-added services has opened up opportunities that are we are harnessing to realise to full potential. Going forward, we are upbeat on the performance of EDSC and e-commerce businesses with the opening up of the market to new players and a pick-up in trade”, he added.

LOGISTICS TIMES May 2014

NEWS BRIEFS

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NEWS BRIEFS

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Gujarat Pipavav Port Q1CY14 profit up 73% Maersk group company Gujarat Pipavav Port (APM Terminals Pipavav), one of Western India’s fastest growing gateway ports, reported its Q1CY14 results on 6th May. Net sales for the first quarter ended 31st March 2014 stood at Rs 1562 million as against Rs 1245 million for the corresponding quarter last year; up 25%. Net profit rose 73% - going up to Rs 610 million as against Rs. 354 million in the corresponding quarter last year.

EBIDTA for the quarter was up 61% at Rs 916 million and EBIDTA margin stood at 58.61% as against 45.77% reported in Q1CY13.

ECU-LINE Opens Offices in Malaysia Part of the global conglomerate Avvashya Group and 100% subsidiary of Allcargo Logistics, ECU-LINE has announced the opening of its own offices in Malaysia at Port Klang and Penang, with operations staring from May 2nd 2014.

ECU-LINE is a global leader in NVOCC services and world’s largest LCL service provider. With over 25 years of expertise in the industry, ECU is present across 90 plus countries through 200 plus offices globally.

With a focus on consolidating its global leadership and to efficiently service its customers, ECU-LINE has been expanding its presence globally including Asia over the years. With the setup of its own offices in Malaysia’s two of the biggest ports, ECU has strengthened its comprehensive network to provide NVOCC services.

Port Klang, located 38 km southwest of Kuala Lumpur, is a leading port of Malaysia and one of the fastest growing ports in the world. It has been in the top 16 busiest trans-shipment ports as well as container ports in the world. It runs on three different terminals: North, West and South.

Penang Port is located along the straits of Malacca in the LOGISTICS TIMES May 2014

North Western part of Malaysia. Penang is the oldest and longest established port in the country. It is fully equipped to handle all types of cargos and provides a multitude of services to cater to port’s various terminals and facilities.

Speaking on the occasion the Executive Chairman of Allcargo Logistics & ECU Hold NV Belgium Shashi Kiran Shetty said: “ECU-LINE’s focus has always been to provide best in class services globally to its customers. Our growing expansion in key markets of Asia including Malaysia is a step forward in our goal to integrate our comprehensive global network, to create value for our customer”.

NEWS BRIEFS

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Numero Uno ranking again Retaining its position as the top supplier for Industrial and Automated Storage systems for the 8th consecutive year, SSI Schaefer has once again notched number one rank by the US Magazine, Modern Materials Handling. The ranking was announced recently.

SSI Schaefer holds the number one spot with an increased revenue of 3% to USD2.65 billion over 2012 while Daifuku Co. remained at their number two spot with a revenue increase of 4% to USD2.46 billion over 2012. Dematic and Murata Machinery retained their third and fourth position with revenue of USD$1.5 billion and USD960 million respectively.

Vanderlande Industries swapped places with Mecalux to move up to the fifth position with revenue of USD956 million.

The battle for the top 20 systems suppliers remains as a heated race to the top for 2013. While some of the growth is the result of mergers and acquisitions,

it became obvious that the results reflect two major trends: the big are getting bigger and there is an apparent increase in appetite for automation, largely driven by e-fulfilment that isn’t explained by industry consolidation.

The overall combined revenues of the top 20 material handling systems suppliers showed a jump of 6.5% over 2012 to USD15.6 billion in 2013.

TIACA Hall of fame Air Freight industry veteran Jacques Ancher was inducted into The International Air Cargo Association (TIACA)’s Hall of Fame at the recently held TIACA’s Executive Summit in Istanbul.

Ancher is the 49th air cargo executive to be awarded the honor by TIACA’s Chairman’s Council, based on nominations from the industry.

TIACA past chairmen and current board members joined over 180 guests at the Ritz-Carlton Istanbul on Thursday 24th April to welcome Ancher to the Hall of Fame.

Michael Steen, chair of TIACA’s Chairman’s Council called Ancher a “true business innovator, unafraid of taking risks to demonstrate the need for change if cargo was to remain relevant to scheduled passenger airlines”.

Anchers’ career spanned 40 years with Dutch National airline KLM, with over 17 years devoted to air cargo.

He was executive vice president of KLM Cargo from 1990 until his retirement in January 2001.

Over 200 delegates from 25 countries, including regulatory

officials from the European Union (EU), USA, and the World Customs Organisation (WCO), registered for the AGM/ES and took part in two days of workshops covering topics from Advance Data Filing to e-commerce, led by over 40 industry experts representing all sectors of the air freight supply chain.

TIACA will be holding its next major event, the Air Cargo Forum and Exposition (ACF) in Seoul, Korea, from October the seventh to the ninth 2014.

LOGISTICS TIMES May 2014

IN THE NEWS

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We are close to acquiring a freight forwarding company

In a crucial development last month, Mahindra Logistics which is part

of the USD 16.7 billion Mahindra Group announced receiving an investment of Rs 200 crore from the noted PE firm Kedaara Capital. In a brief chat with Ritwik Sinha, Pirojshaw Sarkari, CEO, Mahindra Logistics explained the strategic implication of this PE deal which includes possible acquisition in the near run. Edited excerpts: In strategic terms, how do you evaluate this PE fund infusion in Mahindra Logistics at this juncture?

Mahindra Logistics Ltd (MLL) being a part of the Mahindra Group, a PE investment specifically was not an imperative for us.

However, Kedaara Capital has a unique operating PE model which we, at MLL, can leverage effectively. We have an aggressive growth aspiration and it is our goal to reach a turnover of INR 6000 crore by 2020. The essential value that Kedaara brings is the unique operating partner model, where we stand to benefit not only in terms of the operating partners experience and expertise but also Kedaara Capital’s experience with evaluating and enabling an in-organic strategy and assisting transactions which will add significantly to our expansion plans. So this mix of both organic expansion as well as an aggressive in-organic strategy will help us achieve our vision of being India’s leading, most preferred integrated logistics service provider.

Last year, when Logistics Times had spoken with you, enough indications had come in pertaining LOGISTICS TIMES May 2014

to the company weighing options to raise funds. But then you had appeared to be more keen for an IPO. Then why did you decide for a PE fund infusion first?

We have every intention of going in for an IPO. It is my objective to take MLL to an IPO by 2017. Private equity firms perform a thorough due diligence before investing into a company and this itself gives confidence to other investors on route to an IPO, hence this PE investment.

Is it true that Kedaara Capital has picked stakes to the tune of 22-23 percent? This is what my sources tell me.

Kedaara Capital has invested INR 200 crore in MLL for a significant minority stake.

You had earlier also indicated some mid-level acquisitions during the course of 2013 which have not materialised. Will you be using

part of the accrual via PE infusion for those acquisitions now? If yes, then what could be the time line?

Yes. In fact, Mahindra Logistics is close to acquiring a majority stake in a freight forwarding company.

The groundwork for the same was done in the year 2013 and we expect

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to announce the deal in the coming weeks.

We plan on investing in a variety of areas including freight forwarding, warehousing and express logistics in the near to mid-term.

You now plan to launch your IPO three years down the line. Tell me how do you intend to scale up your operations in the period leading to the IPO? What is the kind of topline you would like to have when you hit the bourses?

the Mahindra group, we have inherited our group’s core philosophies of ‘Accepting No Limits’, ‘Alternative Thinking’ and ‘Driving Positive Change’ and it is these ideologies which will help us Rise.

In the longer time frame, we plan to focus on intermodal transport, consolidation of warehouse into multi-user mega units and enhancing

our service portfolio through a variety of offerings. This will enable us to provide truly integrated, end to end logistics services. Enabling all of this will be a considerable investment in IT and in the development of human capital. Also, as infrastructure in India improves and as GST is implemented, the growth opportunities for us at MLL will be incredible.

Mahindra Logistics is planning to get publicly listed by 2017 and is targeting revenue of INR 6,000 crore by 2020. We plan to achieve this through organic as well as inorganic growth. Over the past four years, we have grown rapidly by diversifying our industry segment focus, developing an integrated logistics services portfolio, and continuing to grow our unique people transport solutions.

As we build scale, we will also be looking at a variety of new and emerging areas of opportunity, including but not limited to international freight forwarding, express, e-commerce logistics and agricultural logistics.

This PE deal, is it in some way testimonial to the fact that professionally run 3PL firms are in the reckoning in the private financial market now?

Professionally run 3PL firms have always been an extremely attractive investment. The important factor going forward will be how these firms grow exponentially. One of the key factors for us at MLL will of course be an IPO, which will open up opportunities for us in India and abroad. Being part of LOGISTICS TIMES May 2014

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INTERVIEW

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Developing RHTP standards is a must

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A recent report from a leading international consultant titled ‘Building India: Transforming the Nation’s Logistics Infrastructure’ mentions that around $45 billion is lost each year due to the inefficiencies in India’s logistics network.

Enabling access to better equipment such as larger trucks and setting common standards ensuring consistency in containers, pallets and cranes is one of the mitigating LOGISTICS TIMES May 2014

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actions proposed in the report.

Devdip Purkayastha, President, CHEP India, believes the central message of this report needs to be taken seriously and there is an urgent need of a decisive push from the industry stakeholders for evolution of standardized supply chain operational modules, broadly termed as Racking-HandlingTrucking-Palletizing (RHTP) standards which will benefit all. Edited excerpts of a recent conversation with him: LOGISTICS TIMES May 2014

INTERVIEW

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Do you find supply chain operational practices in the country basically of the nature of a jigsaw puzzle due to lack of standardization?

Everyday tons of goods move across the supply chain in India.

These goods are shipped in many different ways through various modes of transport in unit load on pallets and also as single boxes, handled in different ways, both manual as well as automated, stored in various configurations, from open storage to enclosed one, from racking to ground stacking. This complex permutation and combination in the use of racking, handling, trucking and palletizing or absence of some of these modules lead to operational inefficiencies, wastage of resources, ineffective use of manpower and space creating bottlenecks at the docks, lower truck turnaround time, increased supply chain costs and most importantly delay in reaching the market.

And you firmly believe that standardization could be that much desired panacea…

Predicted by various studies and acknowledged by many, India is at the cusp of breakaway growth.

Many industries are focusing on creating a lean and responsive organization to capture these exciting opportunities. Businesses which react faster and are quick to adopt the required changes will rule the market. One of the biggest drivers of change will be in supply chain which is transforming from being a support function to its present role as a major strategic contributor that is enabling businesses to create the market differentiator. There is a gradual shift from the product, service or solution being the competitive edge to ‘speed to market’ defining organization success. Today LOGISTICS TIMES May 2014

supply chain is the sunrise industry which is evolving towards global standards.More than ever before the industry understands the need for collaborative working to address the various challenges that can hamper growth. There is a firm belief that ‘Collaboration at the backend will help Compete at the frontend’. This is precisely the need for ‘Standards’ Now the moot question is: who should take the responsibility of pushing this cause to the stage of effective implementation? How can new standards be evolved?

‘Standards’ should be defined and decided, ‘by the industry, for the industry, from the industry’.

Logistics industry bodies and associations will have to drive initiatives to create a platform to develop and disseminate the standards. They can use their knowledge base, industry expertise and influence among various stakeholders not only to create but to actually help quickly adopt and integrate these standards within the industry.

Reaching out to the local standards body such as BIS and engaging with various associations that cater to the trucking, racking and material handling industries will help understand the current status. The task is not only to define standards for each of the modules in Racking, Handling, Trucking, and Palletizing (RHTP) but also to ensure that these standards are compatible with each other. The basic premise for the need of standards is to enable collaboration, to ensure free flow of goods across supply chains and hence each leg of this chain will have to be compatible with the next in terms of handling, moving and storage infrastructure.

In practical terms, how will

these ‘standards’ actually help the industry?

We should try and understand the scenario today.

Let us critically analyze each module of RHTP. Racking, which are used extensively in any warehouse layout is a very critical aspect of a modern supply chain. Most racks designed for optimum space utilization, are based on the pallets available at hand or with the product to be stored in mind.

This racking setup decides the handling equipment to be used.

In trucking, there are standards for chassis sizes and build but none for the truck bodies. Most vehicle body building companies follow their own designs and mostly customized to customers’ requirements. So far so good, each pillar is working efficiently in its own domain at the localized level. Most Pallets available in the market today again do not follow any standards.

Now let us try and understand the handling practices as goods move from the supplier to the manufacturer to their warehouse and onwards to the retailers’ location. A supplier packs raw material in individual cardboard or other boxes, hand balls them into a truck and dispatches to the manufacturer. These are then manually unloaded at the manufacturer for consumption.

Finished goods are then packed in boxes at the manufacturer, loaded into trucks, again manually and transported to their warehouse.

In some cases, in some modern organization these are palletized and sent as unitized loads. At the warehouse end, these are unloaded manually in most cases or by the use of forklift and other material handling equipment (MHE) wherever available and stacked on racks or ground as the case maybe.

The next leg is when these finished

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goods are delivered to the retailer.

The goods are manually loaded into vehicles, box by box, even the unitized load on pallets that are taken off racks are actually dismantled into individual packs.

The retailer receives these boxes which are than re-arranged on their pallets and stacked or on ground.

Have you noticed the number of times the goods were ‘manhandled’? Did you notice the labor and time requirements?

Can you imagine the loss of efficiency, infrastructure resource bottlenecks, costs and time to market? Can you fathom the safety risks and compliance challenges?

The RHTP standards are expected to mitigate most of these risks and also ensure a green and responsive supply chain.

What should the ‘Standards’ look like? How will the above scenario change, if these standards are adopted and integrated in the supply chain?

As mentioned earlier, we expect some prestigious industry body to take the lead. Yes, we are engaged with some of them and are discussing the best possible ways in achieving this herculean yet strategic task of developing RHTP standards which will help modernize the Indian supply chain.

We believe that once these standards are defined, goods will move efficiently across supply chains following the ‘least touch’ methodology. To understand this better, let us visualize the above movement of goods from supplier to the manufacturer and onwards to the retailer, post adoption of standards.

The supplier will unitize his raw material on a standard pallet and load using standard material handling equipment (MHE) into

a standard dimension truck which is designed to carry these standard pallets.

The manufacturer, whose infrastructure based on the defined standards will easily unload the goods by using standard MHE quickly with less or no product damage. The standard pallet need not return to the supplier and can easily be used by the manufacturer in his operations, thereby saving return transport costs. The manufacturer can than load his finished products on the same pallet (yes, the standard pallet that was used to receive raw materials), and transport, again in standard trucks to their warehouse. The palletized load is stacked on standard racks directly without any manual handling at the warehouse. In a similar way, the final leg of the journey to the retailer will also be handled efficiently on pallets using standard equipment and infrastructure. This may seem unbelievable but is very much possible. All that is needed is the Standards, quick industry adoption and collaboration between all stakeholders in the end to end supply chain. The value created and the cost saved will be shared by all.

What kind of role you envisage for companies like yours which has a global presence and knows the benefits of operating in a standardized environment?

What kind of role you see for yourself in being in the forefront of bringing this much desired change?

CHEP is a global leader in equipment pooling solutions based on Pallets and Crates. We help collaboration within the supply chains of all stakeholders in an organization’s eco-system including their suppliers,

3PL partners and customers.

Standardization is the basic premise of our business model.

We work closely with customers to understand their operation and suggest value added solutions.

We engage with them to integrate their upstream supplier network, enabling better infrastructure and resource utilization while reducing input costs. Similarly, we study their plant operations, storage, warehousing and distribution to help seamless movement of finished goods.

CHEP also works closely with the industry bodies, event managers, media as well as customers to advocate the benefits of standardization, collaboration and automation. The essence of this partnership is to ‘Build Better Supply Chains Together’.

What do you think can accelerate this process?

More than ever before the industry understands the need for working collaboratively to address the various challenges hampering its growth. Many organizations are adopting automation and standards in their operation. Most businesses are embracing change, they now prefer to outsource their non-core activities and hence implement standard processes required to integrate with their partners. Focus on green practices; labor compliance and understanding the importance of safety are beginning to form part of standard processes. We strongly believe that the ultimate driver for standards will be the customer who demands quality, timely and quick delivery and most importantly value for money. However, this cannot happen in individual silos and will require the support of the entire supply chain industry to make RHTP standards a reality.

LOGISTICS TIMES May 2014

REPORT

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Outlook: Indian Automobile Industry

Noted research and consultancy firm Frost & Sullivan recently released a report which underlines the possible trends in the Indian Automobile industry in the medium run. Here is the executive summary of the report: LOGISTICS TIMES May 2014

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The Indian Automobile Industry has shown healthy growth from FY’08 to FY’13. High inflation, fuel prices and unfavourable interest rates, resulting in high cost of ownership, have affected car sales in FY’14.

Despite the fall in FY’14, over the next few years, solid but cautious growth is expected due to policies announced by Government in the interim budget and improving affordability, rising incomes and untapped markets. All this will provide promising opportunity for Automotive Industry in India.

The growth phase cycle of the automobile industry is governed by a multitude of factors including macroeconomic variables, such as GDP components, industrial production, inflation, interest rates, stock indices, sector variables like model launches, vehicle price and intersegment competition, and enablers/barriers such as finance availability, road connectivity, etc.

Domestic sales of Passenger Vehicle segment declined by 6.0 percent, Commercial Vehicle segment sales declined by 25.3 percent Three Wheeler sales declined by 10.9 percent when compared to FY’13.

The Two wheeler segment on the other hand, has shown positive growth of 7.3 percent in FY’14.

Total automotive sector forecast (Domestic Sales): CAGR 7.8 Percent (FY’14 – FY’19) Passenger Vehicles (PV) The passenger car (PC) market is primarily aspiration driven and the launch of new models will spur the growth of this segment.

This combined with the advent of technology-inclined Gen Y, the future will see many high-end passenger vehicles. The launch of technology loaded models with attractive optional features will be the key to growth in this segment.

The developing public transport systems that are being put in place in the urban environment by the Government are proving an efficient mode of commuting into cities especially for the working population. This coupled with reduced parking spaces available has deterred the use of personalized

transport by the working class.

Also, with the Government establishing and enforcing emission norms in new vehicles combined with the advent of safety regulations, prices of personal automobiles will rise to accommodate these features and this price rise may hinder growth.

Though rise in fuel prices is a concern, the only effect of deregulation of fuel prices in the immediate future will be on the sale of diesel engine powered vehicles as the rate disparity between diesel and petrol goes down.

This will reduce the number of diesel vehicles sold.

Passenger Vehicles: Segment wise analysis

The Micro segment is expected to grow at a CAGR of 13.8 percent; the Mini segment will keep its pace due to the penetration in tier III cities and the rural segment and is likely to grow at a CAGR of 6.7 percent over the next five years (FY’14 - FY’19).

Though rise in fuel prices is a concern, the only effect of deregulation of fuel prices in the immediate future will be on the sale of diesel engine powered vehicles as the rate disparity between diesel and petrol goes down. This will reduce the number of diesel vehicles sold.

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REPORT

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Another factor in favour of growth is the evolution of urban areas that adopt the Hub and Spoke model which will pave the way for the use of Small Commercial Vehicles (SCVs) and Light Commercial Vehicles (LCVs) for end connectivity; leading to growing sales figures in these segments.

The Compact segment is likely to grow at a CAGR of 4.0 percent over the next five years. This segment is likely to be affected in the near future due to increasing preferences for compact Sports Utility Vehicles (SUVs – Ford Eco Sport, Renault Duster) and Super Compact segment vehicles (Suzuki Dzire, Honda Amaze, Hyundai Xcent, etc.)

The Super Compact segment which is expected to see few more new launches is likely to grow at a CAGR of 10.3 percent over next five years.

This segment is perceived to be value for money.

With a maximum number of new launches by almost all the OEMs in Utility Vehicles (UVs), this segment is likely to grow at a CAGR of 20.2 percent over the next five years. The SUV is seen as a status symbol and feeds the aspirations of the growing middle class and the affluent.

Another factor is the availability of financing options which has brought the expensive SUV into the affordable range for the consumer.

UVs also provide the required capacity to accommodate the large Indian joint family and with the multi-utility nature of the vehicle, it proves to be the perfect vehicle for the small entrepreneur.

Commercial Vehicles (CVs)

Due to surplus capacity in the trucking system, weak transporter viability, slow infrastructure projects, ban on mines and other pessimistic sentiments in the market, the Commercial Vehicle segment saw a decline of 20.2 percent in domestic sales in the year FY’14 when compared to last year.

The dual pricing of diesel will affect the Commercial Vehicle segment in a major way and many commercial vehicle operators will be hit hard at least until their prices are restructured.

But with growing infrastructure, like better roads and Mega Corridors, the path is open for high powered LOGISTICS TIMES May 2014

vehicles with better mileage and higher payload capacity.

With fleet operators switching to Fleet Management Services to reduce the vehicle down time and increased efficiency by managing their routes real-time, these new vehicles will prove a boon to them as they come with these devices built in them by the OEMs. Another factor in favour of growth is the evolution of urban areas that adopt the Hub and Spoke model which will pave the way for the use of Small Commercial Vehicles (SCVs) and Light Commercial Vehicles (LCVs) for end connectivity; leading to growing sales figures in these segments.

Also, the Government is establishing its public transport network with the crux being on Bus Rapid Transport Systems (BRTS). This will lead to many procurement deals from various state governments.

The Government is pushing for buses with new features such as low floor and air conditioning which

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will provide greater passenger comfort. Also, the entry of international players in the Indian market has led the private sector to offer better deals to passengers and will boost the demand for such vehicles among the passengers as well. All these factors will lead to strong growth in the buses segment.

On the whole, the Commercial Vehicle segment is likely to grow at a CAGR of 6.4 percent backed by the growth of Small Commercial Vehicles and Intermediate Commercial Vehicles (ICVs).

The two-wheeler market has emerged as the most vibrant and transforming segment of the overall Indian automobile industry, witnessing an unprecedented growth.

Various structural positives associated with the domestic twowheeler industry including favorable demographic profile, moderate two wheeler penetration levels, under developed public transport system, growing urbanization, and strong replacement demand are primary factors in favour of the two-wheeler market.

In rural areas, consumers look for versatility and ruggedness at affordable rates. Also, the roads are not well developed and are quite small paving the way for the growth of two wheeler sales.

In urban areas, increasing congestion within cities and the lack of parking space plays into the consumer’s mentality to choose a two wheeler.

Even though many families have cars, they use two wheelers for their daily office commute.

The fuel efficiency offered by a two wheeler is another bonus to the price minded Indian consumer. Another factor bolstering the two wheeler OEMs are its exports with large opportunities to grow in overseas markets, mainly Africa and Latin America. The demand for Indian bikes is growing abroad and this will increase the industries’ presence in India.

Overall, the two wheeler domestic market is likely to grow at a CAGR of 5.3 percent over the next five years.

Also, relatively low volume segments such as the niche (Premium Segment) occupied by Eicher Motors (Royal Enfield), besides other cruiser and superbikes from the stable of Harley Davidson, Triumph, Kawasaki, Honda, Suzuki, Ducati and BMW will help the industry to grow further. The premium segment is expected to remain the fastest growing over the medium term, given the

In

strong growth in purchasing power in the hands of middle-class urbanites, especially in the age group of 20-30 years.

Three Wheelers (3W) The fuel efficiency offered by a two wheeler is another bonus to the price minded Indian consumer. Another factor bolstering the two wheeler OEMs are its exports with large opportunities to grow in overseas markets, mainly Africa and Latin America.

The demand for Indian bikes is growing abroad and this will increase the industries’ presence in India.

Overall, the two wheeler domestic market is likely to grow at a CAGR of 5.3 percent over the next five years.

Also, relatively low volume segments such as the niche (Premium Segment) occupied by Eicher Motors (Royal

urban

areas,

congestion

within

increasing cities

and

the lack of parking space plays into the consumer’s mentality to choose a two wheeler. Even though many families have cars, they use two wheelers for their daily office commute.

Enfield), besides other cruiser and superbikes from the stable of Harley Davidson, Triumph, Kawasaki, Honda, Suzuki, Ducati and BMW will help the industry to grow further. The premium segment is expected to remain the fastest growing over the medium term, given the strong growth in purchasing power in the hands of middle-class urbanites, especially in the age group of 20-30 years.

Three Wheelers (3W) Despite the near-term headwinds, Frost and Sullivan expect the three-wheeler industry to report a moderate volume CAGR of 3.6 percent over the next five years. Long-term sales growth will be the highest in the passenger carrier segment, and lowest in the goods carrier segment due to intense competition from the SCVs. LOGISTICS TIMES May 2014

GUSET COLUMN

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E-commerce & Logistics: Smooth synergy or uphill challenge?

P.C. Sharma CEO, TCI XPS

O

ne of the many success stories of liberalization in India has been the advent of internet and the subsequent repositioning of various sectors around it.

One such repositioning has been e-commerce, or the online market space. While it creates easy avenues for shopping for consumers at relatively lower prices, it provides for some significant cost advantages in terms of storage for the e-retailers.

Competing on the prices, however, requires an efficient leveraging of the logistics to translate into cost advantages. This has, in turn created space and need for efficient logistics provider for such e-retailers.

In conventional stores, customers were expected to travel to the store for purchases. This required the retailers to store sufficient in-store inventory to avoid any customer loss.

Goods were transported from the suppliers to the retailers through Regional Distribution Centers. However, e-retailing has revolutionized this traditional

LOGISTICS TIMES May 2014

model. Orders are placed at the Regional Distribution Centers and delivered through various logistics providers.

The growing prominence of e-commerce with rising internet penetration and consumer confidence in online shopping has also come as a big boon for the warehousing solutions service provider. This is due to the fact that despite commerce moving online there is still the need to address the issues like warehousing, packing, shipping and tracking. E-commerce merchants are now increasingly relying on warehousing service providers.

The e-commerce market clocked a CAGR of more than 54% till 2011.

However, it still accounted for 0.1% of total retail sales in 2011 in India.

The industry is currently valued at $2 billion but reduced margins puts a serious pressure on cost-side.

This indicates a huge potential for growth, not just for e-retailers but also for allied sectors. Logistics, for example, is one of the key allied sectors.

The express industry caters to multiple industry segments by providing time bound logistics services. The customers use express delivery services for shipment of various products, having high value like life-saving pharma products, electronic products, spare parts, trade samples etc. As a premium segment, the express industry in India is small but significant in the logistics industry and is one of the fastest growing segments of the industry. It has evolved rapidly and has increasingly added a variety of services and user segments in the domain of express deliveries.

As per Crisil Report, 2012 the market size of express logistics

segment during 2011-12 was estimated at Rs. 10,870 crores (about USD 1.8 billion). The industry is expected to grow at 17% per annum compared to 11% growth estimated for the overall logistics industry to Rs. 17,450 crores (about USD 2.9 billion) in the next three years .

The express segment in India forms an important part of the logistics industry. By providing an integrated time-bound door-to-door delivery services, the industry is catering to the requirements of businesses as well as retail customers to deliver shipments under tight timelines.

In addition, the industry makes significant contribution towards employment and exchequer. It is witnessing a demand boost due to the above average growth of industry segments like organized retail, e-commerce, consumer durables, electronic products and healthcare. The segment is also receiving a fillip from the higher level of consumption demand in the country for items like electronics, garments, etc, in turn creating additional demand for express industry.

Typically, logistics accounts for about 10% of the total costs for e-retailers . However, the squeezed margins, makes bearing such costs almost economically unviable. Even this is only a partial picture of the criticality for logistics. Reverse logistics is also becoming more important. While the industry average is about 20%, some segments like apparel have an abnormally high return rate of 60%. In about 70% of cases of reverse logistics, the cost to pickup and return is greater than the value of the item. This has increased the challenges which the leading ecommerce players face in current operating scenario.

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Transformation of e-commerce would also facilitate the adoption of newer models for logistics.

Large warehouses located outside the metropolitan limits reverses the trend of aggregation around large retail outlets. Moreover, growth of ecommerce is likely to help in leveraging economies of scale.

Further, given that home delivery forms an integral component of the ecommerce experience, the cost of moving goods to the shoppers’ location has to be considered in the design of supply chain and relevant logistics.

However, this has also created space for specialized logistics service providers like TCI, which can use technology and other efficient processes to bring down these costs. On-time delivery is another key parameter, and an important differentiating factor for e-commerce. Given the sensitivity of the customers to the time-bound delivery and the price, this forms a lucrative opportunity for specialized logistics provider to operate in the sector.

TCI offers multiple services in both B2B and B2C categories. TCI XPS is fully geared to cater to the logistics requirement of e-commerce sector and can cater to the specific warehousing requirements of sector due to its ability to deliver products to customers in a safe, secure and cost effective manner across the

Typically, logistics accounts for about 10% of the total costs for e-retailers.

However, the squeezed margins, makes bearing such costs almost economically unviable. Even this is only a partial picture of the criticality for logistics. country. For its B2B customers, it offers Forward Movement Service portfolio management which includes last mile delivery from warehouse and inter-warehouse transfer. Further, it also handles Reverse Movement Service portfolio, which includes movement from vendor to warehouse, vendor to fulfillment centre and packaging from vendor locations. For its B2C customers, it offers warehouse to customer, vendor to customer and bulk and break services through its unique hub-and-spoke model for delivery. It also handles reverse logistics for its B2C category, which includes customer to warehouse and customer to vendor movement.

On an average, TCI handles about 10000-12000 shipments per month.

TCI has also developed expertise in Above 5 kg weight category which contributes to about 9-10% of

the total e-commerce shipments.

Further, there has been an increasing focus on COD segment, which accounts for 60-80% of the total e-commerce servicing. While this is proving to be a challenge, mainly due to issues related to reverse logistics, it also offers a window of opportunity for differentiation and further innovation.

E-commerce has, undoubtedly, made a strong presence felt.

However, while the demand side continues to be strong, lack of necessary infrastructure is proving to be a major impediment in continuing growth. Whether the sector takes off, aided by necessary support from key 3PL providers, or ends up in a quagmire due to lack of necessary logistics backbone would largely depend on the ability of the existing players to respond to the changing needs of the sector.

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HUMAN RESOURCE

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Skill Gap in the Indian Retail Sector

Saurabh Agarwal Founder & Managing Director SkillCube

I

ndia today is a shopper’s paradise.

The surge in competition, manufacturing and foreign investments have led to the easy availability of goods in the markets.

A fact that is evident in the number of malls and supermarkets that are mushrooming annually in Tier 3 & beyond cities. This has led to the demand of employees in the retail sector, making it a source of easy money for fresh graduates.

However, the major problem that has emerged as a result is the lack of adequate skills in the prospective employees, leading to the idea of inculcating practical skills in trainable candidates.

In 2012, the Government approved the allowance of 51 percent foreign investment in multi-brand retail and approved reforms for singlebrand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India.

Indian government continues the hold on retail reforms for multibrand stores. These market reforms paved the way for retail innovation LOGISTICS TIMES May 2014

and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well as single brand majors such as IKEA, Nike, and Apple.

Total retail employment in India, both organized and unorganized, account for about 6% of Indian labor work force currently - most of which is unorganized. This is about one third of the level in United States and Europe and about half of levels in other emerging economies. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in

India. Training and development of labor and management for higher retail productivity is expected to be a challenge.

According to a journal by Timesjobs, Indian retail sector is pegged to create 10 million jobs by 2015.

However, the industry will require a huge surge in skilled workforce to sustain the economic growth.

The retail market of India has been ranked the second most attractive emerging market. Retailing is one of the pillars of the Indian economy and accounts for 14 to 15 percent of its GDP.After the government of India announced the opening of FDI in multi-brand retail,there has been a lot of interest from brands

37 Basic Skill Sets

across the world and therefore even more focus on the need for skilling the workforce.

The organized retail sector is divided into front-end and backend operations like customer service, logistics, merchandising and marketing which form the backbone of the store. While on the face of it the operations seem easy, there is a huge gap in terms of lack of adequate knowledge of software pertaining to the processes, lack of research of local markets that needs to be carried out, in order to understand market trends and also product-specific knowledge that is crucial for selling. Apart from these skills, there is also a dearth of soft skills and knowledge of interpersonal communication that goes a long way in securing a client.

Retail is a popular industry, so it’s imperative to find out what the in demand skills are, acquire these skills and give oneself a competitive advantage.Some roles will require a very specific set of skills. For instance, Visual Merchandisers will need to have a creative flair with an eye for three-dimensional design and the ability to translate design concepts into tangible displays that will woo potential customers.

Luckily, most of the skills that are required for each position will be learnt on the job but, you one have already acquired some of them during their respective career or

While on the face of it the operations seem easy, there is a huge gap in terms of lack of adequate knowledge of software pertaining to the processes, lack of research of local markets that needs to be carried out, in order to understand market trends and also product-specific knowledge that is crucial for selling. work placements.Regardless of whether one enters the career via the graduate or non-graduate route, the retail industry recognizes a set of few core competencies that anyone serious about carving out a career for them in this sector will need.

These competencies include a range of typical skills that employers are looking for in applicants, as shown in the chart above.

Above all else, employers are looking for people who can use their initiative to look for ways of improving the way things are done, are committed to their employer and are passionate about their sector whether it is fashion, food or gadgets.

Despite many initiatives being taken by Government and private skill development players, there

is a major skill gap in the industry which exists today due to monetary constraints and perception of students. The government provides vocation-based training that is affordable but poor in quality while quality training by private companies cost money. Another important issue is the perception among students of these skills to be too ‘basic’ for formal training.

They do not wish to employ time in learning skills which they consider they would pick up while on the job. Employers also prefer hiring students with formal education instead of vocational training, making skill developers quirk existing college programs with vocational courses to attract students. Some students also prefer courses which guarantee placements.

LOGISTICS TIMES May 2014

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BEST OF LOGISTICS TIMES

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4 years is not too long a period to say that we know a lot. But 4 years is not too short a period to feign ignorance either on the relevant issues of a specific niche domain.

On the occasion of our 4th anniversary, we bring you what we believe have been our best in last 48 months in terms of content catering : ground zero coverage of logistics related infrastructural facilities; bringing in the ringside view of the churnings within major LSPs; knowledge sharing by some of the brightest minds in the fray on some of the pertinent issues and trends; our Big Debate initiative wherein we did make an attempt to indulge in micro-analysis of issues like deficiency in cold chain regime, striking the balance between cost and services, if the concept called sustainable supply chain is a myth or even understanding the aspirations of future professions vis-à -vis the prevailing hullabaloo that quality manpower is hard to be found around. Here is a glimpse of the best of Logistics Times’ journey since May, 2010: LOGISTICS TIMES May 2014

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Vi(O)r(i)ginality!

Ramesh Kumar

Stop... Stop... Don’t google! You’ll be bamboozled. Why? Because there is no such word. But you will find ‘virginity’ certainly. Or ‘originality’.

But not this combo of virginity plus originality.

Circa 2010 January when we met over a cup of garam chai at Barista in New Delhi, co-founders of this niche B2B publication Ritwik Sinha and yours truly were stumped on what the maiden or virgin launch issue ought to be. For others, it would have been easy. But not for us. Why? Having seen the kind of magazines trundled out as logistics and supply chain magazine in English, we were puking. Honestly.

Put together, both of us have clocked 50 plus man years in the field of business journalism – print, television and web collectively.

When you add Publisher-cumEditor in Chief Raj Misra’s own track record, this figure jumps to 70 plus aggregate years. None of the B2B niche magazines in this sphere can match editorially.

Having decided on the name,

Logistics Times, without much loss of time and energy and designer Kausar Hussein trotting out multiple options for the masthead, the issue on hand was: what should be the cover story for the virgin issue? One thing was crystal clear. The story ought to be original and visit or interactive based, and not email based or marketing honchos masquerading as editorial coordinators ‘sucking’ their thumbs while the potential advertiser’s marketing guy busy drafting responses to the questions, he himself masquerading as his own boss. Why such derisive and condescending attitude of Logistics Times? Well, that was the true characteristic of logistics and supply chain magazines in India that time.

Perhaps even now.

The natural corollary was: Logistics Times would not put pen to paper.

Or key in a single character unless

someone has been ‘physically’ met or ‘sites’ physically visited. That was the kind of difference we want to bring to the table. Second rider was: no lead story would be based on a single interview with the CEO or Chairman or Managing Director.

Our stories would be chiselled on the basis of interaction with multiple vertical heads. Those who refused multiple access would be politely told, ‘sorry’.

New magazine and such a height of arrogance? No, not at all. What is the point of bringing out another shoddy advertising driven magazine with ‘oh, la la’ hoopla? We, the Misra-Sinha-Kumar trio, were clear about their product delivery. The best and novel. High class business journalism in the logistics and supply chain arena.

By sheer coincidence, our maiden mail to Vishaka Container Terminal on the eastern coast in

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Vishakapatnam, Andhra Pradesh fetched the right response to our query in double quick time: “Will you be interested in allowing access to your container terminal for a cover story of Logistics Times’ inaugural issue?”

Early March that year both of us (Sinha and self) flew down to Vizag for interaction with Capt.

Ravi Kumar and team mates. Two days flew in a jiffy with excellent fresh inputs. The topbrass had actually gone out of its way to arrange meetings with freight forwarders – their clients – for yet another perspective. Just Editor-in-Chief Raj Misra (R) and designer Kausar Syed (L) viewing not that alone. We even the prototypal copy of the inaugural edition at the printing press. ambled into the deputy chairman’s office of Vizag Port Trust to seek The natural corollary was: Logistics Times would his views on how Vizag Port is handling the not put pen to paper. Or key in a single character current load and business prospects in the years to unless someone has been ‘physically’ met or ‘sites’ come. physically visited. That was the kind of difference we 2010, many eyebrows were raised. What kind want to bring to the table. Second rider was: no lead of a magazine is this? No ribbon cutting photos. story would be based on a single interview with the No ‘dull as drab’, PR- CEO or Chairman or Managing Director. ish interviews. Logistics Times was a genuine business magazine with 100% meet over a cup of tea of coffee?” other rag tags masquerading as focus on logistics and supply chain. The real impact began to sink. The genuine logistics and supply chain Not the usual ragtag which the message was simple and crystal magazine. industry was exposed to until then. clear: Logistics Times has arrived. The proof of our guts to be In fact, many wrote “obituary” for With a bang. Every single issue since different with heavy editorial this magazine since this product that historic day has been lapped up content and a focused approached was beyond their expectation or thanks to its editorial sagacity. Yes, did pay rich dividend over a period ken. Logistics Times ushered in a we did have our trying moments of time. Many could not survive for revolution of sorts. A few issues with no advertising support. We a variety of reasons. But we did with down the line, requests began to held our heads high and refused a firm belief in the diktat: Content pour in exploring ‘why not we to compromise and become like is King. Truly so.

The author, one of the founder-editors of Logistics Times, has moved away to pursue his truck driver welfare focused social activities via KRK Foundation and to write books. However, he continues to be on the Editorial Advisory Board of this magazine, contributing regular columns.

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BEST OF LOGISTICS TIMES Inaugural Edition May 2010

L

ogistics Times’ journey had begun on the east coast of India – at Vizag port to be precise. Being glued to our avowed principle that we will reach out to the point of action for authentic coverage, team Logistics Times had visited Visakha Container Terminal to put together the cover story of its inaugural edition. The DP World owned facility clearly exemplified that players in the logistics fray are capable of dreaming big too.

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August 2010

September 2010

Barely four months old, we had an overflow of opinion from the domestic and international experts/practitioners when we came out with a Supply Chain Special. As many as two dozen renowned personalities contributed to this edition sending the message loud and clear that supply chain segment is all set to take the center-stage.

It was a coup of sort for us – putting all four divisional heads of DHL in India on the cover of our September edition. The cover story churned out was based on the interviews of as many as 16 top officials of the company (plus a visit to some of their advanced facilities around Mumbai) and it clearly pointed out that one of the most respected global logistics giant has resorted to make the most of the possible synergies between its units to keep its flag high on the Indian turf.

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March 2011

May 2011

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What does it take an MNC with definitive positioning in several markets to cope with typical Indian challenges on the ground?

Especially when your offerings entail pushing a new idea or new operational modules. Our cover story on CHEP primarily dealt with this moot point.

This was a special edition focusing solely on the warehousing scenario in the country. No doubt, expansion of warehousing footprint has been a shining chapter of the Indian logistics growth story in last one decade, the edition had primarily probed the moot point: is this growth structural? This issue had also subtly underlined the euphoric sentiments within the industry on the proposition of the implementation of GST and its possible impact on the warehousing business.

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June 2011

July 2011

The government had just announced achieving an export target of $500 billion by 2014. And we were quick to probe: is it doable given the infrastructural and procedural constraints? At that point in time, India’s export base was around $240 billion.

Though one more financial year is left, there is no doubt in anybody’s mind that peak figure of $500 billion is not going to be attained.

At best, it would be around $350 billion.

It was the edition which had reinforced our commitment to authentic coverage. Ramesh Kumar, one of the founder editors of this publication, presented a report on the real operational conditions on Indian highways by criss crossing over 10,000 km travelling in trucks and trailers. Clearly the first initiative of its kind which had drawn kudos from everyone in the industry.

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November 2011

December 2011

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It was the time to visit Blue Dart on a standalone basis. Undoubtedly, one of the most respected company in the logistics and supply chain, the conversation spread across two days with its top brass clearly underlined that after establishing its supremacy in the domestic air freight, the company is keen to bring in the combo of strength in the ground express segment. An interesting moment during the coverage came when Blue Dart’s MD Anil Khanna was asked, “ Do you think there is a hand of providence in helping Blue Dart since none of your competitors in the air segment have survived in the past?” Khanna only smiled back.

Logistics Times was the first publication which was allowed to visit Arshiya’s upcoming Free Trade Warehousing Zone (FTWZ) at Khurja in the western UP just before its partial launch. At that time, there was unprecedented buzz about this facility and it was billed to emerge as country’s biggest FTWZ. And no doubt, it was an epic scale structure in every respect. However, the company has not been in the pink of health in the last couple of years and this unit too has not taken off on the expected lines.

Yet nobody can take it away that this unit reflected the manifestation of a big-ticket dream.

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June 2012

July 2012

What do you expect from the supply chain unit emanating out of India’s leading retail firm?

This is what we probed in June 2012 when we indulged in close quarter analysis of Future Supply Chains’ (FSC) operations involving no holds barred conversation with its top brass and visit to some of its advanced ‘big boxes’ (they don’t use the term warehouse) outside Mumbai. Much like its parental firm, the company clearly has set ambitious targets to draw future perfect for itself.

India has some serious agrarian strength.

At the same time, it also has serious supply chain gaps in terms of optimal utilization of its agricultural produce and these are the issues which have been in existence for a long time.

But does fixing them entail applying rocket science? We had turned our focus on this pertinent issue in July 2012.

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August 2012

February 2013

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It was the second time that Safexpress supremo Pawan Jain was on our cover. While on the first occasion (in 2010) he had spoken about the broader strategy of the company, this time the sole focus was on the pan- Indian network of Safepress’ logistics parks which is believed to be giving a cutting edge to company’s positioning in the market.

This issue turned the spotlight on yet another logistics unit of one of the leading and most rspected business conglomerates. Tata group owned DIESL was in the midst of a serious makeover under the stewardship of the recently appointed CEO Milind Shahane and our cover story presented the details of how this unit is bracing up for challenges in the future while pursuing its growth objectives which can’t simply be ordinary given its lineage.

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May 2013

December 2013

It was precisely a year ago that we had come out with a cover story on Mahindra Logistics, yet another LSP which is the chip of a big and very prestigious block. And its top brass had spoken in no uncertain terms that after a slow beginning, the company has picked up momentum and fast-paced but focused expansion would be the driving mantra.

This edition carries a brief chat with its CEO Pirojshaw Sarkari sharing the details of a PE deal which Mahindra Logistics inked last month.

Unlike the early years of this millennium, the concept called emerging economies is not only restricted to a select group of countries now. New additions have been made to the list and this edition made an attempt to trace the common challenges in the new economic hotspots which boast of tremendous potential but where adoption of advanced supply chain practices is a big challenge.

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March 2014

April 2014

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Pharma has emerged as a typical sectoral strength of the Indian economy in last one decade and this in turn has provided a major shot in the arm to the international air cargo operators with pharma becoming a star component of the exports basket.

And going ahead, the demand for Indian pharma is all slated to further mount in the international markets. Will Indian air cargo industry manage to encash this opportunity given the constraints on infrastructural and procedural fronts? There was mixed response from leading industry representatives.

Perishable wastage is not a typical Indian problem. Every year the world at large is losing food products worth a staggering $1 trillion with the robust participation of the developed countries as well. However, there seems to be a larger global realization now that deployment of advanced cold chain systems is inevitable – the central message of our cover story.

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KNOWLEDGE SHARING February 2012

Prem K Verma CEO, TML

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ndia is the second fastest growing automobile market in the world after China. It has emerged as the world’s second largest manufacturer of two wheelers and fifth largest manufacturer of commercial vehicles besides the seventh largest passenger car manufacturer in the world.

With the growing domestic market, high quality standards, cost effective manufacturing base with product development capabilities and availability of skilled manpower, India has the potential to emerge as an auto hub. To effectively position the industry as an automotive powerhouse, Indian automakers need to adopt and implement some best industry practices. xxxxxxxxxxxxxxxxxxxxx

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uto industry is a complex system, with various subsystems, which are interlinked and inter dependent. Logistics is one of the critical subsystems which play an important role, as it involves efficient integration of suppliers, manufacturers, warehouses / stores and encompasses the company’s activities at many levels. Inbound logistics is a key area of growth with quite a few suppliers maintaining warehouses close to plants for logistical and tax reasons. xxxxxxxxxxxxxxxxxxxx

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PL activity in India is an emerging business and has a huge business potential. In India, this industry is less than 10 percent of the total logistics business

as compared to 80 percent in Japan. Transportation is mostly outsourced by Indian automotive companies where as value added services are least outsourced.

The Indian auto market is becoming increasingly more globally integrated and competitive. As OEMs want to concentrate on their core capabilities, outsourcing is no longer considered a taboo.

Manufactures and traders would be more inclined towards outsourcing logistics functions and those LSPs who can provide value added / range of services besides transportation and warehousing would always have an edge over others. xxxxxxxxxxxxxxxxxxxxx

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April 2013

Dr. Amrit Pandurangi Senior Director, Deloitte Touche

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ne parallel which needs to be stressed upon is the efforts of the goverment on energy efficiency as seen in last few years. They have been putting huge amount of focused effort, huge amount of money, very innovative methods, a full-fledged institutional arrangement, and a good set of people are backing this cause.

Bureau of Energy Efficiency is now a well established agency.

I firmly believe that something of that nature can be done for the logistics industry as well.

We can think of a Bureau of Logistics Efficiency where the industry and the government can jointly work in an integrated manner. xxxxxxxxxxxxxxxxxxxxx

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he small and medium players in this business who require massive modernization can’t go to banks and borrow at 14-15 percent. They don’t have the courage to take such risks and service such expensive loans.

Banks too would not be willing to lend them loans because they don’t look at this business too favourably. They mostly understand new companies and new assets. That’s where you can think of a modernization fund with slightly concessional assistance. This would require focused guidelines particularly to identify the eligible beneficiaries. xxxxxxxxxxxxxxxxxxxx overnment of India is spending $40 billion for modernizing cities, initiating reforms under

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JNNURM programme. This is one of the largest city reform programme not only in India but in the world. And what are they spending money on?

They are spending money on water supply, urban transport, urban roads, etc. They can easily spend some money on the development of logistics related facilities – truck terminals, logistics parks, etc. to decongest the cities. So straight away you could have a major source of funding.

Creation of truck terminals, bypasses around the city meant to benefit the cities in general terms would particularly be addressing the problems of the logistics industry. xxxxxxxxxxxxxxxxxxxxx

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July 2013

Harry Lagad

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oday, we see, countless scattered skeletons of major brand name companies, who, once dominated the world of consumer products, such as Home Appliances, Mobile Phones, Computers. The once glorified brand leaders who used to beat their chests with pride on their share of the market, today struggle to keep up with the late entrants who are capturing the hearts and the emotions of the consumers, who are enjoying the launch of a skew of new and better looking, better priced products and such is the fickle nature of these consumers, that they constantly keep looking out for more and more innovations and more and more better prices and services. xxxxxxxxxxxxxxxxxxxxx

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here is then the other Economy, “The First Buy Economy”, which simply means, that “if I have the money, I shall buy the product because I never had this product before”. Simply put, “I cannot wait, if I can afford it, I need it now”. And this is the second half of the global economy which you and I are seeing today in our part of the world, from China, to Russia to India and other growth markets of Asia. xxxxxxxxxxxxxxxxxxxx owever, I also foresee that there are those companies, who have taken the bolder steps to continue shaping and investing into their innovation arena, of engaging more and more competent people than the right people and out-sourcing

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and shedding off non core activities, leaving those to the service providers who know these areas better and focusing more and more in their ability to launch a product, run it to the maximum profitable life cycle and instantly kill the product and re-launch a brand new product, all the while, engaging the consumer at every stage of its life cycle!

Investments in emerging technologies such as RFID, 3D product designing and customised manufacturing are paying off rich dividends. Those are just a handful today and it is our leadership that is going to ensure that the handful slowly grow into multitudes as we open our mindsets and allow the liberation of our people and their ideas!! xxxxxxxxxxxxxxxxxxxxx

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September 2013

Hitendra Chaturvedi Founder & MD, Greendust

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n an era wherein e-tailing business is growing by leaps and bounds all across the globe, reverse supply chain has also become very critical.

One has to understand that in a holistic supply chain, the strength lies in the strength of the weakest link. And this is something leading manufacturers all over the world have realized which in turn has given a decisive push to the rise of the reverse supply chain business. Statistics tell the story. For every 100 products that are sold or pushed forward from manufactures to the consumers in the US, about 8-10 items come back to the manufacturers. xxxxxxxxxxxxxxxxxxxxx

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n today’s market scenario, products can be returned at the drop of a hat. Customers can return back for multiple reasons – transportation damage, accessories missing or even for the reason that they did not like the colour of the product once they receive it. That is they notice a discrepancy in the colour design of the product on the portal or any other promotional medium and what actually falls in their lap. Retailers too return for multiple reasons – they may send it back even for the reason like loose packaging. xxxxxxxxxxxxxxxxxxxx he growth in e-tailing is going to provide a big push to reverse supply chain in the country.

In the initial stages, some e-commerce firms had shown

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reluctance to outsource their logistics requirements. But that is not the case any more. They have realized that outsourcing both forward and returns create more value for them since managing logistics is not their core competence.

An interesting question I am often asked is: can we expect the global reverse supply chain specialists arriving in the country in the near run?

My feeling is they would come only when the players they cater to are allowed to set their shop in the country. If a Walmart comes, it will have a huge returns management challenge and it will bring large-scale specialists. xxxxxxxxxxxxxxxxxxxxx

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BIG DEBATE September 2012

“Everything comes at a price,” there goes an old saying. But in a market which is yet to evolve and show signs of maturity, isn’t it a difficult proposition for LSPs to convince their clients that better and advanced service can be provided at a higher cost? LT debated this moot point at a round table session organized in Mumbai. The panelists were: Sushil Rathi, VP (SCM), Mahindra Logistics; Rakesh Batra, Partner, Ernst & Young; Vasu Ramanujam, Secretary General, Service Chain Forum; Ganesh Iyer, National Sales Manager, Entercoms; and Ashutosh Mayank, Senior Associate, Lumis Partners.

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November 2012

This round table session was organized in association with leading industry chamber ASSOCHAM and the central point discussed was: do we need o live with cold chain deficiencies as a permanent evil?

The panelists were: Pawanexh Kohli, Chief Advisor, NCCD; Sanjay Sharma, MD, Global Agrisystem; B D Narang, Former Chairman, Oriental Bank of Commerce; and Ajay Chopra, MD, Competent Agri Solutions.

December 2012

Lack of quality manpower seems to be a major concern (often bordering on lamentation) for the logistics and supply chain industry. But do they care to understand the aspirations of the future brigade?

This was the core point of discussion organized in association with BIMTECH involving more than half a dozen students of retail and international business management streams of the institute.

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February 2014

Sustainable supply chain, no doubt, is the most coveted equation for practitioners. But what precisely is sustainable supply chain given the myriads of definitions floating around? To understand various dimensions of this concept and get a sense of its relevance for a marketplace like India, Logistics Times had organized a round table discussion at Indian Institute of Foreign Trade (IIFT), Delhi.

The panelists were: Dr. Nitin Seth, Professor, Supply Chain Management of IIFT; Suunil Dabral, Country Manager, SSI Schaefer and Vineet Mehrotra, MD, Fonty Supply Chain Solutions.

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EVENTS

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NCCD Workshop The National Centre for Cold Chain Development (NCCD) organized a national level workshop on 9th of May at India International Centre, New Delhi. The event was largely attended by nodal officers for cold chain development from different states. Some of the important speakers at the workshop were: D K Jain, Additional Secretary, Department of Agriculture; Sanjeev Chopra, Joint Secretary, MIDH; R K Tiwari, MD, National Horticulture Board and Pawanexh Kohli, Chief Advisor & CEO, NCCD.

LOGISTICS TIMES April 2014

RNI No. DELENG/2011/39329

Regd No.: DL(E)-20/5380/2014-16