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LogisticsTimes

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CENTERSTAGE BEGINNING OF THE END

October 2013

PERSPECTIVE WHY ONLY 300 KM?

In the Offing:

24x7 Helpline for Reefer Vehicles

QUICK CHAT BHARAT THAKKAR

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Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure

Volume 4: Issue No.6 * October 2013 Editor in Chief

Raj Misra rajmisra@logisticstimes.net

Editor

Ritwik Sinha ritwik@logisticstimes.net

Sub Editor

Neha Richariya

Photographer

Mohit Malik

Designer

Kausar Syed

Circulation & Distribution Legal Advisor

Kamruddin Saifi Rakesh Garg

Our Bureau Mumbai

Rahul Kumar rahul@logisticstimes.net

Bangalore

B Shekhar shekhar@logisticstimes.net N Raju

Chennai

raju@logisticstimes.net Sudhir Kumar

Hyderabad

sudhir@logisticstimes.net

Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Pawanexh Kohli Principal Advisor, Cross Tree Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Management Ramesh Kumar Member, National Committee on Supply Chain & Logistics, Govt. of India

Marketing & Sales Kalika Singh Ph: 011-22478538-39, 9891007542 Email: advt@logisticstimes.net Printer & Publisher Deepa Misra for

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

www.logisticstimes.net

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COVER FEATURE

In the Offing:

24x7 Helpline for Reefer Vehicles Edit Note

08

News Briefs

10

Product

36

Career

46



22 CENTERSTAGE Beginning of the end

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PERSPECTIVE

Why only 300 km/day?

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48

BHARAT THAKKAR

ELSC Award

QUICK CHAT

EVENT



EDIT NOTE

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A welcome move? That our perishable management system hardly has anything to write home about is no secret to anybody. And while poor storage system is a serious bottleneck here, the sub-standard transit methodologies are equally responsible. There are examples from some developed markets which have adopted mechanism to ensure that reefer vehicles are given preference while on move. The objective behind this approach is – perishables should be reaching to their destination in the shortest possible time. But for over 30,000 reefer vehicles plying on Indian roads (and this number is growing consistently every year), there is no such special priviledge. They continue to be victim of the usual transit hazards on highways (infrastructural, system made and even criminal intent) as the regular trucks. The only difference being the losses in the case of reefer trucks resulting from delays are more serious in nature since they carry time sensitive products. Needless to say, this trend also contributes to those colossal perishable losses we as a nation have to incur year after year. To do away with the delays issue in reefer vehicle transit in the country, the National Centre for Cold-chain Development (NCCD) has now stumbled upon a unique idea of kickstarting a dedicated helpline service for reefer truck drivers. Our cover feature in this edition focuses on this proposed initiative wherein Chief Advisor of NCCD, Pawanexh Kohli has shared the details. The project is both unique and ambitious in the sense that it entails to involve local officials of 625 plus districts in the country. Going by my own preliminary interpretation in terms of attaining its objective, a helpline of this nature would clearly be a long-haul story rather than creating an instant magical wand kind of effect. The primary nature of the modus operanding would be to consistently collect complaint data over a period of time, identify the prominent trouble zones for reefer movement in the country and constantly remind the local officials to take action. Almost in a gentle rap on the knuckle manner. The point now is: can we really call this initiative (likely to become a reality in January next year) a welcome move? Most of the cold chain sector representatives we spoke to find it a good-intentioned move in principle. But then there are scores of examples to prove that honourable intentions alone can’t guarantee faultless execution. The bigger concern, of course, is how the local official machinery actually respond to those constant reminders from Delhi. Leaf through the cover feature to look at various strands of a promising initiative which is clearly not shorn of its share of ifs and buts even as NCCD is busy clearing the decks for its implementation. ACAAI – the apex body of the air cargo fraternity - would be holding its 40th annual convention in the Pink city later this month and in a candid chat with us (another highlight of this edition), the president of the association Bharat Thakkar underlines the primary agenda which would be taken up this time. Waiting for your response Ritwik Sinha ritwik@logisticstimes.net

LOGISTICS LO LOGIST LOG OG GIST STICS ST STI ICS TI TTIMES MESS Aug August Au ust 220 2011 011 011



NEWS BRIEFS

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Weak Industrial Performance The CII ASCON survey for JulySeptember 2013 quarter indicates a scenario of subdued growth with green shoots of recovery continuing to be elusive in the near future. The survey reveals that the number of sectors reporting negative growth in JulySeptember 2013 quarter of the current year has increased significantly over the corresponding period of last year. This is despite the fact that the government has introduced various economic reform measures to seize the declining growth. The CII ASCON survey, which tracks the growth of industrial sector on a quarterly basis, based on feedback received from sectoral industry associations, shows that out of 91 sectors surveyed, the sectors registering ‘low’ and ‘negative’ growth for July- September 2013 quarter remain significantly high at 84.61% as compared to 76.1% last year for the same period. The number of sectors reporting ‘excellent’ growth (>20 %) show a bleak change by going up to merely 4.39% (4 sectors) in the current quarter (July-September 2013) as compared to 3.8% in JulySeptember 2012. The ‘high’ growth (10-20%) sectors have come down to 10.98% this year from 29.1% in the same quarter previous year. The proportion of sectors reporting ‘negative’ growth (less than 0%) has risen drastically from 15.5% in JulySeptember 2012 to 38.46% in July-September 2013, the number of sectors having more than doubled to 35 from 16. The number of sectors reporting low growth have shown a marginal decrease to 46.15%% from 51.4% same quarter last year. Another significant finding of the survey is the clear shift of number of sectors from high growth (30 sectors last year as compared to 10 this year) and low growth sector to negative growth (16 sectors in negative from last year has increased to 35 sectors). This slowdown in the industry still remains despite several monetary tightening and fiscal consolidation measures by the government. The survey categorises the growth range in four broad categories, namely excellent (>20%), good (10-20%), low (0-10%), and negative (less than 0%).The disaggregated analysis of the survey reveals that most of the high and excellent growth has been registered by select segments of white goods segment driven by sales in rural/ tier 4 & 5 cities. LOGISTICS TIMES October 2013

The Vehicle industry has witnessed a low to negative growth with most of the segments such as motor cycles, 3 wheelers, utility vehicles, M&HCVs, tyres, cycle tyres, in these categories. However, scooter and scooterettes along with tractors have witnessed a high growth. Some segments of White Goods industry such as refrigerators, air conditioners, small appliances have registered about 12%-15% high growth rate. The LCD/LED segment has been witnessing a boost and growth has been exceptional pegging above 20% mark. The rural purchase trends and sales in tier 4 & 5 cities have contributed significantly to this growth Consumer Durables like rubber goods, glass products also fall under low-negative category.A similar trend was observed in the intermediate goods sector with segments such as motors, ball and roller bearings, synthetic fiber, yarn recording a low growth. The Capital Goods industry continues to fall under low-negative growth. Sectors like machine tools, power cables, distribution transformer have fared poorly. Major segments in the capital goods sector expecting low / negative growth include earth moving & construction equipment, machine tools, distribution transformers, textile machinery, motors, relay control panels, power transformers, pumps. This in turn have an adverse impact on the downstream industries associated with these industries. The sluggish performance of both producer as well as consumer goods indicate subdued demand conditions in the economy which going forward does not sound optimistic for revival of growth in the coming quarters as well.


Cargo Pressure Continues at Major Ports

Leading rating agency ICRA expects cargo pressure to continue at major ports, with iron ore and containers the main laggards. “Iron ore has been the main laggard in the first five months (April-August) of FY 2014, registering a 44% decline on yoy basis, as a result of the continued stalemate on domestic mining activities. Container volumes have also shown some slippage, declining by 5% yoy owing to the lagged effect of slowdown in global markets and domestic economy” according to a recently released report by ICRA. “While revival of container volumes would be dependent on pickup in the overall manufacturing sector activities and correspondingly exim trade, iron ore exports could be favorably supported by resumption of mining in certain areas; moreover, the Government of India has been exploring various options to boost export activities, including revival of iron ore exports, ” ICRA has noted. Regarding the newly announced tariff guidelines, ICRA further noted that the although the new announced final tariff guidelines do not permit full flexibility to the operators in terms of setting market linked tariffs (as proposed under the draft guidelines), the new guidelines can be considered to be positive for attracting in-

vestments into major ports. On July 31, 2013, the Ministry of Shipping (MoS) announced new guidelines for setting of tariffs in major ports. The new guidelines have come into effect from the same date and will be applicable to projects bid out since. The guidelines were adopted with a view towards providing flexibility to the major ports, and private terminal operators operating therein; to set market linked tariffs for their services. The major deviations in the final tariff guidelines as compared to the draft guidelines circulated earlier by the MoS are with respect to the tariff ceilings that are now applicable. The draft guidelines did not specify any cap or ceiling on the market linked tariff which can be proposed by the port/operator; instead incremental revenue share (subject to a minimum of 50%) was to be levied on the difference between the reference tariff and the actual tariff. As per the final guidelines, the tariff which can be proposed by the operator would be subject to a ceiling of 115% of the inflation indexed reference tariff. Nonetheless, given the other structural issues hampering development at major ports - such as delays in obtaining requisite approvals, etc - the actual materialization of project awards as planned by the MoS remains to be seen. LOGISTICS TIMES October 2013

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DFC to Spur Private Investment Mindboggling business opportunities would be unbound in the near future in the Indian Railways, particularly in the field of public-private partnerships (PPP), announced Subodh Jain, Member, Engineering, Railway Board, at the 10th edition of the International Rail Conference, organized recently in Delhi. Speaking at the session on Rail Infrastructure and Transportation, Jain said that policy initiatives for the modernization and technology up gradation of the railways were in place. However, the huge resource crunch for implementing projects required the participation of the private sector, both from India and abroad. Describing the steps taken by the Railways to encourage private engagement, he pointed out that changes in the procurement policy now enabled private parties to sell their products directly to the service providers. Jain also observed that the Dedicated Freight Corridor (DFC) would not only make the functioning of the Indian Railways more focused and user-friendly, but also upgrade the system as one of the best run railway networks in the world. RK Gupta, Managing Director, Dedicated Fright Corridor( DFC) highlighted the business opportunities in the implementation of the DFC. With the completion of the North-East and the Delhi-Mumbai corridors, the traffic movement would be smooth, and

would bring about substantial business opportunities in the field of automation, signaling, traffic planning, technology for enhancing efficiency, station renovation and maintenance, he said. According to Gupta, the World Bank has funded the Delhi Mumbai Corridor to the extent of US$ 2.5 billion, while JETRO, the Japanese organization, is the funding agency for the North-East corridor. As much as . 91% of the land acquisition of the Delhi-Mumbai Corridor has been completed, and the agency has got the required environmental clearances. He invited foreign investment in the earmarked sectors, particularly in the industrial hubs coming up along both corridors.

Allcargo Acquires US Firm Allcargo Logistics has made a major acquisition in the US market which was announced in the last week of September. According to a company release, Allcargo has acquired 100% interest in Econocaribe Consolidators, a US based logistics company, through its wholly owned subsidiary, Ecu Line. Econocaribe, incorporated in 1968, is today the 3rd largest LCL consolidator (NVOCC) in the US. With its headquarters in Miami, Florida, Econocaribe has 9 offices in the US and 22 receiving terminals throughout the US and Canada, as well as partners across the world. Econocaribe specializes in freight consolidation and FCL services to Latin America, the Caribbean, Europe, the Mediterranean, the Middle East, Africa and Asia. They also offer import LCL/FCL transportation LOGISTICS TIMES October 2013

services from around the world into the United States and Puerto Rico. Ecu Line has, in recent years, been working in the USA, engaging Econocaribe as its agent. This acquisition now enables Ecu Line to complete its service offerings, both in terms of global capabilities and coverage. The acquisition also increases Ecu’s foot hold in the US market. Speaking about the acquisition, Shashi Kiran Shetty, Executive Chairman Allcargo Logistics,India and ECU Hold NV, Belgium, said “Econocaribe has been our partner in the US and we have worked very closely with them. They have an extremely efficient and capable management team that has taken the company to being amongst the top NVOCCs in the US. I am very happy that now they are a part of our family and we have now become truly a global MNC, which is a dream achieved”. John Abisch, President, Econocaribe Consolidators, added “I expect both organizations will benefit from joining forces and allow us to provide a great environment for our employees and great service to our clients”.


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LOGISTICS TIMES October 2013


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DHL Express Announces Revised Rate

DHL Express has announced a general average price increase in each of the 220 countries and territories that it serves, effective January 1, 2014. In India, the average price increase for Time Definite International products will be 9.9%. “Our pricing strategy is targeted at ensuring a sustainable value proposition for our customers. We continue to make significant investments in our global and incountry network, which offers world class delivery performance for the benefit of our customers,” said RS

Subramanian, Country Manager – India, DHL Express. In 2013, DHL added capacity to air networks in all regions globally. In India, DHL has made significant investments towards strengthening the existing network and expanding the footprint across the country. DHL’s annual rate increase is driven by the continuous investments made to support growth and improve quality and impact of inflation on input costs. “Mitigating the impact of high inflation has been a key driver behind our pricing strategy in India. We are also faced with the added pressure of the depreciating rupee. Since January 2013 the Indian rupee has depreciated by over 16% and so far DHL has absorbed costs whilst ensuring that delivery times and service quality continued to improve,” adds Subramanian. According to a company release, a significant part of the costs incurred are dollar denominated, which makes the express industry sensitive to currency fluctuations..

Innovative Direct Priority Ocean Solutions FedEx Trade Networks, the freight forwarding arm of global shipping giant FedEx Corp. (NYSE: FDX), last month announced the launch of its FedEx International Direct Priority Ocean service in India. This innovative, end-to-end ocean solution is now available from four Indian locations: Bangalore, Chennai, Delhi and Mumbai. The addition of these new India origins extends the reach of the specialized ocean service and provides customers who export to the United States with additional ocean freight forwarding options. With FedEx International Direct Priority Ocean, cargo is shipped from the origin to North America, with final delivery available throughout the contiguous United States. This specialized service includes premier ocean freight forwarding, U.S. customs brokerage, online visibility and reliable delivery for both less-thancontainer-load (LCL) and full-container-load (FCL) cargo. FedEx Trade Networks introduced FedEx International Direct Priority Ocean in 2011, providing a more economical option to air freight forwarding, while offering faster, reliable ocean transit times than traditional ocean shipping. Customers can enjoy better control of the supply chain with dependable predictability of final delivery, while receiving an individual point of contact, a single rate and a single invoice. According to a company release, there is a strong demand for solutions like FedEx International Direct Priority Ocean, particularly in fast-growing, emerging markets like India. While FedEx Trade Networks LOGISTICS TIMES October 2013

overall ocean volume has tripled since 2008, its FY13 International Direct Priority revenue grew 182.7% over the prior fiscal year. “Ocean freight in India showed growth of more than 12% last year, and is expected to grow at a CAGR (compounded annual growth rate) of 14.90 % by 2016,” said Christian Blain, FedEx Trade Networks vice president of EMEIA (Europe, Middle East, India and Africa). “This launch makes us the only company offering this type of service between India and the United States, and is an integral part of our growth strategy to provide customers around the globe access to premier FedEx freight forwarding services.”


DHL Global Forwarding Announces New CEO DHL Global Forwarding last month announced the appointment of Samar Nath as Chief Executive Officer and Country Manager for its Indian operations, effective September 10, 2013. Having served for more than 15 years with various organizations, Samar Nath brings a wealth of experience and knowledge to the position. Prior to this appointment, he has worked as Executive Vice President and Managing Director for India & South Asia at CEVA Logistics and Managing Director for India & South Asia at APL Logistics. “Samar is well-known for his visionary leadership in the field of logistics. I look forward to his expertise in further

consolidating DHL’s business as the leading logistics company in India.” said Kelvin Leung, CEO, Asia Pacific, DHL Global Forwarding. “At the epicenter of the rapidly growing Asia Pacific region, India is of strategic importance to DHL’s global forwarding operations. Samar’s appointment will help drive us towards our goal of continuously outgrowing the market and setting new standards of excellence for our customers”, he added. In his previous roles, Samar has an impressive track record in leading companies through various growth stages with a strong proficiency in business development, establishing startups and business integration. Samar holds a Bachelor’s degree in Commerce and an Executive MBA in Marketing Management from Jamnalal Bajaj Institute of Management, University of Mumbai. He will be based at the company’s corporate office in Mumbai.

New Cold Chain Solution CEVA Logistics and TOWER Cold Chain Solutions have announced the launch of the KryoTrans KTM (KryoTrans Modular)modular pallet shipper, a new solution for shipping temperature sensitive pharmaceutical products in a secure environment at a consistent temperature. The innovative KTM solution represents the combination of CEVA’s supply chain excellence, and experience in delivering pharmaceutical quality and compliance to the market, and TOWER’s coldchain packaging experience and capabilities. The two companies have worked together to develop the KTM solution specifically for the pharmaceutical market. Selecting the correct packaging system requires an understanding of transportation logistics, the environment the shipment will be exposed to during transit as well as access and the ability to handle shipments in transit to maintain the cold chain. The modular container is designed to provide a secure and flexible means of transporting temperature controlled pharmaceutical products such as vaccines. It is capable of being used at -20, 2-8 and 15 to 25degrees Centigrade using phase-change materials and at temperatures from -20 to -60 degrees Centigrade using dry ice. The containers are capable of maintaining the temperature for up to six days; critical when shipping temperature sensitive life saving drugs around the world. The KTM’s modular construction allows it to be produced in 12 different sizes, accepting palletized loads

that range

from half height Europallet to double height, double length U.S. pallet. The KTM comes equipped with the KryoLogger data logger, which provides a full internal temperature audit trail, plus external temperature traces and a proximity sensor that logs occasions upon which the door is opened. Leigh Pomlett, CEVA’s President, Europe, commented: “Flu vaccines are just one of the many pharmaceuticals that need to be maintained at a precise temperature to retain their efficacy; having to replace even one case of these critical products comes at a high cost. The partnership between CEVA and TOWER facilitates the implementation of well planned, secure and compliant cold chain logistics to enable our customers to reach patients worldwide through CEVA’s network of healthcare facilities across the globe.” LOGISTICS TIMES October 2013

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UPS Annual Healthcare Survey Product protection, which includes security of high-value shipments and product spoilage prevention, is the top challenge for healthcare executives in Asia, according to UPS’s latest “Pain in the (Supply) Chain” healthcare survey, conducted by TNS. The UPS “PITC” survey, now in its sixth year globally and in its third year in Asia, revealed that 76 percent of Asian executives are concerned about product security, significantly higher than their peers in North America (45 percent) and Western Europe (47 percent). Similarly, 67 percent reported product damage and spoilage as a top concern, nearly double that of North America (38 percent) and Western Europe (34 percent). “Developing markets in Asia face varying degrees of infrastructural development, as well as rapid growth rates and non-harmonized regulations, all of which may have contributed to the concerns raised,” said Lim Bee Koong, director, healthcare strategy, UPS Asia Pacific. “UPS’s dedicated facilities with its full range of temperature controlled environments are equipped with technologies and processes to ensure business continuity. We place significant effort in this area, putting UPS at the forefront of product protection.” Increasing regulatory expertise to overcome compliance challenges Along with ensuring product protection, regulatory compliance remained a top concern among all executives surveyed (70 percent of Asian respondents). Consistent with other geographies, healthcare companies in Asia are making strategic moves to invest in technology, develop more partnerships with third party logistic providers, and increase internal expertise to help them address compliance issues. Optimism amidst the concerns The survey revealed that Asian healthcare executives are still grappling with supply chain issues compared to their counterparts in North America, Western Europe and Latin America. These issues include product LOGISTICS TIMES October 2013

security, gaining access to global markets and new business channels; suggesting that there is a gap where third party logistic providers can step in to support with tailored solutions. Despite this gap, Asian healthcare executives are globally the most optimistic about the economy, with only 31 percent reporting that they are still feeling the effect of the recent years’ downturn (compared with North America - 57 percent; Western Europe - 47 percent; and Latin America - 69 percent). Among the Asian respondents, 74 percent are also planning to expand globally in the next five years. Consistent with 2012’s results, China, India, Brazil and the United States are the top four countries targeted for global expansion and investment in new technologies remains on top of the list for companies to improve competitiveness and enhance efficiency. “Industry experts estimate 25 percent of healthcare products are time and temperature-sensitive and require specific cold-chain transportation and storage,” Lim added. “To protect these high-value products, manufacturers are looking to invest in technology and in third party logistic providers. We have invested heavily in temperature sensitive services such as UPS Temperature True® which helps maintain shipment visibility and integrity, ensuring that shipments arrive in perfect condition.”.


Government to launch Infrastructure Investment Trusts

In a bid to stimulate investments, develop and build infrastructure projects and nurture a strong long term relationship between the project sponsoring authority and the private partner, the Government will launch Infrastructure Investment Trusts by November end this year. This was stated by Dr. Arvind Mayaram, Secretary, Department of Economic Affairs, Ministry of Finance, while speaking at FICCI’s 5th India Infrastructure Summit 2013 held last month in Delhi. Like the Real Estate Investment Trusts (REITs), the Infrastructure Investment Trusts (IITs) will manage the projects over a longer period of time to do away with the

current practice of private players turning into developers whose interest is limited to merely contracting for construction and are not attuned to a 25-year relationship with the Government. “A major reason why some PPP projects in the infrastructure sector have run into problems is that many private partners did not price the risk in projects over a 25year time frame,” Dr. Mayaram said, adding that even officers in the public sector do not have the capacity to carve out a long term relationship with the private sector. Dr. Mayaram underlined the need to engage with pension funds from overseas and welcomed the Canadian High Commissioner, Mr. Stewart Beck’s offer to bring in pension funds to develop Indian’s infrastructure sector. Such initiatives, he said, would encourage Indian investors to follow suit. Currently, individual investors fight shy of allowing investment of their long term savings in the bond market for lack of appetite. He said that it was wrong to conclude that the PPP in infrastructure projects was a failure. “An assessment of the PPP projects showed a mixed picture. In fact, half of such projects were doing well,” he emphasized. Speaking on the occasion, Subbu Narayanswamy, Director, McKinsey

& Company said that in order to make better decisions on selection of PPP projects, India could set up a national level agency (similar to Korea’s PIMAC) to enhance efficiency and transparency in infrastructure development by pressure testing project’s business case and reviewing past PPP project performance. For streamlining project delivery, it could also set up IIT-level project management institutes to create a world class cadre of project directors and strengthen dispute resolution mechanism by setting up dedicated fast track courts for infrastructure related cases (similar to Technology and Construction court in England). India could also launch transformation programs to improve operations and utilisation of existing assets in National Highway Authority of India, Indian Railways, Airport Authority of India, JNPT, etc and in select water distribution and electricity distribution boards, Narayanswamy said. Hari Sankaran, Chairman, FICCI Infrastrcure Committee and ViceChairman & MD, Infrastructure Leasing & Financial Services Limited and Dr. A Didar Singh, Secretary General, FICCI,also shared their perspectives on the subject. Meanwhile, the Government has also decided to constitute a Regulatory Authority for the Road Sector as was announced by the Finance Minister in his Budget Speech of 2013. The Regulatory Authority will perform the adjudicatory and advisory role and will have financial, administrative and operational autonomy, said Vijay Chhibber, Secretary, Ministry of Road Transport & Highways, Government of India, while LOGISTICS TIMES October 2013

INFRASTRUCTURE

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INFRASTRUCTURE

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speaking at the session on ‘Roads & Highways – Hurdles & Solutions.’ The chairperson of the session, Mr. B K Chaturvedi, Member, Planning Commission, Government of India, said that the roads and highways sector witnessed a comparatively slow growth in the last five years owing to the global economic downturn and domestic issues such as delays in getting the relevant clearances for constructing roads, unclear mandate on different taxes levied in various states and limited number of developers in the country. Other important speakers at the session were: K K Kapila, CMD, Intercontinental Consultants and Technocrats; D K Sen, Executive Vice President & Head - Transportation Infrastructure, Larsen & Toubro Limited; Sudhir R Hoshing, CEO – Roads Business, Reliance Infrastructure Limited; and Sanjeev Ghai, Chief General Manager, IIFCL. Ghai stated that the number of developers is limited and there is a need to increase the number to achieve the target of investing $1 trillion on infrastructure in the 12th Plan period. The work done so far under the PPP model has given satisfactory results but the partnership element has been missing, hence closer cooperation is needed between the public and private bodies. LOGISTICS TIMES October 2013





CENTERSATGE

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Beginning of the end “Well, there is no question of resigning…I am not the master of what people say. It has happened and…I will try to find out the reasons why it had to be done that way. I think, I have been used to ups and downs and I don’t get easily upset”. Manmohan Singh, PM On Board A1 (1st Oct’13)

Himanshu Shekhar

LOGISTICS TIMES October 2013

This was Prime Minister Manmohan Singh’s response to persistent queries from media personnel on Rahul Gandhi’s public outburst against the controversial ordinance to protect the tainted politicians from losing the membership of Parliament or Assembly if convicted in a court of law. On Board Air Force One, he chose to put up a brave face as media repeatedly asked him whether Rahul Gandhi’s comments could be construed as a direct attempt to question his authority in the Government. As Manmohan Singh enters the last leg of what has been a checkered

tenure at the top since May, 2004, Rahul Gandhi’s much publicized criticism of what was essentially a ‘unanimous’ decision of the Cabinet is indeed a ‘red mark’ in his report card as Prime Minister. This episode perhaps marks the beginning of the end of the Manmohan era. UPA-2 has been beset with scams and scandals ever since it returned to power in May 2009. But never had a senior Congress leader openly challenge the authority of the Prime Minister and his cabinet in such an open manner. Though Sonia Gandhi intervened to assuage Prime Minister’s frayed nerves, the


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political message that Rahul Gandhi tried to convey through this episode appears to have been effectively sent across. The words Rahul Gandhi chose and his body language when he poured venom on the Manmohan Cabinet’s decision to bring an ordinance to protect tainted politicians is broadly being seen as growing frustration within the party with the performance of UPA-2. As Rahul Gandhi prepares the party cadre to fight the anti-incumbency sentiment across the country, he knows it is going to be a very tough election campaign in 2014. At a time when the party is getting ready to face tough questions from the electorate on the track record of UPA-2, the decision to bring an ordinance just two months ahead of the assembly polls in five states in NovemberDecember was clearly ill-timed. The controversy surrounding the ordinance also raises questions about a generational shift in the power structure within the Congress party. Rahul had made this amply clear while rejecting the ordinance that he had discussed his reservations against the ordinance with senior party leaders but was persuaded to toe the party line. He had argued at the Press Club: "I have heard the arguments…In my organization the argument that is being made is that we need to do this because of political considerations. The Congress party does this. The BJP does this. The Janata Dal does this. The Samajwadi does this.

The

controversy

surrounding

the

ordinance also raises questions about a generational shift in the power structure within the Congress party. Rahul had made this amply clear while rejecting the ordinance that he had discussed his reservations against the ordinance with senior party leaders but was persuaded to toe the party line. Everybody does this. I think it is about time that political parties mine and all others stop making these kind of compromises…” In fact, just a day before Union Minister Milind Deora had tweeted about his opposition to the ordinance. Significantly, this controversy raises fundamental questions about the functioning of the Congress party, especially after the ascension of Rahul Gandhi : Is there a disconnect between the Party and the Government and among old and youth leaders on important matters? Are the views of youth leaders not being addressed seriously by party elders? Did Rahul Gandhi chose to assert

himself to send a message across that he must be consulted on all important issues? In the corridors of power, there is a sense now that Rahul Gandhi’s views must be taken on board before important policy decisions are formulated. Where does this leave Manmohan Singh in the emerging power hierarchy within Congress party? Though some kind of status quo has been restored, the writing on the wall is clear: time has come for the older generation to make way for Rahul brigade in the party. The Manmohan era seems to be gradually coming to an end. (The author is a senior journalsit working with NDTV.)

LOGISTICS TIMES October 2013


COVER FEATURE

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In a unique initiative of its kind (and probably also the first anywhere in the world), the National Centre for Cold-chain Development (NCCD)has decided to kickstart a dedicated 24x7 helpline service for over 30,000 vehicles that carry temperature sensitive cargo on Indian roads. The service would entail taking local authorities of 630 districts in the country in the coLOGISTICS TIMES October 2013


In the offing: 24x7 Helpline for Reefer Vehicles

ordination loop for actual action on the ground. Pawanexh Kohli, Chief Advisor, NCCD provides the details in an exclusive conversation with Logistics Times‌ LOGISTICS TIMES October 2013

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COVER FEATURE

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Pawanexh Kohli Chief Advisor, NCCD

F

irst thing first. Oddities notwithstanding, the entire reefer trucking sector in the country is simply huge with about 8000 to 9000 refrigerated vehicles and 25000 insulated vehicles. On a general basis, there is a very large volume of freight vehicles plying on Indian roads – something which seems to be on an ever growing trajectory and as a consequence there are very large players handling different kinds of cargo. The nature of cargo varies but what remains uniform is the nature of the problem – inordinate in-transit delays owing to various reasons including infrastructural bottlenecks and cumbersome regulatory procedures. Stakeholders in the transportation business are always searching for solutions. The Transit Scenario As NCCD, our focus is on the cold chain and we have now kickstarted the idea of an unique helpline service for reefer vehicles. But first the LOGISTICS TIMES October 2013

background. Unlike other forms of cargo, if the perishable cargo is stopped and delayed in the transit, it is subject to a higher risk due to its short shelf life. This risk translates into physical loss and as anation we need to care about this wastage. We all know that India has one of the highest wastage of perishables every year. And our primary agenda is to reduce the losses. The food losses in the country can’t just be ensured by creating adequate cold chain capacity, which on a cumulative basis actually requires storage, transport and other forms of physical infrastructure. There are also other important processes involved but the greatest risk level is when the goods are in-transit mode on the roads and reach the consumers. We also understand that the major advantage of cold-chainis to extend saleable life cycle, which in effect buys time to reach consumers. This effort is wasted if we cannot reduce time spent on roads, blockages and bottlenecks on the roads.We need to ensure that the cargo

spends the shortest possible time in reaching to the markets and consumers. It is no secret to anybody that the most difficult process to manage in logistics is the inventory in transit. If there is any delay or hassle, the goods may lose its value in quality, quantity or subsequent storability. When moving perishablesitems like ice creams, butter, pharmaceuticals, meat, fruits and vegetables, etc. - any delay onroad especially if there is a large time lapse because of some malafide intent, the cost could be dearly. I have been told that vehicles are often stopped on the roads by criminal gangs, hoodlums, or even unnecessarily by the RTO personnel to extract some gratuity. And gratuity is more forthcoming from a perishable cargo carrier. If you stop a reefer vehicle and switch-off the cooling system, the driver is pressurised because product in his care will rot. In that kind of situation, the best option available is to buy your way through. We do not believe


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all the checks on the road are cumbersome. Some of them are genuine. But the issue is: even the genuine checks can cause delay in perishable transit and the point is how to streamline them. Can we make sure that the most sensitive link in the chain, which is transport of perishables, can be hastened, quickened, put on the fast-track? We can’t ensure their faster movement on roads than what the condition of any stretch would permit but we can surely work in the direction of expediting their movement by devising solution to do away with the hassles which can be streamlined. It is to address this key issue of expediting reefer vehicle movement that we have mooted the idea of starting a 24x7 callin-centre for reefer drivers, to record and process their troubles. There will be a toll-free number where they can immediately call when faced with a troubling situation. Just to illustrate the general scenario in roads for reefer vehicles, a carrier might be carrying chicken all the way from South India to Kolkatta passing through seven different states. And in each state, they keep stopping for checks on a cargo which is already on challan, all the paperwork has been initiated and the recipient is responsible for receiving at his end. Now you just imagine, such a vehicle is stopped 15 to 30 times all through the route. So a trip which may take five days gets elongated to 10 days. Remember, when these vehicles are stopped, they join those serpentine queues alongwith other regular trucks with no preference shown to them. They normally remain stuck there for hours. Delays become cumulative -each delay for perishable cargo is a higher LOGISTICS TIMES October 2013

risk because the longer you are relying on the cooling system of the vehicle, greater are the chances of the failure of the machine and of course there is the unnecessary loss of usable shelf life! Also remember, this same trip is completed on car in in two and a half to three days. Any fast track movement if facilitated will reduce and aid the cold-chain at multi-fold levels. It will lead to the greening of the cold-chain by reducing fuel used both in cooling and transport, it will minimize risk of food waste occurrence, it will ensure that the shelf life extension is not depleted in held-up inventory but actually used at consumer shelves. Furthermore, it will reduce the cost of cold-chain and will bring more stakeholders into the fold.

Basic features

of the helpline

The mechanism of our helpline service would be like this: a toll free number would be provided (it will be aggressively advertised) and every time there is a bottleneck enroute, the driver can call us directly. Most of the calls, of course, would be related to unwarranted stoppages and on road harassment. The subjective definition of these stoppages would necessarily need to be provided by the caller. Calls can also be initiated by the cargo owner, the transport owner though we expect the onsite drivers will be the primary initiators. Our agenda would be to record enroute bottlenecksand use the information to facilitate easing of both process related and regulatory concerns. We will have a list of questions


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for the complainant wherein the caller will obviously be asked to identity himself, the vehicle,the owner of the truck and or cargo, size of the vehicle, nature of the cargo, the location from where he is calling and the precise nature of the problem. These things will get documented at the call center. And within minutes of receiving the call,

the data will be transcribed into an SMS and an e-mail which will be sent to four-five identified government departments and people of authority governing that specific region. The Principal Secretary (Transport) of that particular state or the State Transport Commissioner, Director General of Police (DGP), NHAI Chairman ‘s

OPINION

It could be a tall order Reefer trucks are like sacred cows for our industry. By their very being, they undertake the carriage of highly sensitive perishable cargo. I believe any step in a helpful direction to industry, is a good step. Of course, the proof of the pie remains in the eating. There are many instances Sanjay Agarwal of good intentioned initiatives becoming Chairman Devbhoomi Cold Chain nightmares in themselves. For that to not happen here, a very strong and purposeful monitoring of the processes at NCCD end would need to be developed. All the governmental harassment that this system seeks to check are really good-intentioned provisions gone awry. Thus it can’t be ruled out that this system may suffer from apathy or carelessness to the reported woes by truckers. As far as problems faced by truckers from criminals or hoodlums, I think a simple panic button should be provided, which will transmit the panic signal, and with GPS will give the NCCD precise location of truck, and then it should be the responsibility of NCCD to notify local police authorities and record a follow-up and conclusion, this should be usable in an insurance claim. This is because it would not be possible in such situations for the trucker to give detailed information to the NCCD operator about the owner of the truck, size of the vehicle, nature of the cargo, the location from where he is calling and the precise nature of the problem, etc. Regarding state boundary crossings, NCCD could play a great role in facilitating reefer truck movement by certifying the delicate nature of cargo carried and recommending priority clearance. It could even be a one-window clearance for all state boundary crossings. If the idea that “reefer trucks are sacred cows” can be conveyed to all and sundry, then this initiative of NCCD would be deemed a success. But admittedly that is a tall order.

office and some other local officials will also receive information. We are preparing the list of authorities on a panIndian basis who govern issues that we perceive bottlenecks for reefer movement. We will notify them and keep on updating the feedback which we receive. Now the issue is what would be the time lapse between recording a complaint and alerting concerned authorities? We are already in the process of identifying an implementation partner from within the NCCD member database and we will have to see what kind of system capabilities can beput in place. But I don’t foresee the call centre’s response time would be more than 5-10 minutes after receiving a call. A redressal call center NCCD is not spread across the country and is merely a domain specific think tank for the government.Yet as the umbrella agency for various cold chain stakeholders, it is the nodal center for communication for them. Hence it is important to understand, NCCD is not proposing an independent action center but the mechanism for a redressal center. How will we redress? By immediately alerting the authorities once we have a complaint registered. Now it would be upto the local authorities on how they act to deal with the issue on the ground. So we respect and depend on local authorities to take action. In actual terms,these calls will normally be made after facing a bottleneck or post any unfortunate harassment. So any resolution is unlikely to be instantaneous. The information that is received and passed on to state authorities will also be collated – state wise and LOGISTICS TIMES October 2013


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district wise- and with the help of stakeholders we will devise targetted policy interventions to actually streamline and mitigate concerns in specific areas and regions. Many state level authorities are apprised of the importance of cold-chain and are ready to support changes to ensure fast track movement of perishable goods. Now the question is: are we going to have a direct interface with the local authorities? The answer is yes and no. That is why we have devised a mechanism wherein senior officials would be alerted and they can further ask their subordinates to take the required action. We would then directly interact with relevant authorities on a regular basis to assess the impact and implications of the flow of information and to advise on possible corrective measures. This information will also be regularly published online. We believe over a period of time this information will lead to the changes required in the regulatory pattern via-avis reefer transit. Where are the hassles? Can we simulate interstate movement on roads as on rail, specially for perishables? Can the genuine regulatory checks be streamlined and can the unofficial stoppages be ended? In addition to the daily recording of the complaints, we will also prepare and share monthly reports with the state governments. For that we would expect a certain quantum of data to be built up which may take a few months initially. Though we will be advertising this service aggressively, it will probably be a while before all concerned parties get aware about it. The volumes will be a function of the awareness level. Once we have a base data LOGISTICS TIMES October 2013

OPINION

Treat drivers as customers In my opinion, a truly effective helpline is one that caters to the customer’s requirements and models itself based on that. In this case, we are talking about the drivers as customers. So, in order for the helpline to be effective, let us first understand the driver. In the logistics industry, the drivers carry tonnes of valuable cargo almost every single day through all kinds of road and weather conditions. Yet, inspite of all Bela Gajjar these hurdles, it is this group of people who Head- Customer Relations make sure that we never have to go without Mahindra Logistics our favourite brand of soap or cereal. So, all that said, how does one cater to this group of people? While we can look at all the ‘state of the art’ technology, it is the front liners that can make or break this. The front liners have to be knowledgeable, of course but more than that, they need to be adaptable to the needs of the customer (in this case, the driver). There has to be a willingness to listen and understand the kind of concerns and queries that may be brought out by the drivers. No matter how big or small the concern may be, it is real to the driver and hence requires a resolution just the way we would do for our other customers. Resolution timelines need to be in place depending on the kind of concern and it has to be followed through completely. This is not something that can be done in isolation and without the support of a cross functional team who shares the same goal. The benefit of having a help line service of this sort is also multi -fold. Not only does it give the drivers a sense of belonging, it also shows that someone cares about them and the problems they face. This of course has a direct reflection on the quality of service the driver delivers to our end customers. Ultimately this permits us an insight into the challenges faced on the road, it also gives us the opportunity to make suitable changes to ensure seamless delivery of goods. This is particularly true for the perishable goods where timely delivery is of paramount importance. So, simply put, creating and managing a dedicated helpline for drivers involves: Easy Access Timely response Support team Analysis to mitigate recurring concerns

pertaining to the pattern and trend in reefer movements in different pockets of the country, we will start sharing it regularly with the central ministries, state

governments. I think, going ahead the concerned central ministries may recommend action items to the state governments.


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This is a pan-India public service which is being provided and at first we will setup this toll free call-in-centre as a small operation. Depending on the volume of calls received, we will accordingly scale up the

operations. Presently, we do not have much idea what could be the call volume. The callin-center is planned to be free and open to the entire range of 30,000 plus reefer fleet plying in India.To call-in, the vehicle

Even the genuine checks can cause delay in perishable transit and the point is how to streamline them. Can we make sure that the most sensitive link in the chain, which is transport of perishables can be hastened, quickened, put on the fast-track?

LOGISTICS TIMES October 2013

must be operating for perishable cargo and the complaint must be related to transit delays. As the reefer fleet operators find some value from this service, we expect the volume of calls to increase. At that stage to handle large traffic, if required we may request the user companies to come forward and share in the cost.We will decide on this once we know the call volume patterns. If scale becomes big and if we have to deploy 50 people to man this call center, then we would expect some support from the industry. NCCD afterall is all about forging partnerships and collaboration with private parties to pave way for the structural growth of the cold chain sector. If required, we will then discuss with companies the future option of pre-registering for a nominal fee of maybe Rs 100300 per vehicle once a year. This will also streamline the process for them. Suppose a company has got a fleet of 50 trucks and we have the registration number of all these vehicles in our data base, if the call comes from one of them it will be quickly registered since they already exist in our records. If they are registered with us and happen to have a GPS-enabled fleet (in the future all government support to this sector via subsidy assistance would make it mandatory for reefer vehicles to have a GPS system), then the position too can be accurately ascertained. No time would be wasted there. A major risk area which reefer operators and cargo owners often face is linked to the refrigeration failure. We may explore to even record machine failures and pass on technical complaints to equipment service providers all over the country to fast track emergency repairs.


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Advantage Logistics The logistics industry involved in cold-transport benefits from this initiative by having a single point option to officially record their in-transit complaints.This would help to narrow down which specific stretches on the highways the harassment is prevalent, which regions require attention for regulatory amendments, etc. All of this would translate into cost savings to service providers. The policy makers will benefit as recipients of structured base line data, specific to perishable trade and its bottlenecks, and can bring to focus required amendments. The nation would take a step closer towards hassle free movement of perishable items. Industry & Stakeholder Partnership Right now, this is entirely an idea or a concept mooted by NCCD and it has already received approval to implement this reformist step. We are now scouting for implementation partners. We are talking with some private firms with the capability to implement it. One foresees and hopes that organisations with progressive leadership and strategic mindsets would step forward to partner in this initiative. Some private players have already responded with extreme enthusiasm. But personally, I am frequently disappointed with the industry. They expound positively to many initiatives which we propose.Yet when it comes to joining hands as partners, they often display dithering signs. NCCD was set up by the government at the behest of this industry, as an urgent need from this sector, yet very few have stepped up to truly consort with NCCD. Sadly,

Right now, this is entirely an idea or a concept mooted by NCCD and it has already received approval to implement this reformist step. We are now scouting for implementation partners. matters of their own interest are shelved by them, with only unilateral demands put forth. This could very well be due to current business environment, yet unless the industry takes the bull by its horn, they will not be able to fulfill their long term goals. Industry players need to move beyond their immediate sufferance and work towards mitigating its recurring occurrence. NCCD will continue to function to promote integrated cold-chain systems in the country. The industry need not only take advantage from the side lines but should also sincerely and actively participate. Well, this redressal mechanism is about recording their sufferance and devising solutions thereof. One is not aware if such a service exists in any other country. In our view, this may be the first of its kind initiative in the world. In the context of conditions in the Indian marketplace, this would be very unique because we have various inter-state regulations, norms, policies, state RTO policy, etc. We want to at least bring them in an alignment to facilitate smooth reefer movement. If you consider Europe, the reefer

vehicles are stopped only at international border check points and provided priority at that. Here in India, they are not only stopped at state borders but also at multiple points within the state. No priority checking is offered. This is despite our having inter-state transport permits which are regulated yet there are stoppages and checks to monitor that. There could be a central monitoring mechanism developed to counter that. Once everyone registers with us, their inter-state movements or permits can be on records, reefer vehicles can be given special permits, checks maybe limited only to origin and destination points, free toll access provided, etc. So this could very well become the precursor to becominga nodal platform for all reefer transportation in our sub-continent. As I said earlier, right now we are scouting for an implementation partner and we hope to finalise an implementation plan in coming weeks. The agenda is to launch the Reefer Vehicle Redressal Centre (RVRC) around the beginning of the next year. (As told to Ritwik Sinha) LOGISTICS TIMES October 2013


PERSPECTIVE

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Why only 300 Km/day? Why not more...

Ramesh Kumar*

At the time of Independence (read Circa 1947) when the Indian road sector had nothing to boast off in terms of kilometers, heavy commercial vehicles used to cover not more than 250 km in a day. Over the past 11 Five Year Plans, this critical parameter has inched by an additional 50 odd km. Pathetic, indeed. Out of curiosity, I trawl into the archives of Government of India – more specifically the budget speeches of the Finance Ministers of yore. What do I find? The word, “transport” appears for the first time in the 1947-48 budget speech of Shanmugam Chetty (page 5, para 8). What did India’s first Finance

talk about something that does not exist? Why only 300 km a day today – 66 years after Independence? Why not more? Is it possible? Or isn’t? If yes, what is preventing this higher goal? Is it peculiar to India or other countries as well? Questions galore. Bear in mind that we are not talking about carriers covering this distance in a running time of 24 hour cycle. Then what? We are talking about the vehicle moving on road for not more than 10 hours in any 24-hour cycle. What? Yes, it is true, Indian commercial vehicles do not – repeat, DO NOT – move on highways beyond 10 hours on any given day. Listen to Mckinsey’ report

Why only 300 km a day today – 66 years after Independence? Why not more? Is it possible? Or isn’t? If yes, what is preventing this higher goal? Minister tell the nation? “In recent months, the production of coal has shown some improvement. but so far as the consuming public is concerned, this has been more than neutralized by difficulties in transport resulting in large accumulation of coal at the pit heads. Transport and other difficulties explain the drop in production to some extent, but this is also partly due to labour unrest and strikes.’ No mention of ‘highways’ at all. How can the Hon’ble Minister LOGISTICS TIMES October 2013

on Building India: Transforming the nation’s logistics infrastructure by 2020: In addition to mode costs, transit times across modes in India are longer and vary widely compared to developed countries. This can be partially attributed to low average speeds. For example, the average speed of a truck is 35 km per hour on India’s highways as compared to over 75 km per hour in the US. Similarly, the average speed of freight trains is 25 km per hour in India while it is close


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PERSPECTIVE

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to 45 km per hour in the US. Low average speeds are accentuated by a variety of factors: uncertainty in waiting times at toll stations, freeze in truck traffic during the day, high turnaround times at ports, low priority accorded to freight trains on Indian railways, low-quality track infrastructure and outmoded trucks susceptible to frequent breakdowns, resulting in long transit times. These challenges significantly increase the management complexity for users of India’s logistics network. If you don’t trust McKinsey, then hear this out from the Working Group set up six years ago in the run up to the Eleventh Five Year Plan (2007-2011), stewarded by doyens of the road transport industry. A semi-governmental version on the challenges and specifically answering this perpetual “why only 300 km a day?” query: Barrier free movement of passenger and freight by road across the country is vital for promoting efficient economic development and growth. A goods vehicle in India is answerable to all the checkpoints and traverses under conditions which are not ideal, leading to lower speeds and low utilization of rolling stock. This makes seamless flow of freight traffic across the India difficult. A typical truck operator has to normally face seven different agencies for either obtaining clearances for carrying goods or paying certain charges at the check post. These agencies are mainly: 1. Sales Tax 2. Regional Transport Officer (RTO) 3. Excise 4. Forest 5. Regulated Market Committee 6. Civil Supplies (for check on the movement of essential commodities, black marketing, weights and measures, food adulteration) and 7. Geology and

What is lacking perhaps is courage and conviction of the biggest industrial lobbies – CII, FICCI, Assocham to tackle this issue head on. Mining. These checks are generally conducted by respective agencies at separate points, resulting in more than one detention. Detention of vehicles causes lower speed, loss of time, high fuel consumption and idling of vehicles, leading to underutilization of transport capacity and adversely affecting their operational viability. Besides, it imposes economy wide costs which are not easy to assess. Better roads and faster speeds may be offset by Inter State Check Posts (ISCPs). The system in vogue hinders rather than facilitates smooth flow of freight and passenger movement across the country and has thwarted the formation of single common market.” 3PLs and fleet owners have come to accept this and given the condition of Indian highways – some patches are excellent and some are absolutely worst – a minimum of 300 km per day is accepted. This norm is applicable for all single driver-driven vehicles on long distance. No wonder, the average speed of heavy commercial vehicles on Indian highways have not kept pace with the passage of time since the Independence in 1947. Sophisticated vehicles with higher speed levels have arrived already, but their on road performance has not improved – for no fault of theirs. It is not as if we will be never be able to cover 750-1000 km/day as the foreign fleets do. India Inc, the ultimate users of HCV vehicles for

movement of raw materials from various places to manufacturing site and again pushing finished products to nooks and corners of vast India, can lobby hard with the government to stop the ‘harassment on highways’. Let us not lose sight of the fact that the biggest business conglomerates operating out of multilocations across India in different states and therefore can pressurize respective state governments to ‘rectify’ this major malady. Transport is a state subject and therefore it is within the states’ ambit to do something concrete and positive for the industry if they wish. Will they, on their own? Doubtful. Will they, if employment generators (read India Inc) demand? Certainly. What is lacking perhaps is courage and conviction of the biggest industrial lobbies – CII, FICCI, Assocham to tackle this issue head on. Halting Highway High-handedness will be win-win for all: industry will have quicker and efficient supply of raw materials and finished products; higher turnaround for motor maliks. Higher revenue through increased fuel sale; higher user fee at toll gates. Higher growth. Shifting the goal post to 500 km/ day in the immediate future is for the asking. But nobody is asking. If the RTO/TI challenges and interstate border challenges can be streamlined and tackled, India will indeed be a super economic power. The biggest question is: do we aspire for it?

* The writer is the author of 10,000 KM on Indian Highways, Naked Banana! and An Affair With Indian Highways. He is also the Founder-Chairman of KRK Foundation, working for improving the living and working conditions of truck drivers and their families living in remote villages of India. LOGISTICS TIMES October 2013




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PRODUCT

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QUICK CHAT

40

â?žBusiness trends are not positive

â?ž Agents

Air Cargo Association of India (ACAAI) - the apex body of the air cargo fraternity in the country- will be holding its 40th annual convention later this month in Jaipur. ACAAI president Bharat Thakkar explains to Ritwik Sinha the broader issues which will be taken up in the convention this time. Edited excerpts: LOGISTICS TIMES October 2013


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Let me begin with a very simple question. How would you explain the trends in air cargo business in past one year? We all know that the global economic environment has not been that positive for quite sometime. So though we were expecting that the business will improve, it hasn’t really happened. The focus of Indian air cargo focus in the last few years with last one year being no exception has been the pharma sector. In fact, this sector has become the backbone

of our line of business and will continue to remain so for over a long period. But on a general basis, the galloping growth trends which we had become used to during the best spells in our recent history – 10 percent in international and as much as 20 percent in domestic – we have somehow lost the way to sustain this trajectory on a consistent basis now. It is very clear to us that there has been a decline in demand in the recent years though there have been some sectors where business have improved. A clear example is

the growing demand in the garment sector in the last two months. But in terms of air cargo tonnage growth which we were expecting to be in the range of 7-9 percent, the trends have been disappointing and we believe that this slowdown in the air cargo tonnage growth will continue in the next year. Even the pharma exports is facing some transit issues in Europe. I don’t envisage our growth to be more than 2 percent this year. I guess, the recent currency LOGISTICS TIMES October 2013


QUICK CHAT

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fluctuation must have also adversely impacted your business? Yes, that is true. Though some exporters believe that they are benefitting because of the recent currency trends but I don’t think that is the case. With the change in guard at RBI, the rupee decline has reversed considerably. One wonders why nothing was done for three months prior to the arrival of new RBI chief on the scene. In the backdrop of the existing business trends which you said is far from satisfactory, what are the pertinent issues you will take up in this year’s convention? Our conventional theme this time is very vital because it has a wider link with the air cargo industry. We are going to highlight some very pertinent issues. Most importantly, we will talk about policy – what kind of changes is required to bring the stakeholders together. We will have top government functionaries from the Ministry of Civil Aviation, senior representatives of companies running key airports, pharma companies, etc. setting up the tone in the inaugural session. Senior officials of some auto firms would also be available. Let me know the specific themes which you would take up. There are a host of specific issues which we are going to take up during the course of the conference. For instance, we will discuss the key issues related with technology like IceGate. Even some international experts believe that Indian customs system is good. But the system has some glitches which need to be fixed expeditiously. The other thing is the general mindset that is somewhat averse to adopting new technological applications. It has to be wiped off. Without adopting LOGISTICS TIMES October 2013

Even the pharma exports is facing some transit issues in Europe. I don’t envisage our growth to be more than 2 percent this year. technology, you can’t restrict the transaction cost. If you remember, ACAAI in association with Kale Logistics had launched a web platform called UPLIFT. Today as many as 18 airlines are using it and the result has been very satisfactory. Airport operators are now testing it. We are keen to emphasize that this kind of application is more important for small freight forwarders to stay competitive vis-à-vis major players like DHL, FedEx, etc. Other point which we would highlight is that all nodal agencies of the government involved in air cargo movement like EDC, Wildlife Office, etc. should be linked to the EDI system to actually create a single-window procedural mechanism. This could contribute significantly in reducing the dwell time in custom clearance. Another significant agenda would be to simplify air logistics. For instance, any cargo in the world going to the USA, the origin shipping country has to file AMS (automated manifest system). It hits the Department of Security website and then the department screens the importer and exporter following which a signal is sent to the airline. Before that a cargo can’t be flown in. It can be equated with issuing somekind of freight visa after proper screening. Why can’t we have a similar kind of system? We would also like to address the issue of benchmarking the price especially in the case of delay. During the best years of air

cargo business which I believe was prior to 2008, we all used to hear this theory that India has the potential to emerge as a major air cargo hub in the world. But nobody talks about that now. Have we given up that dream? No, we have not given up. There is example of Delhi where GMR has done well. In geographical sense, the location is good and the land mass is also available. We as air cargo agents would like to see a similar kind of facility coming up somewhere in South India. The reason being: South India is just like Europe. Hyderabad, Chennai, Bangalore, Tirupur, Vizag, Coimbatore, Selam, etc- all these cities are like UK. We can run from one city to another through an intercity train service. Furthermore, you have Sri Lanka below. But the issue is: infrastructure in Chennai is not up to the mark. You have Bangalore and Hyderabad but they are like dry ports. The point is we need a vibrant cargo hub somewhere close to the port area and not too much far away from it. ACAAI as you know has been vocal about creating Air Freight Stations (AFS) in places like Chennai and Mumbai which will help the exim trade by doing away with the congestion at the existing hubs. If these hubs come, the cost of exim will come down. And at the same time, India will get more business. Today any additional airline that operates to India understands how much of passenger volume it will move. In the same way, the cargo business will also add more business. As I said we have not given up on that dream. In 1980’s the milestone we were chasing was to have bonded warehouses. And then we thought about cargo villages. But it is still on papers. In the past several initiatives have been discussed but somehow it didn’t work out. I guess, it will take some time.



SUPPLY CHAIN MANAGEMENT

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Role of Packaging Piyush Kumar Director INDUS B2B Solutions

Today’s e-commerce boom has redefined the Indian logistics sector and has ushered in a stronger packaging need Packaging has been by and large the most important part of product profiling. It is the science, art and technology that protects and enhances the product enclosed for proper transportation, distribution, storage, sale and use. Today packaging is continuously evolving as a science and technology with prominent innovations being made day in and day out. In many countries packaging is fully integrated into government, business, institutional, industrial and personal use. Critical issues are faced by different segments of society pertaining to safe movement of cash, confidential documents and valuables such as evidence for police services, examination papers, diamonds, precious metals, foreign exchange, election papers, cash in-transits and passport, among others. Such incidents of exam paper leaks or tampering of evidence or theft of passport and cash in transit can be avoided by taking small precautions like the use of security and tamperevident packaging products that ensure the highest level of tamper evidence. LOGISTICS TIMES October 2013

While it is expected that every corporate has to deliver the product, safe and secure, to the right person in right time frame, there are instances of tampering, theft, or depletion of products or important documents during transportation. Where most companies take great efforts in designing and manufacturing their products, product samples and quotes, all effort goes in vain when the products and important documents are received in deteriorated condition. There are chances that the products/ important documents might arrive in a depleted condition due to wear and tear during transportation. This

is where tear free security envelopes play a major role. Tamper-evident packaging ensures an envelope carrying important documents cannot be opened without damaging or tearing the envelope. An ordinary envelope can be opened and then sealed again without leaving any evidence. Tamper-evident security envelopes leave clear and indelible mark to any attempt of unauthorised opening. Thus, it is able to provide perfect optical opaqueness and ensure maximum confidentiality. These envelopes also safeguard the products/ documents from pilferage and depletion during transportation.


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There are many reasons for employing tamper-evident products. Tamper-evident devices or features are common on packages to deter package or product tampering. They are used wherever one wants to know whether the packaging/ product being transported are tampered with. Such packaging material offers irreversible proof of tampering which enables one to take quick action. Thus, any tampering of confidential document or examination papers or any security lapse can be immediately brought to the notice of the authorities with the help of the security and tamper-evident products, which show evidence of tampering. Tear Free Envelope is also a very important branding tool, as it goes a long way in reinforcing the brands’ trust and establishing credibility

The tamper-evident packaging material is in wide use in the western countries; companies in India too have started realising the importance and benefits of such products. over companies that use random envelopes. Security and tamper-evident packaging products are being used world over, in government departments, educational institutes, police and investigative bureaus to protect confidential information and evidence samples from unauthorised access. Security and tamper-evident products highlight evidence of tampering through their reliable special security closure, and unique sequential number or bar coding, clearly and instantly. Due to the unique nature of security and tamper-evident products, an excellent deterrent to unauthorised access, tampering or theft becomes easily traceable. The tamper-evident packaging material is in wide use in the Western countries; companies in India too have started realising the importance and benefits of such products. In fact companies in India are now gradually and steadily shifting from conventional packaging products to security and tamper-evident products. For emerging industries like e-commerce it is critical to gain repeat customers. Repeat purchases or loyalty is determined by perceived usefulness, trust, satisfaction, and perceived value of the product. Looking at the condition of goods when received, the customer builds a perception about the product and its supplier. The customer never physically comes in contact with the seller and the final product, which

is delivered to his/her doorstep, can make or break the customer loyalty. Similarly even the more established industries and bodies like banking, education, passport offices, investigative bureau, government departments and corporate have adopted a safe passage for the movement of important documents by shifting to highly secure and tamper-evident envelopes from the conventional ones. One of the packaging envelopes categories is a security envelope, used by textile garment companies to courier or transport their samples to and fro between mills, shops, customers, dealers and the like. These envelopes provide a great deal of security as they are water resistant, their peel and seal technique saves time, effort, and energy and they are easier to handle as they are lighter than cloth and paper, so less cost of couriering occupies. They also occupy 60% less space than conventional envelopes and can be branded as per customer requirement. Globally, not many companies manufacture high security tamperevident bags and envelopes, which are used by e-commerce retailers. The infrastructure required to assure the reliability is difficult in terms of machinery, standards, people and technology. In a country like India, where damages in transit or tampered couriers are a common sight, e-retailers lose customers every time a damaged product is delivered to him. LOGISTICS TIMES October 2013


EDUCATION

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Spotting Right Talent

T

here exists a severe skill gap in the logistics industry and efforts need to be made to bridge this gap. What really is “skill”? Skill is “doing a hands-on job with training specific to it”. All categories of human resource in the logistics sector need to be skilled. These would include drivers, delivery agents, station/ warehouse supervisors, booking clerks, operation managers and all the front end staff. Are they motivated and skilled enough to discharge their duties and ensure efficiency in the supply chain? Are they able to meet customer expectations? Handling and servicing of the huge infrastructure needs expertise and safety can be ensured through training. There is urgent need to hunt for talented manpower to be able to successfully handle the growing demand of this sector. Logistics is one industry which forms the backbone of any economic activity. Logistics and supply chain management help to build the chain of activities that will transform raw materials into goods and services to satisfy consumer demands. Logistics sector is supposed to be one of the key determinants of the pace of future growth of the Indian economy, especially when some industries like steel, pharma, food and agro-business, and auto are witnessing strong growth rate. Transportation is an important element of logistics, for all things manufactured (freight) need to be moved from the point of origin to destination of the final consumer. The freight could be moved through any one mode or a combination of modes. The trend (as given in accompanying graph) shows a growth in the LOGISTICS TIMES October 2013

Dr. Veni Mathur Ex-faculty, IIT, Delhi Dean, Million Minds

A survey done by KPMG (2010) of 80 premier logistics companies revealed that manpower costs are nearly 8-10% of overall sales in this sector. transportation sector, which is due to reasons like: a) A large number of multinationals trying to set up shop in India. b) An increase in the awareness of consumers, due to globalization, leading to an enhancement in the pattern of demand. Some of the multi-nationals that have entered the Indian market are Gazeley Broekmen (Walmart’s logistics partner), C H Robinson, Kerry Logistics and others; besides a series of mergers and acquisitions like DHL acquired Blue Dart and Fedex bought over Pafex and AFL etc, have increased the demand for quality service by customers. Many

of these players are planning to broaden their areas of operations by developing their own logistics parks. If the trend continues as per the estimates, the organized players will need skilled human resource to manage increased operations. The domestic logistics industry which is estimated to generate business worth $110 billion in the next two years will need additional 420,000 pairs of hands at all levels. A survey done by KPMG (2010) of 80 premier logistics companies revealed that manpower costs are nearly 8-10% of overall sales in this sector. This translates to about Rs. 500 billion spent on manpower, out of which only 13-14% is spent on training, welfare, etc. This share is extremely low as compared to global norms of more than 20%. Thus, there is great scope for carrying out Talent Hunt and training of manpower to meet the needs of this logistics industry. The average consumer is more enlightened about his rights and openly demands them. The consumer is not only looking at value for money but is demanding state-of-the-art quality of goods and services. Their demand for instant satisfaction has led to the emergence of concepts like Justin-Time and Reverse Logistics. Outsourcing has become the order of the day due to the pressure on reducing cost and improving quality. Core competency or specialization is needed at every step of the way. All the drivers of the supply chain; production, location, transportation, inventory, marketing need to be well linked with information technology for speed and transparency as well as for data collection. The supply chain operations of plan, make, source nn nn and deliver; with proper planning


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and scheduling, manufacturing, procurement and dispatch, are all important activities that need specialized manpower, which needs to be carefully selected/picked. Low penetration of IT and the increased competition have created immense opportunities and scope for employment in this sector. The logistics costs in India are among the highest in the world, at 13 to 14% of GDP. Besides, the Indian infrastructure is rated 54th among the 59 countries studied for assessment: Road is 56/59; rail 25/59; seaport 51/59 and airports 40/59. The poor skills of logistics human resource are due to a large number of factors, such as – 1. Improper recruitment 2. High attrition rate 3. Poor career progression 4. Lack of use of technology 5. Economic losses due to accidents 6. Huge claims and compensations to be paid by the carriers 7. Inability to successfully carry special cargo 8. Low income and motivation of the employees 9. Attitude of the employers 10. Lack of awareness of safety and crisis management 11. Lack of knowledge of global standards 12. Poor infrastructure At present India has the potential of becoming a logistics provider of class, only if appropriate HR training and recruitment policies are implemented, along with infrastructure development which is largely the responsibility of the government. The features in favour of India are – Nearly one-fourth of the youth population of the world resides in India India has the second largest pool of technically qualified work force The interplay of transportation,

technology and value added services will improve customer satisfaction as well as bring the cost down and increase efficiency. A boom in the logistics industry can be envisaged with recruitment of motivated manpower of the right kind/type. There is shortage of proper manpower training institutes. Improper recruitment of manpower can be curtailed if an agency takes the initiative to carry out extensive Talent Hunt activities. There is need for some organizations to become facilitator for providing such services to this sector. Million Minds Management Services Ltd is one such organization which carries out this task of recognizing and training fresh talent for the logistics industry. Our flagship annual event “Logistics Achievers Award & Talent Hunt” is conceived to reward and showcase the talented students from various B-schools, who are selected through a stiff competition. Million Minds organizes 'Logistics Talent Hunt Award' which has been designed to search for talented students, who can think out of the box and bring out new ideas in the field of Logistics and Supply Chain Management. This

is a platform whereby the students can display their talent and win a chance to be placed and be a part of logistic companies. Management graduates are invited to make a presentation on pre-determined topics. Jury, consisting of stalwarts in the field, would make judgments to declare the prize winners. Apart from felicitating the winners with prize money, certificates and trophies, Million Minds assists them in their placements in leading companies. Million Minds has been instrumental in placing the winners of Talent Hunt 2012 and 2013, with big brands of the logistics industry, and are very satisfied with their jobs. The inclusion of trained and motivated manpower would improve the level of professionalism in the sector. The growth in the logistics sector will also see the owners charting out a clear progression policy for the human resource, wherein the manpower has a better chance for moving to higher levels in the hierarchy. The selection process of the Talent Hunt activity will introduce only those candidates who have a keen aptitude towards this sector and bring out innovation to meet the challenges and help to reduce cost and increase the level of satisfaction. LOGISTICS TIMES October 2013


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7th Express Logistics & Supply Chain Conclave

The 7th Express Logistics & Supply Chain Conclave was held on 26th & 27th September 2013 at Taj Lands End, Mumbai. The Theme of the conclave was “Fast, Streamlined, Customized - The Next Steps of Leadership”. The 7th edition featured 130 speakers from across industries who shared their experience with the audience through panel discussions, presentations and case studies. Around 500+ industry leaders & practioners from the SCM community attended the conclave. The ELSC conclave also featured an exhibition area which had 30 stalls wherein the supporting companies showcased their products and services during the duration of the conclave. The hugely popular & much anticipated 7th ELSC Awards was held on 26th September 2013, from 7.00 pm onwards at the same venue. These awards were presented by Reverse Logistics Company - Green Dust. Prominent well known industry experts spoke on various subjects / topics. Some of them were: S K Tyagi, Raymond; Pramod Sant, Siemens; Rajeev Mehta, Ultratech Cement; Tej Nirmal Singh, Ericsson India; S G Rao, Novartis India; Manas Sahoo, Fresenius Kabi India; . Sandeep Kumar, Johnson & Johnson; Thomas Lobo, Pfizer Pharmaceuticals India; Avinash Talwar, Dr. Reddy’s Laboratories; Jayanty Sastry, ACC; Lakshman Rao, Nike India; Pradip Saha, Colgate Palmolive (India); S K Krishnan, Mahindra & Mahindra; Arun Banavali, Hindustan Construction; Keshav Kotwal, L & T Power, Suneel Aiyar, Leapridge Advisors; Ramki Ramakrishnan, SKF India; Anand Maithani, Apollo Tyres; Anand Venkateswaran, Hyundai Motors India; Rajesh Gupta, JK Tyres & Industries; AD Banerjee, Tata Motors, to name a few. The conclave witnessed two exemplifying CEO’s round table wherein R S Subramanian - DHL Express India, Devdip Purkayastha - CHEP India , Percy Avari - Aramex International, Jasjit Sethi - TCI Supply Chain Solutions, Yogesh Dhingra, Blue Dart Express, Samir Bodas, ICERTIS, Suunil Dabral, Schaefer Systems, Chitra Shinde – Gati Kintetsu Express & Pirojshaw Sarkari, Mahindra Logistics shared their thoughts. LOGISTICS LOGIST STICS TIMES October 2013


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LOGISTICS TIMES October 2013


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Major Award Winners Best Express Service Provider of the Year - Domestic Blue Dart Express Ltd. Best Express Service Provider of the Year – International DHL Express (I) Pvt. Ltd. Best Sea Freight Service Provider of the Year Kuehne + Nagel Pvt. Ltd. Best Freight Forwarder of the Year Schenker India Pvt. Ltd. Best Road Service Provider of the Year Gati-Kintetsu Express Pvt. Ltd. Best 3PL Company of the Year Mahindra Logistics Ltd. Safexpress Pvt. Ltd. Best Air Cargo Carrier of the Year FedEx Express Best Air Cargo Terminal of the Year Cargo Service Center India Pvt. Ltd. - Mumbai & Delhi Terminals Best Inland Service Provider of the Year APM Terminals India Pvt. Ltd. Retail Supply Chain Excellence Award Shoppers Stop Ltd. Supply Chain Company of the Year Safexpress Pvt. Ltd.

LOGISTICS LOGI GISTICS TIMES October 2013

Best e-Commerce 3PL Company of the Year Aramex Warehouse / Material Handling Company of the Year Schaefer Systems International Pvt. Ltd. Madura Fashion & Lifestyle Supply Chain Solution Provider of the Year CHEP India Pvt. Ltd. ELSC Company of the Year TCI Group ELSC Face of the Year Mr. Rubal Jain, Director -Corporate Strategy, Safexpress Pvt. Ltd. ELSC CEO of the Year Ms. Chitra Shinde, President, Gati-Kintetsu Express Pvt. Ltd. ELSC Exemplary Leadership Award Mr. P C Sharma, Chief Executive Officer, TCI XPS Mr. Pirojshaw Sarkari, Chief Executive Officer, Mahindra Logistics Ltd. Mr. Srinivas Sattiraju, Chief Executive Officer, DelEx Cargo India Pvt. Ltd. Lifetime Achievement Award Mr. Anil Khanna, Managing Director, Blue Dart Express Ltd.


New growth opportunity for Indian LSPs

Frost & Sullivan successfully hosted the fourth edition of its annual strategy workshop for the logistics sector, titled ‘Supply Chain Transformations 2013’ in Bengaluru last month. In this edition, Frost & Sullivan sought answers for specific questions that included - How can Logistics Service Providers (LSPs) help generate new opportunities for the Indian manufacturing sector? How can Technology Service Provider (TSP) capabilities and emerging IT solutions be leveraged to fulfill evolving business needs of the logistics sector? What are the implications of FDI in retail on the country’s manufacturing and logistics sectors? Frost & Sullivan, in its study, found that the transportation and logistics market in India grew at a CAGR of 15.1 percent between 2007 and 2012. But 2012 posed a challenging scenario that has been carried forward into 2013. The key challenges facing the Indian logistics sector today are decline in domestic manufacturing and output, decline in export and import of goods, which has affected domestic and international logistics services segments, respectively. The workshop witnessed LSPs present various means to aid logistics end users find growth opportunities in domestic and international markets. It was summarized that in the domestic market, growth can be achieved by providing collaborative logistics and sharing information about warehousing space, position of trucking assets, etc. Meanwhile, to successfully tap opportunities in the international market, it was revealed that LSPs need to enhance their overall cost competitiveness, visibility, service flexibility, and IT infrastructure to enable smooth and error free information exchange. LOGISTICS TIMES Octoberr 2013 2

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EVENTS

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CRWC bags excellence awards

Central Railside Warehouse Company Limited (CRWC) a Public Sector Undertaking (PSU) under the Ministry of Consumer Affairs, Department of Food and Public Distribution bagged excellence awards in the category of ‘Best Logistics Company in Government Sector’ at the recently held “Eastern & NorthEastern India Supply Chain & Logistics Summit 2013” in Kolkata. The event was organised by Bengal Chamber of Commerce and Industry. The award to CRWC was received by A.K.Ghosh, Terminal Manger, Dankuni (West Bengal) from the Executive President of the chamber..

Bullion Association Award for BVC

The Bombay Bullion Association which commemorated its 65th Foundation Day this year has launched the first India International Bullion Summit (IIBS). During the summit BVC Logistics, a leading player in providing logistics solutions to the gem and jewellery sector, was awarded the prestigious Best Logistics Company award. The award was received by Uday Chinai, Chairman and Managing Director, BVC Logistics. LOGISTICS LOGI GISTICS TIMES October 2013


Announcing Partnership

Hong Kong based ASR Group (the only listed freight forwarding company at HK Stock Exchange) recently entered into a strategic tie-up with New Delhi based-TKWs Group to form AOE-TKW Logistics India. A formal announcement was recently made in a glittering ceremony at Park Hotel in Delhi. Besides directors from both companies, many prominent companies of India Inc’s telecom industry participated in the ceremony to bless the new entity. Guest of honour was Polar Air’s Sales Director – Asia Pacific region, Atlantus Wong.

ANNUAL PROJECTS MEET

Interarch conducted its sixth Annual Projects meet at Lemon Tree, Ghaziabad, New Delhi (NCR) over two days, 23rd - 24th September 2013. The project meet saw Gautam Suri, CTO and Founder Director; Arvind Nanda, CEO and Founder Director and Mahesh Verma, Sr. Vice President presenting the key notes and recognized some of the deserving projects from across the country. At the meet Interarch also released its first Site Management Manual for its partners which will highlight the key areas of day to day work at an Interarch project site at different levels of execution. This projects meet also marked the completion of a successful one year for Certified Builder, an initiative by Interarch for all the associated partner builders. LOGISTICS TIMES October 2013

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EVENT ANNOUNCEMENT

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LTH 3 to add more features A press meeting was called for the launch of season 3 of the “Logistics Talent Hunt 2014” organized by Million-Minds on Friday, 27th September 2013. The event was attended by members of the media. A presentation was made discussing the details of the talent hunt activities that are planned by MillionMinds. This time four new places have been identified for the competition besides Delhi, Mumbai, & Jalandhar. The new locations are: Chennai, Jaipur, Lucknow & Patna. The grand prize this season is an international industrial visit for the winning team in addition to trophies, certificates, CILT membership, BAC student membership, summer training,etc. A new concept – Corporate Forum of Brand Ambassador Club is being introduced this season due to immense demand on social networking sites like Facebook. It will include young professionals with maximum experience of 5 years. The competition for the first regional level will take place on 12th October 2013 at Institute of Marketing & Management, LOGISTICS TIMES October 2013

Qutub institutional Area, Delhi which is the Education Partner of the talent hunt exercise for Delhi region. According to organizers,

nominations have come from a large number of colleges and it is expected that the competition this season will be intense than ever before.



RNI No. DELENG/2011/39329

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


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