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Cargotalk AUGUST 2012

Vol XII No.9 Pages 56 Rupees 50 cargotalk.in A DDP Publication

SOUTH ASIA’S LEADING CARGO MONTHLY No.1 in Circulation & Readership

RNI No.: RNI No.:DELENG/2003/10642 DELENG/2003/10642 Date ofofPublication: 22/05/2012 Date Publication: 22/7/2012

Reg.(ND)-11/6002/2010-11-12. No.: DL (ND)-11/6002/2010-11-12. U (C)-272/2010-12, Postal Reg. Postal No.: DL WPPWPP No.:No.: U (C)-272/2010-12, foron posting on 25th-26th of advance month at NewDelhi DelhiP.S.O. P.S.O. for posting 25th-26th of advance month at New

FASHION

LOGISTICS A high value market awaits integrated services

Air Cargo Security Is a common practice possible across the world?

GAGAN PROJECT FOR CIVIL AVIATION Final System Acceptance Test completed in Bengaluru

PLUS

International Conclave in Chennai urges for strengthening port connectivity


Publisher

AUGUST 2012

SANJEET Editor

RUPALI NARASIMHAN Sr. Assistant Editor

FROM THE EDITOR

RATAN KUMAR PAUL Desk Editor

NEELAM SINGH General Manager

GUNJAN SABIKHI Deputy General Manager

HARSHAL ASHAR

Regional Manager: South

K N SUDHEER

Regional Head: North & West

SHIV KUMAR

Asst. Manager: West

ROLAND DIAS

Assistant Manager Advertising

MUKESH GAMRE

Assistant Manager Marketing

YOGITA BHURANI

Sr. Marketing Co-ordinator

GAGANPREET KAUR Creative Design

SHIVALI SHAKDHER Advertisement Designer

VIKAS MANDOTIA Photo Journalist SIMRAN KAUR Production Manager

ANIL KHARBANDA Circulation Manager

ASHOK RANA

Profit from reverse direction It is beyond imagination for most of the logistics service providers that Reverse Logistics could be a crucial element for completing the supply chain mechanism and the growth engine for the company. Some of them, however, are diligently concentrating their efforts on this area to strongly establish their footprints. Experts say that India experiences between 4-5 per cent return rate and value of returned goods is anywhere between Rs 60,000-75,000 crore per annum. Asset recovery of defective/surplus goods in India ranges from 2 per cent to 50 per cent (of landed cost) and is currently carried out through highly unorganised channels that is fraught with leakage and a total disregard to environmental norms. Indian companies have been too busy ensuring their forward supply chain is in place so they can deliver products to their customers. They don’t have the time or the directive to look at orphaned, returned goods that sit in some warehouse just rotting away.

annum. It is expected that the demand for transport and logistics will continue to grow as the Indian economy is on a high growth trajectory. The Indian Third Party Logistics (3PL) service providers’ market was estimated at about $890.3 million in 2005 and is expected to grow at a CAGR of 21.9 per cent to reach around $3,557 million in 2012. The above figures are excluding the size of Reverse Logistics. Experts suggest to look at ‘returns’ strategically. Returns may be a small fraction of total sales, but they can have a very large impact on the bottom-line of users and service providers of 3PL. They should get complete transparency of returns inventory across the supply chain. The trade practitioners will have to be bold and make quick decisions on liquidation of current aging stocks. It would be a classic symptom of someone who thinks returns as a necessary evil, to be dealt with locally only, but this is a short-term thinking that will slowly bleed them dry. They will have to have a plan to manage returns systematically at corporate level. This would strengthen their position in the market.

It is worth mentioning that the logistics industry is valued at approximately $90 billion, employing 45 million Rupali Narasimhan people and growing at the rate of 30-40 per cent per Editorial Director

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DDP Publications Private Limited New Delhi: 72 Todarmal Road, New Delhi – 110001, India. Tel.: +91 11 23731971, 23710793, 23716318, Fax: +91 11 23351503, E-mail: cargotalk@ddppl.com, Website: www.cargotalk.in Branch Offices Mumbai: 504, Marine Chambers, New Marine Lines, Opp SNDT College, Mumbai – 400020, India Tel.: +91 22 22070129, 22070130 Fax: +91 11 22070131, E-mail: mumbai@ddppl.com Middle East: P.O. Box 9348, Saif Zone, Sharjah, UAE Tel.: +971 6 5573508 Fax: +971 6 5573509 Email: uae@ddppl.com CARGOTALK is a publication of DDP Publications Private Limited. All information in CARGOTALK is derived from sources, which we consider reliable and a sincere effort is made to report accurate information. It is passed on to our readers without any responsibility on our part.The publisher regrets that he cannot accept liability for errors and omissions contained in this publication, however caused. Similarly, opinions/views expressed by third parties in abstract and/or in interviews are not necessarily shared by CARGOTALK. However, we wish to advice our readers that one or more recognized authorities may hold different views than those reported. Material used in this publication is intended for information purpose only. Readers are advised to seek specific advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the readers’ particular circumstances. Contents of this publication are copyright. No part of CARGOTALK or any part of the contents thereof may be reproduced, stored in retrieval system or transmitted in any form without the permission of the publication in writing.The same rule applies when there is a copyright or the article is taken from another publication. An exemption is hereby granted for the extracts used for the purpose of fair review, provided two copies of the same publication are sent to us for our records. Publications reproducing material either in part or in whole, without permission could face legal action.The publisher assumes no responsibility for returning any material solicited or unsolicited nor is he responsible for material lost or damaged.This publication is not meant to be an endorsement of any specific product or services offered.The publisher reserves the right to refuse, withdraw, amend or otherwise deal with all advertisements without explanation.All advertisements must comply with the Indian and International Advertisements Code.The publisher will not be liable for any damage or loss caused by delayed publication, error or failure of an advertisement to appear. CARGOTALK is printed & published by SanJeet on behalf of DDP Publications Private Limited. and is printed at Cirrus Graphics Pvt. Ltd., B-62/14, Phase-2, Naraina Industrial Area, New Delhi – 110028 and is published from 72Todarmal Road, New Delhi – 110001.

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AUGUST 2012

20 Cover Story

CONTENTS DEPARTMENTS Express Logistics 18 Gati-Kintetsu Express JV: INR 267.7 crore investment deal finalised Airlines News

24

Apparels exports from India grew by approximately 14 per cent during 2011-12, touching about $13 billion figure, notwithstanding the economic slowdown in the traditional markets viz US and Europe. Indian exporters expect that the segment will witness a spurt in the near future. However, they require adequate support from logistics service providers to zoom in on emerging fashion logistics markets. Cargotalk presents stakeholders’ perspective…

8 Emirates SkyCargo introduces freighter to Mumbai, strengthens load factor 10 SpiceJet starts new international services 11 South African Airways adds one more flight to Johannesburg

32 49

24 18

Family Albums 46 Gati-Kintetsu Express hosts evening function to celebrate JV formation

International News

47 Rotary Club and GMR jointly organise Blood Donation Camp at IGI Airport

16 DHL opens its largest express hub at Shanghai Airport

47 Blue Dart completes 10th Batch of ‘Blue Edge: Empowering Lives’

Logistics Services

Shipping & Ports

17 Nikon ties up with DB Schenker for 3PL services

49 Port Pipavav chalks out plans for decongestion during monsoon

22 Shri Kailash Logistics completes the first phase of its Logistics Park near Chennai

50 International Conclave in Chennai urges for strengthening port connectivity

Trade Associations 20 FFFAI meets the then President of India

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Events Update

52

Calendar of International Logistics Events National News 21 AISATS’ Bengaluru Cargo Terminal acquires TAPA’s recognition for security standards Cargo Performance 34 Airlines wise export import tonnage performance for June 2012 from Delhi Airport 35 Airlines wise export import tonnage performance for June 2012 from Mumbai Airport

COLUMNS View Point

12

Air Cargo Security: Is a common practice possible across the world? Lead Story

40

Reverse Logistics: An untapped area of complete supply chain management Study & Survey 54 IATA Forecasts for next 12 months: Increase of profitability expected

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Airlines News New Services

EMIRATES SKYCARGO INTRODUCES

FREIGHTER TO MUMBAI, strengthens load factor Emirates SkyCargo has witnessed improved volume of cargo on all India basis from May and June on account of the mango seasonal loads and curtailment of some carriers’ international operations. Keki Patel, cargo manager, India & Nepal, provides details of some recent developments…. Keki Patel

demand requirements, as long as flight operational economics are healthy,” Patel says, as he explains the rationale behind the freighter service. The airline’s new freighter service caters to all kinds of cargo commodities a n d p ro d u c t s , wh i c h i n c l u d e – Courier, Valuables, Priority, General Cargo, CoolChain, Per ishables, Dangerous Goods, Odd Sized Cargo, Domestic Pets, Zoo Animal exchange programmes, etc. Exports are majorly to destinations in Europe, Africa, United States, South America and Middle East. This new launch has added Buenos Aires, Rio De Janeiro, Dublin, Lusaka, Harare, Dallas Fortworth, Seattle, Ho Chi Minh City, Barcelona and Lisbon to its route network in 2012 with Erbil and Washington becoming online in August and September this year, respectively.

The airline’s new freighter service caters to all kinds of cargo commodities and products

To meet its customers’ demand, Emirates SkyCargo has started once weekly B777F operation into Mumbai from June. “There have been no changes in the passenger operations whilst we continue to deploy ad hoc freighters as warranted by demand in both directions,” said Patel. The new freighter service is operated by B777-200 freighter with a capability of 103 tonnes carriage in each direction.The service operates every Wednesday on Dubai – Mumbai – Dubai route. “When the supply chain demands capacity, it is our responsibility as a chain partner to service those market

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“On the cargo front, we have more new Boeing 777 freighters joining the fleet and will be deployed on the major customer demand routes. Additionally, we will work with our customers on ad hoc charters to meet their logistic requirements for large-sized tonnages to be transported in a single lot,” added Patel.

According to him, the air cargo market is getting stabilised due to some external factors. In addition, he said, “With the Rupee depreciation and fuel cost coming down, Indian exports are seeing some benefits for their customers,” he pointed out. He, however, maintained that there are enough market challenges the air cargo industry is facing that are finally creating pressure on cost and sales.“We always evaluate our decisions to ensure we take responsible actions that benefit our partners and add value to the business in the long-term,” he emphasised.

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National News Airlines

NEW INTERNATIONAL SERVICES

STARTED BY SPICEJET In the Indian domestic market,SpiceJet connects 37 cities with a fleet of 47 aircraft that include Bombardier Q400 NextGen Turboprop and Boeing-737 aircraft.

SpiceJet has added new international services by its recent launches of Delhi-Dubai (daily), Mumbai-Dubai (daily) and Delhi-Kabul services. SpiceJet would be initially operating flights on the Delhi-Kabul route three days a week (Tuesday, Thursday and Saturday). Earlier, the airline started services between Delhi-Kathmandu and Chennai-Colombo. In these new sectors the airline is using Boeing 737-800 aircraft.

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SpiceJet is also working on new destinations in India as well as additional international destinations, as the carrier has set its sights on expanding its coverage in phases. Under its expansion in the domestic market, SpiceJet has recently announced its first phase of Northern India expansion. The airline will connect to Amritsar, Dehradun, Chandigarh, Indore and Srinagar to Delhi in the near future. At present, SpiceJet operates more than 275 daily flights to 34 Indian cities. It has acquired 7 new Bombardier Q400 aircraft for enhancing connectivity to Tier II and Tier III cities.

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Airlines News New Launch

SOUTH AFRICAN AIRWAYS ADDS

ONE MORE FLIGHT TO JOHANNESBURG South African Airways is introducing one more additional frequency on Johannesburg-Mumbai-Johannesburg route effective August 21, 2012, making it to a total of six flights a week on day 1, 2, 3, 5, 6, and 7.

South African Airways’ (SAA) increasing frequency and capacity will now allow the airline to offer more space on the Mumbai-Johannesburg route connecting network through its hub in Johannesburg.The airline also hopes to be adding even more flights on this route in the near future as travel and trade between South Africa and India has recently shown noticeable growth. South African Airways is the only direct carrier between India and South Africa with the current capacity of approximately 75-80 tonne a week, allowing onward coverage on its strong network in South Africa, Africa and South America. Presently, SAA also offers regional freighter services from Johannesburg to Blantyre, Dar-e-Salaam, Entebee, Harare, Kinshasa, Lusaka, Maputo and Luanda in addition to the existing belly capacity. SAA now offers dedicated B737F freighter service to Johannesburg on its network, ensuring delivery of shipments in one lot within dateline. SAA has developed Sao-Paulo and Buenos Aires as gateway hub to South/Latin America. Using these gateways and its interline partners, the airline serves to various major cities in South America. Currently, SAA operates 10 weekly flights to Sao Paulo and four to Buenos Aires. SAA has a regular courier service on their flights covering all destinations on their network. SAA is also targeting Import cargo originating from South Africa, Africa and South America into India. 11

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View Point Air Cargo Security

air cargo security Is a common practice possible across the world?

Michael Steen

The recent understanding between the United States, EU, Switzerland and Canada, pertaining to air cargo security has been commended by The International Air Cargo Association (TIACA). However, there are some questions: whether it is complying with the International Civil Aviation Organisation (ICAO) norms and can be practised in other countries, irrespective of different socio-political scenario. An exclusive interview with Michael Steen, chairman of TIACA, throws light on these questions…RATAN KR PAUL

S

teen unequivocally maintained that more countries should follow the lead of the United States, the European Union, Switzerland and Canada in pursuing mutual recognition agreements for air cargo security. ICAO termed the agreement between these countries as ‘welcomed and sensible progress’ towards the shared goals of maintaining the highest levels of air cargo security, without impeding international air cargo supply chains. “As a general principle, we think that air cargo security should be based on global, harmonised security standards established by ICAO. Air cargo security regimes should be multi-layered, risk-based, intelligence-driven and supply-chain-wide,” Steen said. Given that the air cargo industry currently faces looming deadlines for security mandates, such as the 100 per cent screening requirement in the United States, TIACA believes that mutual recognition of air cargo security regimes is the most effective way to meet these requirements. “We commend the United States, EU, Switzerland and Canada for their recent actions in this regard, and urge other countries to pursue the mutual recognition process,” he added. However, he clarified that TIACA recognises that each country will implement these standards in somewhat different manners. That is why it is critical for countries to engage in a dialogue, to learn the details of how each nation implements the security standards and, whenever possible, to mutually recognise each other’s regimes as meeting these standards. This is the best way to enhance security without unduly encumbering trade. “We strongly support efforts to enhance security of the air cargo supply chain without unduly disrupting vital commercial flows. Mutual recognition of robust security regimes is an important way to further this goal. TIACA will continue to support additional efforts to mutually recognise security regimes and to implement global, harmonised standards,” Steen stated. According to TIACA, the progress made by governments to recognise each 12 CARGOTALK

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other’s national air cargo security regimes will eliminate duplication of security controls and costs and time delays associated with this, whilst ensuring strict air cargo safety and security requirements continue to be met consistently. He outlined the work Transport Security Administration (TSA) has been doing on advanced air cargo data alongside other bodies such as ICAO, the World Customs’ Organisation and the Universal Postal Union. Outlining the status of the Advanced Air Cargo Screening (ACAS) programme, he confirmed the pilot project was still going on, having started with express carriers a year ago and subsequently expanded to include passenger and cargo carriers as well as freight forwarders. The objective, he said, was to prove data flows and timelines, adding, “Can DHS (U.S. Department of Homeland Security) looking at this data quickly analyse, determine risk and get information on which screening method to use at the proper place and at the proper time?” The message channels and protocols are critical to this, Steen further said. “The key part of this is moving from the trusted shipper concept to a data driven analysis. We want to make a determination based on historical data about the shippers, plus incorporate the trusted shipper rule sets into ACAS.” He urged forwarders to be a part of this process, stating, “The sooner the data is transmitted the better. We suggest freight forwarders and carriers to conduct active discussions with all parties in the supply chain as soon as possible to help determine the outcome and design the process overall.” Steen also recognised the support the industry is giving to further enhance air cargo security. He said, “Together, we have made significant progress in enhancing air cargo security in the past few years and the industry has risen to the challenge, both in the all-cargo and the passenger carrier segments. We are moving steadily towards closing all gaps. What we have put in place—a risk-based, intelligence-driven approach applying tiered screening protocols—could not have been accomplished without working through the numerous details with industry partnership. TIACA and WWW.CARGOTALK.IN


View Point Air Cargo Security

TIACA further believes that countries adhering to these common core standards should share information on their specific regimes among themselves, with the objective of recognising each other’s regimes as meeting the standards, if at all possible. “This is what the United States, EU, Switzerland and Canada have done – and we urge other countries to take similar steps,” Steen pointed out.

ADVANCED AIR CARGO SCREENING Commenting on the proposed Advanced Air Cargo Screening (ACAS), Steen said that ACAS is a new approach as it involves a collaborative effort between the industry and regulators to pilot and test potential solutions, and learn from its results, before setting regulations. “TIACA is appreciative of the opportunity to work with its industry colleagues and the US authorities in evolving ACAS, and we hope it will serve as a model for other countries, too,” Steen said. The ACAS pilot has grown from its initial focus on the integrators to now include passenger airlines, forwarders and all cargo airlines. There are several Air cargo security should be based on global, harmonised security standards options for providing data and participants may established by ICAO select the option that works best for their business practices. So there are a variety of parties providing data and not just forwarders. “One of the major GACAG (Global Air Cargo Advisory Group) have played a key role issues being addressed by the industry and government is the quality in this partnership approach, and I am confident that by continuing of data, and I know that all participants are taking steps to improve to work together, we can resolve any outstanding and future security the quality. We (both industry and regulators) share a strong interest challenge.” in having the highest quality data, and I’m confident that we will attain that goal as a result of the pilot,” he went on.

COMMON PRACTICE IN DIFFERENT CIRCUMSTANCES

“It is certainly the case that specific requirements will differ from country to country. TIACA is not saying that all requirements should be identical – in fact, we explicitly recognise the importance of flexibility in approach, as our industry is diverse and a ‘one-size-fits-all’ regulation would be ruinous,” Steen maintained. In his opinion, there should be some common core security standards that are adhered to globally. “It’s then possible to develop differentiated, specific requirements based on risk levels, national circumstances, etc., as long as those requirements meet the baseline standards. This means that defining the common core standards is quite important, and we believe ICAO is an appropriate venue for that,” he clarified. 14 CARGOTALK

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KNOWN SHIPPER CONCEPT Steen was of the view that a ‘Known Shipper” programme can be an important component of air cargo security regimes. However, this concept is applied differently around the globe, so it is hard to render a comprehensive judgment on its efficacy. “I think what is most important is that any air cargo security regime must be based on a multi-layered risk-based approach that extends throughout the supply chain and is driven by intelligence. A known shipper programme can certainly be a part of an effective approach based on these pillars – but it should never be the sole component,” he underlined. WWW.CARGOTALK.IN


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International News New Launch

DHL OPENS ITS LARGEST EXPRESS

HUB AT SHANGHAI AIRPORT According to Dr Frank Appel, CEO of Deutsche Post DHL, DHL Express North Asia Hub is a logistics milestone in DHL’s Asia Pacific network and the culmination of a multi-hub and aviation strategy of the company to offer convenient and cost-effective services. “With Asia’s leading economies fast integrating and free trade agreements reducing barriers to international commerce, logistics companies need capabilities that are ahead of the curve and offer simplicity, speed and service,” he said. The Hub covers a land area of 88,000 sqm and it can process up to 20,000 documents and parcels each in an hour. “The facility has outstanding environmentally-friendly features, such as energy efficient T5 lighting and a solar-powered system for hot water.

Outbound shipment processing area at DHL Express North Asia Hub

Leading express logistics company, DHL has recently opened the US$ 175 million DHL Express North Asia Hub at the Shanghai Pudong International Airport. The company has also announced plans to further invest US$ 132 million (€100 million) to add eight dedicated aircraft to service high demand routes between Shanghai and North Asia, Europe and the US, by 2014.

Now, with four hubs in Asia Pacific (Shanghai, Hong Kong, Bangkok and Singapore), the company is able to link to over 70 DHL Express Gateways located throughout the region. DHL’s infrastructural network is served by a comprehensive air network of over 40 aircraft covering 40 countries and territories, and utilising approximately 690 commercial flights per day in Asia Pacific.

LUFTHANSA CARGO

REDUCES CO2 EMISSION freight and baggage transports were made from light composite materials. By reducing weight, the composite materials lower fuel consumption and carbon emissions. Being 13 kilos lighter than the conventional type, the aluminium containers make a weighty difference in close to 70,000 container movements over the two months.

Bettina Jansen, Head of Environmental Management

Lufthansa Cargo reduced CO 2 emissions by more than 700 tonne through the use of lightweight containers in May and June alone. For the first time, more than half the LD3 standard containers utilised for 16 CARGOTALK

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“In the efforts to realise our ambitious environmental targets and reduce specific emissions by a quarter by 2020 on the 2005 level, we will continue investing in modern technology and press ahead with renewal of our container fleet,” informed Bettina Jansen, Head of Environmental Management at Lufthansa Cargo. WWW.CARGOTALK.IN


Logistics Services Success & Achievements

NIKON TIES UP WITH

DB SCHENKER for 3PL services Nikon India, a leading company for imaging products in India has tied up with DB Schenker for its Warehousing and 3rd Party Logistics services for Nikon’s cameras, digital single-lens reflex cameras (D-SLR), lenses and accessories in India. “The decision is a result of an extensive engagement with Nikon India for more than six months to develop comprehensive solutions based on a network of customised infrastructure and robust warehouse management systems for their logistics and warehousing needs in India,” said DB Schenker sources in India.

(L-R) Nikon India team: Kamal Kant – logistics manager; Sajjan Kumar, vice president and Hiroshi Takashina, managing director, Nikon India (R-L) Schenker India team: Naveen Kulkarni, deputy general manager, Logistics; Sohel Azmat, deputy general manager, Logistics, and Shrichand Chimnani, director, Logistics, India

The solutions by DB Schenker in India for Nikon includes Warehousing – inbound and outbound goods management, picking and packing, inventory management and value added services such as labeling, kitting, accessory management, promo bundling and scanning of serial numbers before distribution to customers across India.

Commenting on the tie up, Shrichand Chimnani, director, Logistics, Schenker India, said, “Our Contract Logistics services will enable Nikon India to take advantage of our customised infrastructure, IT solution, customised value-added services to improve the productivity and efficiency in their supply chain; and we hope to extend the partnering to provide similar services at other locations in the country in the near future.”

Blue Dart amongst the Top 25 ‘India’s Best Companies to Work For 2012’ Blue Dart, South Asia’s leading air and

This study, in its 9th year, was conducted

integrated transportation, distribution

by the Great Place to Work Institute in

and logistics company,has been ranked

India in partnership with a leading

13th amongst the Top 25 ‘India’s Best

business daily newspaper. Out of 533

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companies in India that participated,only

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50 made it to the Best Companies List.

st

has also been declared 1 in the

Anil Khanna

Transportation Industry. Blue Dart has

Commenting on the achievements, Anil

received this coveted ranking for the third

Khanna, managing director, Blue Dart

consecutive year.

Express,said,“At Blue Dart,our focus has beenoncreatinganenablingenvironment

‘India’s Best CompaniesToWork For 2012’

that provides for the all-round

is an annual study on workplace culture

development of the individual. Our

aimedatidentifying,recognising,learning

‘People First Philosophy’ has helped us

from and spreading best practices of

move beyond just being a great place to

organisations that achieve business

work to driving employee satisfaction by

objectives by being great workplaces.

providing them the best work to do.”

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Express Logistics Alliance & Acquisition

gati-kintetsu express jv INR 267.7 crore investment deal finalised The 70:30 joint venture deal between India’s leading express logistics company Gati and Japan’s Kintetsu World Express (KWE) to form a new company, Gati-Kintetsu Express (GATI-KWE), has been completed with the approval of the Foreign Investment Promotion Board for the investment of Rs 267.7 crore by KWE.

A

CT BUREAU

midst the wait and watch policy of foreign investors, Gati successfully won the confidence of Japanese investors towards India. Formation of a joint venture with Japan’s Kintetsu World Express is significant keeping in mind the present economic scenario across the world. “We were looking for a strong Indian partner to invest in this emerging logistics market. We found Gati a well established brand. The collaboration between Gati’s huge infrastructure and our global knowhow would definitely yield positive results for the new joint venture—GatiKWE,” said Satoshi Ishizaki, president and CEO, KWE. Speaking at an event in New Delhi for unveiling the details about the joint venture, Mahendra Agarwal, Founder and CEO, Gati, informed that the objective of Gati-KWE would be providing high-end 3PL and supply chain services including cold chain solutions. “From this JV, we will attract global manufacturers and business houses towards the Indian market, especially from Japan,” he said. He also informed that the infusion of Rs 265.7 crore would help Gati to upgrade its existing warehouses, setting up of temperaturecontrolled warehouses and introducing reefer vans/trucks (near 200). A part of this fund will also be utilised for deleveraging of the company’s debt and reduction in the interest costs pertaining to express distribution services. It may be recalled that before infusion of the fund, Gati had a debt of Rs 500 crore.

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Formation of a joint venture with Japan’s Kintetsu World Express is significant keeping in mind the present economic scenario across the world.

“Apart from our regular services, we are also focussing aggressively on eCommerce. We are optimistic that India-Japan Comprehensive Economic Partnership Agreement (CEPA), signed in 2011, would prove to be a great opportunity for the JV. It will also benefit the JV from the two countries $ 25 billion worth of bilateral trade by 2014 from the present $ 10.3 billion trade,” added Agarwal. The JV will be guided by a Board of directors, headed by Agarwal. Commenting on the present market scenario while speaking to Cargotalk, Agarwal maintained, “The bad phase is over. Now the time has come to venture out to tap new markets and new segments with innovative products and services.”

BLAZEFLASH COURIER INKS SERVICE TIE UP WITH ST COURIER-FRACNCH EXPRESS India’s leading courier company, Blazeflash Courier, has recently entered into a service agreement with south India based company ST Courier-Fracnch Express. Sachin Aggarwal, executive director, Blazeflash Courier, informed that according to the agreement, Blazeflash will provide delivery services to ST Courier-Franch Express in Delhi, UP, Punjab, Haryana, J&K, HP, Rajasthan, MP, Chandigarh, Bihar, Jharkhand, Orissa, West Bengal and North East states. On the other hand, ST Courier will offer delivery services to Blazeflash in Tamil Nadu, Kerala and Karnataka.

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Trade Associations News in Brief

FFFAI MEETS THE THEN

PRESIDENT OF INDIA Trade of the country. She was especially keen to learn about the newly launched Women’s Wing and the Young Forwarder Team of FFFAI, the new initiatives launched by the association for empowerment of women in the sector and youth emancipation, respectively.

A delegation of the Federation of Freight Forwarders Association in India (FFFAI),led by Shantanu Bhadkamkar, chairman, FFFAI, had a meeting with Pratibha Devisingh Patil, the then President of India, at Rashtrapati Bhavan, New Delhi. During this meeting, Patil showed keen interest in the presentation made by FFFAI,to acknowledge importance of the role played by the Custom House Agents Association and International Freight Forwarders in the International

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On behalf of FFFAI, Bhadkamkar presented a plaque as a memento of Golden Jubilee Celebrations of FFFAI to Patil. The other FFFAI team members of the Delegation were AV Vijaya Kumar, VS Pradeep, Nailesh Gandhivice chairmen; Amit Kamat, hon. secretary; Shankar Shinde, hon. treasurer; Raman Raj Sud, immediate past president; Radhakrishnan, advisor & convenor of Golden Jubilee Committee; Sailesh Bhatia, S Ramakrishna, Sujit Chakraborty-members of Golden Jubilee Committee; Philomena Pereira,Jyoti Bhadkamkar,Tanvi Bhadkamkarmembers of Women’s Wing and Mihir Bhadkamkar, member of Youth Wing. FFFAI is the apex body of 24 Custom House Agents’ Associations spread across India and represents Licensed Custom House Agents (Customs Brokers). In addition, organisations which are directly or indirectly connected with freight forwarding, shipping and commerce are also associated with FFFAI as allied members.

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News in Brief Success & Achievements

AISATS’ BENGALURU CARGO TERMINAL for security ACQUIRES TAPA’S recognition standards law enforcement agencies,and other stakeholders with the common aim of reducing losses within international supply chains. TAPA currently has over 600 member companies across Europe, Middle East, Africa, America and Asia. “AISATS has shown its determination to secure the supply chain by using TAPA’s best-known methods written by Global Security Supply Chain Experts. The certification of the AISATS facility demonstrates leadership within the supply chain and is another great step forward for TAPA India,” said Jason Teo, chairman, TAPA Asia. The FSR is a new global security standard to protect high value (L-R) Bobson, country head,TUV Rheinland presenting the TAPA consumer goods travelling on international roads and has Certificate to Henry Christopher, SVP Cargo, AISATS Bengaluru Operations been launched by TAPA to stamp out cargo crime levels Air India SATS Airport Services’ (AISATS) Bengaluru Cargo involving attacks on vehicles estimated to cost in excess of Terminal has recently been certified with ‘Freight Security US$ 10 billion per annum. Requirements Class A’ by Transported Asset Protection Association (TAPA) for adhering to TAPA’s stringent and high “AISATS brings in significant contribution to the efficient security standards for its warehouse operations, such as tight operations of the Bengaluru International Airport. We are access controls, secure handling of high-value products, high- delighted to hear about the TAPA certification received by tech equipment for cargo handling and installation of vital AISATS. This greatly reinforces our confidence in the cargo surveillance and alarm systems. TAPA is a global forum that operations at this airport,”added Hari Marar,president,Airport unites global manufacturers,logistics providers,freight carriers, Operations, Bengaluru International Airport Ltd. (BIAL).

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Infrastructure Update Logistics Services

shri kailash logistics completes the first phase of its Logistics Park near Chennai Shri Kailash Logistics, a subsidiary of Kochi-based Rs 400 crore Shree Kailas Group has completed the first phase of construction of its ambitious Logistics Park project at Orgadam near Chennai. The first phase of the project covers 3.25 lakh sq ft of warehouses and 25,000 sq ft of commercial complex. The company has a plan to set up a chain of logistics parks across the country by 2014. S Rajkumar

T

he Logistics Park is to be built on a site of around 35 acres and situated at a prime location on the National Highway 45 nestled between, to the one side, the vastly growing automotives sector and, to the other side, access to the quickly developing consumer area, close to the major Chennai port.

According to S Rajkumar, managing director of Shri Kailash Logistics, around 2,50,000 sq ft area has already been leased out to leading multinational automobile companies like Nippon Express India and Toyota Tsusho. Negotiations are on to lease out a third warehouse which is nearing completion, he added. The Orgadam logistics park provides common infrastructure facilities like spacious roads for diagonal movements of 40 ft containers, uninterrupted power supply, IT and communication connectivity, high-end round-the-clock security, water supply, drainage network and landscaped greenery and gardens.

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The location of the Logistics Park is most suitable for FMCG goods warehousing as it is near to GST 45 Road and Old Mahabalipuram Road and East Coast Road, where more that 70 per cent of the population of Chennai resides. All material coming into Chennai will pass through NH4 and need not go into the city. People can divert from a 200 ft wide road and come into Oragadam, the main junction for secondary transportation to all destinations in Chennai. Airport and Sea port connectivity through the Ring Road makes this site an ideal location for import and export. Rajkumar also informed that to meet the growing demand, the company is embarking on the Phase-II of this park, on a 49 acre land with a total of one million sq ft of warehousing space. This includes temperature-controlled warehouses, 1,00,000 sq ft of cold storage and 1,00,000 sq ft of custom-bonded warehouse, container yard and knowledge and training centre.

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Cover Story Emerging Segments

FASHION LOGISTICS

A high value market awaits integrated services

Apparels exports from India grew by approximately 14 per cent during 2011-12, touching about $13 billion figure, notwithstanding the economic slowdown in the traditional markets viz US and Europe. Indian exporters expect that the segment will witness a spurt in the near future. However, they require adequate support from logistics service providers to zoom in on emerging fashion logistics markets. Cargotalk presents stakeholders’ perspective…RATAN KR PAUL

I

n 2010-11, garment exports stood at $11.4 billion. According to A Sakthivel, chairman, AEPC and former president FIEO, Indian exporters have started diversifying to new markets like Japan, Israel, Russia, South Africa and Latin America to reduce dependence on the US and European nations. He also maintained that the current slowdown would see an end soon and Indian apparel exporters will be able to increase the volume in the current financial year significantly. He also maintained that to compete with other competitor countries, Indian exporters have to bring down the transaction costs. Moreover, end to end logistics services are also required to meet customers’ demands.

EXPLORING THE POSSIBILITIES Sakthivel maintained that product development by adopting new technologies and exploring new markets would be the primary 24 CARGOTALK

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tasks of AEPC. He, however, made it clear that traditional markets, namely US and Europe, would remain as important as before. The US and Europe together account for about 65 per cent of India’s total garment exports. To supplement Sakthivel, HKL Magu, MD, Jyoti Apparels, said, “The Ministry of Textiles is sending many delegations through Apparel Export Promotion Council in European and other virgin markets to explore the possibilities of doing business with them.” He also pointed out that the apparel export industry has made significant progress over the years, not only in respect of its contributions to industrial production, exports and generation of employment, but also in achieving a high degree of sophistication, quality upgradation, cost reduction and standardisation capable of withstanding stiff WWW.CARGOTALK.IN


“Indian exporters are committed to further improve and maintain quality and compliances by insisting on implementation of adequate and effective documented quality assurance systems and procedures, at all stages of designs, planning, procurement, manufacture, testing, finishing, packaging and exports,” Magu affirmed.

international competition. “It is essential that we increase our production and productivity, upgrade technology, modernise equipment, motivate and discipline our labour force so as to ensure efficient use of all factors of production to remain competitive in the international market. The guiding light of our export vision should be governed by the three principles, i.e., quality, price, competitiveness and timely delivery of shipments,” he said.

FOCUS ON TECHNOLOGY

He underlined that at a time when major economies of the world are reeling under the impact of recession and the Indian economy is suffering from low business confidence, the performance of the garments sector has been satisfactory. The sky would be the limit for this highly efficient textile and clothing sector of the Indian economy provided the Government extend the necessary fiscal and commercial relief to the industry. India is now the strategic choice with a vertically integrated, flexible and comprehensive production infrastructure. Skilled labour, production-friendly systems and stable economic environment have helped India deliver wide varieties and huge volumes at competitive prices for the global market.

He also stated that with increased focus on supply chain reliability and cost efficiency, technology is increasingly becoming a vital part of the logistics industry. Garments are the final link in a chain that starts from fibres and consequently have the maximum value addition and job creation possibilities. The typical cost structure of garments would have materials contributing about 55 per cent of the cost, while fabrication, overheads and finishing constitute 22, 15 and 9 per cent of the cost of garments, respectively. The Indian textile and clothing industries have one of the longest and most complex supply chains in the world, with as many as 15 intermediaries between the farmer and the final consumer. Each contributes not only to lengthening of lead times, but also adding to costs. HKL Magu

Magu, however, maintained that the present infrastructure, in general, and logistics, in particular, is sufficient in terms of its capacity. But it seems that capacity is not fully utilised. And there needs to be more co-ordination between different agencies providing logistics services to reap the maximum benefit of infrastructure. “The major recommendation is that all the concerned government authorities should work in co-ordination with each other as it is a matter of national interest which will create a superior image in the world market. Further, the Anand Sharma (extreme right) Minister of Commerce & Industry and A Sakthivel (centre), chairman, AEPC addressing a press meet at ‘Text Trends 2012’ in New Delhi

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Cover Story Emerging Segments

custom clearance time at airports and seaports should be minimum so that actual export happens at the earliest. The no-entry timings of heavy vehicles should be reduced and the export shipments should be allowed to be transported in no-entry timings as well,” Magu concluded.

Jeetendra Mohan

LOGISTICS SERVICE PROVIDERS LUFTHANSA CARGO According to Jeetendra Mohan, regional manager, sales and marketing, Lufthansa Cargo, despite a slowdown in Western markets, new destinations such as South Africa, Latin America have the growing demand for Indian apparels. However, US and EU markets still account for approx 50 per cent of the country’s export. “We see apparel and textile as a major vertical. The apparel and textile industry is very important for us, especially in Delhi and Bengaluru as both markets are dominated by apparels. Roughly 35 per cent of our business constitutes of apparels,” said Jeetendra. Besides belly capacities, Lufthansa has 16 freighters in Mumbai, Delhi, Chennai, Bangalore and Hyderabad. “So cargo capacities are always guaranteed from our end. We have specialised containers which are designed especially for hanging garments,” he added. Lufthansa Cargo ranks among the world’s leading cargo carriers. In FY 2011, the airline transported around 1.9 million tonnes of freight and mail, and sold 9.5 billion revenue tonne-kilometres. Lufthansa Cargo focusses on the airport-to-airport business. The cargo carrier serves more than 300 destinations in around 100 countries with its own fleet of freighters, the belly capacities of passenger aircraft operated by Lufthansa and Austrian Airlines, and an extensive road feeder service network.

Roughly 35 per cent of Lufthanda Cargo’s business constitutes of apparels

Ashish Kapur

For fashion/apparels, Lufthansa Cargo has end to end services. “Besides network and capacity, we also offer specialised service related to the fashion industry, namely: .td Pro (for standard freight), .td Flash (express product for urgent shipments), Midnite Wonder (express solution for personally supervised transit) and cd.Solutions (special product for direct deliveries). Lufthansa Cargo is gearing up to expand its services to some new destinations like Pune and Ahmedabad.

CATHAY PACIFIC AIRWAYS Ashish Kapur, regional cargo manager, South Asia, Middle East and Africa, Cathay Pacific Airways, said that with the slowdown in global economy, fashion industry has taken the biggest hit. With decreasing demand, the fashion industry is the worst affected. “Most 26 CARGOTALK

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of our garment exports are for the stores in the international markets and currently the inventories in these stores are high. Due to less demand, all brands have volumes of garments which are not being sold. In turn, the airfreight business is affected as there is no last minute rush to cater for the demand,” he underlined. Kapur, however, maintained that the potential of fashion logistics in India is huge. “India has the skill, infrastructure, quality and ability to generate volumes. In short, India has all the abilities to cater to the fashion industry needs across the globe,” he said. According to him, Cathay Pacific has a vast product range and different products have different requirements. For garments, in particular, the airline has ‘Garment on Hanger (GOH)’ product, which is used to ship WWW.CARGOTALK.IN


high value fashion products. “As fashion garments and their products play a huge part in the cargo volumes, we are working very closely with this industry. We will continue to cater to this market based on the increasing demand and their requirements,” he assured. Approximately 40 per cent of our Cathay Pacific’s uplift out of India is related to fashion. Garments and the products associated with fashion remain top ranking cargo (in terms of volume) round the year.

DB SCHENKER IN INDIA According to Sateshwar Tuteja, director, sales, key accounts and verticals, DB Schenker in India, the fashion logistics in India is very dynamic and growing rapidly every day. With increasing buying power and global exposure, the middle class in India is driving the growth of fashion and luxury in the country. The global brands are looking at India not just for their production facility, but as a consumer destination as well. The organised retail drive through the malls and stores has reached Tier-II cities and is now fast moving towards Tier-III cities, as well. Therefore, the market trend is showing a continuous upward swing undeterred by the global slowdown. “The potential and prospects of fashion logistics in India are immense, scope of which is not limited only to the freight side, but also to the warehousing and speedy delivery to the stores,” Tuteja said. According to him, the fashion industry in India is fast moving towards end-to-end logistics.

and is becoming an integral part of business, acting almost like a differentiator among competition. “The logistics services providers, who are sensitive towards these changes and have global standards as their benchmarks, will have an added advantage in their long-term partnership with top Indian and global brands,” he felt. He stressed that DB Schenker has a well established competence centre in Fashion & Retail and has over the years developed strong competence to cater to the demands of the fashion industry.

“At DB Schenker, we are not just handling shipments for our customers, but are working on customised solutions and account management. We value ourselves on having standards and best business practices, which are amongst the best in the industry. With the help of the Pan India network of offices, warehouses and logistics experts, DB Schenker is well positioned to provide global services to Fashion & Retail customers in India,” he asserted.

Sateshwar Tuteja

With the sudden increase in online portals, the logistics is playing an increasingly crucial role With increasing buying power and global exposure, the middle class in India is driving the growth of fashion and luxury in the country

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Cover Story Emerging Segments

SEQUEL LOGISTICS Yashpal Sharma

Sujoy Guha

Sujoy Guha, CEO and director, Sequel Logistics, emphasised that Sequel Logistics is India’s leading ‘Critical Logistics’ service provider, specialised in providing comprehensive solutions, services and products in Critical Logistics segment. This includes secured logistics for high value cargo in fashion and lifestyle segment, Sequel Direct (as against hub and spoke) for extremely time sensitive cargo in various industrial segments, Life-care for sensitive cargo in health care segment, specialised warehousing and ecodrive with reverse logistics. Operating in a multimodal environment, Sequel Logistics has developed expertise in the areas of warehousing, distribution, inventory management and related IT solutions only for ‘Critical and High Value’ cargo. “We have developed our own unique Track & Trace system, WMS and Order Management systems and have deployed SAP for our background functions. Our Critical Logistics services are sought by large manufacturers, wholesalers and retailers across the country and some of the most prestigious organisations,” Guha said.

SKYWAYS AIR SERVICES

CHALLENGES BEFORE FASHION LOGISTICS PLAYERS Commenting on challenges to meet logistics services for the fashion industry, Guha pointed out that earlier fashion used to be driven either through movies or with international influence. Today, with the advent of Internet, multiple television channels, ease of communication and a large young population, the globalised fashion trends have been localised in India. While ‘to be fashionable’ used to be the

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domain of citizens of few top cities in this country, today it has spread to the “B” and “C” class cities of India – creating logistical challenges. “With fashions changing every season and with inventory requirements in multiple shapes, shades and sizes – the supply chain for fashion logistics poses tremendous challenges – not only in the inventory pile up but also in terms of quick availability, loss in transit, etc,” observed Guha.

Yashpal Sharma, director, Skyways Air Services, viewed that the current trends in Fashion Logistics globally are not promising. This product’s demand has been on a decline since 2008. “We did see a small recovery in demand in 2010, but the same has evaporated again. With the decline in any product, its logistics gets directly impacted negatively. Thus, this segment of logistics will struggle to see a growth in the near short-term,” he said. Sharma underlined the fact that India historically has been predominantly an exporter with regard to garments and some of the other fashion products. However, lately with the influx of many overseas brands, the country has witnessed a decent change in this trend. “A lot of large brands import fashion goods into India giving LSPs more scope to expand in this segment,” he maintained. In Sharma’s opinion, the potential of fashion logistics has been changing in India the last 3-4 years. From being an export driven segment, it now offers a large scope in domestic warehousing and distribution. With some of the large customers sourcing, storing and WWW.CARGOTALK.IN


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Cover Story Emerging Segments

retailing on pan India basis, the scope of work for LSPs is ever increasing. “Currently, Skyways focuses more on the exports and imports of fashion products, but we are presently doing a detailed research on the possibility of adding domestic logistics for this industry. We would hope to add this in our current portfolio of products by mid 2013,” Sharma shared.

DHL’S ASSOCIATION WITH FASHION SHOW RS Subramanian

DHL has announced its partnership with the Lakme Fashion Week for the 2012 Winter Festive Season in August 2012. Through six years and 12 seasons, DHL’s partnership has strengthened as it collaborates with the best talent in the industry, and this season will present Shivan & Narresh and Swapnil Shinde. The designers will unveil an exclusive collection on DHL’s core theme of ‘SPEED’. Commenting on DHL’s association with the Lakme Fashion Week, RS Subramanian, country manager, DHL Express India, said, “Over the years, DHL has proved to be a strong partner for garment manufacturers, wholesaler, retailers and designers, providing speedy customised logistics solutions to meet the demands of the sector. The Lakme Fashion Week is the biggest event in the fashion calendar and our partnership is to showcase our commitment and expertise to the fraternity.” Around the world, DHL is the official logistics partner for 30 Fashion Week events spanning 15 cities across four continents, (Berlin, Paris, Milan, London, New York City, Tokyo, Zurich, Mexico City,

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Moscow, Toronto, Istanbul, Miami, Sydney and Mumbai). “In India, for the past five decades, DHL has been working with garment and textile manufacturers, providing the logistics support they need to ensure they remain cutting edge in a vibrant marketplace,” said Subramanian. With an international network spanning 220 countries and territories, DHL provides logistics solutions from material purchasing to sampling, to quality control (in production), warehousing and direct delivery to retailers and boutiques across the globe. “Since most garment production is concentrated in Asia and Eastern Europe, complex international shipping instructions and customs regulations have to be complied with, and this is DHL’s area of expertise,” added Subramanian. DHL’s customers include both large retail groups with complex distribution requirements as well as small, independent fashion boutiques requiring a one-off service. Within this partnership, DHL positions itself as the leading logistics company for the fashion industry – one of the world’s most creative, innovative and possibly fastest industries.

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Products & Services New Initiatives

TAIL LIFTS FROM

GANDHI AUTOMATIONS According to Gandhi Automations sources, Tail Lifts are very smooth to use. Using the Futura Retractable range of lifts, the company has incorporated the advantage of a flat/ horizontal platform. This is especially suited to roll cage operations. Here, the Anteo rail system eliminates any ‘Racking or Bounce’ of the lift frame and platform during deployment and retraction. Available in Futura version, one can choose to have the facility of tilting the platform at any level, a must where the operator loads or unloads on gradients. The platform is available with three way stops/leading edges in column lift style to the three open sides and the new Fully Automatic mechanically operated foot protector/Roll cage stop. The guard automatically rises and falls as the Tail Lift is operated.As the platform moves away from body floor level locks lift the guard, thus, preventing anyone on the platform from trapping or crushing

feet or toes,and at the same time holding roll cages from preventing falling as the lift descends to ground level.As the lift is raised back to floor level, the guard automatically falls level with the platform and body floor allowing smooth transition of roll cages into the vehicle. The company sources claim that Tail Lifts are very easy to use with Anteo automatic positioning in and out.

GENERAL INFORMATION Platform Steel platform with front ramps 400 mm high

Side ramps 390 mm deep 500 mm deep 600 mm deep

Mechanical Functions Steel guides with high yield limit, treated and chrome-plated Tail-lift deployment and stowage under chassis by means of double extension cylinder Tilt of platform in all position Self-lubricating bushings and chrome-plated pins

Hydraulic Characteristics Compact and soundproof hydraulic group with closing seal Two single-acting lifting cylinders with lubrication Two single-acting tilting cylinders with lubrication One double cylinder for Tail Lift deployment and stowage under chassis Bellows for cylinder protection Built-in-safety solenoid valves on every cylinder

Quick N Safe to offer FTL and Retail logistics services

Vinod K Jha

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Quick N Safe, a fast emerging logistics company in India, has decided to further strengthen its services by offering new solutions for Full Truck Loading (FTL) and Retail Chains.“We have strategised a growth plan of 20 per cent this year. With this aim, we are increasing our network strength further pan India. Our company is the only organised logistics organisation with pan India presence, which is having its headquarter in East India (Kolkata),’ said Vinod K Jha, CMD, Quick N Safe. The company is also integrating its secondary distribution network in entire East and Northeast, in such a manner, so that any B2B or B2C customer can get more than 95 per cent service level from it.

According to Jha, there are three major contributors for the growth of the logistics industry that include emergence of organised retail,increase in foreign trade and India’s position as a manufacturing hub. In the FY 10-11, Quick N Safe’s turnover was approximately Rs 75 crore. In FY 11-12, the company has closed its turnover at approximately Rs 83 crore, by registering a growth of 11 per cent. “In the past financial year, we could manage to maximise our profit, hitting three major areas,namely - a) identifying loss making business, where our yield per kg was low b) minimising overhead costs, and c) through controlling DEPS (Damage/Excess/Pilferege/Short).”

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Cargo Performance Export/Import

DELHI INTERNATIONAL AIRPORT CARGO DEPARTMENT, IGI AIRPORT, NEW DELHI (AIRLINE-WISE IMPORT/EXPORT CARGO PERFORMANCE FOR THE MONTH OF JUNE 2012) S. No. Airlines

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70

Jet Airways Cathay Pacific Emirates British Airways Lufthansa Cargo Airline Thai Airways Singapore Airlines Fedex Express Corpation Air India Etihad Airways Malaysian Airline System Swiss World Cargo(India) Qatar Airways KLM Kalitta Air Turkish Airlines Uzbekistan Martin Airline Virgin Atlantic Air France Finnair Saudia Austrian Airlines Japan Airlines Aeroflot Cargo Airlines China Eastern Airlines Philippine Airlines Unitop Airlines Air China United Airlines Aerologic Gulf Air Ariana Afghan Airlines Blue Dart Indigo Cargo Mahan Air Ethopean Airlines Asiana Airlines Eva Air China Air Sri Lankan Airlines Ltd Dhl Express Kam Air Air Mauritius China Southern Airlines Air Arabia Aerosvit Air Shagoon Fzc Air People I. (P) Ltd Oman Air Biman Bangladesh Kuwait Airlines Pakistan International Jetlite Air Astana Safi Airways Turkmenisthan Airlines Royal Jordanian Airlines UPS Flywell Aviation Pvt.Ltd Druk Air Iraqi Airways Kingfisher Airlines Ltd. Elal Israel Air Air Shagoon Axios Aviation Services Flywell Aviation Pvt.Ltd Air Shagoon Hercules Aviation Pvt Ltd Aero Space One

Total Cargo handled in June’ 11 % VARIATION

Export (with Peri.) (UPL)(MTs)

All wt. in mt.

Import

Total Cargo (MTs)

% of Total

1840 925 1696 1014 623 447 533 900 657 389 368 434 451 499 333 458 413 241 335 319 266 330 215 100 252 149 117 19 98 132 4 145 90 128 101 109 28 19 53 48 62 0 96 86 25 71 57 0 42 41 17 22 10 4 23 19 15 14 0 5 1 0 0 0 0 0 0 0 0 0

2068 1970 521 770 905 1028 839 364 255 404 383 267 249 192 333 150 184 329 212 169 124 25 116 228 67 167 176 232 117 57 144 2 55 3 21 8 86 91 57 58 39 99 0 1 55 0 2 57 12 2 25 8 19 21 1 0 1 0 13 0 0 0 0 0 0 0 0 0 0 0

3908 2894 2216 1784 1527 1475 1371 1263 912 792 752 701 700 691 666 608 597 571 547 488 390 355 331 328 318 316 293 252 215 189 147 147 144 131 122 118 114 111 110 106 101 99 96 87 80 72 59 57 54 43 42 30 29 26 24 19 17 14 13 5 1 0 0 0 0 0 0 0 0 0

13% 10% 7% 6% 5% 5% 5% 4% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

15889 16259 -2.28%

13781 15926 -13.47%

29670 30369 -2.30%

100.00%

CIVIL AVIATION MINISTER CALLS FOR DEVELOPING AIRCRAFT COMPONENT MANUFACTURING INDUSTRY Ajit Singh, Union Minister of Civil Aviation, recently maintained that there was a need to develop companies to manufacture small components and assemblies of aircraft in India. He was addressing a meeting of a group of manufacturers of aerospace products in Bengaluru. The Minister said the aerospace industry in the country is still in infancy stage. Presently, passenger aircraft manufacturing is being done by public sector and that private sector is also showing initiative in this direction. Besides, there are some manufacturing units which are in the process of manufacturing aircraft parts outsourced by foreign companies. The Minister added that these companies will have the potential to supply their products to foreign companies. The Minister expressed hope that the Indian aerospace industry will compete in the global market and will be capable of attaining international standards. With a view to provide special training for a large number of semiqualified personnel to meet the requirements of aerospace industry, the Ministry has undertaken several mutually beneficial bilateral projects for the benefit of youths. The Minister also stressed the need for a comprehensive civil aviation policy concerning issues pertaining to regulatory standards and the infrastructure that affect the aerospace industry.

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Cargo Performance Export/Import

MUMBAI CSI AIRPORT EXPORT/IMPORT CARGO TONNAGE HANDLED IN JUNE 2012

Weight in Metric tonnes Sr. Airline Export Import No. General Perishable Total 1 2 3 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

Jet Airways 1624.41 Emirates 1651.80 Cathay Pacific 1270.66 Lufthansa 693.30 Singapore Airlines 719.66 British Airways 768.64 Air India 390.42 Air France 486.99 Etihad Airways 687.30 Qatar Airways 328.44 Saudi Arabian Airlines 876.16 Swiss Intl. Airlines 398.50 Turkish Airlines 425.46 Ethopian Airlines 868.81 Thai Airways 288.61 Federal Express 410.60 Malaysian Airlines 429.33 Korean Air 411.18 UPS 114.97 Delta/KLM Airlines 68.45 Fin Air 315.63 Kenya Airways 314.37 South African Airlines 271.47 Gulf Air 98.41 Kuwait Airways 115.89 Air Mauritius 182.07 Charters 0.00 Blue Dart 139.01 Oman Air 110.17 Air Arabia 49.33 United/Continental Airlines 82.37 Indigo Air 114.83 EL-AL Airlines 62.63 Srilankan Air 68.25 Bangkok Airways 74.44 Yemenia Airways 41.57 Kingfisher Airlines 47.60 Pakistan intl Airlines 36.42 Iran Air 29.46 Baharin Airlines 33.06 Egypt Air 24.78 Air China 8.62 Royal Jordanian 9.41 Pakistan Airways 9.22 Austrian Air 0.00 NorthWest Airlines 0.00 Qantas 0.00 Others 35.61 GRAND TOTAL 15188.33

(Including TP Cargo)

Total

1693.57 3317.98 2724.70 6042.68 1787.68 3439.48 1013.70 4453.18 81.18 1351.84 1872.10 3223.94 511.02 1204.32 1500.30 2704.62 167.98 887.64 1305.50 2193.14 630.49 1399.13 687.32 2086.45 1264.21 1654.63 59.85 1714.47 235.94 722.93 620.74 1343.67 74.85 762.15 548.09 1310.24 388.52 716.96 405.92 1122.88 85.09 961.25 84.54 1045.78 172.91 571.41 427.24 998.65 85.97 511.43 364.59 876.02 2.94 871.75 3.87 875.62 101.77 390.38 406.30 796.68 58.07 468.67 326.27 794.94 21.66 450.99 261.32 712.31 1.39 412.57 76.33 488.90 0.00 114.97 347.54 462.51 96.94 165.40 178.37 343.77 18.75 334.38 0.00 334.38 4.08 318.45 4.29 322.74 16.47 287.94 16.77 304.71 180.58 278.99 1.83 280.82 97.69 213.57 15.39 228.97 19.53 201.60 2.17 203.77 0.00 0.00 202.54 202.54 0.00 139.01 54.92 193.94 53.49 163.66 0.87 164.53 103.53 152.86 0.79 153.65 2.93 85.30 51.86 137.16 3.74 118.57 12.06 130.62 1.81 64.44 62.79 127.23 3.49 71.74 20.73 92.46 0.00 74.44 2.23 76.67 19.07 60.64 0.00 60.64 0.00 47.60 0.00 47.60 3.30 39.73 3.13 42.86 9.11 38.57 0.91 39.48 0.00 33.06 0.00 33.06 0.07 24.85 2.74 27.59 0.00 8.62 3.07 11.69 0.00 9.41 0.13 9.54 0.00 9.22 0.07 9.29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15.76 51.37 642.09 693.46 8015.58 23203.91 14315.95 37519.86

EXPORT/IMPORT CARGO TONNAGE HANDLED IN MAY 2012 Cargo Handled in ....May’12 13886.13 8283.21 22169.34 14587.20

36756.54

EMPOWERING DGCA OFFICE TO ‘CIVIL AVIATION AUTHORITY’ SOON Ajit Singh, Union Minister of Civil Aviation has stated that the Ministry is contemplating to give more functional autonomy to the existing Directorate General of Civil Aviation (DGCA) by establishing Civil Aviation Authority (CAA) under an Act of Parliament which will soon be given a final shape. Besides this, there is a proposal to restructure the Bureau of Civil Aviation Security (BCAS) and to constitute a dedicated security force which will soon see the light of the day. Singh also maintained that the Government is in the process of providing air connectivity to remote and interior areas of the country including the North Eastern Region and Tier II and Tier III cities. He made his comments while addressing the members of the Parliamentary Consultative Committee of the Ministry Civil Aviation Ministry in Bengaluru. Singh said that the new policy instrument in the form of Route Dispersal Guidelines is under consideration. It includes creation of Essential Air Services Fund (EASF) for providing direct subsidy to encourage domestic airlines to fly on these remote and interior routes. Singh undelined the need to develop India as an international hub for civil aviation and said that the Ministry of Civil Aviation has initiated action in this regard, which includes revisiting the policy regarding bilateral air service agreements with different countries and also rationalisation of all Bilaterals and traffic entitlements on international routes to Indian carriers and rationalisation of traffic on domestic routes.

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Cargo Performance Airports in India

TRAFFIC STATISTICS DOMESTIC FREIGHT Freight (in Tonnes) For the Month S. No. Airport

(A) 11 International Airports 1 Chennai 2 Kolkata 3 Ahmedabad 4 Goa 5 Trivandrum 6 Guwahati 7 Calicut 8 Jaipur 9 Srinagar 10 Amritsar 11 Portblair Total (B) 6 JV International Airports 12 Delhi (Dial) 13 Mumbai (Mial) 14 Bangalore (Bial) 15 Hyderabad (Ghial) 16 Cochin (Cial) 17 Nagpur (Mipl) Total (C) 9 Custom Airports 18 Pune 19 Lucknow 20 Coimbatore 21 Patna 22 Visakhapatnam 23 Trichy 24 Mangalore 25 Chandigarh 26 Varanasi 27 Bagdogra 28 Madurai 29 Gaya Total (D) 20 Domestic Airports 30 Bhubaneswar 31 Indore 32 Jammu 33 Agartala 34 Raipur 35 Imphal 36 Vadodara 37 Ranchi 38 Bhopal 39 Aurangabad 40 Leh 41 Udaipur 42 Rajkot 43 Tirupati 44 Dibrugarh 45 Jodhpur 46 Silchar Total (E) Other Airports Grand Total (A+B+C+D+E)

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For the period April

April 2012

April 2011

% Change

2012-13

6748 6447 2811 239 130 525 18 517 175 6 228 17844

7087 6397 1059 262 138 656 27 626 150 7 185 16594

-4.8 0.8 165.4 -8.8 -5.8 -20.0 -33.3 -17.4 16.7 -14.3 23.2 7.5

6748 6447 2811 239 130 525 18 517 175 6 228 17844

7087 6397 1059 262 138 656 27 626 150 7 185 16594

-4.8 0.8 165.4 -8.8 -5.8 -20.0 -33.3 -17.4 16.7 -14.3 23.2 7.5

16453 14987 6579 2740 728 393 41880

15759 15894 6497 2654 759 418 41981

4.4 -5.7 1.3 3.2 -4.1 -6.0 -0.2

16453 14987 6579 2740 728 393 41880

15759 15894 6497 2654 759 418 41981

4.4 -5.7 1.3 3.2 -4.1 -6.0 -0.2

2124 165 474 167 111 0 37 233 39 152 67 0 3569

2074 303 510 230 106 0 21 85 32 91 49 0 3501

2.4 -45.5 -7.1 -27.4 4.7 76.2 174.1 21.9 67.0 36.7 1.9

2124 165 474 167 111 0 37 233 39 152 67 0 3569

2074 303 510 230 106 0 21 85 32 91 49 0 3501

2.4 -45.5 -7.1 -27.4 4.7 76.2 174.1 21.9 67.0 36.7 1.9

269 339 109 480 214 410 220 134 86 75 147 0 38 1 36 1 25 2584

249 241 98 499 194 444 180 120 68 119 220 0 57 0 28 7 29 2553

8.0 40.7 11.2 -3.8 10.3 -7.7 22.2 11.7 26.5 -37.0 -33.2 -33.3 28.6 -85.7 -13.8 1.2

269 339 109 480 214 410 220 134 86 75 147 0 38 1 36 1 25 2584

249 241 98 499 194 444 180 120 68 119 220 0 57 0 28 7 29 2553

8.0 40.7 11.2 -3.8 10.3 -7.7 22.2 11.7 26.5 -37.0 -33.2 -33.3 28.6 -85.7 -13.8 1.2

129 66006

110 64739

17.3 2.0

129 66006

110 64739

17.3 2.0

2011-12

% Change

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TRAFFIC STATISTICS INTERNATIONAL FREIGHT Freight (in Tonnes) For the Month S. No. Airport

(A) 11 International Airports 1 Chennai 2 Kolkata 3 Ahmedabad 4 Goa 5 Trivandrum 6 Guwahati 7 Calicut 8 Jaipur 9 Srinagar 10 Amritsar 11 Portblair Total (B) 6 JV International Airports 12 Delhi (Dial) 13 Mumbai (Mial) 14 Bangalore (Bial) 15 Hyderabad (Ghial) 16 Cochin (Cial) 17 Nagpur (Mipl) Total (C) 11 Custom Airports 18 Pune 19 Lucknow 20 Coimbatore 21 Patna 22 Visakhapatnam 23 Trichy 24 Mangalore 25 Chandigarh 26 Varanasi 27 Bagdogra 28 Madurai 29 Gaya Total (D) (E)

17 Domestic Airports Other Airports Grand Total (A+B+C+D+E)

For the period April

April 2012

April 2011

% Change

19410 3397 847 181 4582 0 2716 20 0 68 0 31221

22980 3307 995 213 3633 0 2003 29 0 405 0 33565

-15.5 2.7 -14.9 -15.0 26.1 35.6 -31.0 -83.2 -7.0

19410 3397 847 181 4582 0 2716 20 0 68 0 31221

22980 3307 995 213 3633 0 2003 29 0 405 0 33565

-15.5 2.7 -14.9 -15.0 26.1 35.6 -31.0 -83.2 -7.0

31410 38358 11991 3745 2716 34 88254

34099 40352 11874 3768 3561 15 93669

-7.9 -4.9 1.0 -0.6 -23.7 126.7 -5.8

31410 38358 11991 3745 2716 34 88254

34099 40352 11874 3768 3561 15 93669

-7.9 -4.9 1.0 -0.6 -23.7 126.7 -5.8

0 73 39 0 0 225 0 0 0 0 0 0 337

0 31 34 0 0 166 0 0 0 0 0 0 231

135.5 14.7 35.5 45.9

0 73 39 0 0 225 0 0 0 0 0 0 337

0 31 34 0 0 166 0 0 0 0 0 0 231

135.5 14.7 35.5 45.9

0 0 119812

0 0 127465

-6.0

0 0 119812

76 0 127465

-6.0

2012-13

2011-12

37

% Change

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Infrastructure Update Civil Aviation

GAGAN

project of aai Final System Acceptance Test completed in Bengaluru

T

The GPS Aided Geo Augmented Navigation (GAGAN), which is expected to provide a major technological boost to the civil aviation sector in India, has recently witnessed its Final System Acceptance Test in Bengaluru, in the presence of Ajit Singh, Union Minister of Civil Aviation; V P Agrawal, chairman, AAI and V Somasundaram, member (ANS), AAI. CT BUREAU

he GAGAN project is jointly being developed by the Indian Space Research Organisation (ISRO) and the Airport Authority of India (AAI) in accordance with ICAO’s strategic plan to achieve smooth transition to Satellite-based Navigation and seamless Air traffic management across the continents. GAGAN is the Indian SBAS (Satellite Based Augmentation System). GAGAN is designed to provide the additional accuracy, availability, and integrity necessary to enable users to rely on GPS for all phases of flight, from en route to approach, for all qualified airports within the GAGAN service volume. It will also provide the capability for increased accuracy in position reporting, thereby making possible high-quality Air Traffic Management (ATM). Interestingly, GAGAN will provide benefits beyond aviation to all modes of transportation, including maritime, highways, railroads and public services such as defence services, security agencies, and disaster recovery management by aiding in search and rescue to locate the disaster zone accurately, telecom industry and personal users of position location applications. According to the AAI sources, India is the fourth country in the world, after USA, Japan and Europe to take up the challenge of establishing the regional SBAS that will redefine navigation over India and adjacent regions. The footprint of GAGAN will cover a huge area beyond the Indian territory, from Africa to Australia and can support seamless navigation across the globe.

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(L-R) Ajit Singh, Union Minister of Civil Aviation;VP Agrawal, chairman, AAI and other dignitaries during the Final System Acceptance Test of GAGAN in Bengaluru

The system is also interoperable with other such systems of WAAS of USA, EGNOSS of Europe and MSAT of Japan. India being located in the equatorial region, GAGAN is the first system in the world that is being developed to serve the equatorial anomaly region. The total cost of the GAGAN project is estimated to be Rs 774 crore. The first phase, known as Technology Demonstration System (TDS), was completed in 2007 at a cost of Rs 148 crore. The second and final operational phase, commenced from August 2009, is estimated to cost Rs 626 crore. The objective of the Final System Acceptance Test (FSAT) is to evaluate the system performance

and its critical parameters in the integrated live environment using satellite signals and groundbased systems on integrity, accuracy, continuity and availability for aviation use. A network of precisely surveyed 15 ground reference stations, INRES (Indian Reference Stations), is strategically positioned across the country to collect GPS satellite data. The intense test involves data collected from all the 15 ground reference stations located across the country and satellite signals to provide necessary augmentations to the GPS standard positioning service (SPS) navigation signal. “The successful completion of the Final System Acceptance Test will pave the way for further process of systemcertificationbyRegulatoryauthoritiesandformal commissioning by June 2013,” said AAI sources. WWW.CARGOTALK.IN


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Lead Story CEO Talk

REVERSE

LOGISTICS

An untapped area of complete supply chain management

Reverse Logistics in India has been an afterthought. Forward logistics in India has been so broken and fragmented that the term reverse logistics has been used by many players as a sales & marketing word to get more business. However, it requires serious attention to complete the orbit of the supply chain and logistics services. Hitendra Chaturvedi, Founder & MD, RLC, explains why... RATAN KR PAUL

L

ogistics in India has a huge potential (3 per cent of the GDP), but the country is constrained by infrastructure issues, labour issues and government regulations that are holding it back. India’s reverse logistics potential alone (logistics service revenue only) is between $4 and $6 billion. However, India’s logistics industry is still highly fragmented and there are no professional and global players emerging in a true sense, Chaturvedi feels. “Education is the biggest challenge the industry practitioners are facing in India regarding reverse logistics. Companies were just not aware of the detrimental impact of poor reverse logistics on customer service, costs, revenue, productivity and finally profitability,” Chaturvedi maintains. However, more and more companies are realising that proper reverse logistics can be a huge catalyst for growth. As a result, the market in India is now maturing fast.

RLC provides a one stop, technology-enabled, comprehensive reverse supply chain solution by utilising its pan-India hub and spoke model

Hitendra Chaturvedi

“I call reverse logistics as reverse supply chain, since ‘logistics’ is a misnomer when defining a continuum. In a layman’s term – everything happening after the Particle Swarm Optimisation (POS) is part of the reverse supply chain,” said Chaturvedi. RLC provides a one stop, technology-enabled, comprehensive reverse supply chain solution by utilising its pan-India hub and spoke model and specialised work force that is enabled through its proprietary technology platform. RLC’s brand, ‘GreenDust’ allows online and offline disposition of such returned items to endcustomers. “RLC’s singular goal is to help companies make their reverse logistics process a competitive advantage, allowing them to focus on their core competency of delighting customers through world class products,” observes Chaturvedi. RLC offers services that span, reverse call centre, customer/dealer/warehouse pick-up and transportation, pan-India warehousing, inventory management services, sorting, triage, repair (up to level 4), refurbish, re-pack 40 CARGOTALK

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services, re-sale, disposition, e-waste service, field service, warranty and extended warranty, consulting and business intelligence services focussed on improving reverse supply chain. “We will continue to educate our business partners on the need of improving reverse supply chain and how important it is for their bottom line. We will also continue to push the benefits that such business partners can bring to the environment by properly managing their reverse supply chain,” he feels. According to him, improper, unorganised, short sighted reverse supply chain management is the biggest reason for increased waste in the industry. “We will continue to appeal to companies to start thinking responsibly for our children’s future by implementing a responsible reverse WWW.CARGOTALK.IN


supply chain,” he adds. RLC also emphasises on education, the importance of reverse logistics, infrastructure and enforcing green laws. According to Chaturvedi, the country has laws but proper enforcement is lacking. Recently, RLC has tied up with Acer to streamline their returns. In today’s marketplace, customer returns are a serious liability to any business. The challenge lies in processing returns at a proficiency level that allows a quick, efficient and cost-effective collection and return of merchandise. RLC takes charge of the pan India acquisition of Acer’s returns, factory seconds, surplus and discontinued models. This is further repaired, refurbished, repacked and sold through RLC’s organised retail channel, GreenDust.

CASE STUDY

ON ASSET RECOVERY AND LIQUIDATION OF RETURNED, DEFECTIVE AND SURPLUS GOODS

“I do not blame Indian OEMs or retailers for not losing sleep over this. Indian companies have been too busy ensuring that their forward supply chain is in place so they can deliver products to their customers. They don’t have time or the directive to look at orphaned/returned goods that sit in some warehouse just rotting away,” says Chaturvedi. Moreover, managers in most companies do not have clear performance measures or KRA’s tied to systematic asset disposition/liquidation, thereby, not giving them any incentive to focus on it. The net result is that the problem keeps on getting bigger and bigger. He further explained the issue with a personal experience (an interaction with a senior executive of a company). The senior executive of the company was desperate to get rid of his defective/obsolete inventory but could not do anything. This inventory was growing at an alarming rate as the product was a fast changing IT product. As inventory grew, it became even harder to liquidate as any singular action of liquidation would have brought the issue to the attention of the

RLC’s studies have indicated that India experiences 4 to 5 per cent return rate and the value of returned goods is anywhere between INR 60,000 and 75,000 crore. Asset recovery of defective/surplus goods in India ranges from 2 per cent to 50 per cent (of landed cost) and processed through highly unorganised channels that is fraught with leakage and a total disregard to environmental norms. Companies have liquidated stocks for convenience, end of quarter books and warehouse clearing fire fights, where maximising asset recovery is not the intent.

In the absence of proper controls, the process to categorise a return/defective is highly suspect

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Lead Story CEO Talk

disposition, it is the company that loses the most. Chaturvedi highlights some more examples in this regard. He says that in the absence of proper controls, the process to categorise a return/defective is highly suspect. Good products have been categorised as defective and liquidated. For example, we have seen instances where a company has lost 10 per cent of total value of returns because good stock was categorised as defective and sold. Buyback/exchange programmes become a loss making project due to “leakage” in the system. No process owner wants returned goods sit for a long time in the warehouse. It has been noticed that many good products turn defective either through cannibalisation or just bad warehousing practices. “We have seen many instances, where on an average over 25 per cent of stocks just wither away over time and convert into scrap. In the absence of an organised player, liquidation is left to local management, where a lot of time and effort is spent on identifying such local liquidators,” he points out. The possibility of a nexus between local level management and local liquidator(s) is more worrying, he opines. Local, unorganised liquidation has another detrimental side effect for the If properly and systematically executed, yield by liquidating returned/defective and surplus products company. It has been found that over 30 can be increased 2-4 times per cent of such defective products have a way of coming back into the new product promoters. He did what other managers in his position would have channel. This not only creates bad brand done – kept old, worthless IT inventory on the books with the original image, but also cannibalised new product sales. It furthermore forces purchase price as they showed up as an asset of the company knowing the company to service such products with serious cost implications. well that it was a ticking time bomb. “He did another thing – started In companies where returns are written off the books and the asset to look for another job,” Chaturvedi underlines the consequences of recovery is just another line item called “other income”, it gives a the fact. free hand to nefarious employees to twist the system to their own advantage. According to Chaturvedi, if this company would have put a systematic reverse supply chain process in place and liquidated such stocks “There are few steps you can take pledge to look at returns strategically,” regularly, they would have: observes Chaturvedi. According to him, returns may be a small fraction 1) recovered higher asset value as the IT assets would not have of a company’s total sales, but they can have a very large impact on the depreciated, organisation. “Identify a process owner who is empowered. Get complete 2) would not have to pay for extra inventory space, transparency of returns inventory across the system and their condition 3) would not have to lock money into worthless assets – money through a proper channel and audits. Be bold and make quick decisions that could have been used for growth, on liquidation of current aging stocks. Don’t let liquidation decisions be 4) would not have to pay people just to look after worthless made at local levels,” he advocates. inventory, and 5) would have been compliant with e-waste regulations.

In the absence of a structured process of asset liquidation/ 42 CARGOTALK

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According to Chaturvedi, if properly and systematically executed, yield by liquidating returned/defective and surplus products can be increased 2-4 times. That would mean adding another 1-2 points to profitability. WWW.CARGOTALK.IN


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Study & Survey India- EU Trade

ICRIER UNVEILS

enhance India-EU CRUCIAL ASPECTS to bilateral trade cooperation

In view of a broad-based Bilateral Trade and Investment Agreement (BTIA) between India and the European Union (EU) heading towards completion, Indian Council for Research on International Economic Relations (ICRIER) has undertaken a study on ‘Enhancing Bilateral Trade, Investment and Collaboration in Services: India and European Union’. This study focusses on assessing bilateral trade and investments in services, aimed at providing policy recommendations. RATAN KR PAUL

T

he ICRIER study on India-EU bilateral trade covers five service sectors of interest to India and EU, namely - IT/ ITes, logistics, energy, retail and professional services. The study examines trade potential, investment prospects and collaborations in these service sectors, analyses the pattern of bilateral trade flows, barriers faced in each other’s markets and identifies areas for future cooperation.

Speaking at a meeting jointly organised by FICCI, ICRIER and Konrad Adenauer Stiftung (KAS) in New Delhi, Dr Arpita Mukherjee, professor, ICRIER, raised some of the key issues which require immediate attention of the stakeholders and policymakers of both India and EU. “When it comes to IT/ITes, both India and EU have interest in this sector. But labour mobility restrictions in EU and the complex procedures to obtain visa and work permits in India are a deterrent. Also, the EU with its stringent data recognition policies does not recognise India as a data adequate nation which proves to be a hindrance,” said Mukherjee.She also maintained that to accelerate trade between India and EU, the logistics sector expects more investment, skill development and technology transfer after the signing of the Bilateral Trade and Investment Agreement (BTIA).

OBJECTIVES OF THE STUDY  Provide an overview of

investment barriers faced by the EU companies in India and Indian companies in the EU

services, trade in services and global competitiveness of India and the EU

 Analysing the pattern of

bilateral trade and investment flows in services



Recommend measures to remove the barriers through (a) domestic reforms (b) India-EU negotiations



What the industry should do?

 What can be the potential

trade, investment and collaborations in the context of global developments? Identifying trade and

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In addition, retail is a sensitive sector in India whereas EU is the demander. “In India, although there is 100 per cent foreign direct investment (FDI) in wholesale and single brand retail, FDI is still banned in multi-brand retail. It is proposed that multi-brand should have 51 per cent of FDI,” she underlined.

NON-TARIFF BARRIERS IN TRANSPORT AND LOGISTICS According to ICRIER, the definition of transport and logistics services and its coverage has evolved over the years. It broadly covers different forms of transport such as roads, railways, air and maritime; transport infrastructure like ports and airports; transport-related construction like road construction; and services auxiliary to different modes of transport like storage, warehousing and cargo handling. The EU follows a broad definition of logistics services which includes core logistics services such as storage and warehousing, related freight logistics services like maritime freight transport services, and non-core logistics services such as courier/express delivery services and technical testing services. The EU seeks to get commitments in a broad range of transport and logistics services from its trading partners in WWW.CARGOTALK.IN


the WTO and Free Trade Agreements (FTAs) so that companies from EU member states have wider market access and are able to offer integrated services. The EU also seeks non-discriminatory access to transport infrastructure and facilities and regulatory certainty and transparency. However, the ICRIER study says that not only are there barriers to international trade, but there are also several impediments to intrastate movement of goods in the country because India is not a single market. For example, it takes approximately $432 (€306) to export a container from Kochi, but the figure is about three times higher for Jaipur ($1,289 or €914). The study found that transportation accounts for 62 per cent of the total logistics costs in India. It pointed out that for inter-state transportation, a typical goods carrier has to get clearance from around seven different agencies, including the sales tax department of respective states, regional transport officers, state excise departments, forest departments and civil supplies departments.

BILATERAL TRADE BETWEEN INDIA AND EU The bilateral trade between India and EU in 2011 was US$ 108.8 billion which increased from US$ 83.46 billion in 2010. The exports in 2010 were US$ 41.15 billion which increased to US$ 54.74 billion in 2011. On the other hand, imports in the

Anil Khanna

year 2010 were US$ 42.32 billion, which also increased to US$ 54.07 billion in 2011. For the period January- April 2012, export was US$ 16.17 billion and import was US$ 18.53 billion. The total trade for this period was US$ 34.7 billion.

During a survey, EU companies were asked to list the barriers that they face in India on a scale of 1 to 5, with 1 being the most restrictive barrier. Most of the companies listed “most restrictive” and “restrictive” barriers in each category of service provision. This was a multiple-choice question and companies referred to more than one barrier depending on the type of service that they provided. For logistics companies, the adequacy and quality of the infrastructure were major barriers.

Dr Arpita Mukherjee

The survey found that there are FDI restrictions in certain sectors such as air transport and railways. Significantly, companies did not find this a major barrier in the case of airlines, because several countries, including EU member states, have FDI restrictions on airlines. Logistics service providers pointed out that the lack of physical infrastructure is a major barrier. Although, the government has focussed on investment in improving highways, there are still capacity shortages and the quality of state highways and local roads need to be improved. The poor road conditions affect the longevity of vehicles and the congestion at ports and lack of hinterland connectivity cause delays.

INDIA-EU BTIA TO BE CONCLUDED BY THE END OF THIS YEAR Recently, the Union Minister for Commerce, Industry and Textiles, Anand Sharma, met the European Union (EU) Trade Commissioner Karel De Gucht at Brussels and reviewed the status of India-EU Bilateral Trade and Investment Agreement negotiations. Both sides agreed on a roadmap to conclude the negotiations by OctoberNovember this year. According to Sharma, after a number of rounds of

negotiations, issues of concern to both sides have been identified. “We must devote our energies to address these issues as expeditiously as possible. India is keen on a successful and balanced outcome of the negotiations at an early date,” he said. Both sides expressed their views regarding the areas of mutual concerns. The Indian side sought comfort and clarity on the market access being provided to India in Modes 1 and 4 and asked for assurance that these are actually effective on the ground. In Mode-1, India would need to be declared as data secure in order to provide access. Sharma reiterated that India is data secure, a fact validated by the presence of major international companies which have set-up their offices and R&D centres in India. Similarly, on Mode-4, i.e., movement of natural persons for providing services, India pushed for better access and removal of safeguard clauses that may hamper the actual realisation of concessions offered by EU. India also pushed for more access for domestic industry and Indian agricultural products. 45

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Family Album Celebration

Gati-Kintetsu Express hosts evening function to celebrate JV formation Recently, Gati has concluded the joint venture agreement with Japan’s Kintetsu World Express to form Gati-Kintetsu Express. To celebrate the occasion, GatiKintetsu Express organised an evening function in Gurgaon (Haryana) for its customers.

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Family Album Corporate Social Responsibilities

Rotary Club and GMR jointly organise Blood Donation Camp at IGI Airport Recently, Rotary Club of Delhi (South East) organised two Blood Donation Camps in association with GMR lead DIAL at the Cargo Complex of IGI Airport, New Delhi. A large number of trade practitioners extended their active support to this noble cause.

Blue Dart completes 10th Batch of ‘Blue Edge: Empowering Lives’ Blue Dart recently celebrated the completion of 10th Batch of ‘Blue Edge: Empowering Lives’, which is Blue Dart’s flagship sustainability programme under ‘GoTeach’.Yogesh Dhingra – COO & FD, Blue Dart Express was the chief guest for this function held at Blue Dart Headquarters in Mumbai.

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Market Trends Export Import

first quarter of fy 2012-13 shows slight decline Exporters expect growth from October 2012

Rafeeque Ahmed

According to the figures published by the Ministry of Commerce, export stood at US$ 25.07 billion in June 2012, registering a decline by 5 per cent compared to the June 2011 figure. The cumulative figure for the period of April-June 2012 shows exports at US$ 75.20 billion, registering a decline of 1.7 per cent as compared to the same period in 2011. Recently published IIP data, however, indicate better times ahead…

D

uring April-June 2012 quarter, petroleum registered a growth of 12.9 billion, engineering goods (14.6 billion), gems & jewellery (10 billion), drugs (2.1 billion) and readymade garments (3.2 billion). In percentage terms, during the said quarter, rice registered a growth of 73 per cent, spices (32 per cent), drugs (13.4 per cent), oil meals (13.2 per cent) and fruits & vegetables

(9.53 per cent).

During April-June 2012, vegetable oil registered a growth of 49.8 per cent, sulphur (37 per cent), project goods (27 per cent), transport equipment (21.6 per cent), and artificial raisin (21.3 per cent). In absolute terms, during the quarter period of April-June 2012, petroleum registered a growth of 41.5 billion, gold & silver (9.4 billion); machineries (8.5 billion); pearls (4.6 billion) and electrical goods (7.1 billion). Reacting to the Trade Data for the month of June, 2012 and the first quarter of the current fiscal year, M Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO), said that the export figures are on the expected lines as contraction in global demand and deceleration in manufacturing are the primary reasons for decline in exports. However, Index of Industrial Production (IIP) data released recently, pointed to a modest recovery in manufacturing during May which will help exports in the next few months. “Moreover, the global situation is slowly improving and we expect exports to be at a take-off stage by October this year,” he observed. Ahmed expressed confidence on achieving the export target of US$ 350 billion fixed for the current financial year. The reduction in imports would help to manage the trade deficit which can be kept below US$ 150 billion during 2011-12. According to him, initiatives taken in the Foreign Trade Policy will take little time to bear its fruit and Indian exporters can hope for over 30 per cent growth in the second half of 2012-13. “However, the cost of credit

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is still a cause of concern for the export sector and a general reduction in the interest rate would benefit manufacturing as well as exports,” added Ahmed. Commenting on data of IIP for May 2012, Ahmed said that a moderate recovery in manufacturing was a good sign for the economy as well as exports. “The 2.5 per cent growth in manufacturing, though still below our expectation, shows that the coming months would be better for exports,” he maintained. The FIEO president welcomed the special incentive package announced by the Government to promote large scale manufacturing in electronic system design and manufacturing (ESDM) sector. In his opinion, incentives given to units both in SEZ as well as non-SEZ will encourage Indian entrepreneurs to enter into manufacturing of ESDM products spurring growth of electronic exports. He viewed that this initiative will enable India to leverage its market leadership in software sector for promoting hardware exports as well. “With the vast resources of technical manpower available, we are all set to take the advantage of dislocation of such industries for competitive manufacturing in India which will help the country to reduce its dependence on large volume of electronics imports,” he said. WWW.CARGOTALK.IN


Shipping & Ports Industry Events

PORT PIPAVAV

CHALKS OUT PLANS for decongestion during monsoon

C

Every year, ports in the west coast of India face congestion issues during the monsoon season. With this fact in mind, recently, APM Terminals Pipavav organised a customer meet in New Delhi with an objective to discuss mutually beneficial solutions for decongestion during the monsoon season.

ontainer volumes in India have grown, and at Port Pipavav, it has grown steadily year after year since 2009 when the port started marketing its new facilities. The port has registered a 21 per cent increase in container volumes in the first quarter of 2012 compared to Q1 2011. Simultaneously, rail volumes have grown especially to ICDs located in north India. The port aspires to assist the industry as well as its customers to plan ahead and minimise delays due to congestion. “During the monsoon season, the industry usually faces congestion issues.We want to develop solutions along with our customers so that we can plan in advance and make better use of available options,” said C K Rajan, head - Container Business, APM Terminals Pipavav. The meet was attended by more than 200 customers with representation from CHAs, forwarders, shipping lines, transporters, train operators, ICD/CFS operators and others. Captain A K Kaura, president, North India Steamer Ship Association (NISSA), was present on the occasion and shared his thoughts from users’ point of view.

APM Terminals Pipavav officials and other dignitaries addressing the customer meet

Located in Gujarat, APM Terminals Pipavav is one of India’s

an international network of ports and terminals belonging

fastest growing ports. APM terminals bought a majority

to APM Terminals of the Moller-Maersk group. The port

stake in the company in 2005 and after modernising its

has sales offices in Ahmedabad, New Delhi, Ludhiana and

facilities, Port Pipavav began marketing its services to

Jaipur to take care of customer requirements The sales

clients based in northwest India. The port has steadily

team also includes a Customer Service manager at the port,

improved cargo volumes, number of clients, road and rail

who interacts with the operations team, the Customs and

connectivity and storage facilities. Port Pipavav is a part of

customers to facilitate smooth movement of cargo.

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Shipping & Ports Trade Associations

INTERNATIONAL CONCLAVE

IN CHENNAI

urges for strengthening port connectivity

Recently, the Federation of Indian Export Organisation (FIEO) organised a ‘National Conclave on Shipping’ at Chennai. The primary objective of this Conclave was to discuss issues concerning various legislations impacting port functioning.

The National Conclave was supported by the Chennai Port Trust, APM Terminals, Container Corporation of India and some other organisations. In view of a possible conflict of liabilities arising from references to different documents; development of port infrastructural facilities and services for multimodal transport; impetus to coastal shipping; policy on rail connectivity; setting up of an Infrastructure Ministry; simplification on customs procedures and formalities, the conclave was very crucial for the shipping and port industry, especially in India.

SURVIVING THE ECONOMIC SLOWDOWN

India’s seaborne foreign trade is 90 per cent by volume and 70 per cent by value, hence the ports play a significant role in improving foreign trade in the growing economy. Over the last decade, the average annual growth rate of port cargo volume has been about 10 per cent. The future potential of the port sector, particularly container ports, is huge considering that the container traffic is projected to grow to 40 million TEU by 2025. Inland water transportation also remains largely undeveloped despite India’s 14,000 km of navigable rivers and canals. “Exporters in southern India largely depend on the Chennai port, especially exporters of Karnataka, Andhra Pradesh apart from Tamil Nadu. However, today the situation has taken a serious turn and

Walter D’Souza, regional chairman, FIEO- southern region, while delivering his speech highlighted the economic slowdown and its serious impact on exports from India. He advised the exporters to explore new markets and new buyers in the existing market to take full advantage of the depreciation of rupee, while simultaneously increasing their productivity through efficiency and cost cutting measures as a long-term strategy to survive in the world market. Towards this objective, he said that FIEO has lined out several promotional activities. He urged for good physical connectivity in the urban and rural areas, essential for economic growth. “Since the early 1990s, India’s growing economy has witnessed a GK Vasan, Union Minister for Shipping, is addressing the Conclave rise in demand for transport infrastructure and services. However, the sector has not been able to keep pace with the rising demand and is proving to be a drag on the economy,” he said. Major improvements in the sector are, therefore, most of the exporters have been forced to divert their cargo to other ports which causes delays and additional expenditure,” maintained required to support the country’s continued economic growth. D’Souza. Most of the issues are related to outside the Port for which the Port is not having any direct control. “There are inordinate delays in the delivery of containers at CFSs. Even for bringing the container for Customs examination, there seems to be severe traceability issues. Unlike in other countries where containers are kept in order in the D’Souza underlined the fact that India has 13 major and 199 minor stack yards and their locations are fed into central computers, at the and intermediate ports along its more than 7,500 km-long coastline. CFSs it is rather a labyrinth process to search, identify and deliver

CONTAINER TRAFFIC ISSUES

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them. No one knows where a particular container is stacked,” he exclaimed. There are also severe space constraints. Above all, exporters are made to pay for the demurrage charges both to the CFS operator as well as the steamer line for these delays which resulted due to inefficiencies of CFS and other infrastructure providers. “A regulatory authority has to come into the picture to control CFSs. Recently, the Government of India introduced the Cargo Handling Act to control the CFSs. But nothing has been followed at the ground level,” he pointed out.

The need of the hour is to expand and develop the minor ports and improve the infrastructure facilities in the port.

DEVELOPING PORT INFRASTRUCTURE

Poor road access to the port had caused container trucks to form slow-moving queues of several kms and miss scheduled vessels. “The need of the hour is to expand and develop the minor ports and improve the infrastructure facilities in the port. Congestion in major ports resulting in heavy demurrage and loss in foreign exchange has become a major cause of concern,” D’Souza added.

of Indian ports vis-à-vis other ports in the region. Therefore, it is important that the connectivity of major ports with the hinterland is augmented not only to ensure smooth flow of traffic at the present level, but also to meet requirements of the projected increase in traffic.

M Rafeeque Ahmed, president, FIEO, highlighted that the fiscal year 2011-12, Indian exports have registered $303.7 billion, logging an annual growth of 21 per cent. Imports have grown to $488.6 billion with 32.1 per cent growth. “This rapid growth in trade can be sustained only if the port infrastructure keeps pace with the increasing volumes of cargo,” he observed. He emphasised that road and rail connectivity forms an integral part of the port infrastructure as inefficient evacuation of cargo can mar the entire operation of a port. In particular, containerisation of cargo presupposes a seamless link with the road and rail network in an ‘end to end’ transport system.

Indian ports handled 9.7 million TEU in 2011, which represents only 8 per cent of the global benchmark ratio for economic output. This indicates that for an economy which is the world’s third largest after US and China, limited port capacity/congestion may be impeding trade growth as it ranks 13th and 21st globally for imports and exports, respectively. FIEO has already submitted a report highlighting the projected shortfall in port capacity in view of our long-term EXIM target to reach 4 per cent of the world trade.

“With infusion of new technology and capacity building, the cumulative/total capacity available at ports, at present, matches the current requirement. However, ports are unable to handle additional traffic because of slow evacuation of cargo from the ports,” Ahmed added. Thus, despite having adequate capacity and modern handling facilities, ports are not able to ensure a quicker turnaround of ships. Presently, the average turnaround time at major ports is 3.42 days. This undermines the competitiveness

The Conclave was attended by more than 200 participants from the export/import community, shipping lines, CHAs and freight forwarders. GK Vasan, Union Minister for Shipping was also present at the event as the chief guest. In his speech, Vasan maintained that the government had identified 42 projects for capacity addition in ports in the 2012-13 fiscal year, of which 29 projects would be through PPP and would boost capacity by 244 million tonne at an estimated cost of Rs 14,500 crore. 51

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International Events Logistics Events

1. ACI-NA/World 21st Annual Conference & International Events Exhibition September 9-12, 2012 Calgary AB Canada Contact: meetings@aci-na.org

4. FIATA 2012 World Congress

8. Automotive Asia Congress

October 8-12, 2012 Hyatt Regency Century Plaza Los Angeles, CA FIATA2012@vrsevents.com Call: 202-373-4174

November 6-7, 2012 Venue: Thailand – Bangkok Candy Tan candy.tan@terrapinn.com

9. 9th China Air Cargo Summit

Calendar of International Events

November 13-15, 2012 Pullman Guangzhou Baiyun Airport China Contact: marketing@aircargosummit. org

2. RLA Conference & Expo: RLA Singapore 2012 Workshops: September 24, 2012 Conference & Expo: September 24-26, 2012 Singapore Contact: Reverse Logistics Association Fax: +1 801-206-0090

3. ACF 2012 October 2-4, 2012 Georgia World Congress Center 285 Andrew Young International Blvd. N.W. Atlanta, Georgia 30313-1591 Phone: 1 786 265 7011 Email: secgen@tiaca.org

5. SCM Logistics World 2012

10. 8th Trans Middle East Bahrain 2012

October 16-19, 2012 Marina Bay Sands – Singapore Candy Tan candy.tan@terrapinn.com

November 20-21, 2012 Gulf International Convention and Exhibition Centre, Kingdom of Bahrain Contact: Tel: +60 87 426 022 Fax: +60 87 426 223 Email: enquiries@transportevents.com

6. India Maritime 2012

11. Intermodal Europe 2012

October 17 -20 Panaji, Goa, India Contact: Federation of Indian Chambers of Commerce and Industry (FICCI) Federation House 1, Tansen Marg, New Delhi-110001 Ph: 011-23359734 E-mail: s.sundli@ficci.com; rishi. arora@ficci.com

7. 2nd Logistics West Africa Conference & Exhibition November 5-7, 2012 Lagos. Nigeria Details: www.cwc-logistics.com

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International Conference & Exhibition on Container Movement November 27-29, 2012 Amsterdam RAI Contact: Sophie Ahmed Event Director Tel: +44 (0)20 7017 5112 Fax: +44 (0)20 7017 7818

12. International Aviation Issues Seminar 2012 December 6-7, 2012 Washington, DC Contact: meetings@aci-na.org

WWW.CARGOTALK.IN


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Study & Survey Air Cargo

iata forecasts for

next12 months Increase of profitability expected According to the July Survey of airline CFOs and heads of cargo by the International Air Transport Association (IATA), airline business confidence has improved since April this year. Expectations for profitability over the next 12 months rose to the highest level recorded since January 2011; although that level remains quite a bit lower than late 2009 and during 2010. CT BUREAU

a) Cargo

b) Carg Last three months

100%

90

Last Three Months

70%

Next Twelve Months 53.6%

50%

42.9%

40%

35.7% 28.6%

30%

28.6%

Weighted Score

80%

Cargo volumes were reported to have fallen in the second quarter, but heads of cargo are expecting some improvement ahead, albeit 54 CARGOTALK

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60 50 40 30 20

Jul 2012

Jul 2011

Jul 2010

Jul 2009

Jan 2012

Improvement / Increase

Jan 2011

No-change

Jan 2010

Deterioration / Decrease

Jul 2008

0%

Jan 2009

Jan 2007

10%

Jul 2007

0

10.7%

Source: IATA

Recent and expected change in yields a) Cargo

b) Cargo 90 80

90%

Yields on passenger markets are expected to improve modestly, suggesting that airlines are expecting to see improved margins in their passenger business. However, cargo yields are anticipated to continue to decline. Volumes are also contrasting between the passenger and cargo businesses.

70

10

20%

100%

Decrease

No-change

Jul 2012

Jan 2012

0%

Jul 2011

10%

Next twelve months Jul 2010

17.9%

0

Jan 2011

14.3%

10

Jul 2009

20%

Last three months

20

Jan 2010

30%

30

Jul 2008

32.1%

40

Jan 2009

35.7%

50

Jan 2008

46.4%

60

Jan 2007

53.6%

50% 40%

Weighted Score

Next Twelve Months

70% 60%

70

Last Three Months

80%

% of Respondents

The improvement in the second quarter and in future expectations were driven principally by a large fall in input prices, following the $30 a barrel fall of oil prices between the end of March and the end of June this year. The fall in input price expectations over the next year is the largest since oil prices fell at the end of 2008.

80

Jan 2008

60%

Next twelve months

100

90%

Jul 2007

The survey also highlighted that there was significant regional variation with European airlines reporting the weakest confidence levels.

Recent and expected change in traffic volumes

% of Respondents

A

ccording to the IATA survey, the second quarter industry profits appear to have improved from the weak first quarter, although the survey responses suggest they were still down on the second quarter of last year. Improved expectations for the next 12 months suggest that airlines expect a stronger second half to this year and better profitability in the first half of 2013.

Increase

Source: IATA

much lower than expectations about passenger volumes. The IATA survey pointed out that the cargo business looks less positive, with a deterioration of confidence on cargo yields. Less than 18 per cent expect to see improved cargo yields over the next 12 months and the net balance is consistent with a fall of cargo yields. However, given the prevalence of fuel surcharge mechanisms in the

air cargo business and the expectation for falling fuel prices, this result is not surprising and may still support some margin improvement. Expectations about employment did not change much between the April and July surveys. Airlines report moderate job cuts in the second quarter and expect similar cuts ahead. This suggests airlines are anticipating further gains in labour productivity to help reduce non-fuel unit costs in the year ahead. WWW.CARGOTALK.IN



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