Lt march 2011 net

COVER STORY

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INTERVIEW Samar Nath

DRY PORT Dry what?

PROFILE Jagdish Khanna

LogisticsTimes www.logisticstimes.net

Marchh 2011 20 201 20 01 11

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BUDGET 2011-12 Bouquets & Brickbats

CHEP India:

Birth of a new solution Pranil Vadgama President

LOGISTICS TIMES July 2010

Logistics Times

CONTENTS

All about Transportation, Distribution & Infrastructure Volume 1: Issue No.11 * March 2011 Editor in Chief Raj Misra rajmisra@logisticstimes.net Editor Ritwik Sinha ritwik@logisticstimes.net Consulting Editor Ramesh Kumar ramesh@logisticstimes.net Mumbai Bureau Rahul Kumar rahul@logisticstimes.net Sub Editor Neha Richariya Photographer Anil Baral Design Consultant S. Athar Hussain Designer Kausar Syed Circulation & Distribution Kamruddin SaiďŹ Legal Advisor Rakesh Garg

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COVER STORY Birth of a new solution

Editorial Advisory Board Paul Lim Founder & President, Supply Chain Asia Vinod Singhal Brady Family Professor of Operations Management, Georgia Institute of Technology, College of Management Kate Vitasek Faculty, Centre for Executive Education The University of Tennessee Prof. K S Pawar Nottingham University Business School Prof. Samir Srivastava Associate Professor, IIM-Lucknow Prof. Akhil Chandra Institute of Logistics & Aviation Mgt Sanjay Upendram Founder & Chairman, Amarthi Management Consulting Swaran Singh Soni Consultant (Oil Industry) Arif Siddiqui Chairman, Coign Consulting

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

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

www.logisticstimes.net

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BUDGET 2011

Bouquets & Brickbats Edit Note

6

Shipping

24

Mobile SCM

42

My P&Q

48

36

SECURITY

Managing risks on the road

16 INTERVIEW

Samar Nath

38

DRY PORT

Dry What?

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PERSPECTIVE

Bumps Ahead

PROFILE

Jagdish Khanna

EDIT NOTE

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What a solution, sirji?

As consumers, we have noticed them around us – pallets and crates. More specifically, those plastic crates which are used in carrying soft drinks and easily noticeable at any retail store. But like any other supply chain tool, these too hardly ever become a point of interest for us – in terms of understanding their strategic importance in the operational value chain which ultimately ensures delivery of goods and products to us.

But as we discovered during the course of attempting the cover story for this edition, wooden pallets and plastic crates do play an important role in the supply chain of certain leading verticals – like FMCG and Automotive – and if these resources are utilized and deployed in a more scientific way, then the critical advantages they could deliver are immense. This is what CHEP India, a wholly owned subsidiary of Australian conglomerate Brambles group (with presence in nearly 50 countries), is trying to do in the domestic market. The unit which was set up in 2008, is floating the idea of pooling of pallets and crates – a working mechanism which has proved its efficacy in many other markets in the world. The solution offered by CHEP has multi-pronged benefits – it ensures the optimal utilization of pallets and crates by doing away with their wastage, the on-hire model takes away the burden for the end user industry to invest directly in these tools, they fit in perfectly in a scenario when the space constraint in warehouses is resulting in vertical expansion and not horizontal and the reusability of these tools make them ecologically beneficial. And the entire operation is being supported by a robust IT platform which keeps a tab on the movement of the tools. Spending two days with CHEP India top brass last month in Mumbai was quite a revelation as there are distinctive layers of the new operational module which the company is pursuing in order to make a mark in the Indian market. And going by the response of its key functionaries, after surmounting those initial hurdles, the degree of acceptability of its solution is gradually increasing. The presence of 160 clients in its kitty is probably the biggest substantiating point to this acceptance claim. A promotional film of CHEP India was run through to me during this visit and I did find some of their customers greeting their pooling solution almost with “ what a solution, sirji” kind of expression.

Leaf through the story for details…

What could be called an ideal budget? Something that pleases everybody? Well, that is a loose response or approach but probably that is what we expect from the finance minister when he rises to present his budget every year. Like the budgets in the past, budget 2011-12 too has its share of hits and misses but unlike many other prescriptions in recent years, there seems to be less misses for the logistics industry this time. As our specific budget section in this edition underlines, there are more bouquets than brickbats for the FM from the logistics players even as some disquieting notes are indeed strong.

Another highlight of this edition is interview with Samar Nath, MD- India & South Asia, CEVA. The Indian unit of this global logistics major is tending to fast track its growth and among other things, its key target in the near to medium run is to balance its portfolio making verticals other than freight management much stronger. Nath candidly shares the Indian roadmap of the company for the next few years.

Waiting for your feeback.

Ritwik Sinha ritwik@logisticstimes.net LOGISTICS LOG LO OG O GIST STTIC ICCSS TI TTIMES IM MEES MES ES M Maaayy 20 May 22010 10 10

NEWS BRIEFS

8 Container Terminal

The government is planning to build a mega Container Terminal at India’s second busiest Container Port at Chennai. The Minister of Shipping, G.K. Vasan recently informed the Rajya Sabha in a written reply that dates for submission of Request for Proposal (RFP) bids for this project have been extended to the middle of April now from December end as prospective bidders asked for more time to study environmental issues closely. The proposed mega terminal is likely to have a handling capacity of four million twenty feet equivalent units (TEUs) of containers annually.

FedEx Completes Acquisition FedEx last month announced completing the acquisition of the logistics, distribution and express businesses of AFL and its affiliate, Unifreight India (UFL). After FedEX struck a deal to buy out AFL last year, both the companies had set up integration teams to discuss the precise modalities for this acquisition.

“The acquisition of the AFL and UFL businesses has enhanced the leadership position of FedEx in the Indian express market and offers our customers access to a range of service options, including air express, domestic ground and value added-services such as warehousing, logistics solutions and 3PL,” said Hamdi A. Osman, Sr. Vice President FedEx Express, Middle East, Indian Subcontinent and Africa. According to Cyrus Guzder, Executive Advisor to FedEx Express, India, the customers of AFL too stand to be benefit immensely out of this deal.“With this transaction, FedEx Express will now provide all international services for AFL and UFL customers, who will have direct access to the FedEx international air and ground network in more than 220 countries and territories worldwide, enhancing their business flexibility and speed to market,” he added.

Direct India-Europe service

Shreyas- AICFWC alliance Shreyas Relay Systems last month entered into a strategic alliance with All India Coastal Forwarder Welfare Committee (AICFWC), India’s only association focusing on domestic cargo in containers using costal shipping.

The company organized ‘Trade & Logistics Knowledge forum 2011’, a knowledge-based interactive platform on Logistics segment for the members of the association. The first series of event was recently organized at Gandhidham, witnessing complete strength of association members’ participation.

LOGISTICS TIMES March 2011

In a significant development, Maersk Line last month announced the launch of a new service which would mean addition of direct India- Europe line in company’s operational profile. The new service would be connecting South and East India to North Europe and would be called the ICON service - India Colombo North Europe service). According to a news report, the ICON service will deploy 7x3400 TEU vessels and operate with the following port rotation: Chennai – Colombo – Salalah – Zeebrugge – Felixstowe Rotterdam – Bremerhaven –Salalah – Colombo. “ With excellent transit times from Chennai (India) to Felixstowe (UK), this is a fast poduct and well suited for all our customers in time sensitive industries like apparel and retail. This also addresses our customer’s long standing demand for a direct product from South India to Europe which helps in achieving better efficiency in supply chains and reducing overheads for our customers.” Rizwan Soomar, Managing Director, Maersk Line (India & Sri Lanka) was quoted as saying.

BUDGET REACTION

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Budget 2011 - Review By Kiran Salunke, Managing Director, Siesta Logistics Corporation Limited The Union Budget of 2011 seems progressive and focused towards addressing a wide spectrum of current challenges. For Siesta Logistics and Corporation Limited, the prime focus areas are the introduction of Goods and Service Tax and infrastructure investments.

Based on the Finance Minister’s comments during the budget speech we are optimistic that the GST Bill will be implemented by FY 2012-13. The present multi layered taxes not only adds to the cost of products and services but also increases the time of domestic distribution. Introduction of GST will not only simplify the movement of goods but will effectively reduce time and cost involved.

Another big focus area for us is infrastructure; the budget clearly deemed infrastructural development critical. The sector received a 23% higher allocation for this year and rural sectors too received a huge boost.

As the economy grows and extends beyond the metros, development packages such as those planned in the current budget are an absolute necessity. A sustained investment of this scale will not only enhance the development of the transportation network but will also promote the much needed overall and well distributed growth in India.

Initiatives like exemption of basic Customs Duty to specified machinery used in the construction of national

LOGISTICS TIMES March 2011

More bouquets than brickbats Unlike in the past, budget (2011-12) presented by Pranab Mukherjee on 28th February has not left the logistics and allied industry players and observers with the feeling of being ignored. There are a host of pronouncements – new provision for cold chains, the promise of increased expenditure on infrastructure and a clear indication that GST would become a reality soon – which have been greeted with applauds from the logistics industry even as there are some strong disquieting notes.

Christoph Remund, CEO DHL Global Forwarding India

The Union Budget 2011 – 2012 has concentrated on reforming the tax structure with a reduction in surcharge and a peak standard rate of excise & service tax at 10% .

The long awaited implementation of GST after the protracted delay is re-assuring and seems certain

by April 2012. Additionally, the opening of foreign investment into infrastructure projects where the spends are estimated in the range of $1 trillion over the next five years comes as a welcome move as this will help improve urban infrastructure and speed up the movement

of goods in ports, rail and highways.

Fiscal incentives for investment in cold chain is another favourable announcement from the pharma logistics industry’s perspective. We hope the government reconsiders charging MAT on SEZ facilities.

Abhik Mitra, MD, TNT INDIA

From a logistics industry point of view, the delay in the GST implementation is of concern. Also the service tax now being paid on accrual will impact cash flows negatively in an industry which is already operating

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at low margins. There are no positives for the logistics industry overall.

Ajay Chopra, CEO, DIESL

A budget is an exercise that a government carries out annually 6/10 and at basic level it serves the purpose of outlining how the money that the government has taken or borrowed from us the taxpayers will get utilized. However at a bigger level it’s a strategy document which announces the path that the people who have the power to change or bring about change are planning to take in the years ahead.

So did the budget meet the expectations on these fronts?

Well , both yes and no. Yes, in the sense that coming in midst of high inflation and global economic chaos and with the crying needs of social and infrastructure sector investments the FM has done a commendable job of maintaining continuity and channel even higher plan expenditure into these areas.

No, in the sense that coming at such critical juncture the budget fails to bring any path breaking initiatives , it shows certain timidness on the tax front on both direct and indirect taxes areas e.g. the DTC while announced still fails to include all provisions into it and while there was mention of GST roadmap a number of times, no clear timelines still emerges. On custom duty also once again individual items have been looked at for concessions instead of systemic improvement.

The biggest challenge that Indian economy faces today namely inflation, especially food inflation and the slow speed of infrastructure development find no concrete solutions or action plan in the budget document.

Anil Khanna, MD, Blue Dart

The budget has given both the common man and industry something to cheer and demonstrated the government’s focus on driving sustainable inclusive growth. We are happy to note that significant progress is under way towards introduction of GST and that the constitutional amendment bill would be placed before the Parliament in the current session itself.

We are optimistic and look forward for its introduction in FY 2012-13. Leaving service tax and central excise duty rates unchanged is a step in the right direction.

On the flip side, the industry was looking forward to a reduction in corporate tax to enable it to make some big ticket investments.

However, this was ignored by the government in this budget. Overall the budget is welcome news for many despite certain challenges that need to be looked at.

Harry Lagad Executive Director, Gati

The most important aspect of budget 201112 is that the GST is finally

being introduced in the Parliament which means, by next year, we should see the full roll out of this system.

This will largely benefit all logistics and transport players as it will revamp the way the Indian logistics market is currently working.

Secondly, from a Gati perspective, we see the announcement of the infra status being awarded to the Cold Chain is a critical initiative which has far reaching impact on our business. The ability to now import spares for the shipping industry is also seen as a positive step by us as this will help our shipping division.

But the shipping sector needs even more benefits if it has to become a key sector for India. Given India’s vast coastline, this sector should have been given prominence.

Singapore recently announced a policy of reduced taxation and interest rates to support the growth of the shipping sector.

Vineet Agarwal, Executive Director, TCI

The finance minister has announced a slew of measures to boost investment in the infrastructure sector with a view to propel the announced 9 per cent growth trajectory by 2012. To enable the development and the flow of funds to the sector, FM has proposed tax-free bonds and has increased the FII limit for investment in corporate bonds.

Government’s plan to come

up with a comprehensive policy for further developing PPP projects will definitely improve the infrastructure conditions. However, what is currently required is a speedy single window approval system.

The Minister has not left out the logistics sector, the backbone of the economy, and has set aside Rs. 2000 crore for warehousing, mainly in the area of agriculture. Augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked.

Providing cold storage chains an infrastructure status is a welcome move as it will help improve and add infrastructure in this area.

The scope of exemptions to improve storage and warehouse specialty for agricultural produce has been further enlarged.

However, the government should have considered giving the logistics sector an infrastructure status on a whole.

R K Saboo Chairman, EICI

In one sentence if I can summarize this budget, then it is a 6/10 “No Profit, No Loss” package. In other words, “No Bad News is Good News.”

I am not an analyst but if I look it from common man’s perspective then I would say that the government should have taken some significant steps to handle inflation, which is the most worrying factor in addition to ever LOGISTICS TIMES March 2011

BUDGET REACTION

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increasing corruption.Also some steps should have been taken to increase FDI cap for retail sector.

Vineet Kanaujia, GM–Marketing, Safexpress

This Union Budget is a big leap towards our economic growth rates 8/10 surpassing China. The allocation of Rs. 2,14,000 crore for infrastructure sector is a vital step by the government.

This allocation is 23.3% higher than last year and amounts to 48.5% of the plan expenditure.

The government has eased the flow of foreign investment into infrastructure projects, which will improve urban infrastructure; additionally, it has raised the corpus of Rural Infrastructure Development Fund to Rs. 18,000 crore.

Since infrastructure growth is the foundation of economic growth, therefore these concrete measures by the government towards boosting the infrastructure will strengthen our economy further. This will also pave the way for Supply Chain & Logistics industry to grow from the present USD 110 billion to over 200 billion by 2020.

The introduction of a Constitution Amendment Bill for Goods and Services Tax (GST) in the current session is another crucial move in the right direction.

Percy Avari, Country Manager, Aramex

6.5/10

The budget 2011 comes at a time Indian economy on the whole

LOGISTICS TIMES March 2011

is on an upswing which is being challenged by an uncontrollable inflation and declining industrial production.

Unfortunately the current budget does little to control the inflation or promote industries to support the growth momentum. Whilst the increased allocation on infrastructure, agriculture and education will help the growth of the economy in some way, continuance of reform agenda and fiscal consolidation is surely missed. Rescheduling of the implementation of GST to 2012 continues to raise a question on when it would finally be happening.

Lars Sorensen CEO, Damco

The 2011 budget is growth oriented and the targeted growth rate of 9% promises to bring opportunities for the logistics sector as well.

Infrastructure development is critical for logistics industry growth in India and here the finance minister has increased the allocation for infrastructure development by 23%. He also announced infrastructure debt funds and increased the limit for foreign institutional investors in corporate bonds for infrastructure from $5 billion to $25 billion. These measures will increase infrastructure investments and will hopefully lead to the development of world class facilities in India.

Vijay Kalantri President, (AIAI)

This year’s Union Budget is balanced on an overall basis

but has lost an opportunity to give the much needed impetus and thrust to the infrastructure sector as per targets. At the same time, the budget should have been indexed to match the inflation index while raising the various limits of Direct taxes.

The proposal to introduce the Goods and Service Tax (GST) and Companies Bill in the current parliament session and implementation of Direct Tax Code by 2012 will help industry and trade to plan investments and will thus give impetus to growth. The budget has, however, neglected the Small Scale Sector in view of the employment generation and contribution of the SME sector to the GDP and growth. The Excise exemption limit should also have been enhanced in view of the inflation and cost of inputs and raw materials.

Sankalp Shukla Director, Inlogistics

Finance Minister has been able to maintain a good balance 7/10 between maintaining growth and cutting deficit in this budget.

Continued focus to strengthen country’s infrastructure reflects of governments intentions to reduce the countries’ logistics/ transaction cost in medium to long term.

Specific focus to attract private participation in agri-

logistics and supply chain infrastructure by offering tax sops will attract private capital and enterprise in this important sector.

Though steps taken by FM will facilitate the GST roll out, a clear target for its roll out would have allowed companies to plan relocation of their Logistics assets in time.

On a personal note, steps taken by FM in the areas of direct transfer of cash subsidies and special focus given to National Skill Development Council (NSDC) will result in true inclusive growth of the country.

Sanjay Agarwal, CMD Dev Bhumi Cold Chain

Though there is too much noise on the provisions which 4/10 this year’s budget has offered, I still strongly believe that giving infrastructure status to cold chains at best is a half baked or cosmetic measure.

Considering the challenges in this segment and the potential it has to solve a whole lot of economic problems, cold chains need to be identified as part of agriculture sector. It has to be identified as essential services. Depreciation benefits again is not the right response as it would propel big corporate houses to get into the business to clean up their balance sheets.

TS Narasimhan Executive Director, DARCL

Astute budget largely, holding the reins of inflation,

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foot firmly on the ground continuing boost with 23% in 7.5/10 infrastructure spend – investments in cold chain storage, backed by investment of Rs.520 billion in education ,to increase much needed skilled work force . Greeting the senior citizens from arm’s length giving relief; while eating out and curtailing profligacy is fine but health care should have been spared. Plans to plug leakages and corruption and the poor to get cash subsidies , is a welcome move thanks to tech drive UID by March 2012.

Pranil Vadgama President, CHEP India

The FY 1112 budget is generally a growth 5/10 package budget that is seeking to build on strengths of Indian economy and face the challenging environment of global economy. This budget seeks to address the crucial issue of infrastructure funding, through tax free bond issue, tax exemption extension for one more year, setting up debt fund to direct foreign investment towards infrastructure sector. This should tackle the infrafunding bottlenecks to a large extent.

My next two points are, however, probably the most important regarding the modernisation of the supply chain in India. One - the announcement of placing constitutional amendment bill on GST should expedite

implementation by year 2012 (we are all hoping) and secondly the unfortunate non commitment on FDI investment in retail which may impede organised growth in the FMCG Retail sector.

Parag Joshi, CFO CEVA Freight

Quite predictably, the budget 2011-12 speech by 6/10 the Finance Minister didn’t bring too many good or bad news to the logistics sector which incidentally continues its struggle for survival without any identity or recognition (as an industry) even at the near end of the 12th five-year plan since independence. The conviction in the FM’s speech about the roll out of GST definitely sounded positive.

Another encouraging aspect of the budget speech is the unrelenting focus on infrastructure development.

Development of logistics infrastructure like Ports, Roads etc. will definitely result in logistics cost saving.

The doors to global retailers remain closed as FDI in retail has not been given any importance in this budget.

Kalpesh Pathak Asst. VP (SCM) - Fiat India

Good news for the auto industry as there is no change in 7/10 excise duty.

Announcements such as launch of “national mission for hybrid and electric vehicles” , excise and customs

benefit on hybrid, electric and fuel cell technology based vehicles will have no immediate impact.

However, it help in long run. 23 % allocation on infrastructure (Roads, Ports and Airports) and raising FII limit on corporate infrastructure bonds to $20 billion will help continued improvements in infrastructure which is must for logistics efficiency improvement across the country.

Unni Nair, Chairman & MD LCL Logistix

We welcome the measures to promote the development of cold chain logistics, and funds allocated for warehousing of agro commodities. This will help our industry.

Duty imposed on export of iron ore may cause negative impact on the logistics players in this segment if the export is reduced due to duty implementation.

Ajay Singh Bamel, COO Apeejay Infralogistics

This budget has been a moderate package but 6/10 still it will be good for logistics industry because of few decisions: (a.) infrastructure outlay has been increased which will result in improving logistics business directly and indirectly by investment in logistics parks/ports/ warehouses; (b.) import

incentive given to cold chain equipment will improve cold chain infrastructure; and (c.) allowing foreign individual to invest in local AMC and MF may attract investment in logistics infrastructure and which will again help in bringing in efficiency in supply chain.

Kiran Salunke, MD Siesta Logistics

The Union Budget of 2011 seems progressive 7.5/10 and focused towards addressing a wide spectrum of current challenges.

For Siesta Logistics and Corporation Limited, the prime focus areas are the introduction of Goods and Service Tax and infrastructure investments.

The big focus area for us is infrastructure and the budget clearly deemed infrastructural development critical as the sector received a 23% higher allocation for this year.

Initiatives like exemption of basic customs duty to specified machinery used in the construction of national highways and the import duty exemption for spares and capital goods required for ship repair units will significantly influence the development of the country’s infrastructure.

Vinay Kshirsagar, CFO Shreyas Shipping & Logistics

Ship owners have been allowed to import duty free spare 6/10 parts which is a positive move. In indirect LOGISTICS TIMES March 2011

BUDGET REACTION

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gap funding.

Gagan Seksaria, KPMG

terms, this budget offers a host of benefits to the logistics industry. The bottlenecks in transportation of food etc. have been identified and FM has introduced various measures to curb the same. Tax free bonds to boost infrastructure will go a long way in augmenting the road and rail infrastructure.

Investments for warehousing of upto Rs. 2000 crore will help the company to expand its warehouse activity Cold storage projects being classified as infrastructure sector is a welcome move by FM. Setting up of 15 mega food parks is another positive initiative.

Sanjay Upendram Amarthi Consulting

Positive impetus for warehouses and cold 6/10 storage, where there is a significant loss of $13 LOGISTICS TIMES March 2011

billion in food produce due to lack of cold storage facilities, is a welcome measure both in terms fast tracking and providing capital investment. The following changes will have a positive impact on India’ storage capability and minimize loss: capital investment in cold-storage firms will be treated as infrastructure investments; full exemption from excise duty to airconditioning equipment and refrigeration panels for cold chain infrastructure has been extended; conveyor belts and other equipment used in cold storages, mandis and warehouses have been included in the full exemption from excise duty; augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked and capital investment in creation of modern storage capacity will be eligible for viability

The benefits for the cold chain sector are welcome 5/10 and will encourage investors and entrepreneurs. Challenges, however, in the modern cold chain sector are on the demand side and a policy initiative to drive usage will spurt the sector and do away with the need of supply side sops. While positive signals on GST are welcome, the preparations needed on a company level for a transition are significant and complex and must be preceded by a sufficient and firm notice of the date so whether it is 2012 or 2013, it must be known now. On the transport infrastructure side, investment interest must be converted into cash through firm policy action and strong project pipeline execution instead of more announcements and this is especially true for rail.

Uday Palsule MD, Spear Logistics

Cold chain will improve investment return due to new infrastructure status and also due to exempting AC units and reefer panels from excise.

Foodgrain warehousing requires radical reforms to reduce wastage. Current

budget has made tentative changes by fast tracking new 15 million tons capacity by allowing private entrepreneurs into it and additional capacity of 2 million tons under Public Entrepreneurs uarantee (PEG) Scheme through modern silos. This could have been bolder by loosening FCI hold over warehousing Food grain.

However, a landmark event and game changer for logistics industry will be GST. Constitutional amendment, setting up of GSTN and changes in service tax are strong signals and indicators of government intent for implementation of GST. Soman Nambiar Supply Chain Consultant

As budgets go, I find no flashes of genius, brilliance or originality, just another replete with reforms to sustain the ‘growth mantra’ , muffled sops/exemptions to retain small cash in middle class’ pockets, untested proposals on infastructure in the realms of Direct/Indirect/Service Tax, and impractical thoughts on bridging Fiscal Deficits’.

Seriously, India’s biggest and singular challenge is not so much in the budget, it is in our inability to institutionalize a powerful, upright and transparent delivery system.

There is no hint of any step addressing the horrible apathy, greed, cynicism and corruption permeating every arm of governance and consequently all sections of society.

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“Portfolio balancing is the prime target” For the Indian unit of global logistics major CEVA, CEVA the prime target in near to medium run is to add more punch to its verticals other than freight management and evolve an operational equation which is aligned with group’s global reckoning. Samar Nath, MD – India & South Asia shares the details of this portfolio balancing plan in a free wheeling conversation with Ritwik Sinha. Excerpts: LOGISTICS TIMES March 2011

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To begin with, give me some historical perspective of the evolution of this company since the beginning to this day in the Indian market.

As far as my knowledge goes, we began the activity as Circle Freight India in 1980s and from there we have graduated into being acquired by EGL which had a traditional freight forwarding business with strong elements of contract logistics as well. And in 2007, we were rechristened as CEVA logistics globally. CEVA has a very balanced portfolio – of freight management and contract logistics. This equation though does not exist in India and one of our key targets here is to attain similar vertical ratio.

One of the strong perceptions about CEVA in India is that your operations are broadly metro centric and you have not been able to penetrate much in the emerging business hotspots in the country.

How would you respond to this assumption?

As part of the management team here, I don’t think this perception has any merit. Globally we have such a big network and that gives us the strength to move along with our customers and their business requirements. In India, we have 20 offices today and we have been consistently adding locations. This year alone we have plans to open few more offices in the country. And that does not count the number of contract logistics sites which are going to come up. So I think that notion is not valid. I think, we have shown the ability to expand if our customers expand geographicallybe it manufacturing, distribution or transportation need. The prime target is to offer easier supply chain processes to our customers wherever they are.

If you typically look at any well established LSP in the Indian market, they usually offer services in threefour verticals. What is the precise case with you – do you have service line beyond freight management and contract logistics?

If I cite some reports of Frost & Sullivan or Mckinsey, then CEVA ranks number four in Asia-pacific region.

Yes. If you look at our portfolio, we focus on three verticals globally. The first one is – FM ( freight management)- traditional ocean, air and brokerage activities. Second is CEVA Ground – the transportation activity which can be by roads and railways. Third is contract logistics where we have what we call the traditional warehousing activity. Since we are in the heart of manufacturing, we are focused on I2M ( inbound to manufacturing). We manage complete transportation pickup, inbound, warehousing, feeding to the line and at the second level it becomes the after market services. That is how we are, globally aligned and that continues in each of the countries.

If I specifically ask about India, then what is the ratio contribution from each of these segments to your overall business?

As of today, FM drives the show for us with a hefty share of over 50 percent and other verticals share the remaining part of pie. But going forward, we definitely see contract logistics and CEVa Ground to gain more because there is a huge domestic opportunity here both from the list of customers in our global network who are in India as well as mid-sized and Indian companies whom we are focusing on. And we hope that our portfolio would soon be balanced. So in next three-four years, the desired portfolio balancing will fall in place.

So in a way, you are saying there would be more emphasis on contract logistics?

Globally as I mentioned, we have a very balanced portfolio between contract logistics and freight management. We are ranked as number two player in the world in contract logistics segment with roughly about three percent market share. And like many other players, we also do have this aspiration to expand our contract logistics business in India. In fact, in last few years we have expanded all verticals we are currently focusing on. We have probably best of the MNC clients for our verticals here. We continue to add value and a vast global network is our strength.

So as I said, we currently have lopsided portfolio and we would like to balance it.

A lot of players who are planning to make a mark in contract logistics, they are talking of buying their own equipments and vehicles. What is the model you are keen to follow?

At CEVA, we continue to believe that we can manage things better. We are more of a combination of 3PL and 4 PL activities.

That’s where our global network strength has been. There are definitely entities, mostly domestic 3PL players, who are creating assets. But we mostly work on our people and the knowledge pool we have, that is leveraged in following best practices globally. Also the kind of technology we add to our operations, that gives us a cutting edge. With a combination of these factors, we believe we are offering a superior supply chain. We haven’t felt that we need to buy the assets because as you know, when you are talking about assets you are primarily talking about transportation and warehousing areas LOGISTICS TIMES March 2011

INTERVIEW

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from a contract logistics’ standpoint.

And these are very fragmented areas at the moment. So we would not like to own assets but rather indulge in their better management. There is sufficient quantity of these assets available in the market but they need to be properly managed and here there is a need of companies like us to manage supply chains in a more controlled fashion.

Are you also looking at project logistics? India is billed to spend very heavily in sprucing up infrastructure during the 12th plan period and that would mean a lot more opportunities in massive logistics operations related with infrastructure.

Project logistics is something which we have very recently started. We are involved in a couple of activities on this front mostly in the natural gas and oil areas. This is just the beginning for us in India at the moment. But that is not a high focus area for us at the moment. We do follow the customers we are already handling, if they have a break bulk or project movement, we will do that. But we don’t look at it as vertical focus. It forms a part of the freight management activities which we do here.

I posed that question because I notice a host of logistics players in the country are pinning very high hopes in this vertical?

From our perspective, we are not the

player which is focusing high on project cargo kind of movements. But what we would say is that if I have an energy company or an industrial company which has project movement from any other country in the world to India or outbound, we are available. We wouldn’t say no to such an opportunity. We can demonstrate that capability, if it is required.

Please give me a sense of the sectors with whom you are more aligned here in India?

Its industrial, technology, consumer retail, automotive and now healthcare. These are the areas where we are focusing and aligning a lot. Let me tell you, globally we focus on aerospace in a major way. Here we are handling this segment on a low key basis now but going ahead we would like it to become a major strength for us in terms of sectoral focus. This industry is gaining ground in the country and we would enhance our efforts to get more opportunities in this space. In terms of sectoral drivers, the ranking for us reads as: industrial, automotive and technology.

But I am happy to share with you that consumer retail has grown in a major way this year.

Going by the general profile of the group, it seems to be very strongly positioned in the developed western world. But if you look at the broader global macro-economic trends as evolved in last 10-15 years, then there is a significant tilt happening

We would like our customers to rate us as the most admired company in terms of our services because it would get us the right reference which we want.

LOGISTICS TIMES March 2011

in favour of Asia in terms of economic balance of power. Has this trend started reflecting on your strategy and operations?

If I cite some reports of Frost & Sullivan or Mckinsey, then CEVA ranks number four in Asia-pacific region. This ranking is based on market share, revenue, and other parameters which have also been included. And we are aspiring to move much faster in the region because there is definitely a complete change in focus to this part of the world. Bulk manufacturing, sourcing and assembling is happening in Asia now. And I am happy to say that we are very well entrenched in Asia in order to support both the companies globally that we are serving and also to the domestic companies which are coming up in a major way in countries like China and India. We look at balancing both now that so many Asian companies are going global. We are, in fact, pushing our I2M service in Asia in a major way.

Finally, what is that big picture emerging for the Indian unit of CEVA. For instance, where would you like it to see reaching twothree years down the line?

We would like our customers to rate us as the most admired company in terms of our services because it would get us the right reference which we want. This would be a big differentiator for us at the India level. Today, we are already known as a company which focuses on operational excellence. It is these executions which at the end of the day would lead to very tangible numbers, the great KPIs, time bound activity in terms of cost, waste management, year on year cost improvement for our clients, etc.

Do you envisage taking inorganic growth route in the near run to enhance your size?

For us, I think in the next three years, our focus is on organic growth. But if there is a right opportunity that fits into our portfolio in terms of something which we wish to have, we would be open to that. But at the moment, our thinking purely is to grow on our own.

PERSPECTIVE

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Bumps Ahead!

Vijay Bhalaki, Director, Athena Infonomics India and Research Fellow, Center for Asia Studies observes that the proposed Goods and Services Tax (GST) has widespread implications for the logistics sector. Logistics is directly affected through the tax on services and indirectly affected by taxes on inter-state and intra-states sales, and excise duties. GST proposes to integrate Excise, Service and Sales taxes under one umbrella. A well knitted GST model may have some positive ramifications on the logistics industry in specific and the services sector at large.

The goods and services tax legislation is a landmark policy reform which attempts to integrate India’s multifarious consumption taxes. Indirect taxes in India are levied and administered by multiple authorities at central, state and local levels.

Prominent amongst these are Excise Duty, Service Tax and Customs duty at the Central level and Value Added Tax, Entry Tax, Stamp Duty, Motor Vehicles tax, Property Taxes etc at the State and local levels.

The current architecture of indirect taxation in India provides for greater concentration of central levies at upstream value chain of products (viz., Excise on Manufacture, Customs on Imports etc) and a downstream concentration of State Government levies (viz., VAT on Sales, Entry Taxes on Goods etc).

One can observe multiple inefficiencies in the existing model including lack of coordination between various tax authorities, lack of data interchange system, poor tax base, cascading taxes etc.

In order to overcome the inefficiencies of the current setup and establish a LOGISTICS TIMES March 2011

strong base for consumption taxes, the Government of India along with the Empowered Group of State Finance Ministers has mooted the idea of an integrated indirect tax system. The GST model proposes to subsume several state and central taxes on goods and services into one umbrella tax system with joint participation of State and Central Governments in levying and administering the system.

The Goods and Services Tax model proposes to independently and concurrently levy CGST (Central GST) and SGST (State GST) by the Central and the State respectively. To uphold cooperative federalism, both levies are proposed to be on a common and identical base. However, issues pertaining to the level of exemption/ compounding threshold limits have not been resolved yet. Both CGST and SGST are proposed to be levied right from the stage of manufacture till the stage of retail sale. Hence, the basis of charge for the proposed Goods and Services Tax will be the supply of goods & services.

This could, if optimally implemented, mitigate the cascading effect and ensure

a seamless flow of input tax credit throughout the supply chain. Hence, the objectives of this reform process is to bring out an efficient Goods and Services Tax model which would lessen the regressivity of consumption taxation from the current levels and reduce the overall excess burden, caused by taxation, on the economy.

The Economic Justification GST would benefit businesses by allowing a more comprehensive coverage of input tax and service tax set-off. It also proposes to do away with the Central Sales Tax. Wider base, transparency and comprehensive set-off features of GST would improve compliance, lower the tax burden on the industry and reduce transaction costs in doing business.

A lower burden of domestic taxes, through GST, would also increase the competitiveness of Indian goods in the international markets.

The Proposed Model The first discussion paper, the task force report and the NCAER report on GST prepared for the thirteenth finance commission, still remain the three most

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important public documents on GST. The salient features of the proposed model as described by the above documents and the reports in media are: The Goods and Services Tax system would be designed on the basis of the destination principle of taxation.

This would imply that the revenues generated under the GST system would seamlessly flow to the states where the final consumption takes place.

There will be two levies under the GST model. The state government’s levy is known as SGST (State Goods and Services Tax) and the Central

Government Share in known as the CGST (Central Goods and Services Tax). Unlike the present system, both levies, i.e., SGST and CGST would be made applicable on all goods and services.

Since, SGST and CGST are levied and collected independently no cross utilization of tax credit would be allowed.

The discussion paper on GST proposes an automated and integrated system to treat interstate movement of goods and services known as IGST. GST is an integrated tax system and is to be levied on both goods

and services. However, the rates for services and goods are yet to be confirmed.

GST is essentially a tax on the value added at different points in the supply chain. GST offers a comprehensive and continuous chain of set-off benefits from the producer/provider point till the retailer point hence, mitigating the excess burden of taxation.

Administration for SGST and CGST is proposed to be vested with both the State and Central Governments respectively. Hence, probably, this may necessitate periodical returns to both Central and State authorities.

LOGISTICS TIMES March 2011

PERSPECTIVE

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The first discussion paper on GST proposes that the following popular taxes would be subsumed under the new regime.

State Taxes: Value Added Tax/ Sales tax, Entertainment tax (unless it is levied on local bodies), Luxury tax, Entry tax not in lieu of Octroi, State surcharges and cesses in so far as they relate to supply of goods and services Central Taxes: Central excise duty, Additional excise duties, Service tax, Countervailing duties on imports, Additional duty of Customs in lieu of value added tax or central sales tax, Surcharges and Cesses etc.

However, there are several contentions voiced by various state governments in fear of revenue loss. Recently, Orissa rejected a proposal to subsume Coal tax in GST fearing a loss of up to Rs 800 crores. States have also voiced concerns over proposals to subsume Purchase Taxes and Entry taxes. Hence, there is no consensus yet on the comprehensive list of state taxes to be subsumed under GST.

Logistics and GST The proposed Goods and Services Tax has widespread implications to the logistics sector. Logistics is directly affected through the tax on services and indirectly affected by taxes on inter-state and intra-states sales, and excise duties.

GST proposes to integrate Excise, Service and Sales taxes under one umbrella. A well knitted GST model may have some positive ramifications on the logistics industry in specific and the services sector at large.

A simplified GST administration would imply a centralized registration facility which is advantageous to the sector.

Separate administration set up for SGST and CGST would simplify the litigation process. The GST model proposes an automated system to process refunds and to reduce related hassles. GST would premise upon a sophisticated IT platform and eventually proposes to do away with the state border check post system.

Publicly available descriptions of GST offer no solutions to resolve the complex LOGISTICS TIMES March 2011

This is a crucial phase for the industry to mark a beginning on its learning curve to comprehend the proposed reform and brace up for a structural overhaul in the nature and conduct of indirect taxation in this country issues in valuation of Services. In the context of applying the destination principle of taxation to allot tax revenue, it is important to define the origin and destination rules for services, which is yet to be done. Also, it is widely expected that, issues in the lines of CENVAT credit availment and utilization for input services may continue in the new regime albeit in a different form.

Contentious Consensus The legislative process involved in rolling out GST would include (a) amendment of the constitution (b) passing the GST bill in the parliament (c) ratifying respective GST bills in all state legislatures. In the sidelines, GST rollout would also include a consensus on the dispute resolution mechanism, administration structure and compensation package to states for loss of revenue in the immediate years following GST implementation. Efforts are in progress to bring out a bill to amend the constitution to allow states to levy taxes on services and manufacturing while permitting the union government to levy tax on sales.

In a recent landmark decision, the UPA government has resolved to amend the Constitution to enable states to have the same powers as the Centre in administering the proposed Goods and Services Tax (GST). The revised draft of the Constitution Amendment Bill on GST will drop the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board.

However, the Union Finance Minister will remain the chairman of the council, which will take decisions on the indirect tax system.

The constitution amendment bill, which was expected to be introduced in the winter session of the parliament, is yet to be tabled. An agreement is believed to have been arrived on the compensation package; however the mechanism to examine revenue loss claims and administer the compensation scheme is yet to be finalized. The original implementation date for GST was envisaged as 1st April, 2010. This date has been later revised to 1st April, 2011.

However, the Finance Ministry has, reportedly, admitted that the proposed Goods and Services Tax (GST) regime will not be implemented by April 1, 2011, and said that no timeframe for the introduction of the new indirect tax system has been set yet. There are speculations running in the media that the policy makers are hoping for a roll out at least by October, 2011.

Currently, the government is still in the process of building consensus for the proposed legislation. Consultations between the empowered committee and the finance ministry are in full swing and the draft GST legislation is yet to be tabled before the parliament.

The GST implementation process is yet to gain active political momentum. Given the central government’s preoccupation with its other fire fighting exercises, the unfolding of GST and its consequent implementation is expected to remain sluggish in the near future. However, this is a crucial phase for the industry to mark a beginning on its learning curve to comprehend the proposed reform and brace up for a structural overhaul in the nature and conduct of indirect taxation in this country.

SHIPPING

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An Indian update Capt. Alok Kumar, Senior Vice President, Credence Logistics (Maritime), observes that given the present newbuilt-vessel-delivery plan and world material demand, there is little chance that freight will significantly come up in the year 2011 and 2012. There will be some upside in 2013 and 2014 could be a reasonably good year for shipping.

Shipping is a derived demand which depends upon the commodity movement which in turn depends upon consumption by the consumers of the world. Higher consumption causes higher movement of goods which causes the freights to go up and the shipping companies get higher return on their investment.

In 2008 before the recessionary downturn the demand of raw material especially of iron ore by china, the production hub of steel, was so much that the freights were extremely high and the Baltic dry index (the benchmark) was close to 12000 region which translated into charter hire rates of US $100,000 a day for a Cape (carries close to 150,000 mt and above) vessel. After the recessionary trend set in the Baltic dry index fell from its pick and it is today at 1200 region and the same Cape size is available for a daily hire rate or US$ 10,000 a day.

The depressed freight is due to oversupply of tonnage. In 2008 when the freight LOGISTICS TIMES March 2011

was very high most ship owners ordered new tonnages thinking that the demand will keep growing and they will make a handsome return on their investment.

The delivery time for new ship is six month to two years, depending upon when the order is placed and how empty or overbooked the yards have been when the order is placed. The time lag between the placement of order and delivery causes a cycle of oversupply and undersupply of its own.

When the commodity movement is high owners order more new building tonnage and when the new building tonnage is delivered the excess supply of tonnage brings down the freight so owners postpone the order and after sometime there is shortage of tonnage due to undersupply as very old tonnages are removed from the market due to inability to meet industry standards and regulatory requirements. So shipping goes through a cycle of over and under supply.

People are looking towards China for revival of freight. China is the world manufacturing hub and the largest producer of finished products and the largest consumer of raw material. If China increases the consumption more commodity and material will start moving and that will revive the freight.

The financial easing policy of the world to overcome the recession has fueled inflation which has affected most people whose income did not grow to beat the inflation. Inflation has reduced purchasing power and reduced consumption. To curb the inflation countries will have to increase the interest rates which will affect the productions, businesses, margins an consumptions and also reduce the movement of the goods due to decrease in demand. Hence increase of interest rate which is necessary to control inflation will also reduce the consumption of raw material which in turn will keep the freight i.e. shipping depressed.

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Basis present new-built-vessel-delivery plan and world material demand there is little chance that freight will significantly come up in the year 2011 and 2012.

There will be some upside in 2013 and 2014 could be a reasonably good year for shipping.

No big player. So what?

India does not have a very large tonnage and are not a leading maritime player like Greece, Germany, Norway, France, Korea and few other nations. This means that even due to depressed freight the loss to Indian shipping companies have been less than the losses to other companies like Maersk , Korea lines, CMA CGM etc.

Economic condition and sustained demand in the OECD ( Organisation for Economic Development and cooperation) countries is very vital for the revival and healthy growth of shipping sector. With rising unemployment in USA and austerity measure over Europe the demand is to remain subdued throughout 2011.

Emerging economies like India, China etc who are having large commodity movement due to good GDP growth and who did not have adequate shipping fleet to cater the demand of cargo movement are building up their shipping fleet to reduce their dependency upon foreign fleet. Hence such economies are placing

new building orders which will further pull down the freight rates. At this stage it is prudent to buy the vessels from those available in the market than to place order for new building.

Due to supply demand imbalance there are lot of good tonnages available in the market at a cheaper rate. The ship owners who are barely breaking even and some who are having regular losses due to the depressed freight market are willing to offload their tonnage in the market to cut their losses and emerging economies like India could make use of such opportunities in the market.

India’s strong GDP growth which is primarily from internal consumption is raising shipping demand. India is large exporter of iron ore and large importer of coal and crude oil. These commodities movement require large shipping tonnages. Indian shipowners are expanding their fleet to benefit from the rising domestic demand.

India’s domestic shipping segment is also poised for growth. Rising internal consumption is putting huge burden on the rail and truck network which is already very much congested causing severe logistical issues not confined to cost of delay and poor resource utilization but also causing the environmental degradation. The overflowing road and rail burden is bound to be shared by its

cousin coastal shipping movement which has huge growth capacity and immense added advantage of being low cost, environmental friendly and quick means of transporting goods.

Presently roads share 56%, rails share 36% and coastal shipping shares only 8% of the total Indian domestic cargo movement of 1.2 billion tones. In the next five years the coastal shipping share is likely to increase upto 13% the total domestic movement.

Indian government is considering enhancing port facilities for smaller coastal vessels by developing minor ports and shipping fraternity is demanding service tax rebate and bunker duty rebate to boost coastal shipping. Such is the domestic ship (of smaller coastal tonnages) building demand that none of the shipyards in Goa has ship building berth available for next six to twelve month.

Though international shipping scenario looks less encouraging, the Indian shipping especially the coastal shipping movement is bound to grow. The time is also favorable for emerging economies, like India to build up their fleet through acquisition of second hand tonnage from the international market as these assets are available at cheaper price which may see further correction of 10 to 15% in 2011.

LOGISTICS TIMES March 2011

COVER STORY

26

CHEP India:

Birth of a new solution

CHEP India’s top brass(LtoR): Siddharth Tiwary (HR Head), Vineet Mehrotra (Director Sales, FMCG), Vishal Patell (Director Supply Chain), Pranil Vadgama (President), Subhash Bhat (CFO), Savio Pimenta (Head-IS & Marketing) and Roger Corns (Director Sales, Automotive)

LOGISTICS TIMES March 2011

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With the key objective of driving the modernization of a certain aspect of supply chain in the domestic market, CHEP had set up its unit in India three years back. And after having crossed the initial hurdles to set up a primary base, the unit is now exuding confidence that the concept of pooling pallets and crates would go a long way in the country. Ritwik Sinha reports:

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f Dickensian theory of extremities in life is to be believed (remember that famous “best of the times and worst of the times” quotation from A Tale of Two Cities), then in hindsight the middle of 2008 could hardly be adjudged as the “best of the times” for an MNC well-entrenched in developed markets to take a defining long-haul initiative anywhere in the world. The first signs of global financial tremors were well visible and the wisdom of the day was to hold on or even shrink in size to brave the calamity. But almost displaying a contrarian strategy, Australian conglomerate Brambles group stepped into India, almost silently and quietly, setting up a wholly owned subsidiary, CHEP India to make a defining mark in the area of better utlisation of pallets and crates in the supply chain system and processes in the country. Something which the over $4 billion firm specializes in nearly 47 countries across the globe with the prime concentration in what are popularly known as developed markets.

Cut to the present day and try to gauge the mood .Is there any sign of remorse on the face of any of the top functionaries of CHEP India that probably a better time could have been chosen to make an entry in the big, diverse and even complicated market called India? The answer is a definitive NO. Stroll through the nearly 8,000 square feet headquarters

of CHEP India in Andheri West, Mumbai which populates a workforce of over 50 ( mostly young and the average age could not exceed 30) and what remains clearly unmistaken is the sense of optimism.

“We have done it but bigger and better things are round the corner,” the message is loud and clear. The impact of the message gets more pronounced if one considers the fact that CHEP is not just selling a product but rather an idea which has far-fetched implication for improving the supply chain processes in the country.

Pallets and crates have been part of operational value chain in the country for a long time and there have been their sellers (mostly fringe players) to the end user industry. However, here comes that critical differentiator from CHEP – it does not sell these supply chain equipments.

But rather gives them on hire. And with this model, CHEP India is clearly aiming to position itself in the pioneering slot in terms of popularizing the concept of Pooling which practically means sharing of standardized returnable and reusable packaging by multiple customers – a process which has proved its efficacy in developed markets, clearly experimented upon at a rapid pace in emerging markets like China. And it is a space where CHEP has proven high-end expertise on a global basis. And it is this strategy differentiator which makes the CHEP story all the more interesting.

LOGISTICS TIMES March 2011

COVER STORY

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‘A more efficient India is good for all. We want to be part of that’ Brambles CEO Tom Gorman, during his recent visit to India, shared with Ramesh Kumar his impressions of CHEP India’s business horizon.

Excerpts: When I was working for Ford, I did not have any direct responsibility for India. Most of the time I spent in emerging economies was in Latin America and China. So, in a way, I am embarrassed over not having visited India, one of the fastest growing economies in the world, for such a long time. Though this is my maiden visit, it does not mean I have not paid attention to India at all. CHEP India President Pranil (Vadgama) has presented to myself and the Board of Directors our Indian strategy and we have discussed it in great detail.

What do we know about India? It is a phenomenal opportunity for us. We strongly believe in the first mover’s advantage and developing a robust business ecosystem in India. We recognise that it is going to take some time to consolidate our position here. CHEP is the kind of company that believes in long term planning and does not hesitate to invest for the future.

Patience pays off. Our past experience proved this to be

The novelty factor But before looking at CHEP India’s report card of nearly three years now, its important to get a sense of what precisely they are offering to the Indian customers – firstly, in terms of concept and then the actual product or services differentiator.

To begin with, none of the offerings of CHEP is on sale. They offer their pallets and crates on hire – it goes out of CHEP’s service center and ultimately come back to it before being sent to a new customer. The inception of the journey on a particular supply chain cycle LOGISTICS TIMES March 2011

the right strategy. Even in major economies such as the USA, we waited after entering the country for business to build up. We began in 1990s from zero in the USA and today we do business worth more than $1 billion in annual sales revenue. We are confident the same strategy will pay us rich dividend here too. For that we have to be physically present in this market with the right team to make the right connections and build the business steadily. We are proud of what Pranil and his team have done in India over the past three years.

Business Style In India, we have very reputed companies as our clients: be it multinationals or home grown ones. Our progress has been steady. And it has been rewarding. All our clients are absolute blue chip and that is how we want to build our business.

The way I run the business is not to interfere unduly in

may happen from a particular service center say in Bhiwandi. But it might end its journey in a service center somewhere in the eastern part of the country like Guwahati. Here is an example of how a typical flow movement of pallets happens when CHEP is serving a FMCG client, a stronghold vertical of the company.

FMCG depot places wholesale order on CHEP pallets, forklift picks CHEP pallet with products and loads directly on the truck, vehicles are dispatched to wholesaler warehouse, products on the pallets are unloaded from the truck

using a forklift and placed directly on the pallets racks, the wholesaler delivers these palletized load to their retail store, empty pallets are collected by the CHEP service center closest to the wholesaler location, the pallets or crates are repaired or conditioned (if it is required) and then they are ready to be handed over to the next customer. In the case of Automotive, another key business vertical for CHEP which use more of plastic crates than pallets, the typical movement reads as transfer of crates to the suppliers and from suppliers it goes

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the local relationships that we have with clients. We have central direction with highly empowered local operational teams in place. As far as India is concerned, it is Pranil and his team’s call on how to conduct business here. They go and deliver business. This is working fine. Why tamper with it? We are at a stage where when the CEO is in town, it can be leveraged. But it is not appropriate for CEOs to call on potential clients too much when you have a local team in place that is delivering consistently.

India Strategy The Indian strategy is very clear. We want to grow our business in two key areas. In the fast moving consumer goods (FMCG) segment, our existing client list is pretty exhaustive. The Automotive sector is another promising area. Here again, we are servicing well known enterprises.

All these processes we have in place in India are based on the best practices we have learnt globally.

Sustainability is a core element of our service. This means we eliminate disposable packaging and deliver value for the customer. Today, customers are spending a huge sum of money on disposable solutions. We at CHEP help them achieve their goals of reducing this waste and improving efficiency with our expertise. In the process we help them eliminate other wastes in the system. Our service model is such that we buy all the equipments and customers rent it from us so they need not invest. So it is our investment.

That way, the Indian strategy is no different from what we perform across the globe. Maybe Indian supply chain development is about to take off in a big way. As and when it happens, we will be well entrenched to take advantage of that.

Competition We have competitors everywhere in the world. I don’t deny that. Sometimes, they are big players like us. Sometimes,

to OEMs before coming back to a CHEP service center. In between, there could be a host of storage points for them. And tracking this entire flow is a robust IT portal wherein the users constantly feed the information about the movement of CHEP’s products which they are using. “ Sales of pallets or crates is strict no, no for us. Promotion of pooling practices is our key calling card and it has numerous advantages vis-à-vis the traditional usage of crates and pallets,” says Pranil Vadgama, President, CHEP India, who is spearheading Brambles group’s dream

the competition may be in-house by which I mean they may decide to come out with their own solution instead of outsourcing. We are confident that with the intellectual property we own globally and the knowledge and experience we have accumulated over a period of time, the future is bright.

The CHEP business alone accounts for more than $3 billion in the annual sales revenue for the Brambles group worldwide. Almost 80 per cent of Brambles business comes from CHEP. This should give an indication of how strong CHEP is. We have been doing this since 1958. We have a well established base and know what it takes to be successful. That makes us that more competitive. Our advantages are significant and if we are able to pass on these advantages to our customers, we will be able to grow our business substantially.

Apart from CHEP, we also have a presence in India through Recall. It is in the information management business.

Under this umbrella, we manage documents for banks, insurance companies, governments, law firms etc - safely and securely. Those customers deal with a lot of paper work and statutorily they are expected to safeguard their documents for a longer period. That’s where Recall chips in.

Future I am extremely happy with the depth of CHEP India’s relationship with our business partners. Remember that we have done this from zero level. The market knowledge we have gained over the past three years is really priceless.

Over the next three years, our trajectory will be steep upward. India, I am sure, will be moving up faster as its supply chain management systems develop. A more efficient India is good for everyone. As India grows up, we want to be part of that. We are not a big business, but hope to be a very important partner for our customers.

to make India a vibrant signpost on its global radar.

To begin with, the biggest advantage of using the pallets and crates offered by CHEP brings the cost effective benefits for the customers and end user industry.

Traditionally, the customers have been buying these products to supplement their supply chain operations but with their availability on a hired or pooling basis, expenditure on them does not fall under the capex category anymore. Rather it becomes the part of the opex. “ If a company uses our pallets on a sustainable

basis as per the working modules advocated by us, then its supply chain cost can come down by 13-15 percent. And its not a small margin,” says Vineet Mehrotra, Director Sales (FMCG), India. From the perspective of the Indian market, there is another dimension which probably goes in favour of CHEP’s another important product solution – plastic crates – in terms of financial benefits. Cardboard boxes ( popularly known as cartons) are widely used in the Indian market but they are typically used once and then thrown away. However, the cost of this LOGISTICS TIMES March 2011

INTERVIEW

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“We want to become $100 million company” In a candid chat with Ritwik Sinha, the President of CHEP India Pranil Vadgama explains the roadmap which the company has charted for itself to make much deeper penetration in the Indian supply chain market with its pooling concept.

Excerpts: In 2008, CHEP decided to commence its operations in India and that was certainly not the best of times for a global conglomerate to do something new. What were those basic assumptions behind this decision?

CHEP had commissioned a study in 2007 in India to identify some of the basic drivers for our future operations here. And there were a host of positives which came out of this study.

Firstly, we noticed a growing middle class and, therefore, the consumption was growing. Second thing was that huge demand was created by the availability of credit. So the Indian consumer had a lot of money to spend from a credit facility perspective.

And the third positive trend which we noticed was an increasing urbanization. People were migrating out of the rural belt and the major settlement was happening in eight major metros. When you usually look at India from outside, you find this country too huge and think that you will have to cover everything. But no, that is not the case. The major consumption is from those eight major cities. So you can think of establishing an effective network in covering these cities. The second thing is: the composition of the market. If I look at FMCG and Automotive verticals – there are only a handful of players that makes that big market size. So if you working with Tata Motors, Mahindra and Maruti Suzuki, you have got 60-70 percent of your market already covered from the passenger vehicle side. Same is the case with FMCG. If you have got top ten FMCG companies, then you have got 70 percent of the market. Hindustan Unilever, ITC, Nestle, Coke, Pepsi, United Breweries, Bisleri, Amul – you work with them and they form a large market place. From our perspective, it helps us to focus. It is not that we have to win 1000 customers to get a significant share in the large market place. We can actually win a big market share by aligning with a few customers and our presence being restricted to eight major metros. And this is a fantastic equation. That is what we looked at when we decided to enter.

Tell me in your estimation, where have you precisely reached after starting from point zero.

We started at zero. And every year we have grown by 200-300 percent.

LOGISTICS TIMES March 2011

But that is because your base is small…

Yes, a small base is there. But we have been working aggressively. Today I have 160 customers across FMCG and Automotive verticals. And we are adding customers every week to our portfolio which means that from our first year, we have been doubling our customers every year. It is giving us a good concentration of volume. But we are not going to stop here.

Right now, we are just focusing on Automotive and FMCG markets and this strategy has helped us to build our base. We came to the market with pallets and Automotive crates. But we are also investigating other platforms such as the IBC ( intermediate bulk containers) which are the large containers meant to handle liquid and dry goods. We are already doing some pilots with Coca Cola and P & G. CHEP as I would like to believe simply did not enter into the country with simply a product. It came with an idea – pooling of pallets and crates on a hired model. Now that was quite unique when the existing players were indulging in outright sales. So you had to make an impression at the mindset level which is a difficult exercise. How did you convince your customers who agreed to align with you during those initial days?

The first thing which we did was to identify companies which were looking for continuous improvement in the supply chain.

Now there are many international and domestic companies which are serious about improving their processes. And our

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initial message to them was simple: we are offering a value proposition, we would like to study your supply chain, we have been doing it for over 50 years and we have a huge portfolio of customers globally . The fortunate thing is, the companies which were looking for change did not consider us as a start up. We were starting in India but we were not a start up. And they felt that we have a wealth of knowledge and market experience globally. But we had to prove ourselves. Thinking organizations like Coke, Pepsi, Unilever, Nestle, P & G, etc, asked us to do pilots with them. Every business which we won initially here was on the basis of a trial. Every time we proved it to them that if they use our services and products, there would be a savings in their supply chain cost. And savings primarily happen because of improvement in pallet management, reduction in damage to the components sent to the OEMs, producing or improving the handling of crates or pallets, etc. We have tried to identify one thinking organization and once you get it and do a good job, in our industry the word of mouth spreads very quickly.

CHEP is an MNC. And many of your clients you would have targeted during the initial days are also global majors, companies which must have been well exposed to your services and products in other countries. Did that help in getting them in your fold here in India?

That did help without a doubt. We have global relationship with P & G, Coke, Pepsi, Nestle, Ford, General Motors and leading auto-component suppliers. And that association did help a great deal because they know you are not a new player.

These companies can always refer to their counterparts in any other country to get a reference on us and we have quite a reputation in those countries. But there are relationships which we had to build from the scratch with local majors like Dabur. Even Future group is a large customer for us now and this relationship again has been built from the scratch. A key element for our growth has also been the kind of relationship which we have with 3PLs. The international 3PLs like Toll, Agility, DHL, TNT, etc. know CHEP because we have been associated with them in many other markets. That has also been very helpful.

Your FMCG vertical seems to have grown very fast.

But what about automotive?

In Automotive, you have to go through value proposition sales because there are two parties involved. The first is the manufacturer – a Tata or a Maruti and then there is autocomponent supplier like a Delphi. So you have more people involved in the process vis-à-vis FMCG where it’s a one to one relationship between a buyer and a seller. The other element is because none of the OEMs knew CHEP, we had to start from ground zero in terms of building trust and credibility.

How do you that? You do it through pilots. Now these pilots do not finish off in a month. They took a full cycle of at least ninety days to show results. You supply crates to autocomponent manufacturer, he puts the product in crates, sends it to the OEMs and we go there collect it and bring it back. So this process has to go through several loops to actually truly established the value we can provide to both manufacturers and OEMs. So that takes some time. But this vertical would come up in a big way.

What is that larger picture you have in mind? You started from point zero, have built up some scale and you exist in an environment wherein economy is growing in a high single-digit trajectory. So does that make the near to medium run for you as the time to strike?

It would indeed be the time to strike. We have been here for nearly three years now. We are capitalizing on our first mover advantage. We have developed a very good network and we have developed good relationship engagements with our customers, suppliers and partners. We have a vision that in next ten years, we would try to become $100 million business.

We have incredibly good support from our headquarters in Australia. Their business support - in terms of my management team, HQ involvement and their expertise as well as financial support. And that is what you all need to expand in your operations in a market like India. We know there are four-five key enablers for us to be really successful in India.

One of them, is the improvement in infrastructure – roads, truck sizes, material handling equipment, racking, etc. You see the part of the process for us is, as supply chain improves and modernizes, we will also benefit. But the part of that modernization is linked to how the infrastructure evolves. Its encouraging that Golden Quadrilateral is now more or less complete. We are also excited that the north-south-east-west corridor is also shaping up which would also help us as we are moving a lot of automotive equipments from south to the north. Those are the things which are changing. We have noticed huge changes in past two and a half years.

I can understand the logic of external enablers. But what about the additional push from your side as you tend to become a $100 million company in India?

Without a doubt, our focus would be on palletized flow. That would be a key factor, for pallets to move. At the moment today, they are all static. There would be a point in time when these pallets actually move downstream to either centralized warehouses operated by 3PLs or even potentially down to retail players and their warehouses. When these pallets movement start happening, then we see a lot of benefit and opportunities in our business. In the Automotive business, that flow is already happening.

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COVER STORY

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package is added into the product unit cost. As against this, returnable packaging eliminates this recurring cost. If the packaging process of a customer remains constant for a long time, then returnable crates are frequently lower in annual cost than expendables.

CHEP products, as its officials strongly claim, lead to reduced manual handling which in turn results in lower product damages.

Furthermore, improved packaging configuration is offered by CHEP equipment in comparison to nonstandard equipment thereby optimizing space usage. Last but not the least, is the ecological friendly nature of these equipments drawing their strength from the fact that they are reusable again and again and not dumped or destroyed after the completion of just one supply chain cycle. “ Returnable packaging reduces the amount of trash going into the refill. A package reused is one less package that will wind up in the solid waste stream.

With fewer returnables going into landfills over a given period of time, the cost of packaging material disposal is greatly reduced,” Pranil points out. Additionally, in a scenario where vertical storage on racks is becoming a norm in the Indian supply chain operations (since expanding warehouse capacity horizontally is an expensive exercise due to high land cost), pallets are deemed to be perfect fit for this vertical storage system.

Report Card So going by the unanimous voice of CHEP India officials, the company is offering an absolute win,win proposition to its customers, much like the company has done in 47 countries across the globe.

But the moot points here are: is the pooling model really finding the desired degree of acceptability in the Indian market given the general mindset to own the equipments which prevails here? Has CHEP India really made the kind of penetration it was looking at in the initial years? More importantly, has the new solution moved out of the cradle after its birth a little less than three years ago and started taking those critical first steps on its own?

LOGISTICS TIMES March 2011

The pallet warriors of CHEP India are quick to respond to these critical issues by furnishing the report card. The company today has a customer count list of 160, primarily from FMCG and Automotive verticals which are the major areas of concentration for the company.

The top notch clients literally comprise the prime drivers of their own respective segments and it is a balanced list of MNC majors and domestic giants. “Pepsi, Coke, Bosch, Delphi TVS, Nestle, P & G, Johnson & Johnson, Future Group, United Breweries, etc. are clearly our top clients in the country today,” Pranil informs. Within a short span of less than three years, the company has fanned out with its services centers at over 30 locations on a pan-Indian basis which are: Ahmedabad, Baddi, Bangalore, Bhiwandi, Bhubaneshwar, Chandigarh, Chennai, Daman, Ghaziabad, Gurgaon, Guwahati, Hyderabad, Jaipur, Jammu, Jamshedpur, Kanpur, Kolkata, Mandideep, Mumbai, New Delhi, Palakkad, Panjim, Patna, Pondicherry, Pune, Raipur, Rudrapur, Salem, Silvassa, Vapi and Zirakpur. The list of locations clearly signifies the mixed balance of economic hotspots and the emerging high growth zones. Out of these, the units at Bhiwandi, Bangalore and Gurgaon are also manufacturing sites where pallets are made – one each for the western, southern and northern markets to ensure that the supply line to these pockets always remain consistent and robust. “Barring the six north-eastern states, we have a presence everywhere in the country. Operating on a pan-Indian basis has been the clear component of that broader idea right from day one and we have almost reached there,” CFO & Director Finance Subhash Bhat underlines. On a cumulative basis, the company has built a warehousing space of 2,50,000 square feet on the pan-Indian basis. The company though is reluctant to disclose its topline but Pranil specifies the quantum of investment which has gone into Brambles’ Indian dream so farupwards of $35 million.

Surmounting initial hurdles But having a report card where some

serious brownie points have been accumulated in just three years time has turned out to be quite an exercise.

However, meticulous planning and a dedicated team effort has ensured that things finally fall in place for the unit. “ Ever since we started, we have skipped from one stumbling block to another. But the team which we have cobbled here has done a wonderful job in surmounting those hurdles and in the process charted our operational capabilities much chimed to Indian market conditions,” Pranil says.

Listen to other top functionaries and they have their own tales to tell on the initial hurdles front. For instance, the country does not have clear regulatory provisions for the business model which CHEP specializes in. “Getting the regulatory framework in India to understand our model was very challenging. Most of the states in India still have the archaic models about using forms for inflow of goods and we were given small quota of forms for pallets movement. It took my team three to four visits at least to convince them that our volume is growing and we would be contributing higher VAT in the future,” Bhat narrates. But probably the bigger challenge was the battle of the mindset, that is, convincing the customers why to do something which they have been doing for years in a new way. “ After talking to a few prospective customers initially, our feeling was: the industry wants to use reusable packaging but cardboard packaging was so cheap.

So the lesson for us was to be as cheap as them or you will never make it in India,” recounts Roger Corns, Director Sales, Automotive.

Vishal Patell, Director, Supply Chain who was one of the first inducted top rung functionary in the company in 2008 has a long list of hurdles to narrate which the company had to cross to get going on the Indian turf. Yes, initially potential customers were showing the interest in the new concept but probably somewhere their message was: seeing is believing.

And here CHEP India had to pass the test through baptism by fire route. “We understood very clearly in the beginning that we have to take our customers

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through the step change. So we did a lot of trials or pilots with our customers. We asked them - allow us to do some trials with you. Our team members spent time at manufacturing units and explained them the value proposition we were offering,” Patel explains. On the supply chain front, there were some serious issues related with inputs for the components which got sorted out through trial and error method.

“Procurement was a major challenge.

In India, woods is a scarce commodity and we quickly realized that the kind of volume which we need, if we go to the market to buy huge quantity of woods, it might have an adverse impact on wood pricing. Secondly, the initial product which was pushed into the market was a hard wood pallet which a lot of our customers felt was very heavy. So we worked with our engineering team to develop a soft wood pallet. And we decided to procure our lumber from the sustainable forests from Europe,” Vishal says.

Establishing product standardization was another critical road block which CHEP India had to encounter. Today, its range of standardized products includes two varieties of pallets with 1200 x 1000 mm softwood pallets being the driving equipment made from pine wood imported from Europe, eight varieties of crates - smallest one being 200 x 100 mm and the largest one at 1200 x 500 mm configuration with varying height options, and foldable large containers or FLCs that allows 750 kg of capacity.

But according to Vishal, when CHEP had entered into the market, there were 70 varieties of pallets available in the Indian market. “It took us quite a while to convince our customers the pragmatism of product standardization. How it eases the movement flow if the goods are transferred on pallets and crates which have uniform standard all across the value chain,” he reminisces.

India of 2008 was certainly not such an evolved and matured economy which had too much awareness about the paragons of global supply chain methods in terms of their practical applicability and, therefore, even CHEP was not a name with high recall value in the minds of the potential

customers on the Indian turf. And being typically a business to business (B2B) model, creating awareness about the company’s arrival in the country and expression of its intent was also a major challenge. “ Our buzz creation exercise had started on a small note but it eventually turned out to be very effective.

Since we are a B2B company, we targeted a few customers initially.

All our energies were devoted to events which were focused on these segment customers. We targeted the niche segments- FMCG and Auto. We also did some direct marketing with these companies. We had a little basket of budget for marketing and promotion but we attempted to derive maximum advantage of the resources in hand. Getting the kick out of the last buck was the mantra,” points out Savio Pimenta, Head – IS & Marketing.

Attracting right kind of talent pool was yet another onerous task since CHEP was a relatively unknown entity (CFO Bhat clearly mentions that he heard the name CHEP for the first time, when he was approached by a headhunter). And here the strategy which has gradually worked is to sell the idea of a workplace where alignment of individual aspirations would be an agile process and rewards would be swift. For the top brass, what probably has worked is the adrenaline rush emanating out of imagination of shaping the Indian unit of an MNC which is a global market leader in its area of domain expertise. “Most of us here are from very established companies. But we do tend to do something at different points in time in our career. And here is that opportunity which CHEP has provided,” HR Head Siddharth Tiwary underlines.

But challenges apart, the company, as Pranil asserts had moved into the country

with a strong sense of conviction. After having established strong toehold in leading economies, Brambles group had been looking for opportunity in emerging markets and reaching out to India was just the matter of time (CHEP China had started its operations just two years prior to the commencement of Indian unit’s innings). And this was based on a study which the company has commissioned in 2007 involving CHEP’s own officials and a team from noted global consultancy firm McKinsey. “The study had identified some of the basic potential drivers for our business in India. Firstly, we noticed a growing middle class and, therefore, the consumption was growing. With consumption comes the supply chain challenges in terms of effective delivery of products and services. Second thing was that huge demand was being created by the availability of credit. So the Indian consumer had a lot of money to spend from a credit facility perspective. And the third which we noticed was an increasing urbanization happening in the country. So distinctive pockets were emerging within the country where our services would be needed,” Pranil narrates the basic assumptions propelling CHEP India’s debut. Another key strategy which seems to have worked in favour of CHEP is its strategic concentration on getting LOGISTICS TIMES March 2011

COVER STORY

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the market movers in their respective segments in their fold. CHEP’s global reckoning has also helped the Indian unit to make an impression with the leading MNCs since many of them are served in other markets by the company’s local units.

Key drivers & the road ahead Much on the lines of its global experience, CHEP’s strength in India has primarily emerged in FMCG and Automotive verticals. And here former has the clear lead. “ 99 percent of pallets we make are utilized in the FMCG vertical and we have a client base of nearly 70. The prized position for us would be to serve some of the market leaders on a pan-Indian basis and that we have already started doing with clients like P & G, Johnson & Johnson, Nestle, Pepsi and Future.

We are likely to sign a similar deal with Walmart soon,” Mehrotra specifies. In the Automotive vertical, the big ticket success is yet to emerge as baptism by fire or what Corns emphasizes ‘proof of concept’ syndrome is still in play. That is getting the contract after undertaking some trials or pilots with the prospective customers and unlike in the FMCG, in automotive it is a time consuming process. But the company is hopeful that the big time take off of this vertical is round the corner.

“We have got 85 customers now and most of the major OEMs are there with us. We are reaching to the stage, when we would

LOGISTICS TIMES March 2011

get more ingrained in the operations of our customers. So today if CHEP is involved in one flow of their operations, then we are striving to get involved in all flows – all the components. That would be the part of the move. Our long term idea is to contribute sustainability to the Indian business,” Corns says candidly.

In terms of medium to long-term prospects, the company has a singular focus to first consolidate the FMCG and more particularly the Automotive vertical and then subtly look for opportunity to initiate new offerings. “ We are also investigating other platforms such as the IBC (intermediate bulk containers) which are the large containers which can handle liquid and dry goods. We are already doing some pilots with Coca Cola and P & G. We hope to launch it in next two years,” Pranil observes.

In fact, each of the vertical heads have the clear idea of what their next big milestone would be and they emphatically assure that their preparation to meet the anticipated challenges to attain those landmarks are on a more sound wicket after having crossed the initial rubicon.

“The next big milestone would be the millionth pallet which I believe, we would achieve in the next year. In terms of supply of pallets, we have come a long way. What we are supplying in one month now is something which he had done in the entire year when we had set the ball rolling for our operations in 2008,” this

is Mehrotra’s big ticket projection for the near run. For CFO Bhat, next two years would probably be the most exciting period in the company’s journey in terms of expansion. “In next two years, we would probably have a service center count of 60 on a pan-Indian basis. The vital missing link in our network profile is the absence of a manufacturing unit in the eastern part of the country and that gap would be filled by the end of the next year.” It could either be Kolkata, Patna or Bhuwaneshwar – he points out.

The HR head Tiwary has set the target of making CHEP India as one of the best places to work in India. “ Currently, there are about 100 people on our roll which will jump to 150-160 in next two years.

Going ahead, we are looking at a dynamic structure since our regional presence would be larger. What we are going to do is to devise processes which are best in industry. We intend to put in place a very efficient and effective mechanism for the people to plan out their career.

We are looking at developing very deep leadership capability.

We are going to benchmark our processes against some of the best places to work in India. CHEP afterall is employer of choice in many countries in the world and we intend to match those units,” he explains. On the IT capabilities front, there could be a significant shift towards adopting much advanced technological processes. Here is what Savio has to say. “There is a huge focus by CHEP globally to enhance these facilities where the process of capturing data on flow of goods in an external environment is a lot easier. Just to simplify the jargon, there are provisions for the use of hand held devices, smart phones, IPADs,and even RFIDs. We are looking at introducing these IT processes since the mandate is to build a platform which should be comparable to our global IT benchmarks.”

For Vishal Patell who is spearheading the supply chain division, the anticipated expansion in business would entail encountering new challenges but he assures that his team has worked out what all it will have to deal with in the near to medium run. “Clearly, the number one

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The case of desi tadka From an MNCs standpoint, how do you cobble together an effective and efficient talent pool when you are getting into an unchartered territory? From the outside you might have judged that the new territory has literally transformed into a growth highway but what about dealing with those bumps and rough patches which even the most microscopic mapping can’t tell you in advance?

Well, one of the solutions could be to pick up the show managers with a strong sense of local affiliation. This is what CHEP’s mantra has been (as strongly testified by CEO Tom Gorman) in India.

There are two distinctive layers of this local affiliation strategy which CHEP has deployed in putting together the top brass for the local market. The first layer strongly underlines the strategy as - bring in guys who have worked for you in other markets in the world as they understand the basic grains of company’s culture and its aspirations and when positioned in a market where they are rooted by the rights of their birth or cultural background, they are probably more agile to make possible amendments to let the local outfit evolve with desired local flavor. President Pranil Vadgama, Supply Chain Director Vishal Patell and Director (FMCG) Vineet Mehrotra could easily be called the original CHEPEES since they were associated with the company in other parts of the globe before they were entrusted with the responsibility to put up the show in India. 39 years old Pranil (a Gujarati who was born and bred in UK) has been with CHEP since 2004 and before pulled out for India, he was the Vice President of Asset Management for CHEP Europe.

Prior to joining CHEP, Pranil had spent 10 years with General Electric in Netherlands, Spain, Italy and the US in various leadership roles, his last being the Chief Information Officer for GE Industrial Systems in Europe.

Vishal Patell’s story is also similar though in actual terms, his fling with India chapter had started much before the curtains had actually lifted from the stage in 2008. In 2007, he was part of the team which was sent to undertake

challenge is the sourcing of lumber on a continuous basis. We need them not only to make pallets but also to repair.

Number two is: how we continue to evolve our network to stay close to our customers and yet maintain optimal cost balance because shipping a truck full of pallets is a volume game. So we have to balance off the transportation cost vs. warehousing cost.

We will have to constantly study to make sure that we are in the right place. We

a study on future possibilities in India. When he was summoned to be part of that study team, he was working as General Manager, Intermediate Bulk Container (IBC) Business – CHEP USA. Vineet Mehrotra has been associated with CHEP since 2003 and served in markets like UK, Spain and France before joining the leadership team of the Indian unit in 2008. Prior to joining CHEP, Vineet had spent 12 years with TATA Motors and had played a key role in the launch of TATA Brand of vehicles across 10 Latin American and Caribbean countries.

The second layer is also strongly rooted in the mantra of getting the top notch pool from the local market with a very diversified experience portfolio – of course, with a subtle combo of fling with MNCs and domestic giants. For instance, chartered accountant Subhash Bhat (CFO) brings on the table an experience profile of over 20 years that includes a five year stint with SAP India.

Other important places he has worked are: Marico and Bharat Shell. Savio Pimenta, Head-IS who has also been entrusted with the additional responsibility of leading the marketing team is a quintessential IT man and prior to joining hands with CHEP in 2008, he had spent 15 years with Tide Water Oil India as Head of Systems (Western Region) with additional responsibility for Logistics and Institutional Sales. HR Head Siddharth Tiwary offers an experience profile of over ten years that includes such prestigious names as Wockhardt, Graviss Group and TRF Limited, a TATA group company.

40-something Roger Corns is the only exception to the rule of the local show managers for CHEP India. The Sales Director of the Automotive division is the only nonIndia ( Pranil being an NRI) in the top brass but he comes with a wealth of knowledge in his respective domain. He has previously headed the teams that managed the Ford and GM/Holden accounts for CHEP Australia and held various positions in the IT and packaging industries while living and working in Canada, Australia, and China.

have our strategy ready to meet those challenges. For instance, our lumber suppliers in Europe, freight forwarder and we have a common roadmap for next few years.”

Considering the initial bout of success of CHEP India in promoting polling business, its global competitors may also throw in their hats in the Indian ring. Probably sooner rather than later.

But Corns does not consider it to be an issue which could rankle CHEP India

in a major way. “Global competitors would definitely come. But we will work as hard as possible to ensure that we are well entrenched by the time they arrive.

We will clearly have the first mover advantage,” he assures. The import of the statement is clear: the birth of a new solution in the Indian market could well find greater acceptability in the domestic arena making CHEP the clear long distance lead runner by the time serious competition catches up.

LOGISTICS TIMES March 2011

SECURITY

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Managing risks on the road As supply chain security becomes increasingly more stringent, Tony Lugg, Senior VP Sales & Operations, Astrata, asks, “Does your GPS tracking system meet or exceed the TAPA TSR requirements?�

With high value cargo hijackings on the rise, accounting for as much as 39% of losses in Asia, security continues to be a major concern and priority for the TAPA Members operating in the region. The TAPA IIS reported that over 62% of these losses occurred en route. With similar figures being reported in the TAPA IIS LOGISTICS TIMES March 2011

for EMEA and US, truck security could be regarded as the weakest link.

Asia does not appear to be immune from these types of attacks and we can anticipate that these crime figures will continue to rise. Several new types of crime such as the attacks on moving vehicles recently seen in China have been replicated across

the globe by crime syndicates. India has experienced an increase in attacks on such vehicles - several of which were violent and included the use of machete and knives.

Commodities such as pharmaceutical, tobacco, electronics, sporting goods and retail products all saw higher levels

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of losses in 2010 compared with 2009.

Vehicles carrying these and other ‘desirable’ goods were also obvious targets, for would-be thieves and hijackers so much so that clear colorations between hijacks and the increase of theft of certain commodities in the market such as metal, rice and palm oil could be seen.

With hundreds of thousands of consignments being delivered throughout the region every day, implementing a fleet management telematics system to enhance safety and security has never been so compelling. Indeed, Frost & Sullivan reports that 85% of goods traffic and 75% of passenger traffic is directed through roads.

Recently, organisations have made requests to develop the TAPA Truck Security Requirements (TSR) especially where Logistic Service Providers want to offer the TSR as a standard service.

Some of the world’s leading telematics providers have developed several high tech security solutions, which include electronic locking on the container, trailer & truck doors, additional alarm inputs & siren outputs.

An effective way to meet this security concept is to use the security methodology Deter, Detect, Delay, Respond and Recover.

Deter – Deterrent plays an enormous ingredient in preventing any attack or theft. Ensuring that the GPS tracking system has high security physical features such as anti-hijacking panic switch, alarms on the prime mover and trailer, cargo door sensors, and that the GPS operating software can detect unscheduled stops, deviation from routes and automated voice control, provides excellent preventative tools to prevent such incidents. Case studies show that driver collusion is often involved; however this can be greatly reduced as all aspects of the transit are monitored including driver identification and unusual driving behaviour Detect – With jamming detection, antihijack features, multiple zoning alarm outputs, some systems can detect early red flag scenarios, which send alerts through to the security control room or directly to the security manager on his portable

Asia does not appear to be immune from these types of attacks and we can anticipate that these crime figures will continue to rise. handheld device or laptop. The focus is to provide real-time, secure monitoring of the prime mover, trailer and driver based on a set of rules and exceptions. In some cases, software has been written to detect ‘Red Flag’ incidents, which can be quickly escalated to Police and Security Officers. For example, when the vehicle is stationary, an unauthorised entry into the prime mover or trailer unit can be detected. Other alarm inputs include a ‘kill switch’, panic button and cargo door sensors are also monitored.

Delay – The electronic locking devices that are deployed inside the container, trailer and/or trucks can be opened and closed remotely by the security manager or operations room. This ensures that the drivers have no access to the goods and in the event of a hijacking or theft situation; the locks cannot be accessed by the thieves. Control of the doors in some instances is operated through a tracking system by remote security staff; thereby protecting the customer’s assets at all times. Other features can include the engine immobilizer with horn and blinkers warning system, which can be set off by the security control room remotely while alerting Police and passerby’s to the alert condition Respond – Applying the delay mechanisms causes the criminals a great deal of inconvenience and invariably makes them abort the hijack or theft attempt. It is not always possible to stop a hijack attempt but creating several layers of security & then delay tactics provides additional time for Police and security officers to respond and thus improves the chances of the Police apprehending the assailants and recovering the vehicle and cargo. With the alarms sounding and the truck lights flashing, it takes a brave gang of hijackers to stay around and risk being caught by the Police or security forces.

Recover – The chances of making a full recovery of the truck & load is much

higher, which decreases the overall impact to the buyer and LSP of such consequences of claims & insurance losses, grey market product & line down situation. Knowing the location of a vehicle or fleet of vehicles at all times dramatically decreases the risk of losing cargo or assets by theft. Different zones can be created, meaning when a vehicle enters or leaves a zone, alerts are generated - immediately notifying a control centre or fleet operator. Additionally, high-risk zones or route-deviations can be detected and mitigation services deployed to prevent loss and drastically increase the odds of recovery.

Driver behaviour is essential to the security of the vehicle. The monitoring of assets 24/7 from a professional monitoring facility is a significant advantage.

Combined with local authorities and partners who can carry out mitigation services, this provides a full end-to-end solution for clients allowing them to focus on their business. This means that driver behaviour is constantly monitored and any alerts are quickly escalated.

The driver-operated panic button gives the driver a fast method of informing the control centre that an urgent incident has occurred. This simple action directly alerts the responsible team by phone, SMS and/or email. In most deployments, a voice channel is opened and the security supervisor or authorised person can instantly speak with the driver to discuss the situation.

This can also be used in conjunction with a CCTV system – with cameras fitted in a cab and/or trailer to provide the control centre a real-time view into the situation. By using technology that is part of the overall solution (e.g. GPS, accelerometers), driver profiling can be done to improve the standards of drivers.

This helps to reduce the risk of accidents and cuts the costs associated with each driver.

LOGISTICS TIMES March 2011

DRY PORT

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Dry? What?

Dry port? Is it a wine? That used to be the reaction to the subject of my research. Many of you probably think of port wine when you hear or read about dry port and funny enough it was the result of my very short hit list when I googled “dry port� some seven years ago. Now, there are thousands of hits on the exact subject of dry port related to intermodal transport. Over the years the interest for dry ports has greatly increased, says Dr. Violeta Roso, Division of Logistics and Transportation, Chalmers University of Technology, Gothenburg, Sweden, in this debut piece. Welcome, Violeta!

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Environmental problems have received increasing attention during the last decade and with them also the role that logistics concepts can play in reducing those problems. One of the concepts that, among other advantages, has a role of decreasing environmental impacts is a concept of dry port. The first mention of dry portdates back to 1980’s, however,it was neglected for many years and the interest was recently reborn due to increased awareness of environmental issues related to growing containerized maritime transport.

Progress only in the maritime part of the transport chain (building bigger ships) and in seaports (acquiring bigger cranes), without improvements in seaport inland access, is not sufficient for the entire transportation chain to function. The concept emphasizes the importance of efficient seaport inland access that might be obtained by means of dry ports resulting in numerous benefits for the actors of the transport system.

A dry port is an inland intermodal terminal directly connected to seaport(s) by rail where customers can leave/pick up their units as if directly to a seaport.“As if directly at the seaport” implies certain

level of integration with seaports as well as availability of services that may be found at a seaport, such as storage, maintenance of containers, customs clearance, etc.

The quality of the access to a dry port and the quality of the road–rail interface determines the dry port’s performance.

Scheduled and reliable high-capacity transportation to and from the seaport is therefore necessary. To summarize the main features of a dry port: • Intermodal terminal • Situated inland • Rail connection to a seaport • Offers services that are available at seaports, such as container maintenance, storage of containers, forwarding, depot, security and customs clearance Dry ports are used much more consciously than conventional inland terminals,

with the aim of improving the situation resulting from increased container flows, and a focus on security and control by the use of information and communication systems. The dry port extends the gates of the seaport inland, with shippers viewing the dry port as an interface to the seaport and shipping lines. The main idea of the concept is movement of seaport’s interface inland creating seamless seaport’s inland intermodal access, i.e., smooth transport flow with one interface in the form of a dry port concept instead of two, one at the seaport and the other one at the inland destination, see figure below. In other words to remove some intermediate steps in the transport chain and therefore enabled so-called one-stopshop that enables shippers to have a single contact point on a regional level.

Based on the function and the location

The quality of the access to a dry port and the quality of the road–rail interface determines the dry port’s performance.

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DRY PORT

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Potential benefits resulting from dry ports

Seaports

Seaport cities

Rail operators

Less congestion Increased capacity Expanded hinterland

Lower road congestion Land use opportunities

Economies of Less time in scale congested Gain market roads and share terminals

dry ports may be categorized as distant, midrange and close dry ports.

Implementation of a close dry port in a seaport’s immediate hinterland increases a seaport’s terminal capacity that might result in increased productivity since bigger container ships will be able to call at the seaport. This type of a close dry port may serve as a depot, empty container storage. With dry port implementation seaport’s congestion from numerous trucks is avoided since one train can substitute some 35-40 trucks in Europe.

The benefits from distant dry ports derive from the modal shift from road to LOGISTICS TIMES March 2011

Road operators

rail, resulting in reduced congestion at the seaport gates and its surroundings as well as reduced external environmental effects along the route.

With reduced number of lorries on the roads congestion, accidents and road maintenance costs are reduced as well.

The distant dry port extends the gates of the seaport inland, with shippers viewing the dry port as an interface to the seaport and shipping lines. In other words the distant dry port improves seaports access to areas outside its traditional hinterland, i.e. extends theseaport’s hinterland and attracts new customers.

Shippers

Society

Improved Lower seaport access environmental “Green” impact marketing Job opportunities

A midrange dry port is situated within a distance from the seaport generally covered by road transport and serves as a consolidation point for different rail services. The high frequency achieved by consolidating flows, together with the relatively short distance, facilitates the loading of containers for one container vessel in the dedicated trains.

NEXT ISSUE Key Challenges Amit Kumar, Principal & Lead - Chemical & Natual Resources Industry Group, Accenture Management Consulting

LOGISTICS TIMES July 2010

MOBILE SCM

42

3As & 4Ms It is a dream for supply chain and logistics peopleflow of information and availability of materials and funds can be provided everywhere regardless of time and location. The focus is on increasing efficiency of supply chain and improvement of responsiveness to customers. And the dream is now becoming a reality through mobile communication wireless technology. What it basically offers is accessing and delivering information by Anyone, Anywhere and Anytime, (3As), notes Prof Akhil Chandra of Institute of Logistics and Aviation management Cellular sets (Mobile phones), Personal Digital Assistants (PDAs), Palmtops and now with the release of the iPad

by Apple a hardware revolution with tablet computers has begun and all these gadgets open a new horizon for supply chain management (SCM) systems for businesses providing the ultra portability to all the participants of Supply Chain viz raw material suppliers, manufacturers, distributors, retailers with their manpower and customers widely spread in the factories, stores, warehouses, distribution centers, transportation and marketplace.

So, what is mobile SCM? Simply put, mobile supply chain management is to manage the system of suppliers, producers, distributors, retailers and customers where material, financial and information flows connect participants in the direction at anywhere, anytime based on ubiquitous network made possible through wireless mobile communication LOGISTICS TIMES March 2011

devices which have been stated above viz cell phones, PDAs, i PADs etc. .

Mobile supply chain applications allow users to request information and conduct whatever they want, whenever they want and how they want.

The mobile capabilities of these gadgets provide a convenient, time-saving, and highly accurate means of capturing data on movements of goods and other events.

These capabilities simplify checking and monitoring tasks and provide up-to-date information on process status, enabling enterprises to react swiftly to unforeseen events creating a sophisticated adaptive supply network.

Technological Breakthrough The prominent technologies are wireless communication technologies like WiFi, internet access through mobile like 2G,3G and 4G , wireless LANs, RFID , GPS (Global positioning system) and mobile gadgets as stated above . Apart

from the above it is the cloud computing which has given a ubiquitous access and integration to ERP software, databases and Supply chain software modules like SCM, CRM,WMS, TMS, EDI to name a few.

There are numerous applications like vehicle tracking, dispatch, route analysis, warehouse operations, facility management, depot management, routing, scheduling and many other SCM related solutions. The vehicle tracking apps with GPS technology integration allows businesses to track and manage vehicles through their mobile device from anywhere and at any time.

The dispatch, warehouse operations, depot management applications let mobile employees in the manufacturing businesses to get on-demand access to corporate data while on the road through GPS with wireless technology for better and simple management. . Integration with voice recognition enables hands-

43

free processing for higher efficiency of warehouse operations. The mobile capabilities of MSCM enable companies to make more effective use of men, machine , material and money (4Ms) for receiving, storage, and shipping tasks.

Accurate, paperless data entry saves you time and trouble. Real-time inventory control with synchronous online monitoring of all stock movements maximizes transparency while minimizing administration overhead.

Instant availability of information on inventory levels, storage bins, and other resources enables better coordination and reduces flow times. RFID and barcode technologies integrated with MSCM ensure accurate, up to date inventory information by using bar code/ RFID scanning through employee’s handheld mobile gadgets integrated with central information depository for automatic data entry increasing the accuracy in the company’s inventory management system. MSCM for dispatch also communicates instant shipment confirmation information in to the cell phone integrated with EDI (Electronic Dta Interchange. )

Major applications Mobile Logistics Management: MSCM enables more efficient circulation of the cargos or assets in supply chain. By installing wireless equipments and monitoring microcomputer on transportation vehicles, the enterprises who send the cargos can know the amount of load, capability and location of every vehicle at anytime.

Mobile Supply and Marketing Management: MSCM enables mobile order management, real-time tracking procedures of product order, price query, and reverse supply chain management. Through Mobile Supply and Marketing Management, second tier suppliers and distributors can make real-time information interaction with core enterprises, strengthening the channel and controlling capability of core enterprises.

Mobile Manufacturing Management: MSCM realizes the real-time interaction between managers and workers working on the

shop floor of the factory improving quality, efficiency and response time to its next internal customers. This is proving to be a big tool in asset management of semi finished and finished goods and provide an electronic approach to conventional KANBAN systems used in factory for visual demand and replenishment for a just in Time (JIT) aand lean management approach. MSCM is also a useful tool in total quality management and six sigma approach which manufacturing organizations are continuously striving for.

Mobile Inventory Management: Through Mobile equipments or wireless devices, the inventory and management capability for raw materials of enterprises is greatly increased. In the main management channel, receiving and sending MIS, automatic stocking up management, channel inventory allocation management can be greatly enhanced.

Based on orders, for the inventory of products, sales products, spare parts and recycling wrappages, MSCM helps in productivity-boosting transactions for tasks such as the following: Picking and put-away Packing, unpacking, and repacking Freight loading and unloading checks Inventory queries Mobile printing

Role of IT and telecommunications in Logistics and supply chain industry is ubiquitous and is a cut throat technology to beat the competitors. As businesses strive to be flexible in addressing market needs and aligning their adaptive supply chain accordingly, having the right tools to leverage that flexibility is just as important, if not crucial. The mobile gadgets like tablets, iPAD and PDAs are only enhancing its applications seamlessly throughout the value chain among all its participants be it manufacturers, distributor, vendors, retailers or customers.

Multinationals are already utilizing the mobile SCM to sustain their competitive advantages and India can now ill afford to neglect the fruits of MSCM. In India what is required is a new mind set to embrace IT and telecommunication technology, accept IT based customized solutions to make a beginning and reap the long term but sustainable benefits..

Corrigendum Due to transcription mistakes, some of the terms used by speakers in the table for two discussion published last month were wrongly quoted. We deeply regret the error. The correct version of this discussion has already been uploaded on our portal: www.logisticstimes.net.

-Editor

LOGISTICS TIMES March 2011

25

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PROFILE

46

“Get down at Pulbangash metro and ask anyone … They will direct you (to our office),” said the soft voice over the phone. I was confused still because until then, I never heard of a metro station named ‘Pulbangash’ in Delhi. Actually, it sounded more like some Hindustani raag.

Moreover, I was unaware of its exact location. But meeting the owner of that gentle voice was very important for me.

the search for vehicles began in earnest to do the only business they were very good at. Through some linkage, they were able to approach the Maharaja of Jaipur who had two vehicles which they acquired to start business. The name has to be amended to start business and they thought why not add Jaipur to their original company “Golden Transport” and launch “Jaipur Golden Transport”.

Hard work, no miracle

Okay, let me dispel the mystery over the owner of the voice: it was none other than Jagdish Khanna, Managing Director of more than 70 year old Jaipur Golden Transport entity, notching up Rs.400 crore in business.

Whenever the topic of driverfriendliness arose, the name of Jaipur Golden Transport kept popping up and hence I felt it is important for me to meet the owners. With little challenge, I managed to zero in on the May 1936born Khanna over phone and then the ‘Pulbangash’ riddle happened.

Why Jaipur Golden Transport? Perhaps I was jumping the gun. The story dates back to pre-Partition days: 1940 to be precise when Tulsidas Khanna (Jagdish’s father), Sardari Lal Bahri, Murari Lal Bahri, Siddarth Lall and Makkan Singh were working together from Sargodha district in the undivided Punjab under the banner of Golden Transport with 50 odd vehicles plying on the British India roads – mostly in the northern province. When the foursome migrated to India 1948 lock, stock and barrel with not a single vehicle in their possession, LOGISTICS TIMES March 2011

As they say, the rest is history.

Originally, they began operating from a shed in Lahori Gate in old Delhi.

Signifi cantly, Lall and Singh were Significantly drivers and that is how the association with Khanna and Bahri germinated.

After completing his LLB from Delhi University, Jagdish began to work for Jaipur Golden Transport around 1960.

“We had 40 vehicles at that time,” reminiscences the senior most executive.

By 1970, all his brothers were also working with 200 vehicles under the banner with Tata vehicles dominating two-thirds of the fleet and Leyland, the rest. JGT covered Rajasthan, Gujarat, Maharashtra and the south as well.

However, they deliberately kept Bihar, West Bengal and north East India out

From day one, Jagdish was entrusted with the responsibility of looking after drivers.

of their loop either due to lawlessness or poor business prospects.

From day one, Jagdish was entrusted with the responsibility of looking after drivers. “I realised their life was tedious and tough and therefore began giving them annual leave so that they can go home and spend time with their family,” elaborates the lawyer-turned-business magnate. He also added a MBA to his name meanwhile hoping to add an extra dimension to run the family business more professionally perhaps. “For some, I was their son and for some, I was their bhaiya,” says he underscoring the bond he has built up with the driving fraternity. From 40 vehicles-50 drivers, they graduated into the big league of 500 drivers by 1970 – just a decade after

47

Jagdish Khanna Managing Director Jaipur Golden Transport

Jagdish joined the business.

But, as ill luck would have it, he had to undergo some medical complication in the early 1980s that had kept him away from workplace for a long period.

Under the influence of nearby Birla Mill workers’ union cadre, JGT drivers began to agitate for overtime and other facilities.

Above all, they joined the external union outfit, much to the discomfiture of JGT management. Recalling those trying times, Jagdish says that he was “upset” over the developments. “I tried to explain to them that 8-hour workshift is impossible in transport business. You cannot halt the truck midway on the roads at the end of 8 hour work. What is applicable to labour working on an assembly line under a roof cannot be implemented in an ever-moving business like transport,”

adds he. Well, there were no takers to his reasoning and this forced him to look for an exit.

JGT announced a closure of its business, sold off its vehicles without any loss and settled dues to all employees (mostly drivers) as per the prevailing statutory provisions then. “It was a tough decision, but the right one,” claims he, looking back.

Next year, 1984, he commenced with 15 vehicles and 45 drivers – most of whom stood firm with the management whom he terms as “loyalists”. “My thought was that here is an opportunity to bring about a miracle. I don’t want to be a prisoner of circumstances. With the blessings of my elders, we worked out a scheme whereby we give vehicles to drivers; they run as their own and

JGT provides business. We bought 100 vehicles under this formula and found to our surprise that this has begun to work fine,” explains Jagdish.

Today, JGT operates 750 vehicles, none of them owned by it, but the property of driver-owners. JGT provides freight on one condition that they work exclusively for JGT. Many of original 1984 driver-owners today possess a fleet of 50 trucks each and their children study abroad, boasts the originator of this asset-light formula. Today, many logistics service providers have embraced this asset-light formula. From 50 trucks in 1940 to no-truck in 1948 to 750 trucks today with a business turnover of Rs.400 crore is the handiwork of hard work, no miracle.

–Ramesh Kumar LOGISTICS TIMES March 2011

48

Travel Vignettes*

My P & Q Ramesh Kumar

Next time, when your driver returns from LucknowBenares trip, ask him whether he can identify the colourful lady featured above. Take it from me. Eight out of ten eyes would light up on seeing Monim Khatoon. Yes, that is her name. She, a mother of nine (eight daughters and one son), hawks items of interest to decorate their cabins. She usually operates between Sultanpur and Haidergarh (hardly 60 kilometres before Lucknow).

You can be rest assured that most of them have bought something or other from this savvy saleswoman during

their sojourn through the NH 56. Khatoon picks up her wares from Delhi’s Sadar Bazaar at regular intervals.

On an average, she managed to earn Rs.1,000 by hopping from one roadside dhaba to another where truckers halt for breakfast or lunch. A decent sum, no doubt. “Saab, there is no competition for me in this stretch,Insha Allah!” she exclaims. Does anyone misbehave?

“Nahin,” pat comes the reply. Before sunset, she returns home to fend for her refusing-to-work spouse and nine other mouths. With much difficulty, I persuade

* The Jamshedpur-Ludhiana trip was sponsored by Credence Logistics Ltd, Mumbai

LOGISTICS TIMES March 2011

her to accept a hot cuppa.

She would prefer I buy an artefact from her for the truck in which I was travelling instead a ‘free tea”.

Needless to say, we buy one.

Monim behn, God be with you!

Middle of the road Passing through the land of India cricket captain Mahendra Singh Dhoni – Ranchi, Uttarakhand – we

were struck by this tree in the middle of the road on the National Highway 33 – linking Jamshedpur with National Highway 2 tying Delhi with Kolkota.

Considering the fact that this is the pivotal passage connecting Jamshedpur with Bihar, UP and the north, heavy commercial vehicles carrying steel cargo is inevitable. Drivers have no other option but to manoeuvre their way through this four-lane patch. No doubt, highway expansion work is in full swing. While decades old trees are removed as part of this exercise, this kind of middle of the road obstruction ought to have been given preference.

Eyecandy!

Things are definitely changing on the heavy commercial vehicle segment.

Am not talking about the entry of more and more global giants such as Bharat Benz, Man Force, NaviStar etc. But am talking about

MY P&Q

50

Not art, this one Take a loot at this. Believe it is not a creative photography or artistic impression something mundane.

But industrial waste accumulated next to a vast sugarcane field in Shamli, Uttar Pradesh linking Meerut with Karnal, Punjab. How much this would impact the adjacent sugarcane fields is anyone’s guess.

Yeh hai, India!

how fleet owners are going in for colourful covering of their loads with tarpaulin.

Not the usual, dull khaki coloured ones. Brighter and collapsible too. Take a look at this truck near Jamshedpur carrying steel items for delivery somewhere in north India. Most of Tata Steel consignment out of Jamshedpur managed by Delhi Assam Road Carriers (DARCL to be short) is carted in this fashion. I ran into many such eye candies en route. It is a sheer coincidence I was interacting with Matteo Thomas of Cramaro – an Italian company that specialises LOGISTICS TIMES March 2011

in this kind of tarpaulin covers – who was in India a few weeks ago. Cramaro is in talks with Kailash group for equity participation to go whole hog. Currently, the Bangalore facility manufactures these tarpaulins for domestic consumption.

No Secret!

When Anil Pandeyji - in whose trailer carrying 27

tonne wire rods to Ludhiana from Jamshedpur I was travelling in mid-February – quizzed me to identify the name of mushrooming growth of a particular type of plant, I was foxed.

Honestly I had no clue. We

someone. It was my maiden “crush” with ganja!

had halted at Mohali Chanda for morning tea after crossing Lucknow. As usual it was a roadside dhaba. A bit of agricultural land facing the highway was cleared and a makeshift tea shop had been erected. Pandeyji was showing a large tract land just behind the dhaba where this quizzed plant was in full sway.

What’s it? Sensing my ignorance, Pandeyji quickly dispelled the mystery. It was ganja. How did it come about?

Truck drivers, who consume ganja to overcome their highway blues, ought to have thrown away the remnants after consuming tea at this dhaba. “It was not a commercial cultivation,” hastened to add the dhaba malik. I plucked a plant, crushed the leaves and smelt.

“To get a real kick, they need to be dried,” chipped

on the road. Am not talking about the feathered or winged variety. But the human ones: the RTOs and Traffic Inspectors in each state. They wait on the roadside and bounce on truck drivers demanding their pound of flesh. I ran into a bunch of Traffic Inspectors in Shahjanpur, Uttar Pradesh.

Almost a dozen of them, harassing drivers and getting their ‘dough’. Absolutely merciless.

When they wave, if truckers don’t stop – some brave ones, don’t! - these officials hop on their motor cycles, overtake the truck and abruptly block the road by parking their motorbikes in front of the heavy vehicle. Drivers have no option but to halt.

Then, a bit of drama ensues.

At the end, the vultures are victories. RTOs are different kettle of fish.

They invariably move around in siren-mounted government jeeps. Rude and ruthless to the core. Their demand is always in thousands, not hundreds! When will this harassment end? I have no clue.

The Roadside Vultures No road journey will be complete without one bumping into the vultures

RNI No. DELENG-17848/2010-TC