Lt september 2014 web file by Raj Misra

LogisticsTimes www.logisticstimes.net

REPORT E-COMMERCE

NDIA'S MOST VALUED LOGISTICS MAGAZINE

September 2014

EVENTS LAKME FASHION WEEK

Cover Feature

` 50 Logistics Times

Available on

Tablets & Smart Phones

The changing dynamics of Finished Vehicles logistics

Logistics Times All about Transportation, Distribution & Infrastructure

Volume 5: Issue No.5 * September 2014

CONTENTS

Raj Misra

Editor in Chief

rajmisra@logisticstimes.net Ritwik Sinha

Editor

ritwik@logisticstimes.net

Sales & Marketing

S K Hussain

Sub Editor

Neha Richariya

Photographer

Mohit Malik

Designer

Kausar Syed

Circulation & Distribution

Kamruddin Saifi

Legal Advisor

Rakesh Garg

Our Bureau Mumbai

Rahul Kumar rahul@logisticstimes.net

Bangalore

B Shekhar shekhar@logisticstimes.net

Chennai

N Raju raju@logisticstimes.net

Hyderabad

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

Marketing Coordinator Ph: 011-22478538-39, 9990473003 Email: advt@logisticstimes.net Printer & Publisher Deepa Misra for

D-608, 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

26 THE CHANGING DYNAMICS OF FINISHED VEHICLES LOGISTICS IN INDIA Edit Note

News Brief

Food Supply Chain

IN THE NEWS DHLâ&#x20AC;&#x2122;s E-commerce initiative

IN THE NEWS Lords freight

REPORT Breaking Barriers with e-Commerce

EVENTS Lakme Fashion Week

EDIT NOTE

In Top Gear? It is simply no secret to anybody today that the tremendous upsurge in the automobile sectors is one of the most shining chapters of India growth story which had kickstarted in early 90’s. Alongwith IT, banking, real estate, telecom and other frontline businesses, the automobile industry particularly its passenger car segment has been in the forefront of contributing robustly to domestic economy’s growth. Statistics tell the story. In the passenger car segment, there has been a production growth of nearly six times between 1995 to now and in the process India has become the sixth largest car market in the world and appears in the top league of car exporting countries. With a production base of nearly 4 million units annually, one can well understand the amount of efforts (both quantitative as well as qualitative) it requires to ensure that the finished vehicle is ultimately handed over to the end user (both within the country and outside) in factory fresh conditions. Our cover feature this month penned by noted auto logistics expert Achal Paliwal, who has spent over two decades with Suzuki and Honda, takes a look at the changing dynamics of car distribution – how the process has been streamlined to a considerable extent since the early days of Maruti when car trailers were not available to the immediate future imperatives as volume pressures keep the outbound logistics managers on their toes. Achal’s piece clearly underlines that there are pain points galore – like Railways having failed to become a vibrant mode of transportation for finished vehicles unlike in developed markets; major ports not being too supportive in facilitating car exports and the much talked about collaborative approach within the OEMs not exactly falling in place. And then there are host of other issues like OEMs and auto logistics service provider passing the buck in creating the work pool for the future and lack of financing avenues for pushing in new trailers on the roads. Will auto logistics get into the top gear in the country? That is the broader question which the cover feature in this edition tends to raise. This is clearly the season of e-commerce and some of the leading logistics service providers are making swift moves to align with it. As a report in this edition points out, DHL’s e-commerce division has given clear indications that it is going to treat India as a leading hub for its new age e-commerce offerings. We also bring to you a comprehensive report on this business which was released by e-Commerce Association of India recently. The report while presenting a macro picture of how this game will unfold in the domestic market also talks about the possibilities for players in the SME category. Waiting for your response Ritwik Sinha ritwik@logisticstimes.net LOGISTICS TIMES August 2011

NEWS BRIEFS

RVC becomes operational perishable goods like vegetables and fruits. They can register their complaints on toll free number 18002676223. Complaints may include extortion, transit delays, harassment, etc. The RVC is a joint initiative by the Department of Agriculture and Cooperation, National Centre for Coldchain Development (NCCD) and Mahindra Logistics, In order to facilitate smoother transportation of perishable goods by providing redressal to issues that reefer van operators face on Indian Highways, Agriculture Minister, Radha Mohan Singh announced the launch of a Reefer Vehicle Call-In Centre (RVC) in Delhi on 11th September ( Logistics Times had reported on this initiative in its October edition, 2013). Launching the unique callin- centre, he said that the cold chain sector is fast growing, and key products including fruits, vegetables, meat, fish, poultry, dairy products, confectionery and pharmaceuticals are critically dependent on it. An essential link between source and markets is refrigerated transport, which face several bottlenecks and challenges. The RVC will help create a database of bottlenecks and their types across the national highways. The response generated from this exercise will help devise long term plans and policies to alleviate bottlenecks and thus control inflation in prices of perishable goods in the country. The Minister said that this initiative, perhaps first of this kind in the world would provide help in registering the complaints of more than 30,000 vehicles carrying LOGISTICS TIMES September 2014

he informed. Agriculture Minister further said that interspersed with Prime Minister vision of introducing e-governance measures, particularly in the agriculture sector, this call-in-centre will help in enhancing overall productivity by improving connectivity. India produces about 270 million tonnes of fruits and vegetables and there are about 8000 refrigerated trucks capable of total cargo throughput capacity of 3.6 million tonnes, he added.

India’s exports to reach $750 billion: FIEO India’s exports are expected to reach $750 billion by 2018-19 with improvement in the global trade scenario, apex exporters body FIEO recently said. Global commerce is showing improvement and it is expected to grow at 4.7 per cent this year and 5.3 per cent in 2015. “We are optimistic that we would be able to cross $350 billion this fiscal. FIEO projects an export target of $750 billion by 2018-19. This would require a CAGR of 19.14 per cent during 2014-19,” FIEO President Rafeeq Ahmed said. . He said India’s traditional markets - the US and Europe - are also posting better economic results. These regions account for about 30 per cent of the country’s exports. Slowdown in these western markets have severely impacted India’s outbound shipments. The country’s exports in the last three years have been hovering at $300 billion. It was $312.35 billion, $300.4 billion and $307 billion in 2013-14, 2012-13 and 2011-12 respectively. The government is taking several steps to boost the shipments. Soon it is expected to announce measures in the forthcoming foreign trade policy (FTP). Ahmed said the Commerce Ministry should announce steps such as incentives for project exports, brand promotion, creation of export development fund, measures for

service exports and affordable credit to exporters. Besides, there is a need to revive special economic zones, he added. “There is a need for immediate withdrawal of minimum alternate tax and dividend distribution tax and restore the SEZ policy to its original form. This would go a long way in regaining trust and confidence of domestic and foreign investors.” Ahmed also suggested that the government give interest subsidy scheme benefit to all the sectors and exporters and extend it till March 2017. To reduce transactions cost for exporters, FIEO D G Ajay Sahai said that time for approvals and clearances should be reduced besides simplification of procedures, reduction of documentation should be given top priority.

LOGISTICS TIMES September 2014

NEWS BRIEFS

Logistics in transition The logistics industry is playing an increasingly important role in international commerce. Global revenues had reached €981 billion by 2011 and the market for logistics services is expected to grow up to three percent per year worldwide in the period up to 2020. According to Global Logistics Markets – Trend Analysis, a new market report by Roland Berger Strategy Consultants and Barclays, logistics companies must adapt to new market trends that pose very challenging demands. The logistics industry is presented with new opportunities, such as the growing importance of intraregional markets, the expansion of E-Commerce and in providing specialized services to a range of industry sectors.“The volatile market environment, the everstronger online market, the shift in markets towards Asia, and the growing demand for special transport services necessitate new corporate strategies and considerable investments on the part of logistics providers,” explains Dirk Friebel, logistics expert at Roland Berger.

Importance of intra-regional markets on the rise – especially in Asia

Intra-regional markets’ relevance to logistics is on the upswing. In 2011, the market for logistics services in this sector was well up from the previous year – especially in Asia (+19%) and Europe (+22%). Southeast Asia, in particular, came on strong. Local markets offer providers with focus on selected verticals good growth opportunities and high margins, especially in automotive, consumer goods and industrial products. “The saturation of automotive markets in Europe and North America has had an adverse impact on logistics service providers in these regions,” says Roland Berger Partner Matthias Rückriegel. “Logistics companies should focus on markets with promising outlook to achieve sustainable success.” Currently, China, Japan and India figure most prominently in the Asian contract logistics sector. However, alongside China, other emerging countries such as Indonesia, Thailand, Malaysia, the Philippines and Vietnam will grow markedly up to 2017– by more than 10 percent per year. Although Southeast Asia has emerged as a new logistics cluster, the local infrastructure has yet to attain western standards for quality. “Apart from Singapore and Hong Kong, the region urgently needs investment to improve its transport infrastructure,” says Alexander Doll, Co-CEO of Barclays Germany. “China is playing an important role here with its experience: The country is helping its neighbors develop their infrastructure projects.” LOGISTICS TIMES September 2014

E-commerce: Opportunities and challenges

Another trend shaping the logistics industry is the rapid growth of online business. In 2011, e-commerce’s share of total trade in Germany, the UK and France was up 14 percent from the previous year. This development harbors great business potential for the global logistics industry, but it also has its pitfalls: B-to-C business requires shorter product life-cycles and faster delivery times. “Logistics companies must be able to deliver products in lower quantities – and that at low prices,” notes Dirk Friebel. “This, in turn, squeezes logistics providers’ margins.” Another factor is the local accessibility of suppliers: “Logistics companies should expand their domestic distribution networks in the respective countries in order to reach as many end-customers as possible,” says Roland Berger expert Matthias Rückriegel. “Accordingly, they must invest in new distribution hubs and delivery fleets to secure a good share of the market.”

Tapping into niche sectors with acquisitions

In contrast, certain industry niches that require a higher value add promise more profitable business. For example, pharmaceutical, chemical, gas, aerospace and consumer goods companies around the world are increasingly looking for logistics service providers that can take over specific sections of the supply chain. “Companies that can offer real valueadd to the industry in these niches will establish a foothold and achieve high margins in tomorrow’s logistics market,” explains Christian Schwarzmüller, Vice President, Barclays. “This is because companies are trying to expand their network of logistics service providers to avoid a precarious dependency on a few providers.” More international logistics companies are taking over specialized service providers in individual markets to tap into these logistics niches and extend their service portfolio with value-added services. However, corporate acquisitions in the last few years indicate that the value of most M&A transactions falls short of the $2 billion mark. “The days of major multi-billion dollar transactions are over in the logistics sector. Logistics providers are primarily taking over smaller, highly focused companies whose business prospects promise better margins,” says Barclays Germany Co-CEO Alexander Doll.

Carrier Transicold’s New Citifresh Solution

Carrier Transicold India’s Citifresh range, recently debuted at the National Center for Cold Chain Development’s “Farm to Fork” event in Bangalore and promises to be ideal for transporting chilled products on medium- to large- commercial vehicles with a loading capacity of 16 to 55 cubic meters. According to a company release, the Citifresh range can handle a broad chilled temperature range of 4 degrees Celsius to 22 degrees Celsius. The range operates in tandem with the truck engine and provides a high airflow of 2,200m3/hr, crucial for proper air circulation. As the second largest producer of fruits and vegetables in the world, there is significant opportunity to deliver fresh, healthy food throughout India. Yet some $7 billion (INR 133 billion) worth of fruits and vegetables are wasted every year, primarily due to the lack of an

integrated cold chain. “Backed by Carrier Transicold, a brand that is synonymous with quality and reliability, the Citifresh range provides shippers and growers with an easy-to-use means of delivering fresh, high quality, safe fruits and vegetables to retailers throughout India, which will help to make a difference in reducing food waste,” said David Appel, president, Carrier Transicold & Refrigeration Systems. The Citifresh range’s robust design and stainless steel evaporator are easy to install and maintain, as well as ideally suited for demanding applications including high ambient conditions up to 50 degrees Celsius. The range delivers exceptional value by virtue of its low initial cost and lower maintenance and operational costs, while a dashboard-mounted DIN controller offers ease of use. The Citifresh 500, the first unit to be introduced within the Citifresh range, uses non-ozonedepleting refrigerant R134a. The unit’s high-efficiency compressor delivers refrigeration capacity up to 4,500 Watts in high ambient temperatures. As with all Carrier Transicold products, the Citifresh range comes with the security and peace-ofmind of an extensive aftermarket service network. A highly-skilled team of certified technicians, regularly trained in the installation, maintenance and repair of Carrier Transicold refrigeration products, are ready to support customer fleets across a pan-India network of more than 35 service centres. “The combination of Carrier Transicold India’s responsive customer service and the intrinsic quality of Carrier Transicold’s refrigeration solutions helps to provide optimum uptime for end users,” said Ashok Mirchandani, managing director, Carrier Transicold India.The Citifresh introduction comes on the heels of last year’s launch of the Citimax™ range of light commercial vehicle (LCV) and truck refrigeration units, which are ideal for LCVs and trucks carrying loads up to 30 cubic meters. LOGISTICS TIMES September 2014

NEWS BRIEFS

Snowman IPO elicits robust response Signalling improved market sentiments, the initial public offer (IPO) of Snowman Logistics saw oversubscription to the tune of nearly 60 times last month. This is the second IPO so far this fiscal and the first one after the Narendra Modi-led government came to power at the Centre in May. Snowman Logistics is an integrated temperature controlled logistics service provider. The offer received 194.49 crore bids as against the total issue size of 3.25 crore shares. The IPO was subscribed 59.75 times on the last day, according to data available with the National Stock Exchange (NSE). The portion set aside for non-institutional investors was subscribed nearly 221.79 times while that for Qualified Institutional Buyers (QIBs) received 16.98 times subscription. There was strong response from retail investors as their quota got subscribed 41.26 times. At the upper price band of Rs 47 per share, the sale would fetch up to Rs 197 crore and at the lower end of Rs 44 apiece, the proceeds would be to the tune of Rs 185 crore. The IPO opened on August 26 and closed

on August 28. Snowman plans to use the proceeds from the public issue towards setting up new temperature controlled and ambient warehouses, long term working capital, and for general corporate purposes. HDFC Bank was the book running lead manager while Link Intime India was the registrar to the issue. Snowman, which began its business in 1998, caters to various products including dairy products, ice-cream, poultry and meat, seafood, fruits and vegetables, healthcare and pharmaceutical products.

Thales wins its first ETCS contract

Thales has been awarded a signalling contract by main line operator Southern Railway to supply an ETCS Level 1 solution (known in India as Train Protection and Warning System - TPWS) on the Basin BridgeArakkonam section, in Southern India. This is the first ETCS contract awarded to Thales in India, and also the first step of a large modernisation programme of TPWS systems of the Indian Railways network. On this 66 kilometre-long stretch, the ETCS L1 system will enable trains to run faster, leading to shorter travel times and increased line capacity, while optimising train security and passenger safety through its Automatic Train Protection capability. Thales will deploy its ETCS Level 1 solution and will be responsible for the design, supply, installation and LOGISTICS TIMES September 2014

commissioning of track-side equipment. Thales will also guarantee the interoperability of ETCS L1 track side equipment with existing on-board, non-Thales systems. “This contract, which will increase the efficiency and operational safety of this stretch, further cements our position in the Indian transportation market. Thales’s rail solutions are present throughout India, where we were the first company to introduce state-of-the-art CBTC metro signalling technology. As a trusted partner, we will continue to accompany the development of India’s transport infrastructure,” said Eric Lenseigne, Managing Director of Thales in India. Thales is one of the principal suppliers of train signalling technology and the worldwide leader for the supply of ETCS solutions, having over 30% of the global market share. Today, ETCS is the European standard and Thales has deployed it extensively in Europe as well as in countries such as South Korea, Malaysia, Mexico and Saudi-Arabia. Thales is a long-standing partner in India. In terms of public transport, Thales’s systems are operational in cities including New Delhi, Mumbai, Hyderabad, Bangalore and Jaipur. The Group provides a wide range of urban transport solutions ranging from signalling to ticketing and passenger information systems.

Toshi plans to expand in neighbouring markets Delhi-headquartered Toshi Automatic Systems, a leading player in the automation products in the country, is keen to expand its wings beyond Indian shores. In a recent conversation with Logistics Times, the MD of the firm Sanjeev Sachdev confirmed that after having established a sound base in the domestic market (the company has been existing for over two decades now), Toshi Automatic Systems is looking for opportunity in the neighbouring countries. “We are practically in a position to serve all SAARC markets. But at this stage, we are particularly keen to make a beginning in Sri Lanka and Bangladesh. We are talking to possible local partners in these countries,” Sachdev said. According to Sachdev, Toshi today has an offering basket comprising over 250 products made by leading automation manufactures in the world. “We have a wide range of products and our main offerings can be classified as dock levelers, dock shelter, section doors, high speed doors and docking bay. We have foreign collaboration with over 10 leading automation manufacturers from Italy, Germany, Spain, Turkey, Belgium and also China and Taiwan,” Sachdev added. Sachdev is confident about his foray in the neighbouring countries on two accounts: the cost implication and the possible ease in providing technical support to the clients in the markets surrounding India. “ Under SAFTA act, the cornerstone of provisions for trade within SAARC countries, procuring from India will not be too high once we have got the product from our manufacturing partners in Europe. Plus, we have a

very sound technical support team (comprising 200 technicians now) and it will be easier for them to serve the clients in the neighbouring markets since the movement is not an issue,” Sachdev explained. Toshi Automatic Systems is hopeful that the foray in new markets would materialize during the course of this fiscal. Meanwhile, the company is expecting its domestic business to expand further during the course of the year. “Business sentiments have improved once again and we expect our topline to touch Rs 50 crore this year from a base of over Rs 30 crore

last year. Pharma, Food Processing, Automotive and Warehousing sectors continue to remain our strongholds and we expect orders from them to go up substantially. In warehousing we had noticed some dip in last couple of years but the scene is changing once again. Plus, there are new segments like health care where we are positioning our products. Considering the growing business demand, we have planned to increase our dealer network in the country this year – from 30 to 40,” Sachdev added. – LT Bureau LOGISTICS TIMES September 2014

COMPANY NEWS

FOOD SUPPLY CHAIN

Cold-chain in relation to Food losses Cold-chain does not directly reduce food loss - it is incongruous to proceed with that as the key premise. Such postulation propagates a derived understanding and leads to complacent but unsound expectations. Food suffers loss when it is not consumed - or, when it cannot be marketed within its normal saleable life cycle. Food loss can be reduced by facilitating that the produce reaches all logical and feasible end uses. Cold-chain is a tool that opens access to multiple markets and can ensure that productivity is fully realised, reaching food to where it could not normally be used. Through delaying the final demise by enhancing lifecycle or preserving (as case may be), the time bought is utilised best when the cold-chain is used to transport to consumers. Without a market intervention, food would still be lost, even if within temperature controlled environs. I review quite a few reports and I beg to differ in most cases as the conclusions are predetermined with causal definitions being in disconnect across product segments. I have not yet come across data that is not otherwise motivated, or which I can confidently pass on as correct - various food products would require specific yardsticks as comparator metrics / figures would vary.…would be relief if someone had scientifically derived information to share. In my view cold-chain is always a success as it leaves scope to minimise physical losses to almost zero, and in value terms the loss minimised is in multiples. India's cold-chain successes are reflected in its having a crop like potato as a staple food not natural to the sub-continent and non-perennial production; in having eradicated polio - from a peak of 350,000 infections per annum; in LOGISTICS TIMES September 2014

Pawanexh Kohli CEO & Chief Advisor, NCCD

being the world's largest exporter of beef - albeit carabeef, yet >1.5 million tons shipped last year; in exporting 1.94 million tons of fresh grapes this year; in evidencing a 10 fold increase in 10 years in import of apples - 70% jump in fruit imports between 2012-2013; in having the world’s largest dairy production and consumption - estimated at 60 billion USD; in being amongst the largest exporters of poultry and eggs, etc.... Failures in cold-chain are in sectors were the application is in fledgling stage – namely, in case of domestic trade fresh fruits and vegetables. The loss is phenomenal (and

crop specific) as without access to markets, after a time, all that remains unsold is a loss. Without cold-chain all is lost, with cold-chain there is market access and room for realisation. Food processing - to be differentiated from cold-supply-chain though can utilise temperature controlled technologies - a manufacturing process that physically / chemically converts raw produce into other edible formats, can also alleviate losses. Food processing industry is primarily would-be-waste management for the fresh produce trade, wherein culled produce is

manufactured into a consumable food ingredient (barring a few items where special cultivars for processing is involved). Non-food processing – composting, dye making, medical, etc. – is another end destination and also brings losses down. BTW, cold-chain is not just about refrigeration across the entire supply chain - that may suffice for postmortem products, but it frequently can take a back seat when applied to living produce. Refrigeration brings about intrinsic challenges in fresh produce care which when not catered for, makes the application of refrigeration the premier cause for food loss.

IN THE NEWS

India to pilot DHL’s e-commerce solutions Deutsche Post DHL, the world’s and integrated transportation and ‘Global E-Tailing 2025’. Malcolm leading mail and logistics group, distribution company, Blue Dart Monteiro, CEO, DHL eCommerce has chosen India to pilot the services over 34,154 locations in Asia Pacific said: “With 250 million internet users, Indian e-commerce development of its e-commerce India. remains underdeveloped, with business model for Asia-Pacific. online shopping valued at EUR 2.3 An announcement to this effect Investing in infrastructure billion in 2013. This is expected to was made last month in Mumbai. and new delivery options Through its subsidiary Blue Dart By 2025, e-commerce share of grow to EUR 4.1 billion by 2018, Express, DPDHL’s business unit overall trade volume of emerging a CAGR of 12.3 per cent in five DHL eCommerce has drawn plans markets will be up to 30 percent years. All countries across Asia to invest in infrastructure and (40 percent in developed countries), are in different evolutionary stages the development of fulfillment according to DPDHL’s report when it comes to e-commerce. We centers, multiple delivery and payment options as part of its aim to become the preferred global provider of e-commerce related services including e-fulfillment and e-facilitation. Frank Appel, CEO, DPDHL, said: “Globally, e-retail is rapidly evolving. Over the next five years, the global e-commerce sector is expected to grow by more than 10 per cent per annum with Asia Pacific leading the way. This region is expected to soon surpass North America and Europe as the biggest online market in the world. As the leading logistics company with an unsurpassed global footprint, there’s a huge opportunity for us to become the world’s leading Globally, e-retail is rapidly evolving. Over the provider of e-commerce logistics and we have a ready next five years, the global e-commerce sector solutions infrastructure in India to pilot our solutions.” is expected to grow by more than 10 per cent Blue Dart Express is per annum with Asia Pacific leading the way. well positioned to pilot e-commerce in India and This region is expected to soon surpass North models for Asia Pacific. The leader in door-to-door America and Europe as the biggest online delivery solutions and South market in the world. Asia's premier express air

❛

LOGISTICS TIMES September 2014

need to adapt our service portfolio within the region accordingly.” In India, DHL eCommerce, working closely through Blue Dart will invest in developing multiple delivery options and cash on delivery capabilities. These two key needs were identified by India’s top online shoppers – male, high-income, young urbanites - as part of a 20country consumer survey on international distance selling ‘Shop the World’, carried out by DHL eCommerce to provide a deeper understanding of the home shoppers’ journey. Anil Khanna, Managing Director of Blue Dart Express, said: “Blue Dart’s unrivaled domestic delivery system and network capabilities in India provide the perfect base for piloting the development of region wide e-commerce solutions. We are working closely with leading brands, market place sellers and retailers tohelp them establish a sustainable e-commerce footprint. That’s why we are investing in the right infrastructure -including IT - to build the right model for consumers and sellers.”

size, Indian shoppers expect delivery within five days (global average 6.5 days), parcel tracking options and free delivery. The average rate of return of goods also scored higher than the global average at 29.5 per cent with poor quality or defects the number one reason for returns. The survey also identified growth opportunities in the development of

online payment systems – cash on delivery or cards being India’s top payment choice – and in international sales. The majority of Indian e-commerce is domestic with only a third of consumers having ordered overseas. This is set to grow with more than half planning to place an international online order with US being the number one target market.

Tapping India’s eCommerce potential

According to ‘Shop the World’, online purchases in India are limited largely to consumer electronics, fashion and media products with shopping by smart phone the norm. Indians’ main reasons for online shopping are overcoming geographical restrictions on choice and unlimited shopping hours – although the biggest negative was unknown quality of online products. E-shoppers in India revealed delivery expectations that were higher than the global average. Despite the country’s LOGISTICS TIMES September 2014

IN THE NEWS

Mahindra Logistics acquires majority stake in LORDS Freight Mahindra Logistics (MLL), part of India’s USD 16.5 billion Mahindra Group, last month announced acquiring a majority stake in LORDS Freight (India). The company maintains this will provide a significant boost to the company’s expansion plans. “Our vision is to be ‘India’s leading, most preferred integrated logistics service provider’ and international freight forwarding is an essential component of this vision. With this acquisition, MLL’s service portfolio will be considerably enhanced. LORDS presented an ideal opportunity for us given its proven track record of growth, strong focus on quality and the fact that it has a strong cultural fit with Mahindra Logistics. This is our maiden investment, and will considerably add to the value proposition we offer our customers,” said Pirojshaw Sarkari, CEO, Mahindra Logistics. "Since our partnership with Kedaara

LOGISTICS TIMES September 2014

Capital earlier this year, we see a very clear path to an IPO for Mahindra Logistics. It is our goal to grow to INR 6,000 crores and this is the first of several in-organic steps we have planned. Through a turnaround process, we have made MLL into one of the ten most profitable companies within the Mahindra Group,” said Parag Shah, Managing Partner, Mahindra Partners. “We are very excited to work with the team at Mahindra Logistics. We at LORDS have a keen focus on accelerated growth. This investment by MLL will allow us to pursue a strategy of enhancing our capabilities and expanding our international presence, while simultaneously leveraging MLL’s customer base and process methodologies. LORDS has always had a keen focus on the critical attributes of technology, talent and a global network since its inception; greatly encouraged by a discerning

customer base” said Shamsudeen Ahmed, Chairman, LORDS Freight (India) who has been recognized by Forbes Middle East as one of the “Top Indian Leaders In The Arab World, 2014.” Mahindra Logistics, a subsidiary of Mahindra & Mahindra Ltd., is one of India’s leading Third Party Logistics (3PL) service providers. Over the past four years, MLL has grown rapidly by diversifying its industry segment focus, developing an integrated supply chain services portfolio, and unique people transport solutions. In 2009, the Mahindra Group identified logistics as a key focus area, and since then MLL has been part of the Mahindra Partners division, the US$ 900 million quasi private equity division of the Mahindra Group. Mahindra Partners exemplifies how the Mahindra Group creates value by nurturing and building new businesses of the future. LORDS, specializes in international logistics solutions, and is based out of Mumbai with a presence in most major cities in India. Founded in 2011 by a group of Industry professionals, LORDS brings together some of the best minds in the Indian logistics industry, with the executive management team having over 100 years of cumulative experience in various aspects of the logistics business including freight forwarding, customs brokerage, transportation and warehousing.

❛

Our turnover will cross Rs 2000 cr this fiscal

❛

Immediately after announcing acquisition of LORDS Freight (India), Pirojshaw Sarkari, CEO, Mahindra Logistics spoke with Logistics Times and provided the details of the deal. Edited excerpts: In strategic terms, how important is this deal?

This is our maiden strategic investment. Our aim is to grow to INR 6,000 crores and this deal is the first of several inorganic steps we have planned in order to reach this goal. Our outlook towards this transaction is purely strategic and not financial. This acquisition will enhance our capabilities in international freight forwarding thanks to LORDS’ strong agent network partnership, and expertise in both air & ocean forwarding for exports and imports. This is a key service enhancement to our current portfolio and will considerably add to our value proposition of offering integrated, technology enabled, customized solutions to our customers. The synergies derived from cross leveraging MLL’s & LORDS’ customer base and process methodologies will prove to be a win-win situation for both the companies. How would you explain the key attributes of LORDS which made it attractive for you?

We saw a great deal of value in acquiring LORDS Freight. The professional management team in LORDS has over 100 years of cumulative experience in the international freight forwarding space. Shamsudeen Ahmed, the Chairman of LORDS, has over three decades of experience with large and established global freight forwarders and has an immense number of

network partner contacts. He was recently recognized by Forbes Middle East as one of the ‘Top Indian Leaders in The Arab World, 2014’. The LORDS team’s approach to business is extremely professional, quality-focussed and process oriented. There is a strong cultural fit between MLL & LORDS in terms of the vision and aspiration the promoters have for LORDS and also in terms of the working culture within the organization. In terms of the service portfolio,

LORDS, post this investment, will of course be enhancing or accelerating its growth path both in terms of air and ocean forwarding products or services which it currently offers. One of the reasons which has predisposed us to LORDS is the fact that it has equally good capabilities in both air and ocean forwarding for imports and exports. Another key factor for us is the global network partners that LORDS has developed over the last few years in North America, Europe, LOGISTICS TIMES September 2014

IN THE NEWS

Asia, Africa & South America. These large ocean liners, ocean lines as well as major leading air cargo carriers are very strong network partners that LORDS has been exclusively working with and we see great value in these network partnerships. What kind of boost it will provide to your freight forwarding operations? Is there any freight forwarding linked milestone which you would like to pursue, for instance, its possible percentage share in your overall projected topline number in the coming years?

With this acquisition, international freight forwarding has become a key service enhancement to our portfolio. It is something that our customers have asked us for consistently. We have been very frankly, unable to provide a quality freight forwarding solution to our customers until now. I am very happy that we have made this significant majority investment in LORDS and the international freight forwarding solution bundled as part of our integrated technology enabled customized solution will form a very strong and sticky customer value proposition. We are projecting a turnover in excess of Rs. 100 crores for LORDS. I think that LORDS acquisition fits beautifully with our growth plans. We would have loved to do this transaction may be two years ago but it took us this time to find the right company to invest in. I think we have found the right partner in LORDS today. I think we have the right people managing the business at LORDS and I am certain that the growth pace we have planned for at MLL will be accelerated enormously with the success at LORDS. Your press release clearly indicates that in-organic initiatives will intensify going ahead. Any more acquisition lined up during the course of this fiscal? If yes, then can you specify the vertical.

We have a very clear organic and LOGISTICS TIMES September 2014

Mahindra Logistics plans to cross INR 2000 crores by the end of this fiscal. As we build scale, we will be looking at a variety of new and emerging areas of opportunity, including but not limited to international freight forwarding, express, e-commerce logistics and agricultural logistics. inorganic strategy charted out for ourselves as a company. This significant majority stake in a freight forwarding company is the first step in our inorganic growth plans. We plan to have service enhancements through inorganic means both in businesses in which we currently operate in as well as service line extensions in the future. I am not at liberty to discuss any transaction which we are currently contemplating specifically but I would definitely like to say that it is our objective to create a service portfolio which meets a customerâ&#x20AC;&#x2122;s end to end need, be it on the inbound or the outbound side of the supply chain, whether in India or abroad, across industry verticals, across modes and across types of commodities. Yes, definitely we are going to see a lot of inorganic activity in the next couple of years. What is the topline target you have for this fiscal? Are you noticing a concrete turnaround trend shaping up in the market?

An important trend shaping up in the market is the growing importance of supply chain being seen and experienced by companies as a source of competitive advantage. The upsurge in organized third party logistics players in the market has also given more confidence to logistics service users, since they are able to provide integrated supply chain services. This change in perception has encouraged innovations in supply chain. We also see a shift in prime focus from mere cost cutting to value addition. Use of Information Technology in logistics has increased. At the same time collaboration with stakeholders for consolidation, asset utilization, network optimization has also gained importance. We now see importance of innovation as a service differentiator. There is also increasing awareness on carbon footprint & sustainability. Realizing that the driver community is the backbone of the logistics industry, many logistics players have initiated driver welfare activities. I am hoping that the coming years will see increasing awareness among logistics users about the benefits of logistics outsourcing. Logistics industry will still see a moderate growth rate. Growth in some areas like agricultural logistics, cold chain & storage, e-commerce logistics is likely to be on a higher curve. Automotive logistics will continue to dominate the 3PL market.

COVER FEATURE

The changing dynamics of Finished Vehicles logistics in India

LOGISTICS TIMES September 2014

Automobile industry has clearly been one of the leading sectors in driving India growth story in past two decades. The passenger car segment especially has witnessed an unprecedented surge with India now becoming the sixth largest car market in the world and third major exporting hub of finished vehicles in Asia. The fast-paced churnings within the car segment have obviously led to a host of experimentation in the outbound auto logistics operations â&#x20AC;&#x201C; from a scenario wherein car trailers were not readily available to a situation now when OEMs are talking of a collaborative approach. Noted auto logistics expert Achal Paliwal examines the case of the evolution of outbound auto logistics in the country in the past three decades while emphasizing the serious gaps which need to be filled as the volume pressure continues to keep all stakeholders in the game on their toesâ&#x20AC;Ś LOGISTICS TIMES September 2014

COVER FEATURE

utomotive logistics in India has been continuously evolving like its principal consumer, the Automobile products. The change has been quite swift since 1980’s. Beginning from experimental phase to customisation to the local needs and demand of time, the process of indigenous evolution, we have witnessed in last over three decades. And the process hasn’t reached to the finishing line, nor can it ever be given the fact that automobile sector today has become one of the strongholds of the Indian economy with the country becoming sixth largest car market in the world. So in terms of an efficient and matching back end supply chain system, there is still so much to be done since there are so many serious impediments.

Evolution of car carriers Before the entry of Maruti Suzuki Indian Ltd in 1980’s (it was a publicprivate joint venture and called Maruti Udyog Ltd. at that point in time), car transportation on specialised car carriers was almost unseen and unheard of. Most of the passenger vehicles aka Ambys and Padminis were being transported on their own power with

Achal Paliwal the help of freelance drivers. Traces of this practice can still be found in transportation of rural cousins of SUVs, Tractors and commercial vehicles. When Maruti had set up the shop in 1983-84, they discovered non-availability of suitable carriers to transport their finished vehicles within a vast country like ours. And going by the basic Japanese principles of safety and quality, the situation was unacceptable.

The kind of carriers which we notice today was almost non-existent in those days. To combat the situation, Maruti decided to invite transport companies for car carrying through New Paper Advertisements. In response, few of the ‘progressive’Goods carrying companies which expressed their interest, were asked to convert their rigid body trucks into flat bed structure which could carry at least four units by adding another deck. Although most transporter preferred fixed height partitions for simplicity but some decided to have flexible height to improve their return load prospects. To achieve this, the upper deck was hinged at front end and was moved up-down by chain pulley system at rear end. However, since these carriers did not offer economy of scale, Maruti Suzuki insisted for high capacity carriers which could carry eight or ten cars, popularly known as trailers. But nobody was ready to invest money on such a carrier which can not be used for any other purpose and there was no available design anywhere. Maruti ultimately engaged their own R & D engineers to design car carriers. They prepared a design of trailers which were protected on the side by

Author’s Profile Born in 1966, Mr Achal Paliwal carry nearly two decades of cumulative experience in Indian Automotive Logistics with country’s two prominent Japanese car makers. Since 1986, he was associated with the Industry Leader, Maruti Suzuki India Ltd, in various roles and responsibilities including Outbound Logistics. Thereafter, he has been heading Logistics and Export functions at Honda Cars India Ltd, till June, 2014. At Honda, he not only pioneered many initiatives in collaborative logistics but also established successful Risk Mitigation & Quality Improvement Programme in collaboration with Insurance partners. His efforts as passionate improvement crusader have won numerous appreciations and accolades including Best Entry Award in UNESCO Road Safety Film Festival at Paris, in 2012. His long exposure to Manufacturing and Market side of Supply Chain Management and understanding of International practices in Automotive Logistics acquired through study tours to China, Vietnam, Thailand, Japan and South Africa has enriched the Indian Logistics Industry. He has been actively advocating for Automotive Logistics Industry at various forums like CII, Indian Chamber of Commerce and SIAM. He has been a member of SIAM Logistics Group and Advisory Panel of CII Institute of Logistics. His views on Automotive Logistics are taken with high regard and enthusiasm at numerous conferences on Automotive Supply Chain Management and Logistics, organised by CII, ICC and Automotive Logistics India. He is Mechanical Engineer and post graduate in management, from MDI, Gurgaon.

LOGISTICS TIMES September 2014

â?&#x203A; wire mesh and they again used a split platform which was supported by chain pulley kind of system. Since the cost of this equipment was quite high, Maruti had no option but to even finance such carriers. Maruti entered into long-term contracts with a few logistics players wherein the company would finance these carriers and service providers would solely use for the transportation of Maruti vehicles. This is how, India got two kind of carriers â&#x20AC;&#x201C; the rigid body and articulated trailers. In essence, rigid body trucks were developed by transporters themselves whereas articulated trailers or long body trailers were developed by Maruti. But if you look at the carriers used then, they would appear like the poor cousins of European car carriers of today, which had open roof structure and no hydraulic systems at all. Interestingly, all these carriers used ladder ramps for loading or unloading of the cars, jute

We need to prepare the logistics industry is three ways. Firstly capacity building which essentially means introducing modern high capacity carriers including railways quotient because the roads are getting increasingly choked. Our preference for road would not be valid in the longer terms. Scaling up human resources or skill development would be another major challenge. ropes for securing those cars on the platforms and the platforms were lifted and put down with the help of chain pulley systems. So as and when chain pulley lock stop functioning, there was imminent risk of the platform falling down and damaging the cars as well as injuring the personnel involved. Nonetheless, it was the first stage of

evolution of car carriers in India. Gradually, most of the transporters realized the benefits of these carriers and started investing in them. Therefore, after first few years, Maruti stopped financing these carriers but insisted the fabrication par its design. As the business grew and Maruti started issuing letter of intent to transporters LOGISTICS TIMES September 2014

COVER FEATURE

World’s top 10 car markets (Production)

LOGISTICS TIMES September 2014

Source: Wikipedia assuring them of adequate business, some bankers eventually came forward to finance these carriers. The next level of Logistics Initiatives The first stage of experimentation and improvement with car trailers continued till early 1990’s. The carriers suitable for transportation of 2 wheelers as well as 4 wheelers emerged during this period. The next generational change came with Toyota setting up its shop in India and bringing their home-grown transport service provider – Transystem Logistics Pvt Ltd which is a joint-venture between Transport Corporation of India (TCI) and Mitsui. This joint venture invested a lot in designs of car carriers and established the process of modern logistics management vis-à-vis automotive in India. The containerised car carriers supported by hydraulically operated/perforated platforms, and rear gate cum loading and unloading ramps, which we see today, were introduced by Toyota and were vigorously promoted by Maruti for being safe and most suitable for Indian conditions. Not

limiting to car carriers, Toyota also introduced lashing mechanisms, driver management system and many road safety related practices, which they pioneered world wide and also practiced in India. So in a way Toyota contributed a lot in modernizing the auto logistics equipment and processes, both.

New Age Carriers The Kaizen movement continues .. However, if I recall the period around 1995-96 when I started my logistics inning at Maruti, the open roof carriers of first generation were very much in action. Unprotected roof and sides, further complicated with use of largely unreliable chain pulley operated flexible decks were in absolute majority. As a result (which I learnt later), Maruti at that point in time had as high as 14 percent damages – in the journey from the factory to the dealers. As self insurance pool policy was in practice, the severely damaged cars were brought

back to factory, for repair and auction, else for scrapping of body shell. Both ways, It was Maruti which was suffering huge cost burden which in my opinion was unwarranted and absolute waste. And it was a major organizational concern around mid-90’s for them. Eventually it become my first assignment soon after my transfer from manufacturing to marketing division. The first task assigned to me was to improve the quality of hardware, that is, car carriers. I started analyzing the root cause of car damage, collected data, audited carrier hardware etc. You may find it funny today, but in those days we actually had an annual tree pruning ritual enroute from Gurgaon factory to the Gurgaon Railway Siding which was used for the export of the cars. Without any exception, I along with few trainees and transporter representatives followed the first act of Risk Mitigation. This was just a preliminary step towards transit risk mitigation. Soon I realized that it would not help us in reducing the damages to LOGISTICS TIMES September 2014

COVER FEATURE

a considerable extent because we were just covering 10 kms forgetting more than 900 kms which on average every car travels before reaching the end user. So finally if this was to be reduced, we needed to do something with the hardware, with the processes and the mindset of logistics service providers. What we realized then: there was very little attention on the delivery quality or delivery time by the transport companies. Transporters still used to think their job was to transport cars from point a to point b. In a way, it was not their fault also. They came from a background where they were primarily dealing with the general goods. So we needed to systematically sensitise LOGISTICS TIMES September 2014

these transport companies towards the importance of ensuring delivery quality and delivering cars in the factory fresh conditions and within the standard transit time. Reason was very simple: until they donâ&#x20AC;&#x2122;t understand, the processes will not improve. At the same time, we decided to convince them to invest more in the hardware which required a lot of improvement. For instance, when we decided that we would prefer the carriers with covered roofs, we told the transporters it would be carried out by them even as this entailed 1.5 to 2 lakh rupees of investment in each carrier and also carriers going off the operation for 2030 days to adopt new design. We faced

a lot of resistance from the transport companies in getting their carriers converted into roof covered carriers. Starting from early 1996, this exercise continued till late 1999 and by the end of 2000, we had 100 percent carriers with covered roof. We had to use all means to make it happen â&#x20AC;&#x201C; what we say in Hindi: Saam, Daam, Dand and Bhed. We persuaded them, we also gave preference to them in giving business, we debarred the carriers which did not have covered roof (they became our last priority) and we appreciated and rewarded our transport partners who followed our instructions. At that point in time, Maruti was dealing with approximately 140 transport companies who owned nearly 6000 car carriers. There were other issues also which were subsequently pursued: like converting chain pulley systems into hydraulic platforms. And replacing jute ropes with nylon ropes and after that upgrading to ratchet assisted lashing system which you see today. Again there was some resistance from most of the transporters because for them all this meant additional cost. However, we were determined to make these changes. Toyota by then had already initiated advanced carriers and processes in the market. Here I must compliment a set of transport service providers who came forward and decided to modernize their fleets. They invested huge money as they realized the long-terms benefits. So once the movement started, other transport companies had no other choice but to fall in line. It is important to recollect here that in those days two-wheeler and fourwheeler carriers were the same. Two wheeler carriers had somekind of wheel slots on the platform to hold the bikes. But these wheel hubs were poorly maintained and they were causing a lot of damages to the cars. Then we decided to get these replaced with perforated platform. After Toyota coming into the place, it became much easier to implement these changes transporters understood the importance of safe

structure. Toyota must be credited for introducing advanced car carriers and processes which paved the way for the modernization of car carrier fleets in the country. If 80’s and 90’s belonged to Maruti for finding effective auto logistics solutions to respond to the rising volumes demand, Toyota was in the forefront of taking this task further between 2000-2005. But Maruti, being the market leader clearly had to deal with a much bigger challenge. While they wanted to pursue a high quality transportation, at the same time they had much larger volume to deliver. Its market size was almost ten times of Toyota at that point in time.

holders including LSPs, Dealers, Carrier Fabricating Agencies, other services partners and many stake holders within organisation. Extremely supportive and encouraging role of IT Division and few visionary leaders among our LSPs worked as catalyst to the ground breaking changes. This journey not only benefitted us in terms of improving quality and reducing delivery time, but also saved us considerable freight through assured business mechanism and IT enabled reverse freight auctions, essentially through improved asset utilisation by our LSPs.

IT finds the way, become critical differentiator

Today about 18,000 car carriers are plying on the Indian roads – nearly 28 percent of them are trucks and rest are the high capacity trailers, available in varying sizes and types. No doubt we have majority of good quality carriers today and processes have also significantly improved, but the challenges remain intact with the growth in the scale. The kind of growth which automobile companies are looking for and the way the market is expanding, logistics service providers have somewhat legged being in keeping up with the pace. Today, the focus clearly is on the delivery quality. But at the same time, visibility of consignment across the supply chain has become very important. Right now, the focus of all OEMs is on GPS based tracking system and reducing accidents. When it comes to reduce transit risk or vehicle handling risk, the contribution of human resource from both the sides, OEMs as well LSPs remains a crucial factor. If you talk to transport companies, they will always complain about unavailability of skilled drivers and educationally qualified logistics managers. The problem is, very little is being done either by OEMs or LSPs to improve the situation. It requires a lot of investment in training and development of manpower. Unfortunately, both LSPs and OEMs are passing the buck on the ground that it would benefit the

Subsequently, many other changes were also initiated. These included IT assisted Transport management systems, performance monitoring systems (report cards), policy changes with respect to incentives and appreciation, differential freight payments and carrier tracking etc. However, the process of creating crucial information bridge with LSPs began with advising them to acquire dedicated email ID for each company. Way back in 90s, the computer phobia and popular belief among home grown LSPs was that investment in IT was absolutely unnecessary – clearly two major hurdles. However, when it was decided that freight payment information will be shared only through emails, few pro-IT small time entrepreneurs installed a PC in front of despatch gate and operated email accounts of all transporters who did not have computers or ability to handle them, for a fee. The emails were being printed and delivered to respective LSPs by delivery boys. Today it may sound crazy, but this was the foundation of e-connectivity initiative which in later years enabled them to run entire business without stepping into S&D office at Maruti. In essence, it was a long and roller coaster journey from 14% damages to 1.8% damages which involved all stake

Scenario Today

other party more and hence it should be undertaken by them. Here, I must point out that some of the OEMs like Honda have taken initiatives in terms of linking Risk Mitigation Programs with Transit Risk Cover. Such programmes forged in association with insurance firms have basically been set afoot after 2007. And such kind of initiatives have resulted in huge reduction in damages, accidents as well as the insurance claim ratio, creating win-win situation for both. In Honda’s case alone, the claim ratio has been reduced from 134 percent to 47 percent within 3 years of continuous efforts – certainly a commendable drop. While incidents of road accidents reduced significantly, even minor nature of damages were reduced from 1.8% to nearly 0.2%. To maintain such spectacular performance continuity of efforts is key. Further investment on technology or equipment has been reduced significantly in recent years due to lack of clarity of carrier dimensions in CMVR Act and surplus capacity due to sluggish market. As ‘Good Days are slowly returning’, it is hopped that enthusiasm and investment in Automotive Logistics will also get revitalised in order to meet the market demand.

Railways remain the missing link In developed and some emerging markets, railways is a vibrant transportation mode for finished vehicles. However, we cut a sorry figure on this front. Indian Railways as we all know is a public sector organization and it is used more by the political system to meet with its social obligations. Result is: railways had not been able to pay attention to new freight opportunities including automobiles. In last four-five years, there have been though some encouraging developments, at least in intentions expressed on papers. After clearing the decks for private container train operations, the government had LOGISTICS TIMES September 2014

COVER FEATURE

announced Private Freight Terminal (PFT) and Automobile Freight Train Operator (AFTO) policy. But AFTO policy in its initial stage was neither very comprehensive nor was it practical for logistics service providers. So it was not welcomed by them. However, the recently launched AFTO policy is clearly an improved version, if we leave apart haulage rate variability. But then running such trains will require huge investments - to the tune of Rs 14-18 crores per rake to carry 300 cars. Such kind of investments canâ&#x20AC;&#x2122;t be made by LSPs if they are not reasonably assumed of sure of adequate business, in order to amortise huge equipment and licensing costs. This is dampening enthusiasm. The problem is: OEMs are not ready to commit long-term business via railways for the simple reason that road transportation is 10-12 percent cheaper than railways, as well as convenient to manage. Secondly, on product safety and transit time, Railways is not in a position to provide any guarantee. So OEMs are not sure if the use of railways will be beneficial for them. Thirdly, it is a complex business because it requires a lot of first mile and last mile transportation. Sustaining quality of the car is a function of handling and transportation. And handling at multiple points could well result in more damages. However, some of the major OEMs including Maruti, Tata and Toyota have been selectively using railways for their finished vehicle transportation on certain routes in past decade. For instance, Maruti is running two exclusively designed rakes running between Gurgaon to Bangalore and other selected routes. But on an overall basis, transporting products via railways has certainly not been a delightful experience for any OEM, so far. Situation is expected to change soon, provided emerging private Auto Train operations becomes a reality.

Ports, a pain point There are some OEMs which have set LOGISTICS TIMES September 2014

up their shop with a very strong export specific intention. Not only that, all OEMs today know for sure that given the fluctuating forex situation as well as domestic demand, they must export their cars to hedge their risks and capacity utilisation. But frankly speaking, the export infrastructure required for a product like cars is neither upto the mark nor adequate. The largest challenge we have is: infrastructure at the ports and non-chalant attitude of port authorities towards automobile export. When Maruti started exports from JNPT, they had to set up the entire factory like structure at the port so that they can ensure that cars sent from Gurgaon to JNPT should be restored in factory fresh conditions before they are shipped. It was a stockyard as well as finishing shop. As the port preference shifted towards container export, JNPT decided that since automobile export was not a major revenue earner for them, the finishing plant should be shifted elsewhere. Maruti was thus forced to vacate that place and establish their facility at Mumbai Port. But it is so congested that cars are stored almost 2 km away from the port. Additionally there is too much contamination and traffic that OEMs simply feel frustrated with the extent of damage that happens to cars. From the outside stockyard, cars are driven on Mumbai roads to reach Ghamadia yard, an interim stocking point inside the port and from there they are again driven to the dock for the actual shipment. The entire process is cumbersome and risky. Given a choice, most of the OEMs would like to move away from such facilities but the problem is where to go? In Honda, when we were looking at other options in the West Coast, we found situation being no different at other hubs. So we took the decision to move to a port in the East Coast. Chennai Port was the first point of preference but it again had similar problems as Mumbai Port even as Hyundai has been using it as the transit point for its exports. We finally

zeroed in on a private port- Ennore which has much better facilities. Honda established its storage as well as shipment facilities there. Now you can imagine an OEM like Honda was forced to send its finished vehicles to an outbound hub about 1000 km farther taking three more days just because the port conditions are not good at the nearest point. Initially, it was called a crazy decision. But look at the end result. The transit time to the international destination like South Africa has come down by half. If from Mumbai Port, it takes 40-45 days for your finished vehicle to reach to South Africa, from Ennore it becomes 15-20 days journey. Now Ennore port being preferred port of export for Toyota, Ford, Nissan and Honda, availability of sizeable volume is helping in reducing shipping cost and increasing service frequency. The point is: the port conditions are not conducive for export of finished vehicles from India but it can improve if the port authorities want. A port like Ennore has shown the way. Ports which exist in the country have bulk commodities as their mainstay in terms of revenue generation and they do not want to indulge in much experimentation to accommodate new products. This is the basic problem. Automobile exports are certainly not a priority for majority of the ports and situation will not change till their attitude changes even as the volume is piling up.

Collaborative Logistics A Distant Necessity Perhaps, one of the most talked about subject is collaboration among logistics service providers and among OEMs. In past, inspite of proven success of many such initiatives, mistrust and prominent individualism of OEMs has not allowed collaboration to grow beyond few experiments during crisis period, in Automotive Logistics. Wherever it happened, be it a case of Lead Time Reduction Initiative under SIAM, Capacity Utilization initiative of South-

West based OEMs, or Honda’s own initiative of converting own stockyard at Mumbai into Multi OEM VDC, it has always yielded desirable results. However, as soon as situation becomes normal, collaborative logistics is conveniently sacrificed to market rivalries and exclusivity. It is sincerely hoped that rising cost, shrinking margins and competition for quality resources in future will leave no scope for OEMs but to accept collaborative logistics as welcome initiative.

Immediate Challenges If I have to envision the next five years, I can say with a fair degree of conviction that the volumes are only going to go up in the game and exports are set to grow faster than ever. There are some critical challenges in terms of capacity and capability, which OEMs, LSPs and other stakeholders in the auto logistics business will have to face. We need to prepare the logistics industry is three ways. Firstly capacity building which essentially means introducing modern high capacity carriers including railways quotient because the roads are getting increasingly choked. Our preference for road would not be valid in the longer terms. Scaling up human resources or skill development would be another major challenge. So far, we have not done much in this area. Thirdly and most importantly would be investments in technology and IT infrastructure. With the increased volumes and complexities, supply chain visibility would become a core challenge and unless OEMs as well LSPs invest in their IT capability, things will not work for them. Quite challenging times ahead, indeed! However, like in early years, the Automotive Logistics Industry has not only evolved but have also flourished in extremely challenging environment. I am sure, the Indian logistics industry and their equally resilient OEM customers will not only find the way out to meet the challenges but will also be able to beat them hands down.

Fact File: Indian Car Market India’s passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9 million units in 2011 In 2010, India beat Thailand to become Asia’s third largest exporter of passenger cars. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015. The majority of India’s car manufacturing industry is based around three clusters in the south, west and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and the northern cluster around the National Capital Region contributes 32% Chennai, houses the India operations of Ford,Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, Mini, and Datsun. Chennai accounts for 60% of the country’s automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the country’s largest car manufacturer,Maruti Suzuki, is based.

The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General M o t o r s , Vo l k s w a g e n , Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra and Mahindra with a SUV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujaratwith manufacturing facility of General Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki and PeugeotCitroen plants are also set to come up in Gujarat. In 2011, there were 3,695 factories producing automotive parts in all of India. India’s automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India’s largest export market followed by Italy, Germany, Netherlands and South Africa. India’s automobile exports are expected to cross $12 billion by 2014.

Source: Wikipedia

LOGISTICS TIMES September 2014

AUTOMOTIVE LOGISTICS

Key challenges in Auto In-plant Management Arindam Chakrabarti Head-Industrial & Site Logistics Services, DIESL

In-plant logistics, which includes the spectrum of both inbound and outbound logistics within a plant/ factory, is now gaining importance in India, especially in the automotive industry. Each machine and production unit in manufacturing requires the right product in the right quantity and quality at the right time. Such inward and outward movement of inventory is the lifeline of production or assembly plant and is considered the most important leg of operation. However there are a set of challenges associated with the nature of this operation. Freight cost of inbound supplies are often included in cost of raw material as the terms for purchases are mostly on Free on Road (FOR) basis. With most outstation suppliers having limited scale of operation/ volumes, freight modes employed are often sub-optimal. Original Equipment Manufacturers (OEMs) do not have milk run strategies to encompass 100% of raw material/parts suppliers. Once it is in place, it will reduce inbound vehicles handled and improve Vehicle in Vehicle Out. Incoming parts supplied by upcountry/ interstate suppliers are often stocked in transporters warehouse to conform to Just in Time (JIT) requirements of OEMs. There could be scale benefits from warehousing consolidation if vendor managed inventory (VMI) schemes are promoted/mandated. In fact, the raw material stores could be LOGISTICS TIMES September 2014

minimized further as most of activities can be taken outside the premises. While JIT has become the norm with major OEMs, kitting and sequencing strategies are still to gain acceptance in a big way due to last minute changes in sequence dropping and color plan. VMI warehouses can promote such strategies and reduce line side faรงade requirements and the need for delivering such skills. While returnable bins and packaging solutions have

improve inventory management and increase MHE usage. However, an organized 3PL player who has the expertise to handle in-plant operations can provide/ manage desired inbound activities and respond quickly to fluctuating supply and demand. A 3PL provider uses its operational expertise and technology which enables reduction in inventory pile up and investment costs, improves delivery times, and coordinates multiple components more efficiently. This way, manufacturing plants are able

Each machine and production unit in manufacturing requires the right product in the right quantity and quality at the right time. become popular, there is still scope to increase its penetration. Further the practice of deploying different logistics service providers for forward and reverse legs of the journey increases costs per trip. Palletization levels remains low despite increase in unskilled labor rates due to Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) and other employment guarantee schemes. This can be improved from standardization and better pallet pooling across OEMs. Hence labor dependency remains high. Too many parts are being handled. Higher share of subassemblies at input state will reduce dependency on labor,

to respond to market changes faster and more effectively, as well as maintain and improve service levels and market share. Benefits offered by 3PL companies in In-plant operations: Reduced operating costs in distribution, transport, procurement and staffing; Low working capital because the inventory is reduced and order cycles are shortened; Reduction in fixed capital, as the network becomes more flexible and the customer enjoys higher asset utilization; Enhanced product quality, availability and customer service performance; and Reduced capital investment, increased profitability and greater shareholder value.

REPORT

Breaking Barriers with e-Commerce:

The Measure of Tomorrow e-Commerce Association of India recently released a report which underlines the growth potential of this new business in the domestic market which has already seen some swift moves by the stakeholders in the last couple of months. The report particularly emphasizes how the possible e-commerce wave can also benefit players in the small and medium enterprises category. Excerpts from the report: Background (Innovation and Entrepreneurship)

When Peter Drucker wrote about innovation and entrepreneurship in the mid 1980s (Innovation and Entrepreneurship Principles and Practices, 1985) the developed world was headed towards a primarily entrepreneurially inspired, innovative business culture. Drucker's ideas were the panacea for institutional giants of his time, and the business climate of the 80s was ripe for adopting them. In this context, he treated both innovation and entrepreneurship in the â&#x20AC;&#x153;new entrepreneurial economyâ&#x20AC;? as practices, decisive duties that could be controlled best in a systematic work environment. Although India is one of the few countries in the world which initiated a promotional policy for small scale industrial sector (SSI) or the Micro, Small and LOGISTICS TIMES September 2014

Medium enterprise (MSME) sector. It has been the endeavor of the Government to provide support as well as protection to the SSI sector. Immediately thereafter,

Government of India (GOI) also took up Entrepreneurship

Development Programme for the potential entrepreneurs (generally unemployed youth and also the first generation entrepreneurs) and in the early 1960s, it setup an exclusive Entrepreneurship Development Institute (EDI) for promoting entrepreneurial culture amongst the youth of the country. The movement of Innovation struck formally in the 1990s. Globalization and the shift towards knowledge as the source of competitiveness have rendered traditional policy instruments less effective. Traditional economic/ industrial policies can no longer guarantee high growth and employment, certainly not for all regions and locations. There are many examples of highly successful innovations stemming from small enterprises, which have revolutionized entire industries. Startup companies, young

entrepreneurs, university spin-offs, and small innovative firms, more often than not have brought about technological breakthrough and innovation, leaving behind the R&D efforts and innovation strategies of large global corporations. Innovation today is increasingly going beyond the confines of formal R&D to redefine everything. Today innovation can mean new and unique applications of old technologies, using design to develop new products and services, new processes and structures to improve performance in diverse areas, organizational creativity, and public sector initiatives to enhance delivery of services. Innovation is being seen as a means of creating sustainable and cost effective solutions for people at the bottom of the pyramid, and is being viewed as an important strategy for inclusive growth in developing economies. The world has accepted Indiaâ&#x20AC;&#x2122;s role as a major player in global e-Conomics. Global Analysts and Industry experts' contemplate India to be a major economic power of the future. This is still a distant dream because India has a large youth population of 600 million with just 100 million jobs in her pocket. The million dollar question is that which industry has got the capacity to absorb a workforce of such a scale. The only rational answer to this problem is entrepreneurship which in itself comes with a new set of challenges. A comforting fact is that Indians have a tendency of self-employment which was revealed in the 62nd round of NSSO's report on employment showing a national average of 254 per 1000. E-commerce, Innovation and Entrepreneurship

The rise of e-Ccommerce, has contributed to the growth of retail sector in past few years as both a driver of innovation and

E-Commerce industry is expected to contribute around 4 percent to the GDP by 2020. In comparison, by 2020, the ITBPO industry is expected to account for 10 percent of India's GDP, according to a NASSCOM report, while the share of telecommunication services in India's GDP is expected to increase to 15 percent by 2015. However, with enabling support, the e-Commerce industry too can contribute much more to the GDP. entrepreneurship. Globally, in emerging markets such as India, China, Brazil, Argentina, Chile and Russia, the emarketplace is the key due to its inherent advantages. E-Marketplaces are easier to scale up, capital efficient and enable rapid development of the supply chain infrastructure. While such e-Marketplaces seem evolutionary from the customer end, the yare truly revolutionary from the supplier side. Not only the retail dealers and service providers but manufactures of items like Garments, Jewelry, Stationery, Furnishings, Handicrafts, Leather goods etc. also benefitted from the e-marketplaces. e-marketplaces as platforms create stories, experiences and communication when connecting buyers and sellers. The e-Commerce industry offers great opportunities to the Indian economy, the customers and the society at large, especially to small businesses, small merchants, semi urban and rural population. In recent years, the growth of the global e-Commerce market has made cross-border transactions an intensifying force in India's foreign trade, offering millions of enterprises, most of which are SMEs/ MSMEs, to expand beyond

the domestic market. Over 30,000 sellers sell on eBay India annually to 4 million consumers in 3,311 Indian cities. Over 15,000 sellers export a variety of Indian handcrafted products to 112 million customers in over 190 countries. However, it is interesting to note that this is just the tip of the iceberg. India's 35 million SMEs are not able to leverage the power of the unternet because they lack the critical mass to attract customers online. They still do not have their own website, financial wherewithal, brand nor exposure which greatly impacts their ability to reach out to a wider and bigger market. The ability of a manufacturer to sell directly to customers is a key benefit of such e- Marketplaces, as it rewards the manufacturer directly by way of higher revenues and profit margins, leading to a virtuous cycle of further boosting manufacturing activities. These marketplaces enable the sellers to reach out to customers by utilizing the entire infrastructure of website, marketing, customer acquisition, data analytics (eg. market intelligence on which products sell at what price points, color combinations, sizes etc). Supports in automated accounting, cataloging, packaging, transporting, LOGISTICS TIMES September 2014

REPORT

handling return of products, brand building and handling customer care). It is especially notable that rural economies benefit immensely from such e-Marketplaces. Independent artisans and unorganized smalltime manufacturers can scale up their businesses by doubling-tripling their income every few months without substantial capital investments. Such progress is unthinkable if they had to set-up a physical shop to hawk their wares. Beyond an obvious improvement in their lifestyle, the increase in disposable income is often reinvested in the local economy, thereby multiplying its positive effect. It is estimated that the e-Commerce industry is expected to contribute around 4 percent to the GDP by 2020. In comparison, by 2020, the ITBPO industry is expected to account for 10 percent of India's GDP, according to a NASSCOM report, while the share of telecommunication services in India's GDP is expected to increase to 15 percent by 2015. However, with LOGISTICS TIMES September 2014

enabling support, the e-Commerce industry too can contribute much more to the GDP. The rise of E-commerce Entrepreneurs in India

The introduction of internet in India paved way for start-ups who were IT driven and could utilize the opportunity in front of them. In 1995 marked the beginning of e-Commerce businesses in the country. Moreover, economic liberalization after the launch of reforms in 1991 attracted MNCs and brought about the growth of the IT industry. The implementation of liberalization policies led to the demise of the license regime, and high taxes and import restrictions, as well as facilitated the growth of SMEs. The IT industry and SMEs were the early adopters of internet. This led to the emergence of B2B, job searches and matrimonial portals. India's first online B2B directory was launched in 1996. The liberalization of the country's international trade policies was the key factor that

accelerated the growth of B2B online portals. It enabled buyers and sellers to easily connect with their global counterparts. In 1996, the first online matrimonial portal was launched in India. A concept unique to India, online matrimonial portals transformed the perception about the matchmaking process from “marriages are made in heaven” to “marriages are made in cyber space.” Such portals have now evolved to cater to various segments of the population such as NRIs, H1B visa holders, widows or widowers, divorcees and other special groups. India's online recruitment industry took shape in 1997. The growth of the services sector, following the launch of economic reforms in 1991, resulted in the creation of additional jobs. In this background, internet proved to be an efficient medium that allowed employers and job seekers to connect. Prior to job portals, weekly government magazines such as Employment News and newspaper notifications were the primary means for employers and job seekers to

interact. Although online businesses had begun to develop in the late 1990s, the supporting ecosystem had not been put in place. The first wave of e-Commerce in India was characterized by low internet penetration, a small online shopping user base, slow internet speed, low consumer acceptance of online shopping and inadequate logistics infrastructure. Thereafter, the IT downturn in 2000 led to the collapse of more than 1,000 e-Commerce businesses in India. Following this, there was muted activity in the space in India between 2000 and 2004. The decision of LCCs (Low Cost Carriers) to sell their tickets online and through third parties enabled the development of Online Travel Agents (OTAs). Prior to the entry of LCCs in 2005â&#x20AC;&#x201C;06, air travel was considered a luxury meant only for the rich and for corporate travel. LCCs changed the scenario

by making air travel affordable for a large number of people. They developed their own websites and partnered with OTAs to distribute their tickets online and, thus, contain costs . The Indian Railways had already implemented the e-ticket booking initiative by the time LCCs commenced their online ticket booking schemes. The growth of online retail was partly driven by changing urban consumer lifestyle andthe need for convenience of shopping at home. This segment developed in the second wave in 2007 with the launch of multiple online retail websites. New businesses were driven by entrepreneurs who looked to differentiate themselves by enhancing customer experience and establishing a strong market presence. Starting in 2010, the group buying and daily deals models became a sought after space for entrepreneurs in India, emulating

the global trend. Group-buying sites have seen a significant rise in the number of unique visitors and membership. This growth has attracted investments from VCs. (Cited from E & Y report on Rebirth of e-Commerce in India). Current Status

Backed by increasing internet penetration and convenience, the B2C e-Commerce industry generated between USD 400 billion and USD 600 billion in 2010. With the number of internet users increasing from 2 billion in 2011 to an estimated 3 billion in 2015, the e-Commerce industry may cross the USD 900 billion mark. The US online retail market is expected to record yearly growth of around 11% between 2010 and 2015. In the United States, a growing trend is MCommerce shopping online through the use of mobile phones and tablet computers. The LOGISTICS TIMES September 2014

REPORT

product categories most purchased online in the USA are books, movies and music, and apparel and fashion accessories. Canadian B2C ecommerce has seen strong growth in recent years, fuelled by online coupons and discounts. Doubledigit growth is expected in the Canadian market over the next years The European online retail market is expected to slow to a yearly growth rate of just over 14% to reach around USD 316 billion by 2015. Electronics occupies the maximum market share in the overall European market with 25%. Market growth in the Asia-Pacific region is expected around 15%, with electronics garnering the major share of the market with 21%. The growing industry will also have a positive spillover effect on associated industries such as logistics, online advertising, media and IT/ ITeS. Currently e-tailing accounts for 15-20 percent of the total revenues for some of the big logistics companies. The revenue for logistics industry from marketplace based consumer e-Commerce alone may grow by 70 times to USD 2.6 Billion (INR 14,300 crores) by 2020. By comparison, China' se â&#x20AC;&#x201C; Market places have enabled development of a USD 10 Billion logistics industry, supported by an USD 3 Billion marketing, payments and IT industry. In 2013 alone, creation of supplier villages by a single e-Marketplace have resulted in addition of 60,000 jobs. It is estimated that for every direct job, there are three indirect jobs created in adjacent 7 industries â&#x20AC;&#x201C; this multiplier effect has resulted in over 15 million new jobs created by a single Chinese e-marketplace. Similarly, the allinclusive marketplace model in India provides direct employment to approximately 40,000 people and is estimated to create 1 million direct and another 0.5 Million indirect jobs by 2020. Low entry barriers have attracted LOGISTICS TIMES September 2014

India is home to 3,311 e-commerce hubs, 1,267 rural hubs, 391 export hubs and 2,217 import hubs. To capitalize on the anticipated growth potential, a host of investors, including venture capital (VC) and private equity (PE) firms, are closely eyeing opportunities in e-commerce start-ups. many young and enterprising individuals to try their hand at entrepreneurship. A significant 63 percent of e- Commerce ventures have been started by first time entrepreneurs. The number of users making online transactions has been on a rapid growth trajectory, and it is expected to grow from 11 million in 2011 to 38 million in 2015. Venture capitalists (VC) and private equity players have demonstrated their faith in the growth of e-Commerce entrepreneurs in the country. This is amply substantiated by the significant increase in the total investments (US$305 million in 2011 against US$55 million in 2010) and US$ 2.5 billion in the last one year. Online travel has traditionally been the largest e- Commerce subsector (by revenue) in India. Nevertheless, online retail is catching up fast and is expected to match online travel revenues by 2015. To improve margins, online travel players are diversifying their offerings to include hotel reservations, along with the regular ticketing services. To make the most of this move, players will need to develop skill sets that are different from the ones required in the ticketing segment. They will have to manage challenges associated with a diverse supplier base, technological constraints, customer experience, authenticity

of information and grievance redressal. The online retail segment has evolved and grown significantly over the past few years. Innovations by Indian e-marketplaces like Cashon-delivery, return policy seamless customer information for delivery of the product have been some of the key growth drivers and is believed to have accounted for 50% of online retail sales. Players have adopted new business models including stockand- sell, consignment and group buying. Classifieds, the earliest entrant in the e- Commerce space in India, is undergoing a shift in operational model from vertical to horizontal offering. Players now offer a gamut of services ranging from buying/ selling cars to finding domestic help/babysitter. The Challenge

huge employment opportunities etc. But the industry is faced with significant hurdles with respect to infrastructure, governance and regulation. Low internet penetration of 11 percent compared to world average of 34 percent. The growth of e-Commerce limited by the internet access to a broader segment of the population. Poor 'last mile connectivity' due to missing links in supply chain infrastructure is limiting the access to far flung areas where a significant portion of the population resides at. High dropout rates (25-30 percent) 10 on payment gateways, consumer trust deficit and Slow adoption of online payments which are compelling e-Commerce companies to rely on costlier payment methods such as COD (Cash on Delivery). (Access, logistics, payments are part of infrastructure). The interpretation of intricate tax norms and complex inter-state taxation rules make eCommerce operations difficult to manage and to stay compliant to the Indian Tax Code. The introduction of GST is expected to resolve such issues and additionally a clarity on the interpretation of tax laws for transactions involving information, products also need to be provided. The government's plan to introduce GST (Goods and Services Tax) is a positive step towards simplifying the tax structure on sale of goods and services. According to a report by the National Council of Applied Economic Research, GST can provide an impetus to economic growth by between 0.9 percent and 1.7 percent. More than 140 countries have already introduced GST in some form. Moreover, the government's plan to interlink every panchayat (village council) of the country through high-speed broadband service by 2014 would aid the sector's growth. Also, government organisations

increasing reliance on the ecommerce methodology for their money-related transactions would help the upward trend. The Way Ahead

Though so far various demand and supply driven factor said ed by dynamics in external (government/ regulatory) environment are supporting the growth of the industry. Favourable demographics, increasing number of urban households, growing internet penetration in smaller towns and rural areas, proliferation of mobile devices and emerging need for convenience, choice and access are acting as prime movers from the demand side. The e-Commerce and allied companies have also turbocharged the e-Commerce growth engine by introducing innovative business models, by offering convenient payment options and by introducing technological innovations and customer friendly policies to capture online time and wallet share. Concepts such as flash sales, 'by invite only' sales, India 'Cyber Monday' or the 'Great Online Shopping Festival' have been smashing hits in the past and such innovations will continue to play an important role to promote online shopping. These tactics, in addition to the existing sales, coupons and deals are welcome by the Indian customer. The government and regulatory bodies are also playing their part by investing in infrastructure and

policy support. These bodies have also initiated awareness drives to get wider users (including SMEs/ MSMEs) on to the e-Commerce platform. still concerted efforts would be required for developing and for on boarding the skills such as merchandising,product development etc that are core to e-Commerce. Sustainable growth would necessitate the e-Commerce players to invest in technology to move beyond the customer acquisition phase and to focus on holistic customer experience. Solutions enabling seamless integration of back-end and frontend infrastructure, customer experience enhancement initiatives, integrated inventory management and analytics would be crucial to embark on the transformational journey. This is already being done. In conclusion, India is staring at a new paradigm of digital consumerism. As the clocks ticks, the people of India are enthused and excited to get on to this digital bandwagon. They are connected, they are informed and they can't get enough of it. The e-Commerce industry is offering them their chance. However, the industry needs backward and forward linkages, the integration of department working in isolations and the required support from all stakeholders in its ecosystem to surmount the challenges and to embark on profitable growth. (Courtesy: e- Commerce Association of India) LOGISTICS TIMES September 2014

HIGHWAY NOTES

Height of hypocrisy Driver shortage, mind you, is a global phenomenon. Every single country is afflicted with this malaise. There are no exceptions. Incidentally, reasons for such shortage is no different. The litany is the same as we hear in India. Adrian Gonzalez of Talking Logistics, one of the most vociferous and intelligent commentator on everything under the sun on the subject of logistics and supply chain, drew attention to the issue of driver shortage again a few weeks ago. Better salary, if you think, is the ideal solution to lure more into truck drivery, you're off the mark. Issues beyond pay packet play a big role. Listen to one of the long haul drivers who wrote to Adrian: "... The shortage of drivers is due to the treatment of drivers. They are treated like trash with no rights. [Trucking companies] look at drivers as equipment. The Department of Transport (DOT) treats them as outlaw trash with no rights; they tell them when to drive, stop, sleep, and eat. They invade their home on wheels at will without warrant or cause. They use drivers as revenue for their state or county with bogus tickets. There is no place to park. You cannot idle so you can use your a/c or heat, so you’re hot in the summer and cold in the winter. The truck’s speed and power are cut back so far you cannot pull the hills and keep up with the flow of traffic. That keeps the public pissed because you’re blocking traffic, which causes unnecessary risk of passing on [twolane roads] and keeps all the trucks restricted to the right lane where you’re blocking all the traffic that’s getting on and off the highway. You sit [for] hours at the shippers, and hours at the receivers, and very seldom get paid for those hours. LOGISTICS TIMES September 2014

Ramesh Kumar

So you can’t really think, under the conditions of being treated as 3rd class citizens and outlaws with no rights, [that] you will keep [the] seats in your trucks filled." Wow.... The same old complaints from truck drivers in India as well. Lack of respect is the big ticking bomb. When you're not given even the basic decency, you sulk. Get into depression. Just begin to ignore the rest of the society and behave as if there is no tomorrow. Others

don’t matter. Indulge in all kinds of activities which the same hypocritical society debunks as 'filth'. Seminars and workshops at five star hotels or convention halls debating the ills afflicting the transport industry in general and looming driver shortage particularly are sheer waste of time and height of hypocrisy. The need of the hour is genuine bonding between the target group viz., truck drivers and all layers of logistics and supply chain professionals: be it the security guard or the billing clerk checking the inbound or okayed outbound items at warehouses and factory gates or the transport companies' branch hands that dish out trip advance, they need to be tought basic 'Driver Relationship Management' (DRM) fundas. DRM is not a rocket science, but simple human relationship builders such as a warm smile, affectionate

handshake, a 'hello', 'how's the family?' query etc. One does not have to go reputed management institutes to learn these etiquettes. Every parent has taught their wards in childhood. Just, weâ&#x20AC;&#x2122;ve forgotten. If Ramu kaka, the cook, made popular in Bollywood movies and considered as part of family, why not the much more qualified (even without proper certification for trucking in India) truck driver Anil Pandeyji or Pervez Khan be included into that circle? If anything is found wanting - say, dressing & eating manners etc they can be trained. It's no big deal. Remember that Ramu Kaka when he came into the rasoi was no polished Rajesh Khanna. Over time, he assimilated better etiquette through sheer observation and a bit

The shortage of drivers is due to the treatment of drivers. They are treated like trash with no rights. [Trucking companies] look at drivers as equipment. of genteel nudge and advice from family elders. Similar approach towards the 'ugly and uncouth' truck drivers ensuring our livelihood on a daily basis can transform their lives. This behavioural change on our part will, it can be hoped, may transform their lives. They may shed their low self esteem, gain recognition and then respectability.

When that happens, word will spread that truck driving is no hell, but a decent job. When such positive vibes percolate down, the question of driver shortage will become a thing of past. Are we the white collar blokes - ready to step out of cubicles and cabins and rub shoulders with the soldiers on Indian highways at transport hubs, highway dhabas and checkposts?

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

AGM REPORT

CRWC 7th AGM

The 7th Annual General Meeting of Central Railside Warehouse Company Limited was held on 22.08.2014 at PHD house, New Delhi. It was chaired by Dr.C.V.Ananda Bose, chairman, CRWC, who highlighted the performance and the achievements of the company. CRWC handled a record number of 1,25,700 wagons at its 18 RWCs in the year 2013-14.The turnover of the company increased to Rs.91.32 crores in the financial year 201314 as compared to Rs.83.92 crores in the financial year 2012-13. The profit before tax increased from Rs.24.47 crores LOGISTICS TIMES September 2014

to Rs.27.94 crores in financial year 2013-14. The company has paid Rs.6.08 crores to CWC for the year 2013-14. K.U.Thankachen, Managing Director, CRWC informed the shareholders about the new initiatives, diversification and expansion plans of the company. The company has initiated various plans to set up/operate warehouses and logistics parks in association with other agencies such as IWAI, IFFCO and DFC through joint ventures and strategic alliances. Construction of a liquid cargo terminal at Kolkata and warehousing facil-

ity at Dahej are on the cards. 10 additional terminals are also proposed to be handed over to CRWC for construction of warehouse facilities with temperature controlled storage by Railways. He assured the shareholders that the company is set to achieve greater heights in the field of lLogistics and warehousing. He expressed his gratitude to the Dept. of Food & Public Distribution, Indian Railways, Central Warehousing Corporation and other stakeholders. who continued to repose their faith and trust in the management.

New Management Elected at CILT AGM

The Chartered Institute of Logistics & Transport (CILT), India chapter held its Annual General Meeting on 23rd August 2014 at CSOI, KG Marg, New Delhi. The meeting was attended in large number by the members of the logistics fraternity. CILT is a worldwide organization of professional of the transport industry, set up to promote the study of the art and science of transport in all its branches and modes namely road, rail, shipping, civil aviation, pipelines etc. CILT has its headquarters in London, UK, with a membership of more than 35,000 worldwide. In India, CILT was started in 1987 with headquarters in New Delhi; since March 1998 it has been

upgraded to National Council. The National Councils have independent authority to elect members in accordance with their qualifications and experience. With much enthusiasm and feeling of positivity Shanti Narain, ex Member Railway Board, a man of excellence and great experience, was elected as the Chairman of CILT, India. He has served in the Indian Railways and is presently Secretary General of the IC Centre for Governance. The three Vice Chairmenâ&#x20AC;&#x2122;s elected are: Rajeev Bharadwaj ,Director, Solar Energy Corporation of India; Dr. P.K. Goyal, retd IRTS officer of Indian Railways; and Dr (Mrs) Veni Mathur, Dean, Million Minds Management Services Ltd

and former Visiting Faculty, IIT Delhi. Amit Shankhdhar, AVP (North) DTDC Cargo & Courier Ltd was elected as General Secretary and Vinod Asthana, Former MD, CRWC, will continue as Treasurer. The eight elected National Council members are: Ramesh Krishnan, Supply Chain Head, Sahara Q Shop; Sumant Jha, Senior Vice President, First Flight Couriers; Sanjay Priye, Operations Head Asia Pacific, Safe Net; Vikash Shekhar, CEO, ATC; Versal Sudhera, North India Head, True Logistics; C.V. Kumar, CEO, Goods Mover; Suresh Bansal, Director, DTDC Cargo & Couriers Ltd and Arti Khosla, an ex-official of Indian Railways. LOGISTICS TIMES September 2014

AGM REPORT

EVENTS

DHL presented Masaba Gupta and Amit Aggarwal at the opening show of Lakmé Fashion Week

DHL presented young designers, Masaba Gupta and Amit Aggarwal at the opening night of Lakmé Fashion Week Winter/Festive 2014. Both designers presented a refreshing and contemporary couture collection with very contrasting styles and themes that opened the five-day extravaganza to fashionistas in the city. RS Subramanian, Senior Vice President & Managing Director, DHL Express India said, “DHL has been a long-time partner of IMG Fashion Weeks worldwide and we understand

LOGISTICS TIMES September 2014

the business and the needs of the industry. The fashion, textile and apparel industry is one of the most creative and demanding industries and as the world’s leading logistics company, we provide the best solutions. Fashion Weeks are a perfect platform for us to demonstrate our expertise and we are delighted to be part of this season once again.” Commenting on DHL’s partnership with Lakmé Fashion Week Winter/ Festive 2014, Sandeep Juneja, VP – Commercial, DHL Express In-

dia said, “Working with Masaba and Amit has been truly delightful. Their designs are fresh and contemporary with an international appeal, which is what brand DHL epitomizes – being the world’s leading international express company. And to have the two iconic fashion divas, Shilpa Shetty Kundra and Sushmita Sen dazzle us on the runway made the show even more spectacular and special.” DHL is the Official Logistics partner of Fashion Weeks since 2007 in 11 cities across four continents.

RNI No. DELENG/2011/39329

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

Sabka saath, sabka vikas

Ministry of Information and Broadcasting Government of India

davp 22202/13/0025/1415

Heartiest greetings on 68th Independence day