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A Messy Affair

What makes freight road transportation an affair laden with truckloads of structural/procedural issues?The forthcoming book of transportation sector veteran Chittaranjan Dass closely examines...

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CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 5: Issue No.7 * November 2014 Raj Misra

Editor in Chief

rajmisra@logisticstimes.net Ritwik Sinha

Editor

ritwik@logisticstimes.net

Sales & Marketing

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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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A Messy Affair Edit Note News Brief In the news Perspective Highway Notes

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PERSPECTIVE High Logistics Cost

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COLD CHAIN Food Security Breach

EVENTS CSR Initiatives

EDIT NOTE

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Anatomy of a messy business My association with logistics industry is nearly six years old now and while I have noticed a fair amount of positive churnings in terms of business related development, one nagging point for me personally has been the absence of quality books which tend to examine the oddities in this business. Simply put, the recorded guides which can take you beyond the realm of perception. There aren’t too many well-known authors devoted to the task of dissecting various nuances of the business as is the case with other growing streams.

So against this backdrop, when I was told that transportation sector veteran and one of the most respected figures of the fraternity Chittranjan Dass is releasing a book titled ‘Dass Speak,’ I was naturally quite thrilled. A glance at the base manuscript and it was quite clear that it is a tome deserved to be treated as a treasure. This book is basically the compilation of articles/essays which Dass, 80 plus, has written at different stages during his five decades long association (and the association still continues) with the transportation business. And given his experience, the book ultimately presents a valuable insight into the teething issues in quite a holistic way. ‘Dass Speak’ comprises over 70 chapters – each dealing with some basic issues which on a cumulative basis make our freight road operations anything but a seamless affair. Flip through the cover feature which carries striking excerpts from some chapters of this soon-to-be-released book…

Among other highlights of this edition, we present the ‘Global Connectedness Index’ report for 2014 which was released by DHL recently. The report emphasizes that there has been a visible momentum picking in the process of globalization as reflected in turnaround in global trade in last one year. However, the major push has come from the emerging countries and not the developed ones. And this is a major cause of concern. For the medium run, the biggest threat, however, could be “policy fumbles or protectionist interventions rather than macro-economic fundamentals.”

We come across this argument every now and then – in all conferences and seminars. Our logistics cost to GDP is 13 percent – one of the highest in the world and root cause of many issues in the production and distribution process which ultimately results in our products becoming uncompetitive. But is it a right assumption? How have we reached to this number? In an interesting perspective piece in this edition, Mansingh Jaswal, a senior member of the logistics fraternity presents counter point to this basic argument.

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

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Trying to Make India Power-Surplus by 2019 greater focus on renewable energy sources.

The minister highlighted that the government was sorting out the coal issue by passing an ordinance taking into account the judgement passed by the Supreme Court of India and he was hopeful that private sector participation in the coal sector would once again pick up. In addition, measures were being taken to double the output of coal from Coal India over the next five years. This will help enhance the utilization of existing thermal power plants.

He stated that renewable sources of energy are one of the thrust areas of the government. The government was taking measures to ensure that solar power generation would touch 100 GW by 2019.

The minister further stated that efforts were According to Piyush Goyal, Minister of State for Power, Coal and Renewable Energy the Government is working towards making India a power-surplus country by 2019. He stated that ensuring the availability of power on a 24 x 7 basis is one of the most pressing challenges that the government is facing today. The Minister was addressing a session on “Lighting India� at the India Economic Summit which was recently organized by the World Economic Forum and the Confederation of Indian Industry in New Delhi.

The minister pointed out that 53 million homes in the country were not yet electrified. There were still many offices and factories operating on diesel gensets. The government had made it a priority to find ways of ensuring that power reaches these consumers. He expected that the demand for power in the country would double in the next five years.

To solve these issues, the government was pursuing a two-pronged strategy of improving the utilization of existing assets by improving plant load factor and freeing up stranded assets and improving access to fuel supplies. The government was also improving the electricity mix with LOGISTICS TIMES November 2014

on to improve the bankability of projects in the power sector and that the government was planning to invest US$ 250 billion in the power sector over the next five years.

Gadkari lays foundation stone for Adani Ennore Container Terminal Minister for Transport Nitin Gadkari laid the foundation stone for Adani group’s container terminal at Ennore port early this month. The terminal, which will be constructed in two phases, is expected to be commissioned in March 2016.

On completion, it will be a 730 meter terminal, with 31.5 hectares of back area, and capable of handling 1.4 million TEUs annually. It will be South India’s first e-terminal and all-electric facility, offering paperless operations and direct linkage with CFS and lines through web access and automatic gates, allowing seamless transit from CFS to the container yard.

Speaking on the occasion, Gautam Adani, Chairman, Adani Group, said, “This new container terminal will be a world-class facility, comprising of the latest technology and equipment, and highly motivated workforce. The resultant operational efficiency is sure to provide great value to the southern region of India.”

This world-class terminal will initially have four units of 65 tonne capacity Post Panamax Twin Lift Quay Cranes, with three units of 65 tonne capacity Super Post Panamax Twin Lift Quay Cranes added in the second phase. The yard equipment will initially include twelve 41 tonne lift rubber tyred container gantry cranes, which will accommodate seven rows of containers, with nine more cranes added in the second phase.

Adani Ports & SEZ had signed the concession agreement to set up this container terminal in March 2014.

By successfully commissioning the terminal in March 2016, the company will reiterate its ability to execute large scale infrastructure projects in record time, with world-class build quality and exceptional operational efficiency.

LOGISTICS TIMES November 2014

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India included in ‘International First’ Service Market

FedEx is expanding solutions for global customers who need their critical deliveries to arrive as early as the start of the next business day. According to a company release, the company is broadening the FedEx ‘International First’ early delivery service, increasing the

number of origin markets. The new markets include: Austria, Bahrain, Belize, Bolivia, China, Czech Republic, Denmark, Ecuador, El Salvador, Finland, French Guiana, Guyana, Honduras, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Nicaragua, Norway, Paraguay, Peru, Philippines, Portugal, Poland, Singapore, Suriname, Sweden, Thailand and UAE. This expansion brings the total number of origin markets to 97, and means that customers can now use FedEx International First to ship packages from the above countries to any of the existing International First destination markets.

Depending on origin and destination, FedEx International First shipments arrive within one to three business days, often at the start of the business day.

The service is most often used for business documents, electronic and high tech equipment, medical devices, clinical trials and gear for the entertainment industry-shipments that require delivery on a tight deadline.

“This latest ‘International First’ expansion highlights the FedEx commitment to serve our customers who need to ship critical, time-sensitive material. The expansion also aligns with our global growth strategy, and the need to stay ahead of customer demand,” said Raj Subramaniam, Executive Vice President, Global Strategy, Communications and Marketing, FedEx Services.

Gujarat Pipavav Port posts good quarterly results Gujarat Pipavav Port (APM Terminals Pipavav), one of western India’s fastest growing gateway ports, recently reported its positive financial numbers for the third quarter ended 30th September 2014, owing to good container cargo volumes and steady pick-up in bulk cargo volumes.

Income for the third quarter ended 30th September 2014 stood at INR 1,701 million. The company has reported a 19 percent increase in container cargo, 3 percent in bulk cargo while its rail volume shot up by 21 percent during the quarter.

Commenting on the quarterly results APM Terminals Pipavav Managing Director, Prakash Tulsiani said: “The second half of the year is usually a strong period for us due to season uptake. We witnessed a spurt in bulk cargo volumes, while container throughput was maintained owing to surge in imports LOGISTICS TIMES November 2014

during the quarter. Double-stack rail capability continues to deliver value proposition to our clients.”

The commencement of liquid cargo handling on a fullfledged scale saw a good traction during its first quarter of its operation. “We intend to deliver the best of our services in this segment as well”, he added.

TCI turnover increases by 10.38 % Transport Corporation of India has announced a growth of 10.38 percent in its revenue during the first half of the year. EBIDTA for H1 stands at 8.19 % as against 7.20 % in corresponding period last year.

Revenue have grown by 12.6% during second quarter to Rs. 562 Cr Vs Rs. 500 Cr during corresponding previous year whereas net profits has grown by 63% during this quarter to Rs. 21.37 Cr from Rs. 13.09 Cr in corresponding previous year.

Commenting on the H1 results, Vineet Agarwal, Managing Director, TCI said, “Our positive H1

results can be attributed to TCI’s continuous and persistent focus on value growth verticals like retail, auto, e-commerce, pharma, etc through our Freight, XPS and Supply Chain businesses. We have seen growth in both B2B and B2C parts of the business with our diversified product offering for large scale warehousing, e-commerce fulfilment and other value added services like kitting, packaging, etc.” He further added, “TCI has also seen traction in demand for multi-modal Rail & Coastal solutions from its customers.”

LOGISTICS TIMES November 2014

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New Head for Air Freight Capacity Management DHL Global Forwarding, the air and ocean freight specialist within Deutsche Post DHL, recently appointed Vishal Kashyap as Head – Air Freight Capacity Management, India.

Vishal has over 14 years of rich experience in the Airfreight industry, having worked with leading multi-national logistics organizations.

His expertise includes formulation and implementation of business strategies.

A graduate in Economics and French from Lucknow University, Vishal holds a Post Graduate Diploma in Business Management from the Institute of Management Studies, Ghaziabad. In his new role with DHL Global Forwarding, Vishal will be responsible for execution of the Airfreight procurement strategy in the country, along with managing and driving performance of the Capacity Management Teams.

GLOBAL Single Air Waybill American Airlines and US Airways have reached a significant milestone in their merger as recently they announced combining their cargo divisions. The new entity brings in more than $800 million each year and moves more than one billion pounds of freight and mail annually.

According to a company release, the cargo teams have successfully combined 154 facilities and harmonized products since December 2013, making it the first operations division at the airline to be fully integrated. Jim Butler, president of American Airlines Cargo, commented . “We have brought together the expertise and solutions that customers have come to rely on and the teams that are focused on restoring American Airlines as the greatest airline in the world.

As of today, all booking channels are open and cargo customers have access to flights across the combined LOGISTICS TIMES November 2014

network of the world’s largest airline.”

“Becoming one cargo organization less than a year after we legally closed our merger is a tremendous achievement,” said Robert Isom, chief operating officer of American Airlines.

CEVA and L’Oréal extend relationship in Indonesia

CEVA Logistics recently announced a contract renewal and expanded business with L’Oréal in Indonesia, the world’s leading beauty brand.

CEVA’s partnership with L’Oréal started more than 3 years ago when the company took on the warehouse management of L’Oréal’s distribution centers in Bekasi, providing warehousing and distribution services as well as value added services. Under the terms of this renewed contract, CEVA will handle the warehouse management, VAS, traffic management and reverse logistics for L’Oréal’s range of beauty products from make-up to hair care and skin care.

During the three-year relationship, CEVA consolidated

the distribution centers under one roof, increasing the resource efficiency and optimizing space utilization to cater to L’Oréal’s growth plans.

CEVA’s focus on operational capabilities and continuous improvement are instrumental in keeping up with the demands of L’Oréal’s business growth over the past three years.

Distribution is a strategic differentiator for the L’Oréal group. It is the only cosmetics company that is present in all distribution channels: from hair salons and beauty institutes to traditional shops, and from mass retail to selective channels, making the L’Oréal brands accessible to consumers across the country.

Troy Shortell, CEVA’s EVP for East Asia commented: “I am delighted that CEVA is given the opportunity to mutually grow and support L’Oréal in their supply chain needs with efficient, cost effective solutions as they expand in the market. Our goal is to continuously improve our performance and deliver logistics excellence to the L’Oréal business as their long term strategic partner.”

E-Freight Champion Joins TIACA Board John DeBenedette, M a n a g i n g Director, WIN, has joined the TIACA Board.

John, who has 25 years of experience in the forwarding sector, will work with the TIACA team to push for wider adoption of e-freight and to support the Association’s membership drive.

“TIACA achieves a level of intimacy, vibrancy, and action-orientation to move the ball down the field that is unique and valuable in my experience,” said John.

“It draws a diverse and committed group of industry leaders to all of its meetings, committees, and

workshops, working in concert on topics in common with other industry groups.

“I look forward to contributing as a member of the Board.”

John has held general management, sales, marketing, and technology leadership positions, including seven years with DB Schenker and 11 years building the INTTRA platform where over 20% of global container trade is transacted electronically every week.

His current project, WIN, is a freight industry platform specifically developed for independent forwarders to collaborate electronically with each other, and with air, sea, and freight carriers.

“We are delighted to have John’s expertise to strengthen the TIACA Board,” said Oliver Evans, Chairman, TIACA. “We look forward to working with him on the many exciting projects TIACA has put in place to drive our Association forward for its members.”

LOGISTICS TIMES November 2014

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IN THE NEWS

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Mahindra-IVC form 2x2 Mahindra Logistics recently announced forging a partnership with Indian Vehicle Carriers, to be branded as 2x2 Logistics, aimed at launching assetized operations in outbound automotive logistics.

Mahindra Logistics will have a majority stake in ‘2x2 Logistics’, the new entity, which will initially invest in 100 specially designed car carriers to serve automobile and two-wheeler OEMs (Original Equipment Manufacturers). This partnership will allow MLL and IVC to further develop and expand their transportation networks, linking the North, West, South and East clusters of production and consumption of automobiles.

“This is the first time we will be significantly assetizing our business by investing in 100 car carriers to begin with, and then ramping up capacity. It will help strengthen our operating capabilities in automotive logistics, our largest target industry vertical, with a clear focus on technology, quality and corporate governance. “Our objective at Mahindra Partners is to nurture and Forming such partnerships with our business associates grow the businesses of tomorrow. We follow a unique will be an important part of our growth and success.” model of fostering innovation, creative business models Says Pirojshaw Sarkari, CEO, Mahindra Logistics.

“As OEMs expand their product Salient features of 2x2 lines in India, we see a significant • MLL tohavemajority stake in the new company -2x2 Logistics potential for car carriers which -initially investing in100 car carriers to serve automobile are specially designed to meet a and two-wheeler OEMs. variety of needs, both in terms • The purpose of the partnership is to have assetized of dimensions of the vehicles being carried as well as special operations in outbound automotive logistics, offering handling requirements. We will OEMs global standards of service and technology. have a very specific focus on design • The partnership will help MLL strengthen its pan India innovation in car carriers in 2x2 network, coupled with innovative car carrier designs.

Logistics. We are already one of • Mumbai-based IVC is one of the leading vehicle carrier the largest automotive logistics service providers in India and solution providers to the automobile industry in India, with this joint venture will allow us to over three decades of experience. directly operate assets and serve our customers with a greater degree of predictability and control,” explains Sushil Rathi, Senior VP, Mahindra Logistics. and mutually beneficial partnerships. 2x2 Logistics will “This is a proud moment for all of us as this JV has allow MLL to build a significant asset base and enhance the potential to change the landscape of theIndian its pan-India transportation network, leading us that automobile logistics industry. Having been in the much closer to an IPO by 2017.” says Parag Shah, automotive logistics industry for more than 30 years, Managing Partner, Mahindra Partners.

I can say without doubt that this new entity will have MLL has been aggressively expanding its business with all the capabilities to become a one stop solution for a focus on multiple industry verticals. In August, MLL outbound logistics. We hope to leverage each other’s acquired a majority stake in Lords Freight (India) Pvt. strengths and offer the highest level of quality and Ltd soon after private equity (PE) firm Kedaara Capital service to our customers.” says KS Singhal,Founder & bought a significant minority stake for Rs200 crore in Owner, Indian Vehicle Carriers. the logistics company.

LOGISTICS TIMES November 2014

E-retail industry’s logistics needs new dynamics The Indian e-retail industry has gained significant limelight during the past few months with large scale investments and promotional activities to capture the consumer attention as well as the shopping revenues. The festival season of Dussera and Diwali witnessed the highest growth and sales both in terms of e-retail volumes and revenues in the country, till date.

However, this unprecedented growth has also brought into limelight the lack of supporting logistics infrastructure and capabilities of the e-retailers and their logistics service providers (LSPs) to fulfill the high volume of shipments, rapid transactions and timely deliveries expected by the customers in this business.

Both the e-retailers and their LSPs need to have a very well integrated (seamless) communication system and technology infrastructure along with the physical logistics infrastructure to deal with this dynamic nature of the business.

Unlike a traditional or off-line retail distribution chain of a product in which the customer can purchase only a limited number of products that are already physically present at the sale point, the online customer can seek to purchase a product listed by a vendor from any location across the country. Moreover, the purchased product has to be delivered within the committed period that calls for efficient routing of the consignment from seller to customer and optimal mix of multiple transport modes to ensure the timely delivery. Further, the offline customer purchases the product only after experiencing the product.

So there is very little scope for returns or exchange, unlike in case

Srinath Manda Transportation & Logistics Practice, Frost & Sullivan

captive units of the e-retailers or small homegrown e-retail focused LSPs and the domestic express service providers to an extent.

Leading integrated domestic LSPs and leading multi-national logistics companies operating in the country still have not ventured/focused on this opportunity in a significant way. Further, the most leading LSPs do not know/understand the dynamic needs of the e-retail industry, and also may not have the optimal infrastructure and network

of online customers. This calls for having an extremely efficient reverse logistics network and capabilities.

The controversy around stockouts and non-fulfillment of orders during FlipKart’s ‘Billion Day’ sale was largely due to its unpreparedness in terms of logistics capabilities and infrastructure.

Similar issues have been reported frequently about other e-retailers too. All this calls for engaging large scale LSPs with nation-wide (and if possible world-wide) operational network and capabilities to handle diverse product range and shipment sizes. As of now the e-retail logistics business in the country is largely fulfilled by

presence to fulfill this industry’s needs.

Frost & Sullivan believes that e-retailers need to adopt best practices in sourcing and distribution from established consumer product industries and engage the leading LSPs with proven expertise in such industries and wide-spread operational networks, so as to be able to deal with future needs.

Established leading LSPs also need to gain understanding of this industry’s needs and develop specialist divisions to tap the immense opportunity that lies ahead, considering the various estimates predicting doubled or tripled volumes and sales within the next few years.

LOGISTICS TIMES November 2014

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PERSPECTIVE

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Logistics cost as 13% of GDP in India – Meaning, Interpretation and Basis Indian logistics industry is said to be 13% of GDP. One can hear this figure in almost every intellectual discussion related to logistics and infrastructure.

Many are even unaware of where this figure comes from, this gets actively cited at various industry discussions, conferences and white papers and is interpreted differently by various ‘experts’. Poor state of logistics in the country is a general inference after this citation. The confusion compounds when this gets linked to the transaction cost in logistics. So much so that one would find an executive in a price negotiation discussion citing this figure as if this is the basis of every transactional cost in logistics. Many experts express their concerns over this cost being high in comparison to other countries and try discussing solutions by taking this as a benchmark cost.

But is that a correct figure and if at all, is that a right interpretation of this cost?

Lets us look at constitution of GDP where agriculture contributes 18.1 percent to GDP, industry 26.3 percent and services 55.6 percent. This tells us about the constitution of GDP where each individual sectors assumes a size as a share of GDP. Does industry at 26.3 percent of GDP, tells up about the state of industry in India? It primarily tells us about the size of industrial sector in our country.

Incidentally, logistics encompasses all these sectors and if carved out as a separate constituent it’ll also show up as a percentage in the GDP pie. That’s how the existing academic research work in logistics sector tends to aggregate total logistics cost and express them relative to some economic baseline, such as GDP. But that gives an idea of only the size of logistics industry in the country.

And size does not automatically relate to performance i.e. bigger or smaller is better, etc. The case of logistics adds LOGISTICS TIMES November 2014

Mansingh Jaswal Director & CEO, Genex Logistics

to the confusion due to that fact that unlike many other sectors logistics assumes two roles in trade policy agenda - one is the trade in services of which logistics is considered a separate cluster for discussions and secondly trade facilitation where logistics is assumed to be facilitating the trade.

While the first represents size of the sector and can be seen as percentage of GDP but does not necessarily tells anything about its performance and hence its interpretation with respect to

trade facilitation may not be correct.

Now, lets discuss about the composition of the logistics cost deduced as 13 percent of GDP how did one arrive at this cost? With logistics gaining importance around the globe, different studies have been conducted in different parts of world to establish a comparative number to it.

The methodology to deduce this figure has gone through a kind of evolution.

From a trade research point of view, the logistics costs can be measured or proxied through various approaches viz, as a %age of total firm cost, as a %age of GDP and using performance variable such as World Bank’s LPI. Regardless of which approach is taken to measurement, a key requirement for trade research focusing on logistics is the need for comparable data across a variety of countries and time periods.

For most of the studies, so far, the data source used is either National Accounts data used by OECD member countries (ISIC Rev. 3 classification) or Input-Output data used by non OECD countries. The issue with these data sets is that industry classification does not consider logistics as a separate sector.

Thus the building blocks which go into making logistics cost within these data sets are proxied. So many proxies need

For most of the studies, so far, the data source used is either National Accounts data used by OECD member countries (ISIC Rev. 3 classification) or InputOutput data used by non OECD countries.

The issue with these data sets is that industry classification does not consider logistics as a separate sector.

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to be made in the data sets to deduce logistics cost and as a result, logistics cost has been defined in three scales in these data sets namely narrow, medium and broad. The narrow definition takes into account very specific segments related to logistics captured in data sets whereas the broad definition takes into account the ancillary segments as well in addition. India being a non OECD country, the data taken to deduce the logistics cost is based on Input-Output data of 2003-04 and the logistics sector value added as a percentage of GDP for India was calculated at 6.42 percent as per ‘narrow’ definition and 18.42 percent as a ‘broad’ definition.

The big gap in numbers is confusing and indicates that there is a lot that has been included in the broader definition of logistics with respect to data. And it is quite possible that lots of undesired data may have been included due to the structure of the data itself. Other leading researchers, in a paper published in 1999, computed the logistics cost for India and expressed it at 12.9 percent of GDP which is almost average of the values deduced from narrow, medium and broad definition of logistics as deduced from Input-Output data. So, this seems to be the basis of 13 percent logistics cost. Though this number 13 percent (12.9 percent) is even disputed in academic circles as it seems to have included data on passengers as well and considering that India is a populous country, the passenger movement expenditure in India would be substantial hence the dispute seemed significant.

Few points emerge from this:

X The number so far cited as percentage of GDP has lots of questions marks as the datasets used to deduce the number has inherent structural problems.

X The number which appears as a percentage of GDP is representative of the size of the sector, may assume relevance from a broader policy perspective but may not have much application to

India being a non OECD country, the data taken to deduce the logistics cost is based on Input-Output data of 2003-04 and the logistics sector value added as a percentage of GDP for India was calculated at 6.42 percent as per ‘narrow’ definition and 18.42 percent as a ‘broad’ definition. trade practitioners.

X The number certainly is not to be seen as representative of the transactional costs. Transactional cost would vary from segment to segment, from industry to industry and from company to company.

X This also does not mean that logistics cost in India is high or low, or logistics in India is efficient or not. This only points out that without identifying the micro issue of inefficiency, we may end up (largely, we actually do) employing solutions for issues which are not

there and leave the concurrent issue unresolved thereby damaging the supply chain further.

X A bigger number for logistics cost as a percentage of GDP is generally seen as an opportunity by the investors community largely with the perception that transactional costs exists at this level and can be brought down substantially.

However, the opportunity is with respect to the size of the sector and exists in business models or macro infrastructural platform and not in transactions!

LOGISTICS TIMES November 2014

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Global Connectedness Index 2014

DHL recently released its Global Connectedness Index which analyses the state of globalisation.

This year's index earmarks some recovery in the arena of global trade as the key parameters of the report indicate. The visible green shoots in the global trade turnaround has been particularly contributed by the emerging economies. Here is the synopsis of the report: The latest report shows that global connectedness, measured by cross-border flows of trade, capital, information and people, has recovered most of its losses incurred during the financial crisis.

Especially the depth of international interactions – the proportion of interactions that cross national borders – gained momentum in 2013 after its recovery had stalled in the previous year.

Nonetheless, trade depth, as a distinct dimension of globalization, continues to stagnate and the overall level of global connectedness remains quite limited, implying that there could be gains of trillions of US dollars if boosted in future years.

“In the aftermath of the financial LOGISTICS TIMES November 2014

crisis, globalization has increasingly come under pressure and international trade negotiations face growing resistance,” said Frank Appel, CEO, Deutsche Post DHL. “In this environment

of uncertainty, the DHL Global Connectedness Index offers a comprehensive, fact-based understanding of globalization and demonstrates the huge potential for countries to further increase their connectedness. I am convinced that

a prosperous world needs more, not less integration.”

The DHL Global Connectedness Index 2014 documents the substantial shift of economic activity to emerging economies that is pushing the world’s economic center of gravity eastward.

Emerging countries are now involved in the majority of international interactions whereas before 2010, the majority of international flows were from one advanced economy to another.

Notably, the 10 countries where global connectedness increased the most from 2011 to 2013 are all emerging economies, with Burundi, Mozambique and Jamaica experiencing the largest gains.

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Advanced economies have not kept up with this shift. This suggests that they may be missing out on growth opportunities in emerging markets. “Counteracting this trend would require more companies in advanced economies to boost their capacity to tap into faraway growth,” said Professor Pankaj Ghemawat, co-author of the report and internationally acclaimed globalization expert and business strategist. “This is particularly evident in light of the fact that a decades-long trend toward trade regionalization has gone into reverse.” In fact, the GCI 2014 reveals that every type of trade, capital, information and people flow measured has expanded over greater distances in 2013 than in 2005, the report's baseline year.

The 2014 Index Results

In addition to a comprehensive overview on the state of globalization, the 2014 report also provides detailed insights into the connectedness of individual countries and regions. The Netherlands retained its top rank as the world’s most connected country and Europe is once again the world’s most connected region. All but

Emerging economies are reshaping global connectedness and are now involved in the majority of international interactions.

The 10 countries where global connectedness increased the most from 2011 to 2013 are all emerging economies.

LOGISTICS TIMES November 2014

10 Key Take-Aways 1 Global connectedness started to deepen again in 2013 after its recovery stalled in 2012.Nonetheless, trade growth is sluggish, capital flows have yet to recover to pre-crisis levels, and the overall depth of global connectedness remains quite limited - lower than many people think - implying trillions of dollars in potential gains from boosting it.

2 Advanced economies have not kept up with the big shift of economic activity to emerging economies. This leads to declining breadth of global connectedness. Counteracting this trend would require more companies in advanced economies to boost their capacity to tap into faraway growth.

3 Emerging economies are reshaping global connectedness and are now involved in the majority of international interactions.The 10 countries where global connectedness increased the most from 2011 to 2013 are all emerging economies. However, in terms of their integration into international capital, information, and people flows, emerging economies still lag far behind.

4 A decades-long trend toward trade regionalization has gone into reverse.In fact, every type of trade, capital, information, and people flow measured on the DHL Global Connectedness Index stretched out over greater distances in 2013 than in 2005.

5 Europe is the world’s most globally connected region,with 9 of the 10 most connected countries. European countries average the highest scores with regard to trade and people flows, and North America is the leading region on capital and information flows.

6 Southeast Asian economies stand out for their high depth scores relative to what one would expect given structural characteristicssuch as their size and level of economic development. The top 5 outperformers were Malaysia, Vietnam, Cambodia, Hong Kong SAR (China), and Singapore.

7 The largest average increases in global connectedness from 2011 to 2013 were observed in countries in South and Central America and the Caribbean. Eight of the countrieswith the largest increases were in that region or in Sub-Saharan Africa. Middle East andNorth Africa was the only region to suffer a large drop in its connectedness.

8 The directionality of flows provides important guidance to policymakers in both the public and the private spheres. Its relevance is enhanced by the fact that imbalances in the majority of international flows have grown over time.

9 Looking ahead, the biggest threats to globalization may come from policy fumbles or protectionist interventions rather than macroeconomic fundamentals. Even after the IMF’s latest downward revision, the world economy is still projected to grow faster from 2014 to 2019 than over any of the past three decades.

10 Which globalization index you use matters.The DHL Global Connectedness Index is the only one of the established indexes that registers a big post-crisis drop-off in the overall level of globalization.

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one of the top 10 most globalized countries in the world are located in Europe, with Singapore as the one standout.

North America is the second most globally connected region and leads on the capital and information pillars, with the United States as the most connected country in the Americas. Overall the US is ranked 23rd place out of the 140 countries measured by the GCI. The largest average increases in global connectedness from 2011 to 2013 were observed in countries in South and Central America and the Caribbean. Middle East and North Africa was the only region to experience a significant decline in connectedness.

Measuring Globalization in 3-D

The report was commissioned

by DHL and prepared by Pankaj Ghemawat (Professor at New York University Stern School of Business and at IESE Business School in Barcelona, Spain) together with Steven A. Altman (Senior Research

Looking ahead, the biggest threats to globalization may come from policy fumbles or protectionist interventions rather than macro-economic fundamentals.Even after the IMF’s latest downward revision, the world economy is still projected to grow faster from 2014 to 2019 than over any of the past three decades.

Associate and Lecturer in Strategic Management at IESE Business School).

Unlike other established globalization indices, the GCI analyzes globalization in 3-D: It looks at the depth of countries' cross-border interactions, their directionality (outward flows versus inward flows) as well as their geographic distribution (breadth).

“The GCI, with its unique 3-D approach, is the only one of the globalization indices to register what many observers regard as the

biggest drop-off in the intensity of globalization during the financial crisis,” explains Professor Ghemawat. “That should boost confidence in using it as the basis for diagnosis and decision-making.”

The 2014 DHL Global Connectedness Index draws on more than 1 million data points from international flows covering trade, capital, information and people accumulated over the last nine years.

The ranking encompasses 99% of the world’s GDP and 95% of the world’s population.

LOGISTICS TIMES November 2014

COVER STORY

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A Messy Affair!

Transportation sector veteran Chittranjan Dass’ soonto-be-released book “Dass Speak” examines the critical issues that define road freight movement in the country.

A collection of articles and essays which Das, 84, has penned over his long association of five decades with road transportation, the book clearly points out the procedural and structural impediments which have kept road transportation sector plagued (almost permanently) with a high degree of inefficiency. And this has adversely impacted all stakeholders - most importantly, the national economy. Here are some striking excerpts from the book which has over 70 chapters: LOGISTICS TIMES November 2014

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Chapter:

It should be discomforting to recall Leyyo, Deyyo, Chalo: Law of the that having paid for all legitimate demands of the Centre as well the land for Truck Operations A wide network of officials of various States, the truck owners of the departments, besides the Enforcement Officials country, in order to keep their of Transport Department of States, is spread all vehicle moving on highways, are over the national road network. Their job is NOT made to pay bribe to the extent TO LET GOODS CARRIAGES PROCEED of over 25,000 crores of rupees UNIMPEDED. Truly speaking there are not annually.

as many trees by the side of our highways, as there are the protruding hands of bribe seekers.

Shamefacedly the states even fix for its officials targets of money to be recovered from truck owners. Dare to question these minions of state authorities about what they were doing, pat comes their scornful response dont worry! what they were collecting goes upto the top.

Interestingly in the year 2010 the Central Government made an intervention whereby the existing National Permit Scheme was revised with the object of providing goods carriages HASSLEFREE movement on inter-State routes.

RTI enquiry over two years later reveals that Central Government has yet made no study to find as to up to what extent the present All India Permit Scheme has made inter-State movement of trucks hassle-free. It was a lapse or it was deliberate could be anybodys guess.

It should be discomforting to recall that having paid for all legitimate demands of the Centre as well the States, the truck owners of the country, in order to keep their vehicle moving on highways, are made to pay bribe to the extent of over 25,000 crores of rupees annually. This is according to the study made by Transparency International, a few years ago.

It is sad but true that for operating goods carriages efficiently and optimally there is no licence / protection under the Motor Vehicles Act or Rules. Nor there is any sense of guilt or remorse

any where at the Centre or in the States on the universally known Mantra of operating goods carriages in our country, namely Leyyo Deyyo Chalo. ..

Chapter: High Fines Vs Earnest Enforcement Loading of trucks in excess of the limit prescribed under law is undesirable on various counts. One of these is that it damages roads, the costly national assets, many fold. Official estimates are that a truck carrying 10% excess load damages the road not pro-rata but by 46%. Excess load of 50% shall cause damage to the extent of 406 % and damage shall be 1500 % in case the truck is loaded by 100%.

Till 1988, the fine for overloading was a couple of hundred rupees. After paying this fine the vehicles could move ahead as if it had become harmless. As far back as that the vehicle owners too were struck by this hallucination and yielded to increase in fine, as steep as Rs.2,000, for committing the offence and additional Rs.1,000 for each tonne of excess load or part thereof.

The consequence was truly disastrous. Having settled for bribe lesser than fine prescribed, the enforcement officials indulged in overlooking the other more stringent provision introduced at the same time i.e. not allowing the vehicle

LOGISTICS TIMES November 2014

COVER FEATURE

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Author’s Profile Chittranjan Dass, 84, is clearly one of the most respected figures of Indian road transport business having viewed the changes in the segment from close quarters for a long time. His association with road transport industry is over five decades old now and he has been a leading figure in raising the concerns of this ignored industry within the government circles as well as in the private sector.

Currently, he is Director, SAARC Centre for Transport Studies; Secretary General, ACOGOA; and Editor of SAARC Journal of Transport (EnglishHindi Bilingual monthly). He was Secretary General of All India Motor Transport Congress – an apex organization of goods road transport operators between 19771998. He had also represented International Road Union (IRU-Geneva) in the Asian Productivity Organization’s Symposium on Transport Efficiency (Trucking Operations), held in New Delhi (September, 1977).

For his deep insight in the road transportation issues and thought leadership, Chittranjan Dass has been nominated as member of several prestigious committees in the past which includes - Planning Commission Working Group for Road Transport for Eleventh Plan 2007-2012; National Road Safety Policy Committee (2007); National Road Transport Policy Committee (2007); Government of India delegation to International Conference on Road Transport, 2004 at Yakohama (Japan); Government of India’s Steering Committee on Trucking Operation in India (1999); Advisory Committee of National Highway Authority of India (NHAI); National Road Safety Council, Union Ministry of Surface Transport, etc.

LOGISTICS TIMES November 2014

It is official that over 80% of the accidents occur on highways due to driver’s fault. It is a moot point how the driver was not responsible for the remaining 18% or 20% cases? to proceed merely after collecting the fine but without the gross vehicle weight (GVW) being brought within prescribed limit…

Chapter: Drivers Rest Deficit : Road Safety Concerns Among the identified reasons for the increasing number of accidents on highways, DRIVERS FATIGUE is very significant one. It is in recognition of this that the Motor Vehicles Act, 1988, provides under Section 135 (1) (b) and 1 (c) as follows: The State Government, by notification in Official Gazette makes one or more schemes to provide for (a) an in-depth study on causes and analysis of motor vehicle accidents. (b) Wayside Amenities on Highways, and (c) Truck parking complexes along highways.

The above provisions were introduced in 1988.

Though 23 years have gone by, yet no State Government has given a thought to this very serious issue. This callous absence of wayside amenities on State Highways is not for want of FUNDS. It is for want of a CARING CONCERN. Centres own record of creating wayside amenities on national highways was equally dismal. It is no better either since setting up of the National Highway Authority of India undertaking National Highways Development Projects. Seemingly the Centre is unclear on the needs of amenities on

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highways by owners of non-transport vehicles and the facilities required by drivers of trucks operating on long hauls...

Chapter: A Dangerous Trend A number of common carriers, for transporting their cargo, do not exclusively rely on goods carriages. They have active tie-up with railways as well. For them perhaps, the shift in preference by consignors may not be alarming. For some, it may be a God send even.

At the other end, the truckers, thanks to dynamics of road transport system, are in an unenviable position. They are not able to assert for cost-related hire rates. Thus shift in loyalty of FMCG and others to other mode of transport is a dangerous trend for the truck owners.

Compatibility deficit between common carriers and truckers compounds the vulnerability of truck owners all the more...

Chapter: Convince or get convinced Convince or get convinced worked with IRDA as it should. Third Party Motor Insurance has remained a bone of contention for a fairly longtime. The related policy in the Motor Vehicles Act, 1988, due to its various unrealistic provisions, to repeat the terminology used by them, is bleeding the insurance companies. Indeed, more than them, it is the insureds, being truly vulnerable, were the worst sufferers.

The insurance companies, all of them public sector undertakings, developed a vested interest in every thing that was illogical or irrational in the Third Party Motor Insurance Policy, which were at the root of escalating claims outgo. To cover this, the easiest way out was to frequently increase

The insurance companies, all of them public sector undertakings, developed a vested interest in every thing that was illogical or irrational in the Third Party Motor Insurance Policy, which were at the root of escalating claims outgo. the rate of premium whereas the commercial vehicle owners, both of cargo and passenger, bore the brunt. They were sandwitched between the mandatory provision of being insured for third party liability and the anarchy of the Public Sector Insurance Companies. The administrative ministry, at the Centre, watching the traumatic situation as mute observers.‌

Chapter: Is Golden Quadrilateral Really Complete ?

Constructing roads is fine, but more important is to prevent their premature destruction. Free movement of excessively overloaded trucks on National Highways does precisely that. On the entire stretch of 5846 kilometre of Golden Quadrilateral, there is no tangible effective arrangement for preventing operation of overloaded vehicles.

On the contrary the National Highways Rules provide that the concessionaire could charge from overloaded vehicles Toll at the rate applicable to the next higher category of vehicles.This, notwithstanding the fact that MoRT&H was among the respondents in the Supreme Court case of Mrs. Parmajit Bhasin decided in 2005, stating that allowing overloaded vehicle to move after merely charging fine, was amounting to LOGISTICS TIMES November 2014

COVER FEATURE

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committing a fresh offence.

Bereft of all these pre-requisites, it could be right to say that roads have been layed. But to say that Golden Quadrilateral is now complete is a serious moot point…

Chapter: New NPS, an Unintelligent Joke!

This growing significance of movement of cargo by road was duly appreciated by the Union Ministry of Road Transport and it deserves to be complimented for having dispelled the resistance by railways and reluctance of the States to the concept of inter- State movement of goods carriages. Thus National Permit Scheme (NPS) became reality but not before the States had extracted their pound of flesh in the form of composite fee. This was working well.

Why and how working of the NPS is very opaque.

The truck owners were well contended with the fact that they were saved of the cumbersome formalities of obtaining inter-State permits under reciprocal system. Paying Rs.3,000 initially or the same being increased to Rs.5,000 was no big restraint. Indeed when revision of the scheme was mooted, it was a surprise of sorts. There was no popular demand for replacing the ongoing scheme.

The operators generally were happy with the arrangement. What they were concerned about was the mandatory requirement of two drivers for National Permit Vehicles and sufferance of usual impediments in the movement of vehicles on inter-State routes.

Either of these having not been addressed, the new NPS was no more than an unintelligent joke. Obviously, the promoters of the concept that endorsing the National Permit for whole of the country would automatically endow it with hassle free movement across the country, LOGISTICS TIMES November 2014

On the entire stretch of 5846 kilometre of Golden Quadrilateral, there is no tangible effective arrangement for preventing operation of overloaded vehicles. is nothing but a case of self-deception which is worse than deceiving someone else, which after all is bad...

Chapter: Two Drivers: Who’s Who’s driving?

resting?

Railways were ever averse to growth of road transport. It was natural, therefore, that they were not forthcoming in their support for the idea of commercial vehicles being permitted to move freely in all parts of the country. But their resistance to National Permit Scheme, beyond a point became untenable.

At last, despite railways aversion, the restraint of each State/Union Territory issuing limited number of National Permits every year, was scrapped.

The railways frustration over this, rather halting reform in road transport, manifested in their managing to make it mandatory that all vehicles operating under National Permit Scheme shall have two drivers. Argument was that under the new scheme vehicles shall move from Kashmir to Kanyakumari or from Kuch to Kachhar. This would result in undue fatigue to the drivers. The analogy abviously was with the existing practice in Railways, whose drivers are rested at fixed points...

Chapter: Whose Baby Carriages?

are

Goods

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These vehicles operate freely is a binding responsibility neither of the Central Government nor of the State administrations. On the contrary the RTOs, ARTOs, DTOs et al are given targets of recovery from the commercial vehicles. With such assignment, these officials are assured that no questions were asked for whatever they recover over and above the target fixed for them.

In turn they feel free to appoint their private henchmen for remaining omnipresent through out their territory.

Civil or traffic police, in every nook and corner, consider it as their birth right to halt any vehicle with sole purpose of extracting their pound of flesh. The modus-operendi of these officials is truly baffling. They flag down any truck, carrying howsoever essential commodity, simply take possession of the vehicles documents like Certificate of Registration, permit etc. Having done that, they bargain for the bribe. The option before the driver is to pay the demanded gratifi cation or face seizure of the vehicles against the serious charge of operating without Registration Certificate and the permit.

Far away from their homes, without a friend or quick legal remedy, the driver has but to yield.

This disparate and pitiable status of the truck drivers, supposed to be performing essential service, is because these are nobody’s baby...

Chapter: Toll on highways may take a heavy toll A sort of aggressive competitive race started.

One set a target of constructing five kilometres of highways every day, the other set the target higher to ten kilometre. No wonder thus presently it is 20 kilometres a day.

For achieving such high targets in a restricted time frame, concessionaries began to be

They flag down any truck, carrying howsoever essential commodity, simply take possession of the vehicles documents like Certificate of Registration, permit etc. Having done that, they bargain for the bribe. commissioned. They, in turn, taking advantage of the commitments of the government, dictated their own terms. In the process the whole road construction activity began to be quizical. For instance, government enters into agreement with the concessionaire to build, operate and transfer (BOT) basis.

He shall invest his capital and having recovered his cost plus profit shall hand over the created assets to the government. That is what was meant

by B.O.T. But in fact, the concession agreement allows number of years for the concessionaire to operate the facility before returning the same to the government. Obviously, the time frame for the concession to continue and the investment/ recovery by the concessionaire has no direct relationship. What is the quality of roads built up by the concessionaire and the level of maintenance is being done by him is a dark area in the concession agreement.

Obviously when the investment and profit thereo n has been recovered, he should handover the road to the government. The recovery to the concessionaire has come from road use charge paid by users. So the asset should truly belong to the users. Government becomes only custodian and caretaker. Thereby the toll (fee) must stop‌

Chapter: Had fine been panacea, overloading should have stopped LOGISTICS TIMES November 2014

COVER FEATURE

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in 1988 : Good bye to Road Safety Till 1988 the States fixed the Gross Vehicle Weight (GVW) of goods carriages and based on that levied their tax. The Act of 1988 changed the scenario when axle-load weight limit was fixed by the Centre and the sum total of all axles was made the GVW of the vehicle. Simultaneously, the fine for overloading was raised from earlier less than Rs.200 to a minimum of Rs.3,000 for first tonne of excess load or part thereof. A steep jump of about 1,400%.

States, then, as these are now, were supposed to enforce this deterrent fine.Instead they took affront to the new scheme as it restrained their power to levy tax. So instead of enforcing the new provisions, they, with vengeance, began to allow, against payment, loads in excess of limits prescribed under Section 113 of the Act. For this special Tokens were issued. That being the attitude, what deterrence could be the quantum of fine, is the moot point.

Indeed the Supreme Court in it s order of 9th November, 2005 specifically put instant stop to this token business. Simultaneously, the Act of 1988 provided that goods found to be in excess shall be off-loaded at the risk of driver/ incharge of the vehicle and the same shall be allowed to proceed only after the GVW of vehicle is brought within legal limits. Not one state has come forward to do it s duty.

Chapter: Kill & Proficiency in Driving It is official that over 80% of the accidents occur on highways due to driver’s fault. It is a moot point how the driver was not responsible for the remaining 18% or 20% cases? Further if the driver could be absolved of his role in the case of these 18% or 20% cases how could he be held LOGISTICS TIMES November 2014

responsible (solely) for the said over 80% of accidents. The reason for this doubt is that hardly any driver, while steering his vehicle, normally would crash it into any object or person whether on the road or outside the road, simply for the hack of it.

From this arise two obvious questions. One, are these figures based on factual data collected from each accident and duly analyzed for the causative factors, as provided in the Motor Vehicles Act 1988 ? Assuming that these factors are not mere guesstimates and the Government does not posses the details of the causative factors of all the accidents, then it simultaneously needs to be placed in public domain as to what corrective measures have been taken by the concerned agencies of the Government. Also it should be known, what difference, obviously for the better, has been made by these corrective measures…

Chapter: Driver Training & Their Shortage Not Synonymous In any gathering of road transporters, it has become almost fashionable to grumble about driver shortage leading to apprehension of difficult times ahead for moving cargo booked by them to different destinations.

Dimension of this shortage, if the discussion is extended, gets stretched to vehicle manufacturers.

They are fore-warned that if this trend continues, production of their vehicles shall be perilled.

Soon thereafter, concern shifts to the training of drivers and then both the transporters and the vehicle manufacturers are overwhelmed with guilty conscience. Guilt what? The formers’ guilt being; he owed it to his profession to train drivers but he was not doing so. The reason for latters’ conscience getting pricked is that while he was doing whatever was needed to update the

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technology of his machines and ever increasing the production volumes, but he did not do much to train the drivers. As if it was an OE without which the vehicle was incomplete or deficient.

No serious study has been brought into public domain which authenticates the percentage of shortage at 15 or 20. Indeed it is left to the skeptics to prove the contrary. Be that what it may. For arguments sake, let it be conceded that driver shortage is there. But how come the transporters or vehicle manufacturers feel obliged to train drivers. Shortage and Training are not Synonymous.

Keeping safety aspect in mind, simultaneously the system of testing the candidates for grant of driving licence has also to be streamlined.

Instantly the persons who test the driving skills of candidates should not be burdened with other responsibilities leading to strict standards of testing becoming the casualty. After all it is a serious professional job which should not be trivialized at any cost‌

Chapter: Discrimination between Own and Poor neighbours Son Incidentally, in recent months, there has been significant fall in sale of commercial vehicles

as well. Why a similar concern of the Banks could not be discernable, may be a very obvious question. Notably while the passenger cars are for direct use by the consumers, the commercial vehicles move the economy of the country.

The mass of the owners of commercial vehicles are small entreprenures. Perhaps for that reason, the banks have reservations in dealing with them, much less, considering reducing the rate of loan for them. Similar to car owners, Bank, prefer to deal with only big commercial vehicle customers.

Notably, during the recession of 2007 - 08, even the Reserve Bank of India, (RBI), acting in tandem, allowed the repayment of loan given by banks to big players in commercial goods transport sector to be re-scheduled. At the same time, the Non-Banking Finance Cos. (NBFCs), who are known for financing small truck owners, were denied by the RBI similar facility to reschedule the repayment of their loans. The RBI insisted that in all cases where NBFCs rescheduled their loans shall be considered as bad-loans (Non-performing Assets i.e. NPA) and in consequence adversely affect their refinancing by the Banks.

It was a plain and simple case of discrimination like between ones own son and the son of poor neighbour...

LOGISTICS TIMES November 2014

HIGHWAY NOTES

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Wake up, India Inc! “Ask for “Rajkumar Nai” when you reach our village because there are many Rajkumars here!”, said the voice from Saidpur basti in Auriya district of Uttar Pradesh when I left Delhi for a rendezvous with this truck driver, who had lost his left leg (below knee) and toes on his right leg in a midnight highway accident June 2014. Gupta Transport Company he had been working for more than eight years dumped him in a government hospital, gave Rs.5,000 to his kith and kin and scooted and never to visit him while he was treated. The heartlessness of this motor malik is a different story altogether.

Realizing that the treatment at the government hospital was nothing to write home about, Rajkumar got himself shifted to a private hospital in Etawah and after a long hospitalisation returned home just before Diwali. In the absence of any medicare insurance, how did he manage to pay up the private hospital charges is still a mystery.

Having met him in August while he was in J J Hospital, Etawah and sensing his predicament, when he called up post Diwali to visit him at his home, I decided to motor down – 400 km one way on the National Highway 2 on a cool November day.

Thanks to the good motorable roads via Baburpur and Astu Road in Auriya, I touched down Rajkumar’s basti half past four. His left stump was in still in bandages.

So too, his right toeless right leg. He had his hair cut and was waiting for us – photojournalist Kausar Syed Husain and myself along with driver Bunti – with a cot neatly arranged and some local sweets and chaipaani. En route, I had spoken to Monu Gupta of Gupta Transport Company to enquire about what kind of assistance this company had LOGISTICS TIMES November 2014

* Ramesh Kumar

been providing to the hapless driver who had worked with them for over eight years . The only response was: “What can we do? If we get any

with cow-dung washed flooring and walls. Electricity, erratic. Yeh bhi hai, India!

While fruits, sweets and balloons doing the rounds among the gathered crowd of children and elders in the neighbourhood, Rajkumar confesses that his treatment would be completed by April when he would be ready to wear Jaipur foot. That would be another six months. He admits the futility of not having an accident or medical insurance in his own name.

If only he had.... But that ‘s a BIG ‘if ”.

Why long haul truck drivers ignore the importance of having their insurance baffles me a lot.

Whenever this question is posed to them, their standard response: “Yeh toh, motor malik ka kaam hai! (Fleet owner should give insurance cover to us)”. money from insurance company, we can think (of giving something to Rajkumar)”.

This was my maiden exposure to the truck driver, who could perhaps never ever sit behind a steering wheel, at his homestead. Wife Sangeeta Devi, Class VIII studying son Ramit, three year old daughter Gauri, aged parents, Kailash Nath and Roop Rani eking out a living without the only earning member – now jobless. Add his elder brother and his parivar (wife and two children) living in joint family, tending a small piece of land growing paddy. And living in thatched huts

Why long haul truck drivers ignore the importance of having their insurance baffles me a lot.

Whenever this question is posed to them, their standard response: “Yeh toh, motor malik ka kaam hai! (Fleet owner should give insurance cover to us)”. My counter to that query, “Yeh zindagi aap ka hai, motor malik ka nahi hai” draw raised eyebrows.

Nothing beyond that. Sad state of affairs.

While these drivers need to be educated and made aware of risk transfer/mitigation via accident/ death insurance, trade bodies A I M T C / A I T WA / A C O G OA

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should impress upon their members to ensure accident/death insurance for their drivers. The Government on its part should make it mandatory for every fleet owner to include driver and assistant driver/ kalasi in the mandatory third party insurance. By and large, fleet owners exclude them always while filing up these forms.

Above all, the Indian industry whose survival and success depends 100% on transportation for movement of raw material from multiple locations to the manufacturing site and subsequently finished products from there to nooks and corners of India should award transportation contract to only those transport companies which complies with the provision of medical insurance for every single driver under the Service Level Agreement. No cover for truck drivers, no contract should be the norm. It’s simple to implement.

Rehabilitation of such accident victims from the truck driver community deserves a greater

The challenge is to convince and educate the India Inc that outsourcing is fine, but passing on the responsibility of driver welfare to fleet owners and transporters/ agents is foolhardy. attention. Fleet owners by and large just ignore this critical aspect. They crib that there is an acute shortage of truck drivers and therefore a huge idle capacity. Their better and positive driver relationship management practice – in terms of taking care of drivers during hospitalisation and the long recovery stage – will send the right signal to the target group that their interests are protected and they are not left to fend for themselves - like in the present case of Rajkumar Nai.

Otherwise, India Inc has to dream about the early arrival of “driverless trucks”!

The need of the hour is a mindset change – right across the spectrum beginning with Indian industry (logistics department), trade bodies and individual fleet owners. The challenge is to convince and educate the India Inc that outsourcing is fine, but passing on the responsibility driver welfare to fleet owners and transporters/agents is foolhardy.

Wake up, India Inc!

* The writer is the author of 10,000 KM on Indian Highways, Naked Banana! and An Affair With Indian Highways. He also runs KRK Foundation, a registered Trust, focused on improving the working and living conditions of truck drivers and their families living in remote villages of India. He is reachable at ramesh@krkfoundation.org LOGISTICS TIMES November 2014

TRAINING

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Training in Customs Processes

JBS Academy which specialises in logistics training with a focus on shipping, freight forwarding, customs and air cargo conducted one day comprehensive programme on Customs Clearance at ICD’s and ports in Ahmedabad on Saturday 8th November 2014.

The programme was attended by 60 trainees representing the fraternity of exporters, importers, customs brokers, transporters, freight forwarders, custodians and also shipping companies.

The full day interactive programme was conducted by Samir J Shah, Chief Mentor and Director of the Academy.

JBS Academy has its Certificate and Diploma Programmes certified

by NCVT – National Council of Vocational Training and GCVT – Gujarat Council of Vocational Training.

It has till date trained over 2500 persons in EXIM Logistics. The academy will be conducting similar programmes in different cities in the coming months.

LOGISTICS TIMES November 2014

COLD CHAIN

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Food security breach… and bridging it How does one correctly evaluate the infrastructure capacity needs of a cold-chain?

Only with access to relevant information and only with clear understanding of what comprises the total cold-chain. Unfortunately, such assessments in the past have related to one sole component, the cold store. The most commonly quoted capacity gap was assessed in 2010, where that report stated that the country (India) needed creating another 37 million metric tonnes in storage capacity.

That 2010 analysis assumed that all infrastructure created, continued to be operational, irrespective of technology or ageing. The assessment did not resort to first hand data on the existing usable and available capacity in the country. As a mere desk review of statistics, with the existing capacity not assured, the gap mentioned only served purpose at a basic level.

Yet (and sadly), many “knowledge houses” frequently and unceasingly recourse to quoting this primal assessment, not understanding and so not bothering to research further. Many conjectured (even mandated), that this stated capacity gap, was the urgent and primary option for India. Adding another 37 million tonnes (approximately 120 million cubic metres of temperature controlled storage) which would result in doubling of the storage capacity created so far.

This was an easy assumption, and extrapolated across all product types and dare I state, ‘it seems flawed and impractical’. The first simple inference, surprisingly got propositioned far beyond its original ambit. What comprises the coldLOGISTICS TIMES November 2014

Pawanexh Kohli CEO & Chief Advisor, NCCD

chain was not fully factored, the INVESTMENT OPPORTUNITY and the mood this generated was far too attractive to question…maybe!

Any case, it was a period of copycat culture amongst researchers. After all, the task of assessing reality across Indian landscape is ever daunting, and it is far easier to pass off approximations instead of grilling the logic.

The reality is that our existing storage capacity or even the stated shortfall, was not reviewed in terms of temperature zones or its position in product specific supply chains. In fact, demand from the food processing industry, or other COMMODITIES like spices and pulses may have been missed - and each would translate into differing ‘capacity needs’, even in relation to volumetric requirements per product type, varying on the basis of each product life cycle and the ensuing throughput cycle, across the cold-chain.

More drastically, any analysis cannot be limited to cold storages alone and should refer to other correlated necessary infrastructure.

A cold-chain capacity gap report needs to detail the phenomenal deficit in transport – there is no cold-chain without this link! Most analysis, even from the multitude of privately held research houses, seem to blithely assume that all surplus produce can and should

In all cases, a deficit in production capacity will impact feasibility of storage. The deficit in reefer transport, will forsake the supply lines. A shortfall in cross-docking distribution cold stores will reflect on delivery to MARKETS. Any misalignment among these infrastructure components will break the cold-chain.

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undergo subsequent storage for viable sales in off-season periods.

This presumption was irrespective of feasibility or any other intervention needs. Basically, the need for production units or packhouses is not being factored in... can there be a cold-chain without points of origin!

In case of some fresh produce, like the bulk of potatoes and spices produced, less than a half of apples produced, etc, the formula “production – local sales = storable surplus” can be used. But in case of most perishables, including many food products that come off a factory line, and dairy products, the cold-chain gap needs to be assessed in terms of throughput rates across each infrastructure item.

In all cases, a deficit in production capacity will impact feasibility of storage. The deficit in reefer transport, will forsake the supply lines. A shortfall in cross-docking distribution cold stores will reflect on delivery to MARKETS. Any misalignment among these infrastructure components will break the cold-chain. This miscued approach towards our food supply chain has resulted in missed opportunities in securing our food, in hobbling our chance for greater food security.

The much touted 30% to 40% loss of food awaits definition and debate, but nevertheless, a loss exists and the sole bridge todays technology has to offer is the cold-supply-chain. Have we missed bridging the gap?

Currently, in the fresh segment, the cold-chain misses pre-conditioning centres or pack-houses and yearns for appropriate transport links.

Rough estimates indicate that

to feed domestic farm produce to only 10% of our existing cold storage capacity, 30,000 packhouses dotting across rural India, each feeding twice as many reefer transport units may be required. This is going to need influx of thousands of crores of rupees of capital, into rural India. If implemented, it will bring industrial infrastructure to

rural areas, one that sustains their core livelihood, farming. It will mean MARKETlinked farming, opportunity to maximise value of farm produce, employment diversification and wealth creation at the back end.

This will also require another kind of capacity in cold chain – human capacity.

LOGISTICS TIMES November 2014

GUEST COLUMN

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Accelerating Economic Growth Logistics and supply chain management has assumed a great importance as a subject for economic development of India.

With emphasis on manufacturing, auto industry, IT industry, Medical, Tourism, export orientation, efficient road and transport network, as a world heritage and Cultural Centre, a 7500 coast line, natural resources and weather, the logistics and supply chain industry is extremely important for economic development of India.

Our trade and commerce has progressed from supplier of raw materials in sixties to finished products, with our entrepreneurs competing with international market players Fortune and Forbes lists. Yet we are yet to achieve our deserved place. Exports of India which pay our import bill of dear crude are only $ 320 Bn. However, there is this confidence that India’s exports could be doubled to USD 750 Bn by 2020.

Logistics industry, inter alia, holds a great promise as potential employment generator in different sections, components and stages of logistics and supply chain management. Just to give an indication, approx. 5 crore people are employed in this industry in India. The industry is worth its value equivalent to over 200 bn US Dollars.

The industry YOY is growing at approx. 15%. But we know it is still fragmented un organized and primitive. This though is not the actual exploited potential. It can be worth USD 500 Bn. If India is considered the wholesale and retail market of the world, as everyone from anywhere and everywhere can sell their wares here, we lap it all, and yet it is like drop in the ocean. We can, therefore fathom what we can achieve if only we keep upgrading our infrastructure of LOGISTICS TIMES November 2014

roads, highways, railways, freight corridors, SEZs, CFSs, ICDs, airports and ports, waterways, trucks and tracks. We run the IT processes of the world’s developed economies, and make them model economies. We have to do it for our own country too.

To my mind, I consider that the logistics industry is the core of the economic development. It is also very pertinent in the wake of the change that has taken place on the horizon of our largest democracy, which has ushered in a new government at the Centre. The new government is determined to bring back India on the path of double digit growth, to fulfill the aspirations of citizens of India for an inclusive growth. I am also confident, logistics industry will get the recognition and attention of the Government of India.

Logistics is key

More often than not, logistics is also a misunderstood and also misrepresented. Cross border trade between almost disappeared physical borders of the nations “Supply chain” operates. From Levi’s example, today inter alia making of Airbus 380 is a legend in logistics.

Simply, it means movement of goods

and merchandise, B2B, B2C, C2B seamlessly, end to end, from original producer to ultimate consumers’ hands. One must not lose sight of the fact that for the raw materials, capital goods and machinery, spare parts, consumables, modes of movement, ICT, and other host of services, companies, providers and the producers are themselves the intermediate or end consumers.

All industries require logistics and supply chain management. It is an all pervasive industry from health to happiness; from whole sale to retail; from single brand to multibrand, from creation to destruction and destruction to recreation (I mean scrapping and then reproduction).

Therefore, to put things in simple terms, to be understood by a layman, I think this connotes movement of merchandise from one part of the globe to another, seamlessly just in time, to satisfy a need of the producer, consumer and all those involved in the logistics and supply chain management.(includes intra and inter country movement by all modes – head load, camel and horseback, small delivery vans, trucks, rail, road, sea, air, express, courier, including electronic transfers, and cyber trade).

Need for Skilled personnel for Logistics

Academia and academics are very essential for knowledge and skill development of human resources engaged in this industry. Strangely, the industry does not yet realize that to compete with the giant logistic and supply chain operators of the world, people must formally learn, know and employ modern techniques, technology and state of art equipment essential to achieve the level of professional competence and be competitive. “University has to link to industry” to provide what

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it takes to be a productive employee or worker or manager armed with modern skills and tools. Specific diploma/degree level courses with guarantee of employability by the industry are to be evolved and prescribed to join this industry.

To be 3rd largest aviation player by 2020 we need at least 300 airports.

Our air traveling per capita p.a. is only 0.07 as against China at 0.2, Europe at 1.54 and USA at 2.5. If Indians travelled like Americans, there will be 2 billion passengers, p.a. Are we equipped to take on these numbers? Are we adopting the requisite infrastructure, support systems, skilled manpower and technology? Aviation sector is an important player in logistics as it carries more than 35% merchandise by value. We in the aviation, infrastructure, Logistics and supply chain industry can extend our all willing hands to reach the stars.

Aviation is also high multiplier of investment (Rs.100 invested generates Rs. 325). With the passenger projections at 290 million in 2020 there is enough work for all stakeholders and the government.

Turkey plans an airport with 6 runways and 150 million capacity at USD 10 billion spend, to be commissioned by 2017. Infrastructure is the key.

All 127 airports of India handled 160 million passengers. That kind of “big think” we need to do as a great country.

Need to adopt real time ICT

We have to gear up to handle huge volumes of transactions of all kinds by simplistic electronic forms and controls, “no hold” real time electronic processing, tracking of documents, payments and merchandise adopting state of art movement modes. We have to convert plethora of forms and approvals. We have to come out of hundreds of approvals in some industries before they startup. FDI LOGISTICS TIMES November 2014

The new government is determined to bring back India on the path of double digit growth, to fulfill the aspirations of citizens of India for an inclusive growth. I am also confident, logistics industry will get the recognition and attention of the Government of India. is restricted because of the fearful unease for opening business in India (134th place out of 185 countries, even below BRICS).

Vicious circle of Transaction Cost

The “Transaction cost” has been in deliberations and subject of many a committee for the past 3 decades, yet we haven’t been able to reduce it. Much of it is unproductive and due to high, irrationalized taxation and archaic processes that need a total reengineering. It stands in Indian context to 10-11% of total value of exports as against 6-7% world average.

Approximate average “Cost to export” in India is estimated at 1100 USD and “Time to export” is 16 days. Where as the world does it with 700 USD and 9 days respectively. An estimate of an international agency puts it that there could be a 30% savings achieved, if proper state of art logistics and supply chain management practices are adopted.

This can translate to savings of billions of dollars.

Clearing the impeding factors in logistics

There are issues that will have to

be tackled between the Industry and the government regarding, congestion at ports, efficient turnaround of ships, rationalizing aviation regulation air safety issues and and a pragmatic aviation policy. General aviation, MRO and aerospace, aero-sports, manufacture of aircraft and parts both for civil and military are areas yet to be exploited. Rationalisig into few slabs of customs duties, harmonizing trade and labour regulations, a single GST, a low and common tax on jet fuel and a pragmatic aviation policy to avoid impediments losing airlines and wastage in Logistics and Supply Chain. Organized large scale warehousing, electronic bar coded tracking, high speed rail, roads, highways, larger size trucks have to replace the scene to cope with the expected movement of logistics systems in the next decade when we pace to become 3rd largest economy.

The Author is Former Regional Executive Director - Northern Region, Airport Authority of India, Currently Managing Director of Asia Aviation Associates and Chief of Conference at International Aviation Conclave – 2014

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Products For Logistics Optimization Toshi provides complete solu on for logis cs which includes dock levellers, dock seal and shelter and industrial sec onal door. Toshi offers wide range of technical solu on for safe and efficient cargo flow between vehicle and warehouse. It is used in dock places where cargo is moved from one level or floor to another. The main user of loading equipment are cold storage, warehouse, large shopping center & super market, factories, exhibi on center, custom and logis cs terminals, etc.

Toshi Dock Levellers are designed to act as a bridge in between warehouse and trucks or trailer body and to provide quick and unimpeded movement of forkli during loading and unloading.

It can be used with trucks which are equipped with tail li s. It is provided with safety steel mechanical support, safety foot protec on, and standard rubber bumpers with thick wing steel plates for protec on. It is equipped with fault alarm, mul switch bu on control, and emergency stop bu on on the front cover. It has a loading capacity of 6000- 15000 kgs.

Toshi Docks Shelters are designed for sealing of space between loading docking bay and truck to obtain quick safe loading/unloading of goods.

It protects premises and goods against bad weather, rain, dust and control temperature and provides comfortable working condi ons.

Standard dimension of dock shelters are good to work with truck or standard trailers. It has good wear ability & tear resis ng ability 328 kg ver cal x 344 kg horizontal, high tensile strength 398 kg ver cal x

325 kg horizontal. Toshi dock shelter made of water insoluble material is highly resistant to various chemical, acids, alkalis & are adap ve to all types of vehicles and lorries.

Toshi Industrial Sec onal Doors are designed for intensive usages. They are manufactured to provide maximum safety and quality for the func oning of industrial warehouses, factories, and large sheds enhancing both thermal and acous cs insula on.

The materials employed have undergone the most demanding tests to comply with European Standards. Toshi has wide variety of models to meet customer requirements.Toshi industrial sec onal door panel are equipped with finger safe board available in maximum thickness of 40mm and 50-60mm. Toshi offers various safety device in its sec onal door like an -break device spring in order to protect the system from free fall in case of

steel wire breakage.

Toshi Automatic Systems Private Limited, Regd. Office: M-2 Samrat Bhawan, Ranjit Nagar Commercial Complex, (Behind Satyam Cinema), New Delhi - 110008, Head Office: D-132, Bulandshahr Road Industrial Area, Ghaziabad – 201009, UP Phone:+91-8287116904 ; Fax: 0120-2705117, Email: info@toshiautomatic.com ; Website: www.toshiautomatic.com

LOGISTICS TIMES November 2014

Are you visiting India Cold Chain Show this December?

Get ready to visit 3rd India Cold Chain Show – India’s Biggest Event for Cold Chain Technologies featuring participants from across the globe.

The India Cold Chain Show scheduled from 10-12 December 2014 at Bombay Exhibition Centre, Goregaon (E), Mumbai will bring together cold storages, temperature controlling, material handling, logistics and cold supply chain solutions all together at one place. Every year, ICCS gathers more than 5,500 industry professionals under one roof. Taking place in concurrence with India Material Handling & Logistics Show and India Cold Chain Summit, ICCS gives you an opportunity for business, education and networking.

Supported by National Centre for Cold Chain Development (NCCD), the exhibition offers a large variety of products, solutions and technologies and is particularly beneficial for decision makers from Agro & Agriculture, Fisheries, Dairy, Horticulture, Hotel, Restaurants, Fast Food Chains, Fruits & Vegetables, Food Grains, Retail, Processed & Packaged Foods, Pharmaceutical, Seafood and many other sectors which are regular users of cold storages, temperature controlling techniques, materials handling and cold logistics.

Visit India Cold Chain Show if you wish to procure latest equipments, see live product demos and learn industry trends.

What will you see at ICCS 2014?

X More than 300 live technologies and solutions representing cold storage infrastructure, cold transport and cold supply chain.

X Meet 120+ exhibitors, 250+ representative brands from more than 15 countries.

X Connect with your industry colleagues and meet industry thought leaders from over 30

Pictures of the previous edition

visiting countries at India Cold Chain Summit.

X Learn industry best practices, latest trends and meet potential recruiters.

X Explore innovative technologies at Cold Supply Chain Zone, US Pavilion, UK Pavilion and Reverse Logistics Association Pavilion.

X Annual General Meeting of Federation of Cold Storage Associations of India (FCAOI).

The event has garnered support from Kelvin Cold Chain Logistics as platinum partner, Pluss Polymers as technology partner, BASF India as conference partner, Officins Mario Dorin SPA as cocktail partner, Kirloskar Pneumatic as AGM partner and Fresh Food

Technology India & Van Amerongen CA Technology as delegate kit partners.

ICCS is officially supported by US Commercial Services and will have a US Pavilion during the show. National Small Industries Corporation (NSIC) and Cold Storage Association Uttar Pradesh are also supporting.

Adding value to your visiting experience will be the India Cold Chain Summit, a two day conference taking place on 1011 December that will be co-located with India Cold Chain Show at Bombay Exhibition Centre. The conference discussions and sessions will be based on the theme ‘Exploring new strategies and avenues to expand cold chain business in India’.

LOGISTICS TIMES November 2014

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SOCIAL INITIATIVE

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DIESL organizes Tree Plantation drive and Blood Donation camps

Drive India Enterprise Solutions (DIESL), organized a tree plantation drive across India. This initiative called ‘Plant A Sapling Program’ (PASP) has been a part of company’s annual CSR program for many years. This year, PASP was conducted on 15thand 16th September 2014 in which 65 warehouses located in various Tier I & Tier II citie sparticipated. In LOGISTICS TIMES November 2014

two days, more than 392 saplings were planted by 806 employees of DIESL. The campaign was also linked to Tata Volunteering Week (TVW) II which is a group level volunteering program organized every year by the Tata Sustainability Group (TSG).

In addition to this, the company also organized Blood Donation camps to support TVW II. Employees

from DIESL’s corporate office, branch offices and warehouses volunteered by donating more than 230 units of blood to various blood banks including Arpan Blood Bank (Mumbai, Bhiwandi, Pune), Lions Blood Bank (Delhi , Kolkata), Lhna Blood Bank (Lucknow), Unique Blood Bank (Bangalore), Red Cross Society (Ahmedabad), etc.

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APM says ‘I - Care’

APM Terminals Inland Services, South Asia continues to rollout its “I- Care” CSR master plan to help local communities in India improve their quality of

life. Last month, eye and vision care camps were established to help improve the lives of people located next to APM Terminals Inland Services facilities– these

included contract workers, truck drivers, custom house agents, customers, local communities and other stakeholders.

CEVA’s response to Ebola On October 10th, CEVA airlifted more than 70 tonnes of urgent supplies to Monrovia, Liberia to assist in ongoing efforts to combat the West Africa Ebola outbreak. The service was offered to the U.S. Agency for International Development—the lead government agency coordinating U.S. Ebola response efforts. This agency has been working to expand the pipeline of medical equipment and supplies to the region.

LOGISTICS TIMES November 2014

AWARDS

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Payload Asia Awards

ELSC award for Maini Maini Materials bagged ‘Warehouse & Material Handling company of the year’ award at the 8th Express Logistics & Supply Chain Leadership (ELSC) event on 24th September’ 2014.

The Express Logistics and Supply Chain Conclave, is held annually. The award was received by S A Mohan (CEO) and Rahul Sagar (AGMMarketing).

LOGISTICS TIMES November 2014

Hong Kong Air Cargo Terminals Limited (Hactl) and Hong Kong Air Cargo Industry Services Limited (Hacis), were both honoured in this year’s Payload Asia Awards 2014.

Hactl won the Ground Handler of the Year category. Hacis meanwhile won the Regional Logistics Provider of the Year Award, beating a number of well-known major operators.

RNI No. DELENG/2011/39329

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