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www.surecommedia.in Postal Registration No.: DL (S)-01/3372/2016-2018 WPP No.: U(S)-81/2016-2018 Posted at Lodi Road HPO, ND on the 4th-5th same month RNI No.: DELENG/2009/31040 Published on the 2nd of the same month

GST e-way bill Yet Another Blow? 8 Exporters Demand Exemption on High Rates of GST 36 Apparel tying the knots of Supply Chain 46

VOL IX ISSUE III february 2018 `20

Significance of Connectivity for Industrial Parks 56


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Contents

Volume IX • Issue III • february 2018

Editor and Publisher Smiti Suri Principal Correspondent Ritika Arora Bhola Senior Correspondent Tariq Ahmed Special Correspondent Gaurav Dubey Deepashree Banerjee

14 COVER STORY

Air Cargo Takes off for Newer Avenues focus

SPECIAL FEATURE

Director Ajeet Kumar Marketing Manager Niti Chauhan Asst Manager Marketing Mehuli Choudhury Marketing Executive Sunpreet Kaur Simran kaur Accounts & Administration Poonam Gupta Sr Designer & Visualiser Shaique Ahmad

GST e-way bill Yet Another Blow? ...8

FEATURES

Exporters Demand Exemption on High Rates of Gst .........................36

INTERVIEW

Vinod Aggarwal, MD and CEO, VE Commercial Vehicles Limited ......................................60 Gaurav Dhanda, Deputy Commissioner, SWIFT Project, Central Board of Excise ...................62 Sanjiv Edward, CCO-Aero, DIAL and Ritesh Yarlagadda, CEO, SCWPL ...........................64

Apparel tying the knots of Supply Chain ...............................................46

Significance of Connectivity for Industrial Parks ...............................56

UPFRONT ......................................6 Shippers Speak .......................66 guest column .........................68 NEWS .....................................70-76 PROFILE .......................................76 EVENTS ...................................78-83 UPCOMING EVENTS .....................84 APPOINTMENTS ...........................84 PEOPLECONNECT .......................86

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Designer & Visualiser Mayank Bhatnagar

All material printed in this publication is the sole property of CargoConnect All printed matter contained in the magazine is based on the information of those featured in it. The views, ideas, comments and opinions expressed are solely of those featured and the Editor and Publisher do not necessarily subscribe to the same. CargoConnect is printed, published and owned by Smiti Suri, and is printed at Compudata Services, 42, Dsidc Shed, Scheme–1, Okhla Industrial Area Complex, Phase–II, New Delhi-110020, and published at 6/31-B, Jangpura–B, New Delhi-110014. Editor–Smiti Suri

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Upfront “To change the culture of the road construction industry, we would be reducing the contractual construction time by about 30 per cent in upcoming projects.” Nitin Gadkari, Minister of Road Transport, Highways and Shipping tweeted after NHAI completed construction of two underpasses in 16 months as against scheduled time of 30 months at Gurugram

In order to increase air cargo, it is essential for the airport operators to provide modern infrastructure and facilities at the airports as well as the contiguous areas such as the approach roads to the air cargo complexes, adequate number of truck docks etc.” T A Varghese President, Air Cargo Agent Association of India (ACCAI)

Prakash Kumar

CEO, Goods and Services Tax Network (GSTN)

“E-way-bill platform has been opened up for all states and union territories. Taxpayers and transporters from all states are registering, enrolling and generating the e-way-bills on a trial basis. The trial is up to the end of this month.”

“We have been continuously revising the existing Drugs and Cosmetics Act and amendments are being done for the continuous betterment of the pharma supply chain.”

Dr. K Bangarurajan Joint Drugs Controller of India said while

delivering a speech at PHARMACONNECT 2018 conference in Delhi

“IoT, Artificial Intelligence and Robotics have become pillars of business. Companies should embrace IoT and start looking for the Artificial Intelligence to establish their supremacy in the business.” Tushar Jani, President, Air Cargo Forum of India (ACFI)

said while highlighting the importance of Internet of Things (IoT) in the business world at PHARMACONNECT 2018 conference 6

CargoConnect - february 2018

The world’s emerging market and regions are expected to deliver the fastest growth in air cargo volumes over the next five years, led by the Middle East and Africa.


focus

GST e-way Yet Another bill Blow? 8

CargoConnect - february 2018


yr

focus

T

The nationwide e-way bill system, rolled out on 16th January on a trial basis, will help businesses and transporters to get a hang of the new mechanism that will become mandatory from 1st Feb. These bills, to be generated online or via SMS, will be required for transporting goods across state borders if their value exceeds `50,000. Currently, 15 states are trialing this process, and there was good registration response as the systems opened for new enrolment earlier. Tariq Ahmed presents an unbiased take on this new system with the help of industry experts.

he e-way bill under the GST Regime replaces the Way Bill which was required under the VAT Regime for the movement of goods across the nation. The Way Bill under the VAT Regime was a physical document which has now been replaced with an electronically generated document in the GST Regime. The document is required to be generated online for transportation of goods irrespective of whether such transportation is interstate or intrastate. Under the GST Regime, generation of the e-way bill is compulsory from 1st February 2018. The e-way bills were supposed to be introduced when the GST was launched in July 2017. However, given the technology challenges faced in the initial days of the launch, the use of e-way bills was postponed. These bills have existed under the garb of road permits, entry/exit permits and challans in many states for many years. These bills were also present during the value-added tax (VAT) regime, but there were procedural hassles in generating and authenticating them if a transport vehicle was stopped for inspection. Pirojshaw Sarkari, CEO, Mahindra Logistics Ltd feels optimistic about the e-way bill. He said, “The introduction of e-way billing will bring about uniformity across India, for seamless inter-state movement of goods. As per the recent GST rules, goods worth more than `50,000 that needs to be transported outside a state boundary will require an e-way bill by prior online registration of the consignment. It will lead to quicker transportation of goods, enhance governmental revenues, and increase transparency, especially in cash transactions. With just the e-way bill number, all transactions can now be tracked and average waiting time for vehicles will now reduce, as verification processes will be online. The compulsory introduction of e-way billing may face initial glitches, but in the longterm, it will benefit not only the logistics industry, but the country as a whole. We, at Mahindra Logistics, definitely look forward to its successful implementation.� In the new e-way bill system, the government has roped in the National Informatics Centre (NIC) to run and operate the technology backbone for generating these bills, although GSTN system owns the software. This may have been done after the issues faced with the GSTN system, which took a while to stabilise and scale. The e-way bill system has been trialled with more than 1 lakh bills generated per day without any issues. The system is supposed to handle 50

february 2018 - CargoConnect

9


focus “The introduction of e-way bill will lead to quicker transportation of goods, enhance governmental revenues, and increase transparency, especially in cash transactions. With just the e-way bill number, all transactions can now be tracked and average waiting time for vehicles will now reduce, as verification processes will be online.” Pirojshaw Sarkari CEO, Mahindra Logistics Ltd lakh bills per day. Given the experience NIC has with large real time websites like the Election Commission of India website for Lok Sabha and assembly results, perhaps the scaling may be easier this time. The current e-way bill system will be a uniform one across the country. The format of the bills will be the same across all states. These will only be valid for up to 20 days depending on the distance to be covered. It will be possible to use multiple e-way bills for multiple consignments to be carried at one go. And, there is a provision to complain to higher authorities if a vehicle is stopped for inspection for more than half an hour. In the earlier goods transport dispensation, such stoppages were a key source of corruption and delays in goods movement.

Two sides of the coin With the introduction of the e-way bill scheduled for 1st February 2018, a contentious debate has begun on how this measure can be a serious impediment for goods movement, supply-chain efficiencies, harassment and rent seeking. While this concern is genuine, what has led to this decision has been slowing goods and services tax (GST) collections in the last few months, contributed to by a host of factors—namely reduction in rates, flow through of integrated GST (IGST) and other eligible credits and evasion in several pockets. While the effects of lower rates and credit utilisation were expected, the evasion factor is what is of serious concern to revenue authorities. With the deferral of invoice level matching due to system stability issues, the checks and balances, which were inbuilt in this process, expose the value chain to potential evasion and loss of revenues. Vikash Khatri, Founder, Aviral Consulting Pvt Ltd feels that the impact will differ in short


focus term and long term. He said, “Impact of e-way bill in short term and long term is going to be different. In short term, it will look like a barrier as e-way bill is going to increase the documentation compliance activity for the transportation companies and push them to adhere to transit schedules. It will even discourage the parallel activities happening to avoid tax. These will result in negative growth and sentiment, same as we saw in first few months of GST implementation. But, in longer run things will settle down and ease of movement will increase. Integration of e-way bill with RFID

“Impact of e-way bill in short term and long term is going to be different. Efficient implementation of e-way bills will reshape the logistics industry and make transport of goods easier and faster.”

in the legacy regime, e-way bills and other transportation documentations were in use for trail of goods movements but evasion still happened along with rent-seeking opportunities—that spectre may return to haunt the industry. It’s important we soon get back to invoice matching for credits albeit in a simplified form, which is being considered and will be implemented in the comings months. That to the industry is a more efficient mechanism to track the value chain for evasion and expansion of the tax base. The GST Council meeting slated for 18th January 2018, hopefully should look at all these aspects. But for the interim, industry will have to contend with the e-way bill process and bear this burden.

Vikash Khatri Founder, Aviral Consulting Pvt Ltd will further reduce the transit time and transit hassles. Efficient implementation of e-way bills will reshape the logistics industry and make transport of goods easier and faster.” In general, the validity of the e-way bill cannot be extended. However, Commissioner may extend the validity period only by way of issue of notification for certain categories of goods. Further, if under circumstances of an exceptional nature, the goods cannot be transported within the validity period of the e-way bill, the transporter may generate another e-way bill after updating the details again.

“There is a view that the e-way bill will place new hurdles to goods movement. However, it will actually result in the opposite. For the organised players, there would be a further reduction in delivery time with long distance transportation along with weeding out of service providers who transport goods without paying the due taxes.” Anjani Mandal Co-Founder and CEO of Fortigo Network “There is a view that the e-way bill will place new hurdles to goods movement. However, it will actually result in the opposite. For the organised players, there would be a further reduction in delivery time with long distance transportation along with weeding out of service providers who transport goods without paying the due taxes. This will definitely put the logistics industry on a path to progress. Players associated with the industry must have positive outlook towards the implementation of the e-way bill,” opines Anjani Mandal, Co-Founder and CEO of Fortigo Network.

Going Forward The concern is that organised sectors will ensure compliance but that evaders will still find ways to skirt this process, which will lead to situations of collusion. Even

12 CargoConnect - february 2018

Another area which the council may look at is reverse charge mechanism, which was deferred till March 2018. With evasion a concern, there may be a temptation to bring this provision back to plug loopholes, though such GST paid through reverse charge (a mechanism wherein the buyer pays the tax on supplies purchased from an unregistered dealer) will be available in the credit chain. What this will provide, however, is potential expansion of database. After the initial chaos of 10 weeks, the Union government as well as the GST Council has been on top of GST issues, willing to change rules as well as take a pragmatic view of tax compliance. Similar approach will be needed for e-way bills too. Meanwhile, the businesses should be ready for some fresh disruptions starting from 1st February. These will not be as big as the ones seen at the time of the GST launch. But, it’s time again for new uncertainty and new doubts.


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cover story

Air Cargo Takes Off for Newer Avenues

14 CargoConnect - february 2018


cover story

Air cargo in the past few years emerged as a trade facilitator that contributes to global economic development and creates millions of job opportunities. The global economy by and large depends on the ability to deliver high-quality products at competitive prices to consumers worldwide. Presently, an essential tool in the world trade, air cargo transports over US $6 trillion worth of goods, accounts for approximately 35 per cent of world trade by value and transports commodities that are vital to the growth of new economies and the continuing prosperity of established ones. -Deepashree Banerjee

february 2018 - CargoConnect

15


cover story

A

ir cargo is a relatively higher-cost transport mode which requires a clear Return on Investment (ROI) and that is speed. In turn, speed demands reliability, which depends largely on adequate ground handling resources, correct practices, regulation and compliance, well-trained staff and efficient and reliable transmission of information to create visibility along the supply chain. The year 2017 was a volatile year for the air cargo business due to consolidation in ocean freight, frequent strikes in Europe and airlines cutting down on scheduled freighters among other factors. This resulted in massive delays in airfreight. “However, post Mid Dec we have seen it stabilizing and there are clear signs of it recovering soon. So, looking at current stability and forecasting that we are getting from our Global partner Airlines we can say that gradual shift to air cargo will reduce dwell time in logistics along with adding predictability and security to supply chain,” says Oliver Bohm, CEO, Schenker India.

inside Importance of Air Cargo Air cargo industry must undergo digital transformation Booming E-Commerce

Challenges in Air Cargo

The need for even greater security is likely to continue to dictate practices, operational processes and systems development in the industry. Comprehensive, shared electronic data will become more and more important. The air traffic in India has witnessed a significant growth by 18.9 per cent during the year 2016-17 along with air cargo growth at the rate of 9.3 per cent. Looking on this positive trend, the financial year 2017-18 also looks to be on optimistic end as far as India’s air cargo growth is concerned. Since 2011, two principal causes have been responsible for weak air cargo growth: an underperforming world economy and lackluster growth in trade. It is difficult to foresee or predict the changes and challenges that are likely to take place globally in air cargo. In general, it may be stated that the major global economies are showing signs of recovery after a period of slowdown during the last few years. Hence, it would be reasonable to optimistically state that there is likely to be an increase in the quantum of air cargo globally.

The Way Forward

Importance of Air Cargo

MultiModal Transport to facilitate optimising air cargo procedures Development and Innovations in Air Cargo

The air cargo logistics plays a vital role in the economic development of a country. As Tony Tyler, Former Director General and CEO, International Air Transport Association put it in the IATA Economics Briefing, “Air transport is one of those industries that have transformed the world. Providing rapid

16 CargoConnect - february 2018


cover story Looking at current stability and forecasting that we are getting from our Global partner Airlines we can say that gradual shift to air cargo will reduce dwell time in logistics along with adding predictability and security to supply chain. Oliver Bohm CEO, Schenker India

connections between the world’s cities by air has enabled the globalisation that has shaped modern business and the experiences of individuals. Airlines and the wider air transport supply chain clearly create substantial value for consumers and the broader economy. That value creation is why, over the past forty years, air travel has expanded ten-fold and air cargo fourteenfold, compared to a three to four fold rise

industry. Of even more importance is the need to attract $4-5 trillion of new capital over the next two decades to buy aircraft to meet the needs of the expansion in the AsiaPacific and other emerging regions. Improving the efficiency of use of existing capital, and the returns it generates for investors, will be essential to attract new investment to the industry,” he explains further.

in world GDP. Yet over this period airlines have only been able to generate sufficient revenues and profit to pay their suppliers and service their debt. There has been nothing left to pay investors for providing equity capital to the airline industry.” Tyler also explains how this matters in the grand scheme of things. “Well, now that 75 per cent of the world’s airlines are at least majority owned by the private sector, it should be a concern that today’s returns on invested capital do not justify retaining the existing capital invested in the airline

T A Varghese, President, ACAAI says, Air Cargo works as the main nexus to connect to the world’s trade and unarguably the speediest mode of transportation. “Increase in the volume of goods which are transported by air is a good indicator of the economic strength and standing of any country. In India, the percentage of goods which are transported by air is miniscule in comparison to other modes of transport such as ocean freight, rail and road freight. In order to increase air cargo, it is essential

18 CargoConnect - february 2018

for the airport operators to provide modern infrastructure and facilities at the airports as well as the contiguous areas such as the approach roads to the air cargo complexes, adequate number of truck docks, etc. In addition, it is also necessary that the airlines should offer competitive rates to the shippers and the agents to make air cargo a preferred mode of transportation of goods.” Being a very export-oriented country, Germany relies on an excellent infrastructure and connectivity – of course also by air, says Felix Kreutel, Senior Vice President for Cargo Development and Management, Fraport AG. “Thus, Frankfurt Airport (FRA) is often even considered as the backbone of the German industry. Almost 50 per cent of all German air cargo is flown via FRA. In order to streamline a powerful international air cargo supply chain, it is very important that all players work together and commonly drive international standards, like for example the implementation of eAWBs.”

Air cargo industry must undergo digital transformation Air Cargo works as the main nexus to connect to the world’s trade. The traditional air cargo process is very fragmented and characterised by many individual players. With their integrated logistics concepts, integrators have been disrupting the market for a while now. Also, sea freight is catching up with new product offers and of course in much lower rates compared to air cargo. Digital development provides us the opportunity to offer faster, more efficient and more


cover story Air transport is one of those industries that have transformed the world. Providing rapid connections between the world’s cities by air has enabled the globalisation that has shaped modern business and the experiences of individuals. Airlines and the wider air transport supply chain clearly create substantial value for consumers and the broader economy. Tony Tyler Former Director General and CEO, International Air Transport Association

transparent processes in order to stay competitive as an industry as a whole. The air cargo industry must go through digital transformation to stay competitive, and Fraport AG is committed to help customers go through the necessary processes, Kreutel tells CargoConnect. He adds, “One example of cargo digitisation at FRA is Fair@Link. Today, Fair@Link represents one of the most advanced cargo community systems at any airport in the world. The system enables the electronic exchange of data between participating companies. It digitally networks the players in the airfreight chain and, thus, improves the physical processes between them – not just within FRA’s CargoCity, but, also, well beyond its perimeters.” In order to push this collaboration, the Air Cargo Community, Frankfurt can be seen as a perfect example on how we could work together in future. The association brings together all the players involved in the air cargo business on site and is dedicated to promoting the interests of air cargo-related companies at FRA and to optimizing logistics processes. “Only together, we can leverage the chances that new technologies provide us with. Underscoring our position as innovation leader, end of September, we again invite the most influential thinkers in the business, the wider industry and the research sector to the next ‘Frankfurt Air Cargo Innovation Lab’ in order to discuss the future of logistics and engage in dialogue with one another on how to respond to current trends in the air cargo business. Our website innoFRAtor.

20 CargoConnect - february 2018

AIR CARGO MARKET

850 new and 1,450 Converted Share of fleet

Booming E-Commerce

100% 75% 50% 25% 0%

2012

2032

Delivery units 130 940 640

380

210

2013 to 2032 Freighters 23,00 Larger >80 Tonnes Medium 40 to 80 Tonnes Standard <80 Tonnes Converted

com offers the industry a platform to get informed about new developments and exchange ideas so that we can actively pursue topics, Kreutel informs.

The traditional air cargo volumes though in the growth sector is likely to be in the low single digit while the main growth will come in double digits (likely to be 1525per cent) in e-commerce/etail space, says an expert. This will ensure good growth in the overall air cargo industry. Traditional way of doing business will have to change. The likes of Flexport and Freightos etc are already bringing in the changes. All transactional will have to move into go on to electronic platform making all the processes transparent and more cost efficient. “Those who control the efficient last mile delivery (LMD) will be the winners of tomorrow. Changing consumer behaviour denotes that the industry has to change to cater to the new environment. Google, Amazon, Alibaba, Uber etc are the folks which will force the changes in the air logistics industry,” adds he. According to Mark Whitehead, Chief Executive of Hong Kong Air Cargo Terminals Limited (Hactl), in terms of market potential, the boom in global e-commerce and the maturing of its supply chains provides challenges, but, also opportunities. “More e-tailers and suppliers will enter the market, driving down commodity prices; consumer appetite for greater choice, and customer service expectations, will grow side by side; reverse logistics will become a greater need ever, and will generate huge


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cover story In order to increase air cargo, it is essential for the airport operators to provide modern infrastructure and facilities at the airports as well as the contiguous areas such as the approach roads to the air cargo complexes, adequate number of truck docks, etc. T A Varghese President, ACAAI

traffic flows (although not necessarily for air cargo); meanwhile, e-commerce as a whole will continue to look for logistics economies, providing opportunities for the “traditional” air cargo industry to leverage its core ability: to ship cost-effectively in larger volumes. But, this opportunity will only be fully exploited if air cargo works harder to integrate itself into the

the traditional volumes of movement of components, as well as, finished product. The good news is that e-tail business within e-commerce will grow in double digits. Of course, this business is predominantly producing great volumes in the regional arena. The growth in the transcontinental business will depend on how the governments regulate the

Providing rapid connections between the world’s cities by air has enabled the globalization that has shaped modern business and the experiences of individuals.

digital information supply chain,” adds Whitehead. The air cargo business is a dynamic industry and there are always new challenges to deal with – rising fuel costs, increasing competitors, over capacity in tonnage etc. Ram Menen, Retired Aviation and Air Cargo Executive shares his take on whether he believes the gradual shift to air cargo will reduce the dwell time in logistics. “Technology like mass production via 3D printing which will allow design at a central location and producing (printing) at point of requirement in itself, will reduce

22 CargoConnect - february 2018

e-commerce business. All in all, it will find its own flow and boost the air cargo business. It is the ocean side of cargo that might be seeing shrinking volumes as early as, in the next decade. Overall growth in air cargo business, driven by the activities in the e-tail business, is going to be higher than ocean. The biggest challenge for the air cargo business will be trying to take further costs out of the chain as e-commerce is extremely a competitive arena where volumes are going to be big but margins are going to very low. Consumers today have got used to free delivery to door. So, the cost of logistics will have to come

out of the e-tailer’s margins and as the likes of Amazon and Alibaba will wield tremendous buying power and also get into the transportation and logistics business in order to control their own destiny.” Ashish Pednekar, Chairman of FFFAI shares that apart from traditional products from India, the present government’s focus has been on new areas like agro-based products, perishables and burgeoning retail exports based on MSME sector. Accordingly, there is huge potential to tap those sectors, provided the required end to end logistics infrastructure and a firm policy are in place. “This is crucial to offset the sliding trends of traditional export items viz gems; jewellery, drugs; pharmaceuticals, carpets, Ready-made garments( RMG); textiles etc. It is pertinent to mention that about half of our argo-products are being spoiled due to lack of a scientific cold chain system. On the other hand, as identified by experts, India is blessed with high quality artisans and women entrepreneurs. The e-commerce market place is ideally suited to them as both genuine buyers and payment is ensured by the market place (e-commerce portals). Unfortunately, the issues in e-commerce retail exports have not been resolved despite recognising e-commerce in the Foreign Trade Policy,” he reveals. As far as the significant trends in the airborne freight and cargo services are concerned, Bohm believes there has been a shift in demand scenario from low to extremely high. “Thankfully, our long term contract with Global Partners helped us to maintain


cover story Frankfurt Airport (FRA) is often considered as the backbone of the German industry. Almost 50 per cent of all German air cargo is flown via FRA. In order to streamline a powerful international air cargo supply chain, it is very important that all players work together and commonly drive international standards, for example the implementation of eAWBs. Felix Kreutel Senior Vice President for Cargo Development and Management, Fraport AG.

our high service levels,” shares Oliver Bohm. Also, a new class of cargo which is basically e-commerce is getting top priority of airlines and this will only increase going forward and will massively impact air traffic routes. Another upcoming epoch making trend to shape up the cargo service in the next couple of years is digitisation in

transport. The road feeder services to and from FRA are massive,” he says. “We have over a thousand trucks serving our cargo cities every day. Here again, it is crucial that the different players within the whole supply chain work closely together in order to have a smooth process when handing over

GLOBAL AIR CARGO MARKET SHARE BROKEN DOWN BY REGION (2017) North America

Europe

Asia Pacific

Middle East Latin America

Africa

2.80%

1.60% 13.90% 20.70%

terms of end to end paperless operations, Bohm agrees.

MultiModal Transport to facilitate optimising air cargo procedures Felix Kreutel, Senior Vice President Cargo of Fraport AG shares how multimodal ways can facilitate optimising the air cargo procedures across the country. “Road, rail and sea cargo play a very important role when it comes to transporting goods within the country or even within Europe. For cargo coming from or going to FRA, trucking is the most common way of

24 CargoConnect - february 2018

23.50%

37.40%

the goods. Therefore, we also connect truckers to Fair@Link. Our gates are equipped with a license plate recognition system that indicates handling agents and forwarders that a truck has arrived on site. Regarding rail transportation, we have a dedicated railway line going directly into our CargoCity area. However, it is difficult to bring airfreight shipments by train to airports, with the frequencies and volumes necessary not available.” Adds Kreutel. T A Varghese, President, ACAAI talks about specific challenges faced by the industry and how it can be curbed. “Multimodal transportation is quite

common in the developed economies. The processes and facilities for the seamless transfer of goods from air to rail / road / sea and vice versa are adequately developed in such countries. However, in India, the multimodal transportation concept needs to be developed in a major way in terms of both the processes and infrastructure pan India.” Mark Whitehead, Chief Executive of Hactl, “In Hong Kong, Hactl’s valueadded logistics arm, Hong Kong Air Cargo Industry Services Limited (Hacis), has been a driver of the streamlining of RFS services so that these can provide a reliable, compliant and cost-efficient complement to the air cargo services which Hactl handles, helping Hong Kong to further develop as a viable gateway for air cargo in and out of mainland China,” he informs. He also believes that air cargo should always be viewed as a multi-modal process, because it relies on fast and efficient transition from air to ground and vice versa. This requires innovation; the ability and knowledge to work with regulators and Customs bodies in order to encourage them to facilitate rather than hinder freight flows; investment in resources; and the installation of digital management systems that monitor transitions and highlight potential problems. “Every location has its own unique features and characteristics, that dictate the intermodal options - but the underlying processes of putting it all together are always the same, and the key is always communication and collaboration among all stakeholders. Again, airports are in a strong position to create communities


cover story The biggest challenge for the air cargo business will be trying to take further costs out of the chain as e-commerce is extremely a competitive arena where volumes are going to be big but margins are going to very low. Ram Menen Retired Aviation and Air Cargo Executive

that can overcome local obstacles,” adds Whitehead. Sandeep Chatterjee, Senior Manager, Deloitte on the other hand thinks that in India, the multi-modal mix is heavily skewed and not much thought has been given to why some things are done in a particular way. Thus, it is important that we optimise

the routes and if needed analyse whether a combination of rail, road and air is the most optimum option, feels Chatterjee. “Right now, there are multi-modals between rail and road but not much with air as these are three different players and it usually comes to trust issue why people do not want to collaborate. In India, labour is cheap, so, material handling is cost-effective when we weigh the savings in time and money in a multi-modal mix. The operators need to collaborate for maximum savings as it is very unlikely that the same player will have the facilities for all mode transportation,” says he.

26 CargoConnect - february 2018

Smooth multi-modal connectivity and movement is the ideal situation, states Menen. Though there is good interaction between Air and land; (Ocean > Road > and Rail), Direct interaction between Air and Ocean interaction is still a challenge, thinks Menen. “Having said that, since the highest growth is in the e-commerce space and for some of the changes I alluded to earlier,

this is going to become less relevant in the future,” he says. Recently, the Ministry of Road Transport and Highways and Shipping, Government of India, has involved Aviation Sector while framing up Multi-modal Logistics Hubs policy with a view to provide thrust to air cargo sector. The strategy involves a reset of India’s logistics sector from a ‘point-topoint’ model to a ‘hub-and-spoke’ model, which involves railways, highways, inland waterways and airports to put in place an effective transportation grid. Multiple initiatives to improve logistics efficiency

are already underway including building of economic corridors apart from multi-modal logistics parks. Sanjiv Edward, Chief Commercial Officer-Aero, Delhi International Airport Limited remains buoyant. He said, “The Government’s aim of setting up 400 regional airports having facilities for cold storages along with other logistics solutions within the vicinity of airports connected with rail, road and port, will certainly form a part of value added services and ease all the processes providing just-intime air cargo facilities with reduced cost to boost air cargo growth.” The multi-modal integrated logistics are likely to increase India’s export with reduced logistics cost, as also will provide employment opportunity for the country viz-a-viz making goods cheaper in the domestic market, he notes. To support and strengthen multi modal connectivity, DELhi Cargo is strategically focusing on – • Transshipment cargo handling facilities and processes • Process simplifications involving Customs to further improve efficiency • Unbroken cool chain for movement and handling of perishable and pharma cargo • Enhancing cargo infrastructure and development of on-Airport Logistics facilities However, the real challenge Edward believes, would be to create a smooth chain to make multi-modal successful, as in India


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cover story The e-commerce market place is ideally suited to them as both genuine buyers and payment is ensured by the market place (e-commerce portals). Unfortunately, the issues in e-commerce retail exports have not been resolved despite recognising e-commerce in the Foreign Trade Policy. Ashish Pednekar Chairman, FFFAI

all the business segments have their own aspirational developmental plan. Hence, integrated multi-modal operations plan and strategy are required to be meticulously devised to have seamless and sustained operation system.

Development and Innovations in Air Cargo Chief Executive of Hact l, Mark Whitehead shares, “Today, we are looking at a two-speed air cargo industry: in some countries and locations, the resources, practices, staff calibre and systems are excellent. My company, Hactl, has a long and proud history of investment and innovation, of setting and maintaining the highest standards, and of proactively driving out inefficiencies. But, not all companies and locations are able or willing to adopt such a stance: and so, these elements are barely adequate. This creates a problem: air cargo is only as fast and reliable as its weakest link. There is little point in companies like Hactl and airports like Hong Kong operating at a high level, if the facilities and processes at destination cannot maintain standards. To create an air cargo industry that provides the highest possible standards and therefore maintains market share and attracts new business, we need those countries and companies who already operate at the highest standards to share their experience, knowledge and ideas with less-developed areas of the industry. We are all in this together, and an “us and them” mentality will get us nowhere.” Sandeep Chatterjee, Senior Manager, Deloitte shares his take on the kinds

28 CargoConnect - february 2018

of investments/initiatives he thinks are required from the government and air cargo industry to boost the numbers. “First of all most of our terminals do not offer segregated facilities for different types of cargo as passenger segment has always got the preference. The cold chains have addressed this to some extent but a lot needs to be done here. Secondly, transshipment opportunities are very less at airport terminals. Thirdly, the agent warehouses are located in the city and not in the airport premises leading to huge issues around coordination,” says Chatterjee. Chatterjee stresses on investing in space and facilities for the cargo operations to be completely separate from the passenger areas. Sufficient investment is needed for smooth multi-modal transition in terms of material handling e.g. separate bays for trucks reducing congestion. Allowing private players to operate dedicated planes for cargo is another way out. Although, Government of India has taken initiatives to reinforce country’s aviation sector, including recently introduced New Civil Aviation Policy. Edward from DIAL feels that the policy makes it easier for the country’s airlines to fly abroad as part of boosting air travel and accelerate country’s economic growth viz-aviz to making domestic flying more affordable for India’s expanding middle class. He also notes down some initiatives that would help the sector as below:

• Simplification and Standardisation of the Cus toms as wel l a s security policies and procedures for transshipment as also benchmarking of the same with international best practices • D e v e l o p m e n t o f a i r c a r g o transshipment hubs to cater to growing intercontinental traffic • Digitization of air cargo industry would simplify export/import documentation system IGI Airport, which is the leading airport of the country, both in terms of passenger movement and cargo handling, has taken numerous initiatives and invested significantly in the past decade to boost the air cargo growth. Some of the recent initiatives include – • Implementation of 100 per cent e-Carting facilitation services • Temperature control facility and airside cool dollies to ensure unbroken cold chain • Truck Slot Management systems to improve cargo movement • Mobile App.for Cargo tracking • Development of Common Users Domestic Cargo Terminal for maximum utilisation of space and facilities • Development of Airport Cargo Logistics Centre for an easy consolidation and de-consolidation of cargo etc • Expansion of Domestic Cargo Terminal facility for enhancing efficiency of processes


cover story In Hong Kong, Hactl’s value-added logistics arm, Hong Kong Air Cargo Industry Services Limited (Hacis), has been a driver of the streamlining of RFS services so that these can provide a reliable, compliant and cost-efficient complement to the air cargo services which Hactl handles, helping Hong Kong to further develop as a viable gateway for air cargo in and out of mainland China. Mark Whitehead Chief Executive, Hactl

• Technology advancements and automation in cargo handling to improve speed of operations involving eliminations of several manual process. The following initiatives taken by Government of India have provided boost to the air freight and cargo services, as also are likely to give further impetus to this sector in years to come • The free period for air cargo has been reduced from 72 hours to 48 hours w.e.f. 1st April, 2017. • The concept of 24x7 Customs clearance of Import/Export Cargo has been initiated at 13 airports. • The concept of ‘’Single Window’’ has been launched by Customs w.e.f. 1st April, 2016 in phased manner which inter-alia ensures on-line clearance from various regulatory agencies. • The Common User Domestic Cargo Terminal (CUDCT) concept has been introduced for maximum utilisation of space and facilities in more efficient way. Apart from direct air transshipment of cargo from third country like Dhaka, Delhi Airport has also established freight corridor connectivity with Afghanistan, which is considered as land locked country for export and import. This new initiative of Delhi will prove to be a milestone in globalising air cargo business across the world, leaving aside international issues and deterrents.”

30 CargoConnect - february 2018

Challenges in Air Cargo The air cargo logistics plays a vital role in the economic development of a country. Various specific endeavours are made to streamline the whole process of air cargo across the globe T.A. Varghese from ACAAI feels that the process of air cargo varies from country to country and region to region globally. Hence, he finds it difficult to comment about the streamlining of such processes globally. “In the Indian context, the main issue of concern to the trade currently pertains to the automated Customs system, ICEGATE. At present, the ICEGATE system is prone to frequent failure and slowdown, thereby delaying the expeditious clearance of import and export shipments. Consequently, the importers and the exporters are unable to meet the deadlines of their clients, thereby creating a poor image of the exim trade of India. Therefore, this system requires urgent, immediate and total overhaul to make it adequately functional to meet the requirements of the trade,” he informs. Furthermore, he thinks the Customs regulations pertaining to air cargo need to be reviewed periodically with the objective of simplifying and making them suitable to the requirements of trade and business in the 21st century. In particular, the restriction on transshipment cargo at Indian airports due to the prevailing Customs regulations need to be changed to permit the carriage of transshipment cargo via all international airports in India, believes Varghese. “This will enable our

country to become a hub for such cargo similar to other global cargo hubs such as, Dubai, Singapore, Hongkong, etc,” hopes Varghese. Whitehead from Hactl says that there are many challenges facing the air cargo industry, including the need to reduce environmental impact and the need to restore profitability; these issues are the subject of daily attention and individual and collective action. But, security is and will remain our

Multimodal transportation is quite common in the developed economies. The processes and facilities for the seamless transfer of goods from air to rail / road / sea and vice versa are adequately developed in such countries. biggest test, he adds, as terrorism becomes ever more sophisticated, this must be matched by ever-increasing security measures; these will continue to create additional cost and time pressures for our industry. Air cargo has a great track record of responding to each new requirement, and it’s a testament to our industry that we have so far coped with these added regulations while maintaining and improving processing speeds, and even reducing freight rates. “We must and we will continue to work with regulators and industry bodies to understand every


cover story The Government’s aim of setting up 400 regional airports having facilities for cold storages along with other logistics solutions within the vicinity of airports connected with rail, road and port, will certainly form a part of value added services and ease all the processes providing just-in-time air cargo facilities with reduced cost to boost air cargo growth. Sanjiv Edward Chief Commercial Officer-Aero, Delhi International Airport Limited

new threat, and respond to it effectively. Technology has a key role to play in this process: both in physical monitoring equipment, and also in the collection and sharing of data with all supply chain parties,” Whitehead points out. Sandeep Chatterjee from Deloitte talks about a usual trend out here. It is

The aviation turbine fuel costs are at a record low and there are not too many competitors. It is important that we challenge the fundamental assumptions like Air Deccan which disrupted the passenger segment. Now, most of us can afford an air-ticket. And, as the customer tolerance time becomes more and more

Air freight accounts for 2% of logistics movement in terms of volume, and 30% in terms of value

dynamics of the air cargo business is going to be very different in the future, tells Ram Menen. “The effects of geo-political factors of today, especially in the US in trying to bring back the outsourced business inshore is currently bordering on an unpredictably in the supply chain operations. Depending on how the situation progresses, coupled with any imposition of tariffs, it could have a major impact on traditional flows of cargo. The challenges of fuel prices, capacity are quite normal phenomena and the industry has been dealing with it and will continue to deal with,” shares Menen.

The Way Forward

often perceived that air freight is expensive and, hence, transporters tend to avoid it. Worldwide the percentage of air cargo is 1 per cent which is the same for India but when we look at absolute numbers, India still does quite less of air cargo. India primarily depends on roadways (60 per cent) which is suboptimal and railways anyway have a capacity constraint due to mixing of passenger and freight routes. Inland waterways and Coastal transport are good options but they are dependent on a lot of other factors e.g. monsoon.

32 CargoConnect - february 2018

less (while the manufacturing and procurement lead times have not reduced much), transportation will play a key role and air cargo is the way forward if we are talking about reducing lead times, informs Chatterjee. “Of course, India being a price sensitive market, drones may not be useful as the Indian customer may not want a two hour delivery but will be fine with a next day delivery as long as he does not have to pay for it,” says Chatterjee. Driven by the changes in evolving technology and consumer behavior, the

Ever since 2014, the incumbent Central Government has brought about numerous positive changes in the rules, regulations and procedures in multiple sectors. A large number of outdated regulations have either been abolished or updated to make them contemporary and suitable to the needs of industry, trade and business in the new millennium. This is a trend that should continue in a major way during the next few years to come to revamp the statutes across the board to make India a global hub for not only the airfreight industry, but also for trade and business, notes TA Varghese. Throwing some light on the significant trends in the airborne freight and cargo services in the years to come, Felix Kreutel says that the industry forces us to increase efficiency and offer data transparency. Digitization and new technologies will therefore shape the industry in the long run, feels Kreutel. But, also Big Data and especially block chains will definitely have


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cover story Right now, there are multi-modals between rail and road but not much with air as these are three different players and it usually comes to trust issue why people do not want to collaborate. The operators need to collaborate for maximum savings as it is very unlikely that the same player will have the facilities for all mode transportation. Sandeep Chatterjee Senior Manager, Deloitte

a huge impact by improving security and transparency throughout the supply chain. Interfaces have to be aligned and we need to implement data platforms where we integrate the whole supply chain. “Block chains can support the building of logistic data backbones by cloud solutions or other data networks. We must come to a point where all the community systems at various airports are able to communicate with each other – we need a network of trusted networks,” he adds. Mark Whitehead stresses on collaboration as the main key to the industry’s future development. The task of fostering, setting, enforcing and maintaining acceptable standards across the entire global industry is too big for any one body. A viable alternative route is to foster the creation of local air cargo communities, generally led by airport owners, which will facilitate the sharing of information, ideas and best practice, ease communication and cooperation with local regulators and official bodies, and mobilise effective marketing efforts. “There are several examples of this policy in action, such as Hong Kong: and the results are highly positive, and demonstrate that more can be achieved by a team than by individuals. And, this practice should be promoted to increase the importance of Air Cargo across the country,” Whitehead signs off. The world’s emerging market and regions are also expected to deliver the fastest growth in air cargo volumes over the next five years, led by the Middle East and Africa, observes Sanjiv Edward from DIAL. “Strongest forecast growth is foreseen on trade lanes between Asia and the Middle East, within the Middle

34 CargoConnect - february 2018

East region too, and between North and South America due to several initiatives impelled worldwide to provide momentum to the freight and cargo services, especially in the new era of e-commerce and globalised economy,” he adds.

The uberisation of air cargo will lead to decreased freight charges, feels Chatterjee. The governments should be investing in creating industrial parks and make land available for building facilitation centres around the airport areas. They

Technology advancements and automation in cargo handling will improve speed of operations involving eliminations of several manual process.

Chatterjee from Deloitte throws considerable light on the significant trends in the airborne freight and cargo services in the years to come. “In the coming years customer tolerance time will reduce further and we are already seeing a major shift towards mass customisation. The delivery lead times will be the key and, hence, airborne freight and cargo services are going to expand significantly. There will be specialised carriers who will be able to transport both passengers and cargo in the same plane (which happens mostly as we still do not have much of dedicated air freight carriers in India). We expect to see disruptions in business model in this sector,” he explains.

should also invest in creating a good road transportation network for efficient distribution. Road transportation is a very critical component of air cargo. The government should also work on reducing bureaucracy and pull down the hurdles created by border control processes. Everything that the governments do should be done to facilitate trade and distribution rather than policing it. Today, there is no room for traditional way of doing business. In the air transportation business, the future will belong to fully autonomous aircraft. Cargo drone startups like Natilus will lead this space with large commercial drones ploughing the traditional air routes at much lower operating costs.


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special feature

Recently, Indian freight forwarders have formed a committee to seek exemption on the high rates of GST on air, sea and railway freight on exports, due to which Indian exporters are suffering from major financial burdens and they are not able to stretch their working capital requirements. Ritika Arora Bhola discusses with air cargo experts â&#x20AC;&#x201C; the issue, solution and their expectations from the government.

36 CargoConnect - february 2018


special feature

EXPORTERS DEMAND EXEMPTION ON HIGH RATES OF GST

F

rom the last few years, Indian logistics industry was eagerly waiting for the Goods and Service Tax (GST) bill to be passed and implemented successfully as it promised to bring in plethora of benefits for the freight forwarders. However, little did they know that high rates of GST on air, sea and railway freight on exports would cause additional cost burdens on exporters and would erode the competitiveness of exports. This has majorly affected the working operations of freight forwarders especially active small exporters who cannot spend whopping amounts on GST. Considering this, Indian freight forwarders have now formed a committee to seek concession on high rates of GST. The committee is of considered opinion that imposition of GST on export freight which is later refunded is an unnecessary burden which stretches the working capital requirements of exporters. The report taken out by the committee, recommends that export freight through air, sea and railway may be exempted or rationalised. Elaborating on the pros and cons of GST, Vipin Vohra, Chairman and Managing Director, Continental Carriers Pvt Ltd, explains, “Goods and Services Tax (GST) is a very good concept and expected to address the hitherto prevalent delays and inefficiencies in the logistics system in the country. GST is not levied on export goods and services all over the world. Inclusion of export goods and related services to the taxable items under GST will have negative impact on the exports. This is expected to add to the cost and cause financial burden on the exporters.” He continues, “Logistics costs have been one of the major bottlenecks for Indian exporters

february 2018 - CargoConnect

37


special feature “Levy of GST on export goods and services, is a stumbling block and huge financial burden on the exporters. In addition to scaling up the cost of exports, thereby eroding the competitive edge in the global market, GST adds to the financial burden by blocking huge amount of money, awaiting refund. In the overall interest of the export trade and the Nation’s economy, Government should reconsider the decision and exempt GST on exports.” Vipin Vohra, Chairman and Managing Director, Continental Carriers Pvt Ltd looking for a firm footing in the global market. India, with already high logistics cost at over 15 per cent, is already at a disadvantageous position and this added cost will further worsen Indian exporters’ competitive position vis-à-vis China. Considering the above, there is an urgent need to remove export goods and services from the ambit of GST.” Talking about the rates of GST, Vohra adds, “They are different for different modes of transportation, i.e. air, sea, rail and road, of export goods. This creates confusion, especially in a multi-modal scenario. A considerable amount of money gets blocked towards payment of GST,

faced by the export trade.” Agreeing with Vohra, Ashish Asaf, CEO and Managing Director, S A Consultants and Forwarders Pvt Ltd opines, “GST has definitely transformed the entire business landscape into a modern and efficient model. If we perceive it in long run – changes in the Indirect Tax System has reduced the transportation cycle times, enhanced supply chain decisions, leading to consolidation of warehouses etc., which thereby helps the logistics industry reach its potential in terms of service and growth. But, in the short run, it has various challenges which can be seen from the exporter’s

which falls under the refund process. The process itself seems long-drawn; without any benefit or earning to the Government. The need of the hour is to re-look at the implementation of GST and remove issues

point of view like liquidity problems, the process necessitates upfront payment of GST while procuring inputs and getting refunds after substantial lag block working capital. While, they need to pay

38 CargoConnect - february 2018

IGST or take exemptions, which increases compliance costs and refund may take place after 3 to 12 months of payment of taxes. This gap makes exports expensive and the current scenario nullify the gains, making exporting high cost and complex. This would upset manufacturing, employment, exports and other economic parameters.” Asaf informs that life of over one lakh active small exporters has become difficult due to high GST rates. He further adds, “They cannot export anymore unless they register as regular GST firms. Since taxation at the time of asset creation as well as discrimination between domestic and foreign shipping companies may strike at global competitiveness and discourage fresh investments on the other hand the charges levied passing on to the exporters, is making exports uncompetitive, which would be self-defeating and would result in campaigns such as ‘Make in India’ becoming unfeasible and losing steam.” Meanwhile, Bharat Thakkar, Joint Managing Director, Zeus Air Services Pvt Ltd informs that as per the Rule number 10 of the ‘Place of Provision of Services Rules, 2012,’ there wasn’t any service tax applicable on the air freight or sea freight. And now, after the implementation of GST, logistics sector has come under serious financial burdens and has affected the operations. “It is unfortunate that logistics industry has been ignored, and what is more shocking is that during a discussion on GST with the authorities recently, they agreed on our demands that GST should not be levied and an amendment is possible, but in the last GST Council meeting, we didn’t get any solution,” complains Thakkar.


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special feature “ As per the Rule number 10 of the ‘Place of Provision of Services Rules, 2012,’ there wasn’t any service tax applicable on the air freight or sea freight. And now, after the implementation of GST, logistics sector has come under serious financial burdens and has affected the operations.” Bharat Thakkar, Joint Managing Director, Zeus Air Services Pvt Ltd

Addressing the issue, Samir J Shah, Partner, JBS Group of Companies opines, “The concept of charging on export cycle itself is incorrect and needs to be urgently removed. There is also a similar thought process in the GST council. High rates and the unsettled software add to the woes of an already subdued Indian exporter who competes against countries having a much lower Logistics cost than us.” Coming forward in support of air cargo experts, Air Cargo Forum of India (ACFI) has also taken out few guidelines. K S Kunwar, Director General, ACFI, on behalf of ACFI shares, “We fully support the efforts of the Ministry of Finance (MoF) for introducing the Goods and Services Tax (GST) which is a very bold step of the government for the significant tax reform. Air Cargo Logistics Trade in the Aviation industry in India plays a key role in the long term economic growth of our country as more than 35 per cent of country’s international trade in terms of value, moves by air. However, on the introduction of GST in the aviation industry particularly the air cargo sector is required to undergo significant changes from financial compliance and processes to ensure that business is not affected from the current tax regime to the GST. Since many years the Government has accorded various concessions and exemptions’ which plays critical role in the sustainable growth of air cargo sector and, therefore, it is essential that the Government continues to support air cargo sector under the new GST regime also.” GST on Exports: Exempted or Rationalised? Though GST is refunded later, it has literally stretched the capital requirements of exporters, due to which small exporters are not able to export anymore. On asking whether it should be exempted or rationalised? Asaf comments, “It should not be exempted but rationalised, as pre-GST, exporters were free from this burden. They used export schemes to buy duty-free raw material or machinery needed for making an export product. Now, if a firm adds 30 per cent value to inputs, it would then need to buy raw material of value $ 77 for exports worth $100. GST rate is 18 per cent; he would need to borrow $13.80 from the bank to pay the GST first. The capital lock up at the country level would be staggering and the working capital lock up has increased export product cost by 1-2 per cent. Exporters from the engineering, electronics, automobile, chemical and pharmaceuticals sectors have longer processing time comparatively.” Vohra too reiterates that levy of GST on export goods and services,

40 CargoConnect - february 2018

Expectations from the Government The expectations of Indian freight forwarders have been met – GST implemented, logistics industry granted infrastructure status and lot more. But, Indian freight forwarders are now keen to take this issue forward to the authorities as they couldn’t bear the increased financial burden anymore. Citing their expectations from the government, Vohra mumbles, “The Government has introduced GST regime and accorded infrastructure status to logistics industry to spur investments and bring in much-needed efficiencies to logistics service providers in the country. The logistics industry suffered from the high cost of operations, adding around 14 per cent to the product cost, as against seven to eight percent, globally.Ever since the Scheme was introduced, all stakeholders and affected agencies made representations on various issues encountered by them and the Government has eased many problems, through numerous modifications and changes. The export fraternity is expecting the Government to totally exempt GST for exports and related activities.” On the other hand, Asaf shares several solutions available for resolving the working capital issue which can be adopted by the government. “Government should extend the ab initio duty exemption facility like the one accepted for SEZs, to all exporters. Such exemptions are available in many countries. So that additional cost can be minimized, Tax reimbursement period can be minimized to avoid cash flow crunch which is already promised by the govt. to offer e-wallets or refund by April 1 next year which is positive step that will improve sentiments and reduction of GST rate from many more products and business units.”


special feature “GST has various challenges which can be seen from the exporter’s point of view like liquidity problems, the process necessitates upfront payment of GST while procuring inputs and getting refunds after substantial lag block working capital. While, they need to pay IGST or take exemptions, which increases compliance costs and refund may take place after 3 to 12 months of payment of taxes. This gap makes exports expensive and the current scenario nullify the gains, making exporting high cost and complex.” Ashish Asaf, CEO & Managing Director, S.A Consultants & Forwarders Pvt Ltd

is a stumbling block and huge financial burden on the exporters. “In addition to scaling up the cost of exports, thereby eroding the competitive edge in the global market, GST adds to the financial burden by blocking huge amount of money, awaiting refund. In the overall interest of the export trade and the nation’s economy, Government should reconsider the decision and exempt GST on exports,” he whines. Shah stresses that GST should be exempted. He continueed, “GST being consumption based tax and since consumption in exports is not in Indian Territory all activities leading to direct export have to be exempted - not even nil rate.” On a positive note, Thakkar also jots down his expectations from the Indian government: 1. “Zero Rating: It had been recommended that: (a) international transportation of goods including freight forwarding should be zero rated; (b) ancillary services in relation to international transportation of goods such as Customs clearance, warehousing, storage, cargo handling, packing, unitisation etc. should be zero rated. 2. Single Registration: It had been recommended that the concept of centralized PAN-based registration must be retained, whereby any service provider in the international transportation segment can have a centralised registration and discharge applicable tax through the GST Portal. Further, it has been recommended that the tax payer should be centrally registered at the principal place of business or registered office and

42 CargoConnect - february 2018

According to a report by Government of India, Ministry of Finance (Department of Revenue) Exemption on high rates of GST on export freight by air, rail and sea has been granted and shall apply from September 30, 2018, onwards. The order reads 1. Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place outside India - (Shall apply after September 30, 2018) 2. Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India - (Shall apply after September 30, 2018) undertake compliance from the central location for all activities throughout the country. The place of supply for international transportation of goods, freight forwarding and related services should be the location of the billing address of the recipient of the services as specified in the invoice issued by the service provider.

3. GST Credit: It had been recommended that the credit should be based on the invoice raised by the service provider without insisting on the matching of invoice data through the systems. Further, it has been recommended that the central location which is allowed a single registration should be permitted to take all credits in that location.” Agreeing with Thakkar, Kunwar also reiterates that they have outlined key submissions covering the following aspects:1. Single registration Requirement “There should be a single registration for Air Cargo Logistics Industry constituents of the air cargo logistics trade and industry and given the nature of Air Cargo Services, it is imperative that a central pan India registration be allowed for the Air Cargo service industry for ease of compliance and administration (similar to what already been recommended by the Select Committee for the Banking Industry). ACFI also believes that GST charged to Air Cargo service providers would be a wash transaction as input taxes would be available as set off and therefore, a single registration and pooling of credit will not result in loss of state revenues. 2. Issues related to valuation of services Air cargo logistics services is a complex solution of services and solutions to the end user involving variety of services and skills that cannot be standardised under the valuation rules. Hence, the valuation of such services is a complex mechanism and it depends on contract to contract transaction to transaction. In view of this, the amount charged by service provider on the invoice should be accepted as final taxable value. To minimise tax costs, it is suggested that


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special feature “The concept of charging on export cycle itself is incorrect and needs to be urgently removed. There is also a similar thought process in the GST council. High rates and the unsettled software add to the woes of an already subdued Indian exporter who competes against countries having a much lower Logistics cost than us.” Samir J Shah, Partner, JBS Group of Companies

reimbursements be specifically excluded from the value of service. 3. Proposed place of supply rules under GST a. Location of service provider should be the single registered premise and the location of the service receiver should be the billing address in the records of the service provider as on the date of billing. b. Currently, in respect of freight forwarding in the air cargo segment there is no service tax based on Rule 10 of the Place of Provision of Service Rules, 2012, which provides that the place of provision of service in respect

Impact of GST on Export/Import Ever since the bill has been passed, the pros and cons of it are being discussed actively by the industry experts countrywide. According to them, the benefits of GST can only be perceptible in the long run. At present, they are struggling to adjust with the implications that have come handy with the bill. Vohra shares, “The impact of introduction of GST on the import/ export industry is yet to be felt, fully. The regime is still undergoing many changes and modifications; to remove the issues brought out by the stakeholders.

which has made the process costlier, other than that it has various positive impacts. After having a unified market under the new GST regime, the flow of goods within the country became smoother. The development of transportation and logistics-related infrastructure such as dedicated freight corridors, logistics parks, free trade warehousing zones, and container freight stations are expected to improve efficiency.” Observing the same, Shah also feels that the pressure on finances is high. Also the service providers and users not being very particular have not done suitable quality

“Since many years the Government has accorded various concessions and exemptions which plays critical role in the sustainable growth of air cargo sector and therefore it is essential that the Government continues to support air cargo sector under the new GST regime also.” K S Kunwar, Director General, ACFI of transportation of goods other than by way of mail or Air Cargo to be the place of destination of the goods. c. In the freight forwarding segment involving air cargo pertaining to export of goods from India, the place of destination is outside India and consequently service tax is not payable. This view is also confirmed by Para No.5.9.6 of the CBEC, Education Guide in the prevalent pre-GST scenario.” Offering a solution, Shah suggests, “GST is a definite game changer. We look forward to a simpler tax regime supported by strong software managed by a trusting tax regime.”

44 CargoConnect - february 2018

Speed, transparency and cost reduction at various stages of processing of import/ export activities, single window scheme etc. initiated by the Government for ‘ease of doing business’ are certainly showing results. Once the problems encountered due to the change are removed, the GST regime is expected to deliver excellent results and contribute to the growth of economy.” However, Asaf states, “Shipping, freight, and logistic charges have changed quite a bit, the tax liability on of terminal charges, warehousing, and cargo handling and cost of transportation has increased a bit earlier service tax was not levied on airfreight

data filing in the GST and other portals which has led to blockage of funds. “At the end of six months we should have been settled in this tax regime much more than we are presently,” he mumbles. However, Thakkar concludes by saying, “We, service providers have become financers, as airlines and shipping collect GST along with freight charges and we await its recoveries from customers, as their Credits from GOI are usually delayed.” Only time will tell what lies ahead for the exporters now and how they will manage to steer through all the challenges that looking at them right in the eye.


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feature

Apparel tying the knots of supply chain With India becoming the global hub for sourcing apparel, managing logistics activities efficiently has become the foremost priority of logistics service providers. According to reports, the Indian retail market was worth `41,66,500 crore (US $641 billion) in 2016 and is expected to reach `1,02,50,500 crore (US $1,576 billion) by 2026, growing at a Compound Annual Growth Rate (CAGR) of 10 per cent. Ritika Arora Bhola in line with experts talks about the Indian apparel industry as a whole, significance of on-time delivery, existing challenges and the way out.

46 CargoConnect - february 2018


feature

A

t a first glance, super-models walking the ramp at a fashion event flaunting dazzling longflowing silhouettes won’t let anyone think about the logistics and supply chain processes involved with getting the garments right on time at the venue from the place of manufacturing except for the designer. Also, later when the images of these divas flashes on the TV screens, consumers clamour to find the exact replicas of the outfits, sending the apparel companies into an overdrive to meet the demand and deliver the garments at the earliest. Such scenarios make the supply chain and logistics process in the apparel market very time-sensitive and the ability to exploit this sort of immediate demand helps manufacturers earn huge profits and hold fashion consumers for lifetime. Since India is becoming one of the world’s most important centres to source apparel, managing logistic activities efficiently becomes the foremost priority of logistics service providers. Indian economy is now considered to be one of the fastest growing economies of the world. Of late, the industry has witnessed major shifts in consumers’ preferences from non-branded to branded outfits/accessories, increasing disposable i ncome, i nter net penet rat ion, bra nd awareness, tech-savvy population and lot more. In fact, several renowned international designers have already opened their outlets in India and even leading Indian designers are nowhere behind to make their presence globally. Overall, Indian retail scenario has shown sustainable long-term growth compared to the other developing economies. According to statistics, the Indian retail market was worth `41,66,500 crore (US $641 billion) in 2016 and is expected to reach `1,02,50,500 crore (US $1,576 billion) by 2026, growing at a Compound Annual Growth Rate (CAGR) of 10 per cent. It is envisaged that the current fashion retail market worth `2,97,091 crore (US $46 billion) will grow at a promising CAGR of 9.7 per cent to reach `7,48,398 crore (US $115 billion) by 2026.

India has the world’s largest youth population, which is becoming fashion conscious ow i ng to mass med ia a nd social media penetration. This has opened unprecedented retail market opportunities. The promising growth rate of 9.7 per cent makes the Indian fashion industry prominent in the retail sector. With a GDP growth rate of seven per cent, India has an edge over developed markets of the US, Europe and Japan which are expected to grow at a rate of two to three per cent. Favourable trade policies and increased penetration of organised retail among other factors contribute in making Indian fashion industry attractive for investors. Observing the same, Oliver Bohm, CEO, Schenker India reiterates, “Indian apparel industry which is the second largest contributor in the retail industry is seeing some major shifts in consumer preferences. Increased demand in the domestic market, changes in preference from non-branded to branded and quick manufacturing at an affordable price has lead to major foreign brands such as H&M, Zara, Peacocks, Primark, Xcel Brands and Topshop etc to enter the Indian market. This has opened unprecedented retail market opportunities. The promising growth rate of 9.7 per cent makes the Indian fashion industry prominent in the retail sector. Overall, favourable trade policies and increased penetration of organised retail among other factors will drive the demand for this industry.” While focusing on mobility and on-time delivery Rahul Mehra, CEO, AWL India explains, “Mobility is playing a key role in the end-to-end process of apparel logistics. Applications right from pickup to delivery (including delivery signature), tracking based on order number, customised delivery windows, integration with access points are playing a major role in retail logistics and the future will widely rely on such technological innovations. Smartphone evolution has already transformed the domain of logistics and is expected to play a pivotal role in future too. Moreover, currently orders are driven from

february 2018 - CargoConnect

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feature Various technologies such as CPFR, VMI and RFID technology will be helpful for Indian garment companies to maintain the real time tracing and visibility by detecting errors in manufacturing and warehousing for efficient supply chain process.”

Oliver Bohm CEO, Schenker India major locations but as this industry would grow and the internet would expand in rural areas, there would be focus on rural delivery. This would pose another challenge in terms of network strength as well as cost of delivering at these remote locations.” Agreeing with Mehra, Kabir Rustogi, Principal Data Scientist, Delhivery stresses on the growing e-commerce market and says, “As the coverage of logistics companies gets wider across India, the apparel market will be able to target more and more markets. For example, a couple of years ago, very few e-commerce companies used to service cities and villages in the North-East. However, as logistics companies such as Delhivery have expanded operations in these states, e-commerce companies have been able to tap into the huge latent demand originating from the North East.” Meanwhile, RS Subramanian, Country Manager, DHL asserts, “There is certainly a high demand for Indian textiles and apparels internationally. India is the second largest exporter of textiles in the world, with a global share of five percent. The country as a whole, exports garments to over 100 countries. Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021, with readymade garments as the largest contributor. The greater penetration of organised retail, favorable demographics, and rising income levels will drive the demand for textiles within the country. In terms of exports, setting up of apparel parks within the country, favourable policies and the Government’s focus on Make in India, will provide a major boost to apparel exports. Moreover, the current boom in cross border e-commerce, ease of international shipment movements and the availability of

48 CargoConnect - february 2018

customized delivery options such as DHL Express’ ‘On Demand Delivery’ platform, will in turn contribute to the growth of the sector.”

On-time delivery: Promising Strategy On-time delivery of high quality products to the customers is the only promising strategy that manufacturers or retailers swear by in today’s world. The logistics activities involved in carrying apparel from manufacturing point to the retailer and then to the customer via rail, road, air is a time-consuming process. But, a retailer would never want to lose his customer

and smart warehousing, Bohm highlights, “Manufacturing industry is facing far greater expectations around efficiency and performance than ever before. Customers expect shipments faster, flexible and with more transparency at lower prices. Changing customer expectations is a result of both operating models and profitability which is under strain in this industry. Ultimately, greater adoption of technology along with smart warehousing solutions will lead to a better customer experience. In this context yes, on-time delivery of high quality products and their shipments is a major promising strategy to hold on to customers. As it redefines everything from

On-time delivery of high quality products to the customers is the only promising strategy that manufacturers or retailers swear by in today’s world. therefore he makes sure the supply chain process is efficient enough to meet the challenges of delivering fast and on-time. Also, with the introduction of advanced technology like VMS, GPS, RFID and smart warehouses, the manufacturers are somewhere able to achieve their goals of efficient working and fast delivery. In addition, with the growing e-commerce market, instead of hopping from one store to another, customers now prefer shopping online while sitting at home or at workplace. Talking about the use of technology

the way they interact with customers to how they structure supply chains.” He continues, “In apparel market, there is a constant need of on-time delivery of the projects. Therefore, it is critical for a logistics player to enhance the availability, accuracy and reliability of the goods so that it will reach to their prospect consumers well on time.” Meanwhile, Mehra stresses on the fact that same-day delivery has the potential to fundamentally change the way we shop. He affirms, “It integrates the convenience of online retail with the immediacy of


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feature Success of same day delivery services depends largely on location as same day delivery services are more feasible in densely populated areas as these shipments cannot go through regular hub and spoke delivery model because of compressed timeline.”

Rahul Mehra CEO, AWL India bricks-and-mortar stores. Demand is expected to increase significantly given the compelling value proposition of sameday delivery for consumers. From the perspective of a logistics provider it is all about surviving and thriving in a world where instant gratification rules. To excel

delivery options increase,” says Mehra and adds, “Success of same day delivery services depends largely on location as same day delivery services are more feasible in densely populated areas as these shipments cannot go through regular hub and spoke delivery model because of compressed timeline. The

Top ten exporters of clothing, 2016

(US$ billion and annual percentage change, %)

10

180 160

161 6 4

140 120

6

5

0

0

117 -2

100 80

5

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-7

-5 -15

60 40

28

20

25

-15

-15

18

16

15

7

6

6

Indonesiab

Cambodiab

United States

US$bn Chinaa

European Bangladeshb Viet Namb Union (28)

Exports, US$ billion

India

Hong Kong, China

Turkey

%

Annual percentage change, %

amid consumers’ rising expectations for on-demand fulfillment, retailers require a holistic supply chain strategy and omnichannel fulfillment centers that turn sameday delivery challenges into competitive advantages.” Mehra complains that meeting customer expectations has become more complicated than ever before. “On-the-go, mobile shopping habits make consumers’ behaviour unpredictable, while product variety and

50 CargoConnect - february 2018

type of product/shelf life is another major factor to be considered. It is very difficult to deliver certain large size products like home furnishing items on same day basis. Customer’s expectations about delivery time also vary depending on the product category. Food, grocery and flowers need faster delivery followed by apparels, electronics and other items.” On the other hand, an e-commerce expert, Rustogi focuses on their in-house

supply chain network and tells that it has been optimised for the e-commerce industry, with a focus on delivering shipments at the fastest speed and lowest cost. “We leverage Data Science to ensure that our network design remains optimal even as market requirements change. For instance, Delhivery pioneered the approach of sorting shipments based on locality name rather than traditional pin-code sorting. This approach allows us to process the lastmile of the delivery, the most expensive and error prone step in the supply chain, more effectively. The technology that has enabled this paradigm shift is a Machine Learning Algorithm known as AddFix, which is able to automatically deduce the locality name and precise geo-code of any raw address string.” H igh l ighti ng the i mpor ta nce of delivering at minimum cost, Rustogi insists, “The Indian market is very price sensitive and people normally shy away from paying `150 -200 in Delivery charges. This cost is normally borne by the e-commerce companies, but this may not be sustainable for a very long time.” Talking about the need for on-time delivery and supply chain process of DHL, Subramanian explains, “The apparels sector is fast moving in nature. Customers increasingly want to keep up with the latest fashion trends; thereby on-time delivery is critical. This is our core business offering. However, there are many other factors that also come into play, which logistics players must equally focus on, such as, constant shipment visibility, support on customs clearance and ensuring appropriate handling of shipments. All these factors are equally important for a seamless shipment journey, which is what customers are looking for. We manage the entire supply


feature More than 75 per cent of customers order apparel on e-commerce websites with an option to pay Cash-on-Delivery (COD). Almost 30 per cent of such customers do not end up accepting the shipments. This results in a huge overhead cost for the e-commerce companies.”

Kabir Rustogi Principal Data Scientist, Delhivery chain for our customers in the apparels sector. Right from purchasing materials and quickly moving samples, to delivering the finished product to the stores, DHL Express offers solutions across the board. Our tailor made offerings includes valueadded services such as track and trace capabilities to enhance shipment visibility, international express services for on-time deliveries, as well as global trade services to provide specialist brokerage assistance.”

Apparel Logistics: Challenges India has a large network of air transport, rail, road and sea. But, in spite of the large and impressive logistical network there are inefficiencies in the Indian logistics setup. Inadequate road and rail infrastructure, complicated tax process and many check posts usually caused unnecessary delays due to which goods could never reach ontime. But now that Goods and Service Tax (GST) has been implemented, industry expert seek acche din. According to a report by the International Journal of Managing Value and Supply Chains, an efficient logistics system is required for an effective supply chain. Logistical infrastructure in India is highly fragmented and includes both the organised and unorganised companies, which is mainly dominated by the unorganised sector consisting of the brokers and transport companies affiliating the small owners having five or less trucks, small warehouse operators, customs brokers, etc. High fragmentation and underdevelopment of Indian logistics industry result in the lack of economies of scale. The underdeveloped infrastructure is the main reason why Indian logistics i ndust r y is under per for m i ng. Bad cond itions of the road s a nd ma ny check posts with different document

52 CargoConnect - february 2018

requirements slow the movement of the cargo and it takes three times more time reaching its destination than the one in USA. Insufficient infrastructure of seaports and the procedural clearances lead to the congestion which results into long waiting time of the ships at the ports which may be as long as five days. On the other hand, Mehra says, “The concept of fulfillment goes hand in hand

never cheap.” Meanwhile Rustogi focuses on the importance of having correct geo-codes, “A key challenge in driving automation and efficiency in the logistics and supply-chain industry is to make address records machine readable and convert them to precise geo-codes. Indian addresses are often unstructured, which makes it very difficult for machines to understand them. This

High fragmentation and underdevelopment of Indian logistics industry result in the lack of economies of scale.

with the very nature of the communciation – fast, efficient, readily available. There are multiple lead time requirements based on the customers’ requirements. Other complexities include moving from pallet to piece pick at all levels of the supply chain. Complexity in deliveries - from few retailer addresses to numerous customer address; and add to it the high return flow. The challenge is to create an optimal network per product/ market combination. One of the biggest challenges in the space remains….Location! And good locations are

results in huge costs for last-mile operations. While in developed countries the last-mile contributes around 10 per cent to the overall transportation cost, in India this cost is between 30-40 per cent. Possible solutions include developing smart AI algorithms that are able to convert any address to a precise geo-code with high accuracy, eg., Delhivery’s AddFix, wide spread adoption of smart addressing schemes such as eLoc, Zippr, Plus codes, What3Words etc., which ensure that addresses are standard and machine readable.”


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feature India is the second largest exporter of textiles in the world, with a global share of five per cent. In terms of exports, setting up of apparel parks within the country, favourable policies and the Government’s focus on Make in India, will provide a major boost to apparel exports.”

R S Subramanian Country Manager, DHL Rustogi continues by saying that another major challenge in apparel logistics is related to return of products. More than 75 per cent of customers order apparel on e-commerce websites with an option to pay Cash-onDelivery (COD). Almost 30 per cent of such customers do not end up accepting the shipments. This results in a huge overhead cost for the e-commerce companies. This problem may be solved if e-commerce/ logistics companies are able to profile

in mind, organisations must focus on reducing lead times instead of completely relying on forecasting. Further, attention must be paid to streamlining supply chains. Better transportation, progressive trade policies and technology will all play a key role in this.”

Way out The industry is aggressively looking for solutions to resolve existing challenges so

The concept of fulfillment goes hand in hand with the very nature of the communciation – fast, efficient, readily available. There are multiple lead time requirements based on the customers’ requirements.

their customers and are able to predict the shipments which are at a higher risk of being returned. Such shipments may be handled differently by logistics companies to ensure that returns are minimal.” High l ighti ng the cha l lenges, Subramanian also asserts, “The apparels business witnesses frequent variations in demand due to rapidly changing fashion trends and market volatility. This creates complexities in the supply chain. Conventionally, it is said that the best way to cope with uncertainty is to improve the quality of forecast. However, the nature of the industry is such that it is highly unlikely that there will ever be forecasting methods that can consistently and accurately predict sales. Keeping this

54 CargoConnect - february 2018

that apparel industry grows at a promising rate. Industry experts talks of having advanced technology, smart warehouses, automation as the solutions for achieving greater efficiencies. Bohm highlights, “Various technologies such as CPFR, VMI and RFID technology will be helpful for Indian garment companies to maintain the real time tracing and visibility by detecting errors in manufacturing and warehousing for efficient supply chain process. Technology is another aspect where Indian garment industry should shift their focus on to make major transformational advancements to streamline the supply chain practices. They are lacking behind in the implementation of the practices like VMI and CPFR in spite of its proven necessity. Therefore, it is necessary

to consider the major technological shifts and bring it in the Indian industry to enable and restructure the supply chain as soon as possible.” However Mehra says, “To meet the demand for tighter deliveries, logistics companies are looking to locate their d i st r ibut ion faci l it ie s ne a r m ajor metropolitan areas where real estate commands a premium. In order to remain competitive and turn a profit, maximising the use of the vertical cube for greater storage capacity will become increasingly important. Compression of the Order Fulfillment Process is another challenge which we face. With traditional fulfillment allowing a longer cut-off window to meet service levels, same-day shipping requires the pick-pack-ship process to be handled not in hours but literally minutes. Adding to this complexity is the nature of an e-commerce order which typically is comprised of individual SKUs versus full cases, resulting in labor-intensive and more difficult picking operations.” On a positive note, Subramanian shares, “Customs and border regulations vary from country to country. With our presence in over 220 countries, DHL Express has expertise in the network to overcome challenges that arise out of such regulation. In view of this, DHL Express works closely with regulatory authorities across the world to help customers navigate the complex regulations. We also have extra distribution routes in place to handle increased volumes and last minute critical deliveries. Due to our expertise in this sector, customers can be assured of efficient, reliable and seamless movement of their shipments. This, thus allows them to focus more on their business instead of the complexities involved in logistics.”


“Our world revolves around our customers”


feature

Significance of Connectivity for Industrial Parks

Industrial parks certainly offer several benefits to the industries operating within their periphery. Industries derive certain benefits like easy availability of infrastructural facilities, skilled labour, maintenance, service facilities and easy access to the rail and road facilities. Among all the facilities, the facility of good transportation access is considered essential for the success of an industrial park. Gaurav Dubey takes the view of industrial players on the significance of connectivity for industrial parks and presents a short report.

56 CargoConnect - february 2018


feature

T

he industrial parks are constructed across the world to facilitate the industries and business functioning inside the parks by providing all the essential requirements at a stone’s throw distance. An industrial park is an area zoned and planned for the purpose of industrial development. We can consider it as a ‘heavyweight’ version of a business park or office park, which has offices and light industry, rather than heavy industry. Industries reap a lot of benefits by operating in an industrial park. The units located in an industrial park could enjoy economies of scale by adopting centralised buying and selling. The requirement of all the members for raw materials and components can be pooled

together and bulk purchases made. Such bulk purchases would be eligible for quantity discounts resulting in lower costs. Similarly, in the case of sales, the finish goods of industries can be pooled together and sold. This would reduce selling costs to a great extent. This kind of centralised buying and selling would enable member units to enjoy scale economies. Concentration of similar industries at one place also lowers down the production cost. Apart from reduced production cost, other benefits which industries get are  Easy availability of skilled labor  Availability of repair, maintenance and service facilities  Accessibility of components  Presence of financial institutions

february 2018 - CargoConnect

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feature â&#x20AC;&#x153;Faraway location of an industrial park from a seaport or an airport negatively impacts the industries which do business across the borders or for long distance. The time taken by manufactured goods or raw material to reach airport or seaport via road/rail from the Industrial Park is considered as a parameter to decide the faraway location.â&#x20AC;? Viral Soni CEO, Mascot Infrastructure Private Limited

The infrastructural facilities such as electricity, water, roads, telecom etc. are readily available in industrial estates. Entrepreneurs need not spend their time and money to get electricity connection, water supply and telephone connection. Therefore production can be commenced

limited or non-existent. In such a scenario, remote location of industrial parks or distance from seaports and airports negatively impacts those industries which are involved in the EXIM business. It also marginally affects industries which primarily focus on domestic markets.

Condition of roads and volume of traffic plays major role in the swift delivery of goods to the seaports or airports.

immediately without any wastage of time and resources. Industrial estates create more employment opportunities and increase the mobility of labour. Since many of the units are labor intensive, there are opportunities for both skilled and unskilled workers. Usually, industrial parks are located on the edges or outside the main residential area of a city, and normally provided with good transportation access, including road and rail. However, different industrial parks are able to fulfill theses criteria to different degrees. There are several industrial parks with access only to a nearby highway and with the basic utilities and roadways. Public transportation options may be

58 CargoConnect - february 2018

Viral Soni, CEO, Mascot Infrastructure Private Limited feels connectivity undoubtedly plays a major role in case of the location of an industrial park. The type of connectivity required depends on the nature, type and size of the industry operating in an industrial park. Following are his views:

Disadvantages for a remotely located Industrial Park Basically, Industrial Park means solution for cluster of industries with ready infrastructure space. Connectivity plays important role when it comes to the location of an Industrial Park. The type of connectivity which matters to the

park depends upon the type and size of Industries operating in the park. If there are exports oriented units established in the park, then it is essential for the park to be situated in the close vicinity of seaports or airports. Same is the case for industries using imported goods as their input. Similarly, highway connectivity is of utmost importance for the domestic small and medium scale industries. Faraway location of an industrial park from a seaport or an airport negatively impacts the industries which do business across the borders or for long distance. The time taken by manufactured goods or raw material to reach airport or seaport via road/rail from the Industrial Park is considered as a parameter to decide the faraway location. If manufactured goods or raw material take more than eight hours via road/rail to reach seaport or airport then the industrial park would be considered as located at the remote location. At the same time, faraway location from highway connectivity is absolutely big disadvantage for any Industry which is small or big operating nationally or internationally.

Steps to swiftly deliver goods to seaports or airports Condition of roads and volume of traffic plays major role in the swift delivery of goods to the seaports or airports. This is a classic case for most of the Indian states as they donâ&#x20AC;&#x2122;t have any sea border exposure. In such a scenario, one of the solutions can be rail route connectivity directly to the park or via ICDs (Inland Container Depot). Such connectivity will not only reduce the transport time, but also reduce the cost incurred in the same. Upgrading and widening of roads is also one of the basic


feature

“Economics of industrial parks works on the proximity from the raw material and distribution channels. The industries which focus more on the EXIM business at the place of domestic markets get affected most due to the remote location of an industrial park.” Amit Kumar Promoter and Director, Pristine Logistics

solutions that our country needs to provide better connectivity to the industries located at the remote locations. One more trend which has become popular nowadays is to setup the eco system of Industries within the same region. For example: Gurgaon - where automobile industry has its own ecosystem which is setup in the radius of 50 km. Vendor industries have set up their units near to their customers i.e. auto companies like Honda and Maruti Suzuki. Same model

Distance has great impact on industries having their logistics supported by sea routes, mostly the ones having large amount of import/export of raw materials/ finished goods. is being repeated in Gujarat now where Honda and Suzuki is being followed by their existing vendors. Industrial Park setup in such region greatly benefits such vendor industries to cope up with logistics related hassles. This is exactly what we have done as an Industrial Park Developer - we set up one of the world class facilities -Mascot Industrial Park within 50 km radius from Honda, Suzuki, Tata and Ford as well as in cities like Ahmedabad, Gandhinagar and Mehsana.

Distance affects the financial health of a company Distance has great impact on industries having their logistics supported by sea routes, mostly the ones having large amount of import/export of raw materials/ finished goods. Logistics have great direct and indirect cost impact on the cost of production of any industry; sea route transport being one of the most cost effective logistics means for faraway destination has great impact to the financial health of manufacturing.

Impact of GST on transportation activity GST would be the game changer for Indian Logistics scenario; as it will promote consolidation of warehousing space and production facilities. Instead of number of warehouses/production units in each states GST will promote centralisation of the warehousing and Production units geographically. This means longer leads and to support this industry must streamline their logistics front. Airports and seaports are one of the most dependable means when it comes to transporting goods. Hence, GST will promote creation of large scale industrial parks/zones near to seaport or airports. Amit Kumar, Promoter and Director, Pristine Logistics kept the scope of his comment broad and presented his views ranging from the location impact on industrial parks, role of technology in warehouses of future to GST’s effect on road transportation. He puts forth his views:

Impact of the location on Industrial Parks Any industrial park has two components – supply of raw material and another is

the distribution of its finished products. It entirely depends on the type of industrial park and its main focus area of the business. For example – Food Processing industrial parks are generally located in close vicinity of raw materials as raw materials for Food Processing industry are bulky in nature and voluminous. Hence, their economics works on the proximity from the raw materials. So, it is a dynamic thing there is no fixed rule for it, basically, industrial parks are located where their catchment of selling products are located nearby. Location of an industrial park near railways has its own advantages. Similarly, such industrial parks are located near ports which are involved in Export Import Business. Apart from it, most industrial parks are not impacted by their proximity from ports as they focus more on domestic markets at the place of EXIM.

Role of warehouse automation in business growth Mechanisation of warehouses will certainly put a positive impact on the cost efficiency and it will become the growth driver in the future. Operating cost would be reduced by implementation of technology as manpower has been increasingly getting costlier by every passing day. Earlier, manpower cost was less in China but the scenario there has changed today, similarly, manpower cost is also escalating in India nowadays. While on the other hand, this is also a hard truth that unemployment rate is higher both in India and China so mechanisation of warehouses will also put a negative impact on the employment opportunities. Hence, more and more use of technology will diminish the employment chance of people, but, it would be cost effective for a warehousing company. february 2018 - CargoConnect

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Interview VE Commercial Vehicles Limited (VECV) is a joint venture between the Volvo Group and Eicher Motors Limited. In operation since July 2008, the company includes the complete range of Eicher branded trucks and buses, VE Powertrain, Eicherâ&#x20AC;&#x2122;s components businesses as well as the sales and distribution business of Volvo trucks within India. Eicher Trucks and Buses displayed its entire range of heavy duty Pro series trucks for construction and mining at Excon 2017 including the flagship Pro 8031XM tipper and Pro 8049 Tip trailer for construction. Vinod Aggarwal, MD and CEO, VE Commercial Vehicles Limited in an exclusive chat with Deepashree Banerjee shares the outlook for the company going forward and how this year could turn out to be even better for them.

Commercial Vehicle Industry on a roll 60 CargoConnect - february 2018


VE Commercial Vehicles Ltd sold 4916 units in November 2017 as compared to 3174 units in November 2016, recording a growth of 54.9 per cent. Is this figure projected to increase in the same rate in the next few months? VE Commercial Vehicles sold 6087 units in December 2017, clocking a growth of 49.5 per cent, vis-à-vis same period last year (December 2016: 4071 units). While growth had seen a decline at the beginning of the year, it has been excellent since August. Short-term concerns have been dissipating and the economy is bouncing back. The pent-up demand is also getting freed with fleet owners returning to the market, who had deferred purchases till now. This is translating into higher volumes and movement towards higher tonnages. This is reflective of improving consumer sentiment; moreover, the Government’s increased spend on infrastructure and benefits of GST are also now showing a positive impact. The HD truck industry has witnessed a good growth of 34 per cent over second quarter of FY17. The overall industry outlook looks positive. We are witnessing a huge shift to higher tonnage trucks especially tractor trailers and multi axle trucks. In mining space, demand for 230-330HP class tippers is emerging. This shift is driven by requirements of greater productivity, increasing depths of mines and overall economics of operations.

What did the early trends in December look like in terms of construction and haulage vehicles? Also, how much market share are you targeting by the end of this fiscal year? CV industry is on a roll with an excellent growth over last few months and it was at a record level in November. The truck industry catering to mining and construction segment is in a transition mode as segmental shifts are taking place in terms of Gross Vehicle Weight, vehicle power and performance. With the ongoing push for infrastructure development, there are numerous projects

which are currently underway in sectors such as roads, railways and airport and irrigation across the country with further more in pipeline. Excellent progress has been witnessed in infrastructure especially in road construction. Looking at the overall growth of the industry, we are also looking at a positive growth and better results by the end of this fiscal year.

Eicher recently launched five variants for the e-commerce industry which are priced between `16.26 lakh and 27.4 lakh. How do you believe these variants will provide the e-commerce players with practical solutions for their transportation requirements? Eicher has always been a leading player in LMD segment. Eicher is already well placed with Pro 1000 series in basic truck

Looking at the overall growth of the industry, we are also looking at a positive growth and better results by the end of this fiscal year.” segment and Pro 3000 series in value truck segment. Currently, we command a 32 per cent market share and have been steadily growing. With our latest variants for the ecommerce segment, we want to further establish our strength with an array of long wheelbase product from 10-24ft, suited to ecommerce business requirement. LMD has a huge potential to grow and particularly more so after GST implementation. Several companies are in process of rationalising their warehouses which will involve increased hub to spoke transportations. Our variants for e-commerce are specifically designed keeping in view the specific needs of the sector from long haul to short haul and last mile delivery catering to varied requirements in urban, semiurban and rural areas. With benefits like higher volume space index, best in class fuel efficiency, high power and torque,

longest service interval of 50,000 kms and a warranty of four years unlimited km- Eicher offers the widest and the smart range of trucks for the e-commerce segment.

For VECV, the 12-15 tonne segment is the fastest growing segment with a staggering 65 per cent growth in September. Which are the other segments that are catching up apart from this segment? The 12-15 tonne segment is growing at a fast clip as customers are upgrading their trucks in light of restrictions on overloading. Improvement in national highways and removal of state check posts have improved the turnaround time of trucks and VECV with a wide range of offering from 12 to 15 T GVW and with payload ever higher than a 16 tonne 4x2 rigid truck is gaining rapid acceptance. The Central Government’s drive to significantly improve road infrastructure, for example the Bharatmala scheme is accelerating sales of heavy duty trucks and multi axel tippers. Multiaxle trucks (37 tonne in particular) besides tractor trailers are witnessing frantic growth in sales demand.

According to a release in October, VE Commercial Vehicles has plans to invest `400 to 450 crore as capex, as part of its plan to invest a similar amount year on year. What is this investment aimed at? The company has already invested around `3000 crore since the inception of joint venture. These investments have been made in new product developments where we have adapted Volvo Group technology in our Pro series of products. Then, we have set up a new Euro VI compliant state of the art Engine Plant, Bus body building plant, drive line Gear plants and also in modernising the exiting truck and bus plant at Pithampur apart from market facing investments like setting up company owned and operated dealerships. We will continue to make future investments in line with our business strategy for meeting market needs as well as on new product developments.

february 2018 - CargoConnect

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Interview

Making India’s EXIM swift through SWIFT project How Single Window Interface for Facilitation of Trade (SWIFT) project will enhance logistics efficiency in the country?

Single Window Interface for Facilitation of Trade (SWIFT) project has been playing a pivotal role in the improvement of logistics efficiency in the country. Gaurav Dhanda, Deputy Commissioner, SWIFT Project, Central Board of Excise and Customs, in an exclusive interview to Gaurav Dubey throws light on SWIFT’s impact on the country’s EXIM trade in near future and also talked about the contribution of the stakeholders of logistics industry in creation of SWIFT policy. Here are the excerpts of the interview.             

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As part of the “Ease of Doing Business” initiatives, the Central Board of Excise & Customs (CBEC), Government of India has taken up implementation of the Single Window Project to facilitate the Trading Across Borders in India. The ‘India Customs Single Window’ would allow importers and exporters, the facility to lodge their clearance documents online at a single point only. Required permissions, if any, from other regulatory agencies would be obtained online without the trader having to approach these agencies. The SWIFT, will enhance logistics efficiency in the country by reducing dwell time, cost of doing business and the interface of trade with regulatory agencies.

How SWIFT has been reducing dwell time of Export and Import clearance of shipments? SWIFT reduces dwell time of Export and Import clearance of shipments by making it simpler to process paperwork associated with Customs clearance. • Integrated Declaration: Allows traders to submit their integrated Import & Export Declarations that will contain clearance related information required by Participating Government Agencies (PGAs). Separate forms/ declarations pertaining to PGAs namely Food Safety (FSSAI), Drug Controller, Plant Quarantine, Animal Quarantine, Textile Committee and Wild Life Crime Control Bureau, will be dispensed with. • I n t e g r a t e d R i s k A s s e s s m e n t : Customs already has a functional Risk Management system which allows interception of consignment based on risk parameters. Now, under SWIFT, risk criteria of aforementioned major import regulatory agencies in India for interdiction, sampling and testing of consignments is progressively being fed into the system for an integrated risk based assessment system. • Automated Routing: The system

will apply business rules to identify consignments based on the declaration to automatically route them to the relevant PGAs. Such rules are based on CTHs, End Use of the consignments and other risk criteria provided by the PGAs. This system based referral of consignment for PGA intervention makes the process of clearance more compliant and transparent. • Online Release: The system that records and collates clearance related decisions and approvals from all relevant PGAs and delivers the results to the trader at a single point. • Paperless processing: A system that allows a trader to submit all regulatory information [Including Supporting Documents] electronically with digital signatures.

How stakeholders of the logistics industry have contributed in making of the single window policy which could facilitate ease of doing logistics business in India? SWIFT was launched on April 1, 2016. Above listed initiatives were launched after extensive feedback/ interaction with stakeholders. Logistics industry being an important stakeholder provided valuable suggestions and constant feedbacks on the facilities proposed to be provided under SWIFT which contributed in evaluation and stabilisation of the various aspects of SWIFT. The logistics industry can further improve the dwell time by improving the timelines of filing declarations.

Expected impact of SWIFT on country’s EXIM trade in near future? The objective of the project is to allow importers and exporters a facility to lodge their clearance documents online at a single point only without/ minimal interface with regulatory authorities. In the near future SWIFT will make the entire process of clearance of consignment electronic and faceless. Intervention from various regulatory agencies during EXIM trade, as much as possible, would be based on risk.


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Interview

Meeting warehousing and logistics needs for the freight of the warehouse has been done keeping in view efficient truck movement and quick turnaround of cargo at the docks. Other features like CCTV surveillance, parking, staff canteens have been provided to support the operational staff. Sufficient clear height of around 8m has been provisioned keeping in mind requirements like racking.

How do you perceive the challenges in the present scenario as far as the transportation of non-bonded cargo is concerned? Sanjiv Edward Chief Commercial Officer-Aero, DIAL Delhi International Airport Ltd (DIAL) has engaged Shristi Cargo Warehouse Pvt. Limited (SCWPL) as a concessionaire to develop, operate and manage the first phase of the Cargo City Project (ACLC 2). The construction works for the same has commenced and is expected to be operational in April 2018. Sanjiv Edward, Chief Commercial Officer-Aero, DIAL and Ritesh Yarlagadda, CEO, SCWPL in a candid chat with Deepashree Banerjee opens up about the anticipated project. Excerpts.

Sanjiv Edward, Chief Commercial Officer-Aero, DIAL discusses the potential impact: At DIAL, it is our constant endeavour to improve the service standards and modernise the business for the benefit of various stakeholders, customers for passenger as well as for cargo. In that direction, we have recently launched the first phase of the Cargo city project with the primary objective of catering to the needs of Cargo Freight forwarders

64 CargoConnect - february 2018

Ritesh Yarlagadda CEO, SCWPL and Logistics companies in meeting their warehousing and logistics requirements for the Freight. In this phase, we are developing Air Cargo Logistics Centre (ACLC 2) in front of the Cargo Terminals which will contain warehousing facility for non-bonded cargo with a total footprint of around two lakhs sift. With its proximity to the Cargo Terminals, the ACLC 2 offers unique advantage to its users providing greater efficiencies in their operations and possibility to carry out a host of value add activities. We are very confident that this facility will be immensely beneficial to the entire trade.

Please present an overview of Airport Cargo Logistics Centre (ACLC)-2, IGI Airport in terms of location. Ritesh: ACLC-2 is located at the centre of Delhi Airport right opposite the cargo terminals. The dual advantage of being located opposite the cargo terminals and on the airportâ&#x20AC;&#x2122;s central spine close to NH-8 gives it great accessibility which would enhance efficiencies in transportation and provide a better terminal interface for the freight forwarders. It has the natural advantage of being located in a highly secure environment. DIAL also has plans to construct a dedicated cargo road abutting the north side of the facility connecting the cargo terminals to NH-8.

Take us through the key features that ACLC-2 is going to offer. Ritesh: ACLC-2 primarily offers non-bonded warehouse of around 18,000 sq.m. The design

Ritesh: Currently, there is a scarcity of quality warehousing infrastructure in proximity to the airport. Freight forwarders are compelled to transport goods from their warehouses at large distances directly to cargo terminals. These result in high costs of transportation and truck idle time. Traffic restrictions for heavy vehicles in our major cities make matters even worse from a logistics point of view. High lead time from warehouse to terminal also means that planning for a particular shipment has to happen much in advance of aircraft departure time thus reducing the agility and flexibility for the freight forwarders.

With the resurgence of air logistics in India, how do you perceive this facility will make a considerable impact on the national and international scenario in the industry? Ritesh: Internationally, most of the top airports have developed the second tier of the air cargo logistics ecosystem in the form of bonded and non-bonded warehousing to support freight forwarders. These initiatives have considerably reduced dwell time and given a boost to air cargo volumes. Some freight forwarders have taken up spaces in these facilities and made them regional hubs. They have immensely benefitted due to significant improvement in efficiencies, turnaround time of cargo and this has given them an edge in the industry. Thus, we believe that a facility like ACLC-2 is the need of the hour and will make a significant impact on the national and international scenario by bringing efficiencies to the freight forwarders and making their services more competitive.


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Shippers Speak

Brewing hot with logistics automation Mountain Trail Foods Pvt Ltd, which owns the Chai Point chain of tea stores, plans to raise more than $10 million in a Series C round of funding, which it expects to close in the first half of 2018. Ghanshyam Singh, Director SCM, Chai Point in an exclusive interview with Deepashree Banerjee shares the streaks of his success. Excepts follow.

How important is logistics for the overall scheme of your business? Chai Point being an omni-channel business demands that our logistics stay ahead of the curve. Thus, we believe in planning logistics in tandem with our external and internal teams to make sure that we meet delivery deadlines to our stores and consumers, who are pan India. Giving you a bird’s eye view, logistics kick in the moment we source the tea leaves from estate and are in action till a perfectly brewed cup of tea is in the hands of the customers. There are many layers in between where well oiled logistics plans need to work flawlessly in order to ensure smooth functioning of the overall operations. Fresh products like milk, ginger and lemon need a crucial logistics and distribution planning in order to avoid any damages and affect the shelf life of the products.

How do you ensure smooth coordination between suppliers, transporters and other departments in your supply chain? At Chai Point, we have an internal team for managing supply chain and run point with our external partners who comprise of transport companies, sourcing, warehouse management etc. Thus, being responsive is one of our core value and our partners have equal credit to share here as they are equally responsive to us. Since we are running multi city operations and working with different partners in those regions, as a policy, we have developed SOP for each partner that helps them also understand their deliverables and enables them to achieve desired results by setting the right standards and set of policies.

Are there any unique or innovative strategies that you have adopted for the better supply of your products? Perishable and fresh products form a large part of our product offering. Thus, we have put in place a centralised distribution system for the same so that we get the complete control on right quality material being distributed and within the stipulated time frame.

How do you manage back-end supply? Being present in multiple locations, every component of the supply chain has to work like clockwork to ensure smooth functioning at the front end. With the help of 3PL partners, warehousing and distribution channels becomes more effective and stronger. Tight SLA and KPI fixed with them helps in achieving the 100 per cent deliverables.

66 CargoConnect - february 2018

What percentage of your logistics work is outsourced? What functions are performed by your logistics partners and what are controlled internally? Chai Point’s entire logistics operations are outsourced simply because as a company we are required to focus on our core offerings and not commit investments in building infrastructure from the scratch when the right partners are available in the market. Having said that, our external partners work pretty much like an in-house team and are aware that on-time delivery and clear invoices are major KRAs for them. Since we are a fast growing company, one of our major focus areas under supply chain is continuous routes optimisation to achieve 100 per cent on time delivery. We have defined multiple levels of tracking of deliveries to make sure the target is achieved without any deviations.

Tell us about the most common problem faced by your company during its supply chain process. What steps do you take to overcome these? Handling the fresh products supply is always tough as it has to complete the distribution within the stipulated time frame. Any failure will lead to wastage of products, impact on sales and customer satisfaction. Another pain point which is faced by every organisation is ‘100 per cent Fill Rate’. Stock out and replenishment is a continuous process and minute delay will have huge impacts. Here, we use technology as an enabler. Shark, our Cloud based system, runs the entire company’s operations from sales, to business development and even logistics. All our stores and warehouses are connected through Shark and a seamless communications between the two ensures that we don’t face scenarios like stock outs.

How do you manage your supply chain during peak times such as festivals and promotional sales? At Chai Point, in addition to festivaI led high demands, we also face season increase in demand of our products since we sell both hot and cold beverage. Months before festival sales cycle begin; we use analytics and other tools available to us to plan inventory, consumption etc. in order to activate planning, procurement, warehousing and delivery teams with their respective functions.


guest column

Logistics Data Bank: Technological revolution in the Indian Logistics Sector IoT, Big Data and Cloud-based solution that uses RFID technology to provide near real-time visibility of container movement in the country

By Piyush Sinha ogistics is the backbone of any economy and a vital driver of economic progress as it encompasses the management of flow of goods from the place of initiation to the place of consumption. The Indian Logistics sector, estimated to be worth $260 billion in India and growing at 14 per cent over the past five years is expected to grow to $397 billion by 2020, according to a study by the Associated Chambers of Commerce and Industry of India.While the growth in manufacturing, retail, domestic consumption and e-commerce continues to drive the evolution of the logistics sector, it is the interplay of technology and infrastructure that will eventually change the facet of the Indian logistics industry. Talking about technology implementation, Indian logistics Industry is currently facing various supply chain challenges, including costly freight carrying cost, high turnaround time, poor capacity planning and lack of integration between physical and soft infrastructure. Post the detailed feasibility

L

68 CargoConnect - february 2018

study of the Indian logistics scenario along with the support of Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), NEC Corporation, Japan proposed its Logistics Visualization System, which is a cloud-based logistics visualisation solution, to address the challenge of higher transaction cost in India by bringing in the desired Visibility&Transparency. With a view to reduce the overall Transaction cost incurred by the government by bringing in the required Transparency&Visibility across the supply chain , the Indian government formed DMICDC Logistics Data Services (DLDS), a special purpose vehicle represented by National Industrial Corridor Development Implementation Trust (NICDIT) and Japanese IT major, NEC Corporation, to leverage ICT in the Indian Logistics Industry, inculcate best practices across the various processes and work towards bringing in efficiency. DLDS’s flagship project Logistics Data Bank (LDB) is a game changing solution that uses IOT (RFID technology), Big data and Cloud based solution which integrates the information available with various agencies across the supply chain to provide detailed near real time visibility of Export Import container movement through a single window i.e. www. ldb.co.in for currently about 70per cent of India’s container

movement. The project has enabled quick decision making and has improved competitiveness of logistics and manufacturing industries. It has also provided better governance and complete transparent and visible management for performance evaluation of ports, Inland Container Depots (ICDs), Container Freight Stations (CFSs) and supply chain industry. It was with the support of Ministry of Shipping, LDB started its commercial operations across the terminals of Jawaharlal Nehru Port (JNPT), Mumbai starting from July 1st 2016 and extended the services at Mundra &Hazira Terminals of Adani Ports and Special Economic Zone Limited in Gujarat starting May 1st 2017. DLDS has recently signed agreements to expand the services pan-India starting fromKrishnapatnam, Kattupalli and Ennore ports in the Southern Corridor and Bharat Mumbai Container Terminal Private Limited, JNPT. The recently launched LDB mobile app will help users efficiently track the whereabouts of the containers along with various other features like alerts, Google maps etc, thereby enabling a streamlined supply chain. LDB is one of a kind step to boost ‘Ease of doing business’ initiative as it aims at increasing India’s foreign trade and ensuring greater transparency by following ways:

• Reduction in lead time and transaction cost as a result of predictability and optimisation achieved through LDB would attract companies to open up new manufacturing units, thereby attracting more employment and development of the Indian economy. • LDB system has provided visibility services for more than 6 million EXIM Containers of India in the western corridor starting from the port till the ICD’s / CFSs through a single window. • LDB is one of the key projects featured in the joint statement issued by the honourable PM’s of India & Japan during Japanese PM’svisit to India in September 2017 as well as in December 2015. • LDB is an inter-ministerial project and cuts across the entire supply chain. The project became operational with the support of Ministry of Shipping, Ministry of Commerce, Ministry of Road Transport & Highways, Ministry of Railways, and various departments like Directorate General of Foreign Trade (DGFT), Customs, Indian Ports Association (IPA), Associations of Shipping lines & NACFS (National Association of Container Freight Stations), Tariff Authority at Major Ports (TAMP) and various stakeholders. • LDB analytics are published across the ministries on monthly basis which provide insights into the stakeholder’s performance across the competitive landscape. The author is the CEO, DMICDC Logistics Data Services Limited


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news

India plans common logistics portal

Coastal shipping of coal to double in six years

In a move to ease the transportation of goods, the government is planning a common platform integrating all transactions involved in their production and export. The commerce department has initiated work on an integrated logistics portal or logistics e-marketplace to connect buyers with logistics service providers with all the government agencies such as customs, Port Community Systems, Sea and Air Port terminals, Shipping lines, Railways, among others. Customs department Icegate will also get integrated with the portal. “The speed and cost of doing business depends on logistics...our new logistics division will look at this,” commerce and industry minister Suresh Prabhu said on Tuesday while signing an agreement with the Confederation of Indian Industry (CII) for cooperation in the logistics sector. Logistics costs in India are pegged at 13-14 per cent of the GDP are higher than those in developed countries and the government aims to reduce it to 10 per cent by 2022. Form point of production to export, there are 64 transactions and 37 government agencies involved.

Coastal transportation of coal would increase to about 63 million tonne per annum (mtpa) by fiscal 2023, from around 32 mtpa as of fiscal 2017 as structural bottlenecks ease, ratings agency Crisil has estimated. The bulk of the coastal movement of coal happens along the eastern coast, from the mines of Mahanadi Coalfields (MCL), via the Paradip and Dhamra ports in Odisha. “However, congested berths, particularly at Paradip, are holding back rise in potential volumes. The mechanised coal handling plant berths at Paradip, through which most of coastal coal is loaded, have occupancy well above the benchmark norms of about 70 per cent,” the agency said. “An addition of nearly 22 mtpa of coal handling capacity at Paradip - expected by calendar year 2020, as per Paradip Port Trust - and coal loading through dry cargo export berth at Dhamra will ease the capacity constraints significantly and boost coastal shipping volumes,” Crisil said.

Exporters ask government to speed up key infra projects

NPCC to undertake infra projects relating to road, environment

E x p or t e r s h a v e ask ed th e government to expedite major infrastructure projects like Sagarmala, Bharatmala and the eastern and western dedicated rail-freight corridors to help improve India’s logistics facilities. Citing inefficient freight movement, time taken for movement of trucks and road transportation being the preferred mode of transportation as the root causes of high logistics costs in India, they said high indirect costs of trade caused by undependable transportation and delays contribute to 38-47 per cent of total transportation and logistics costs. India’s logistics and transportation costs are pegged at 14.4 per cent of the GDP as against 8 per cent of GDP in China. For exporters, unreliable lead times do not necessarily increase inventory for themselves, according to Federation of Indian Export Organisations (FIEO) and Confederation of Indian Industry (CII). “But, it does increase inventory for their customers or distributors abroad, making them less attractive as a sourcing partner and also their product less competitive,” the two industry bodies said in a study on export logistics in India. India’s cost to export stood at a $1,332 per container compared with $572 in Indonesia or $525 in Malaysia, as per the study.

70 CargoConnect - february 2018

The National Project Construction Corporation Ltd, a PSU of the water resources ministry, will now undertake basic infrastructure projects relating to road, buildings and environment, Union minister Arjun Ram Meghwal has said. Set up in 1957, the NPCC has to its credit construction of the Wazirabad barrage across river Yamuna in one working season in Delhi, Asia’s longest Sir Arthur Cotton barrage on Godavari river in Andhra Pradesh, Singda earth dam and Khuga Dam in Manipur, Maharani barrage in Tripura and others. Minister of State for Water Resources Meghwal, addressing a function to mark the 61st Annual Day celebrations of the NPCC here yesterday, said the corporation has begun working as the nodal agency in Jharkhand for the ‘Clean Ganga’ mission, according to an official statement. He expressed hope that the NPCC will serve the country well by implementing projects of the ministry and projects of border areas with high quality standards in a cost effective manner, the statement said.


Union Govt all set to implement e-way bill from Feb 1 In a bid to bring uniformity across the states for seamless inter-state movement of goods, the government is set to implement the electronic way bill or e-way bill system from February 1. E-way bill is a system generated bill which every transporter, exceptions in some cases, will have to carry to move the goods from one place to another. These electronic bills can be generated

from the GSTN portal. The e-way bill system was introduced under the Goods and Services Tax , but couldn’t be implemented earlier as the required IT infrastructure wasn’t in place. Last month, the GST Council decided to implement the e-way bill mechanism throughout the country from February 1. In a notification released earlier this month, the GSTN informed the transporters that E-way bill would become mandatory for inter-state movements of goods from February 1, 2018. It further said that the nationwide e-way bill system would be ready to be rolled out on a trial basis by January 16. Ahead of the trials on e-way bill generation, which start today, GST Network CEO Prakash Kumar talked to BusinessToday.in and explained the system’s preparedness and infrastructure capabilities to handle the transition. He said that the e-way bill system is designed to handle around 50 lakhs e-way bills per day. The GSTN expects 10 lakh bills for interstate and 35-40 lakh bills for intra-state. The software for the new system has been developed by the government’s premier science and technology organisation: National Informatics Centre. While, the GSTN owns the software, it will be run and operated by the NIC. “NIC is data centre we are using here, like bandwidth we are paying for the connectivity,” Kumar said adding that “the main data centre is in Delhi”. He also informed that the development of infrastructure for E-way bill system has cost `40 crore to the government.


news

Rail freight loading zooms by 39 mt till Dec

Global air freight demand on track for a 7 year high: IATA

The Railways loaded about 39 million tonne (mt) extra freight in the April-December 2017 duration, a Railway official said, adding that these are initial estimates. This is almost eight times the five mt incremental cargo loaded for the entire 2016-17 over the previous year. All categories of commodities — with the exception of fertiliser — has seen growth. Buoyed by this growth, the Railways is planning to procure 5,000-7,000 wagons in the next fiscal. The Railways is looking to use a bidding system where the lowest cost will be discovered by using a vendor that offers the lowest price for a particular product, said another Railway official. This is even if the entire quantity supplied by the vendor does not match the total requirement of the Railways. In that case, it will source from more than one vendor. The move will help lower the procurement prices for the Railways, he added. The official also said that the track replacement work of Railways has picked up with greater planning. Over 470 km of tracks has been laid in December, picking up from an average of 238 km per month in the AprilAugust 2017 period.

Demand for global air freight, measured in freight tonne kilometres, rose 8.8 per cent in November, compared with a year earlier, the International Air Transport Association (IATA) said on Wednesday. The rise in November puts the air cargo industry on track for the strongest operational and financial performance since the the post-global financial crisis rebound in 2010, IATA said. The growth in freight demand, coinciding with the traditional period of strong demand seen in the fourth quarter, comes despite indicators pointing to air cargo having passed a cyclical peak, IATA said. Available capacity rose 4 per cent in the month, marking the 16th consecutive month of demand growth exceeding capacity growth, which is positive for industry load factors, yields, and financial performance, IATA said. Load factors increased by 2.2 percentage points to 49.1 per cent. “There are several indicators that 2018 will be a good year as well. In particular, buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn are cause for optimism as we head into the New Year”, Alexandre de Juniac, IATA Director General, said. The recently agreed US tax reform bill may also help to support freight volumes in the period ahead, IATA added.


News

Bright days are ahead for India’s external sector

Emirates SkyCargo enhances temp sensitive pharma cargo

The prospects of the country’s external sector look bright in the coming years as global trade is expected to increase, although rise in oil prices could create problems, the Economic Survey said. The survey for 2017-18 was tabled in Parliament by Finance Minister Arun Jaitley on January 29. “The prospects for India’s external sector in this and coming year look bright with world trade projected to grow at 4.2 per cent and 4 per cent in 2017 and 2018 respectively from 2.4 per cent in 2016; trade of major partner countries improving and above all India’s export growth also picking up,” it said. It added however that the downside risks lie in the rise in oil prices. But, it said, this could also lead to higher inflow of remittances which have started picking up. It added however that the downside risks lie in the rise in oil prices. But, it said, this could also lead to higher inflow of remittances which have started picking up. “The supportive policies like GST (Goods and Services Tax), logistics and trade facilitation policies of the government could help further,” the survey said.

Emirates SkyCargo, the freight division of Emirates, has beefed up its commitments to securely transport temperaturesensitive pharmaceutical shipments through its recently opened pharma corridors that offers additional protection across selected stations in its network. According to reports, Emirates SkyCargo is working with ground handling partners and other stakeholders at multiple cities across its global network to ensure that handling operations for pharmaceuticals at various stations are uniform and comply with the Emirates SkyCargo’s stringent norms for pharma transport, as well as EU GDP or IATA CEIV pharma guidelines. This is expected to enable Emirates SkyCargo to offer a supplementary protection of product integrity during transport of temperature-sensitive pharmaceutical cargo through these cities.During 2016, Emirates SkyCargo’s operations at its hub in Dubai, including its dual cargo terminals at the Dubai International Airport, Dubai World Central and the interconnecting trucking operations were certified as compliant to EU GDP guidelines by Bureau Veritas, Germany.

Rail cargo volume set to grow 5% this fiscal After a gap of three years, the Railways may post nearly 5 per cent growth in cargo volume this fiscal, with coal contributing a little less than half of the total volume. During the first nine months of this fiscal, the Railways carried about 849 million tonnes cargo, registering a 4.8 per cent growth. According to sources, January-March being the peak period, the trend may gain momentum and the Railways will finish close to the targeted volume of 1,167 mt, against last year’s total of 1,108 mt. The volume of coal, which contributes 48-49 per cent of the total, increased 2.7 per cent; raw materials for steel plant, except iron ore, increased 6 per cent, and volume of steel cargo had shot up by a staggering 15 per cent. Revenue grew faster than cargo volume at 8.11 per cent, presumably due to adjustments in tariff. And coal consumers were the biggest casualty as revenues from coal freight increased 10.18 per cent against less than 3 per cent volume growth.

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news

Muktyala inland waterway works progressing well

Centre signs pact with CII for logistics

Works for Muktyala - Vijayawada inland waterway development are going on at a brisk pace. The project was drawn up under National Inland Waterway-4 (NIW) project and Union minister for transport and shipping, Nitin Gadkari laid its foundation stone around three months back. The NIW-4 project was intended to develop inland waterways from Kakinada to Pondicherry through Buckingham Canal. As part of the project, a separate channel is being developed from Muktyala to Vijayawada in the first phase. The Inland Waterways Authority of India (IWAI) formed a Special Purpose Vehicle (SPV) along with the state government to complete the project on priority basis. Dredging works have already started to come up with a separate channel in Krishna river to facilitate the movement of large vessels carrying vessels. The route is a priority for the state government as the raw material transportation would become cheaper for the capital construction. As the Capital Region Development Authority (CRDA) is planning to launch the construction of capital buildings from June 2018, the Muktyala - Vijayawada waterway that also connects Harichandrapuram on the other side of the river bank would reduce the transportation cost by nearly five times as compared to road transportation. The waterway transportation would only cost `1 to transport 1 tonne of material over one kilo metre distance. The same would cost `5.75 by road and `1.99 by rail.

The Logistics Division of the Commerce Ministry recently signed an agreement with industry body CII to address challenges facing the country’s logistics sector and help take measures to bring down costs. Logistics costs in India, at 13-14 per cent of GDP, are higher than those in developed countries. The Ministry said it aimed to establish a Logistics Working Group with a co-chairperson from the CII Institute of Logistics, a centre of excellence working on logistics and supply chain management. As per the MoU, CII will identify logistics challenges facing industry and suggest action solutions to the Logistics Division, according to a CII statement. It will also interact with state governments and work on promoting the logistics sector, along with capacity building programmes. The two sides will cooperate in organising a National Logistics convention each year to bring together stakeholders in the sector, the statement said.

India’s growth to lead the global economy, DHL trade data shows

JNPT approve Special Planning Authority for SEZ project

India’s economy holds the brightest growth prospects amongst the world’s seven largest economies, according to results from the Global Trade Barometer released today by DHL, the world’s leading logistics company. The first ever DHL Global Trade Barometer, an early indicator of global trade developments calculated using Artificial Intelligence, Big Data and predictive analytics, assigned India the highest growth indices of the seven countries assessed, due to strong and sustained increases in both air and ocean freight in and out of the country. “More than any of the world’s largest economies, India’s major industries have displayed levels of resilience and growth that will buoy business confidence in the short to medium turn,” said George Lawson, Managing Director, DHL Global Forwarding India. “India’s economy has built up terrific momentum in recent times: since 2008, its GDP has risen every single year to US$2.44 trillion last year, more than double the levels of a decade ago. As the country continues to invest heavily in infrastructure, we expect it to continue its upward trajectory for the foreseeable future.”

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In line with Jawaharlal Nehru Port Trust’s (JNPT) efforts to continuously improve ‘Ease of doing Business’ at JN Port, the Maharashtra government recently approved JNPT to be the Special Planning Authority (SPA) for the Special Economic Zone (SEZ) project. JNPT will now enjoy authority similar to MMRDA and CIDCO. SPA status will enable investors to secure speedy approvals and reduce costs. As is known, JNPT has launched an ambitious multiproduct SEZ under the Ministry of Shipping’s Sagarmala programme, which is coming up on 277 ha of JNPT’s freehold land. The foundation stone for the project was laid by the Prime Minister, Narendra Modi. JNPT has obtained SEZ notification as well as environment clearances for setting up this project in Nhava Sheva, Navi Mumbai. JNPT SEZ is expected to attract investments worth `7,000 crore and generate direct and indirect employment for 1.25 lakh people in the region.


Punjab’s Zirakpur to become logistics hub

MoRTH signs MOU with Transport for London

Looking at the service sector’s 50 per cent contribution to Punjab’s gross state domestic product (GSDP), the state government plans to develop the Zirakpur-Tepla- Rajpura belt as a logistics and warehousing hub. This will boost the development of Mohali as an industrial hub. In Mohali’s periphery, the state government is also going to build an integrated manufacturing cluster at Rajpura on 1,000 acres under the Amritsar-Kolkata Industrial Corridor (AKIC). Rajpura is also being developed as a knowledge hub. In its industrial policy of 2017, the state government has also committed to building cargo logistics centre or custom-bonded warehousing in future industrial estates. Zirakpur’s strategic location as the intersecting point on the Shimla-Delhi-Patiala highway makes the state government believe that it can grow as a natural hub for warehousing. Zirakpur already has many warehousing and logistics units that serve the industrial units of the region.

The Ministry of Road Transport and Highways has signed a MoU with Transport for London (TFL) in New Delhi. The MoU is aimed at using the expertise of TFL to revamp the public transport architecture in the country. TFL is the agency that manages the transport system for Greater London, and has demonstrated its capability by creating a strong and dependable public transport system in the city. Speaking on the occasion, the Minister of Road Transport & Highways Nitin Gadkari said that the country needs a good transport policy that promotes convenient and comfortable public transport system. He said an effective public transport system would be one that ran on electricity or other less polluting, indigenously produced fuels like methanol, ethanol and bio-diesel. Such a system would not only reduce pollution, but would also be cost effective, he said. The minister further said that to implement reforms in public transport systems in the country, we have to learn from the best practices across the world.

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news

NIIF, DP World to invest $3 bn Dubai’s DP World and the National Investment and Infrastructure Fund (NIIF), a fund-managing entity of the Government of India have set up an investment platform to invest in ports, terminals, transportation and logistics businesses in India. The platform, which is based on a previous agreement, will invest up to $3 billion to acquire assets and develop projects in the sector, the entities said in a joint statement. The investment platform will also look at opportunities beyond sea ports such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminals, and logistics infrastructure including cold storage. “DP World has been a part of India’s growth story for nearly two decades,” said Sultan Ahmed Bin Sulayem, group chairman and CEO, DP World. “We believe that our expertise in building best-in-class logistics infrastructure, together with the NIIF’s local knowledge and government partnership is the right combination to take advantage of the significant growth opportunities in India,” he added. “We are proud to partner with NIIF and share our expertise and experience in these areas and the global supply chain to provide cost-effective logistics and warehousing solutions to India’s growing economy and trade,” he added.

Railway launches SFOORTI app for freight monitoring In a major digital initiative to help plan the traffic flows and optimise freight operations, Ministry of Railways have launched Smart Freight Operation Optimisation& Real Time Information (SFOORTI) Application for freight managers which provides features for monitoring and managing freight business using Geographic Information System (GIS) views and dashboard. Salient features of the application include tracking the movement of freight trains on Geographic Information System (GIS). A GIS based monitoring and management tool has been designed and developed in CRIS which provides layered views of freight trains on Indian Railways network which can help plan the traffic flows and optimise freight operations. The FOIS Map View has been designed to cater to Divisional, Zonal and Board levels of management for improved freight operations.

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events

CSC JV awarded International Cargo Handling Concession at CSIA Airport Mumbai CSC, in a joint venture with SATS, has been awarded a cargo handling concession for designing, developing, operating and managing the international cargo facilities at Chhatrapati Shivaji International Airport in Mumbai. The joint venture company, Mumbai Cargo Service Center Airport Private Limited, is held 51 per cent by CSC and 49 per cent by SATS. The concession will start in April 2018 and run till 2036. With this acquisition, CSC group is expected to handle more than ten lakh tons of cargo per annum across various airports of the country. Earlier, CSC has also been awarded a concession to expand and operate the existing cold chain temperature controlled cargo terminal at CSIA Airport Mumbai till 2036. CSC group currently provides employment to more than 2,200 people across various airports of the country. Mumbai airport is a very important cargo gateway airport of the country and currently handles 33 per cent of country’s international air cargo. CSC along with MIAL will develop a world-class air cargo handling facility at Mumbai Airport and deliver top rated customer service. With this latest win, SATS and CSC will connect the Mumbai hub to their network, increasing connectivity and growth

potential for their airline customers and shippers. Tushar Jani, Chairman of the CSC group, said with this concession CSC group will be providing seamless quality services at Mumbai, Delhi and Ahmedabad to the EXIM community and international airlines. He further said that CSC group’s endeavor is to achieve industry leadership through innovative and efficient processes and motivated people.

Cochin Shipyard signs MoU with Mumbai Port Trust

Maersk Line sees Nepal as a long-term trade partner

Cochin Shipyard Limited (CSL) signed an MOU recently with Mumbai Port Trust (MbPT) for management and operation of the Ship repair Facilities at Mumbai Port trust. As per the terms of the MOU, MbPT and CSL are to associate with each other for utilising the Indira Dock facility at Mumbai Port to set up a Professional Ship Repair Ecosystem, that would be beneficial for the commercial as well as Defence Ship Repair Industry in India. The MOU also provides for expansion of the Ship repair capacity within the Indira Dock that may include setting up of a Floating Drydock (FDD) and upgrading existing facility at HDD thereby enhancing the existing Ship repair Capacity in Mumbai Area. This would serve the increasing Ship Repair demands in Mumbai area, being one of the key port of India that connect internationally. Hughes Dry Dock (HDD) at Mumbai Port Trust of approx. size 305 x 30 metres, built in 1914 is one of the largest graving dry dock on the western coast of India. The objective of the MOU is to develop a world class integrated ship repair facility at Mumbai.

Maersk Line at a recently concluded trade meeting in Kathmandu, Nepal, announced its intent to push for acceleration in trade in the country. The Nepal import market doubled in the past 5 years and Maersk line is confident of a continued momentum in this direction. In June 2017, Maersk Line moved the first-ever container shipment from Visakhapatnam to Nepal, via an exclusive block train service aptly named “Kathmandu Express”. This service offers a guaranteed fixed transit time from the load port to ICD Birgunj, just over the Nepal border. Maersk Line is the first shipping line to introduce this innovative product. Since its launch, momentum has built up quickly based on customer demand, and the company expects 5-6 block trains moving monthly from Vishakhapatnam to Birgunj. Steve Felder, MD Maersk Line (India, Sri Lanka, Bangladesh, Nepal, Bhutan and Maldives) stated, “We are confident about the trajectory of the Nepal market, and we would like to be a long-term trade partner in the region. We will be opening our commercial office in Kathmandu in the first half of 2018. Our focus has always been to enable trade through our increased service offering and be close to our customers. We intend to carry this commitment ahead for the Nepal market by providing customers with a seamless experience through both Kolkata and Vishakhapatnam.”

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events

PHARMACONNECT 2018 – South Asia’s biggest pharma logistics conference – held in Delhi Around 250 delegates from 160 organisations worldwide thronged the conference PHARMACONNECT 2018, a pharma logistics conference, was convened at Shangri-La’s Eros Hotel, New Delhi on January 18, 2018. The conference, which was powered by Kerry Indev Logistics, provided an excellent knowledge sharing and networking platform to the gathering of 250 plus logistics and pharma industry professionals. Dr K Bangarurajan, Joint Drugs Controller of India and PK Gupta, Chairman, Confederation of Indian Pharmaceutical Industry (CIPI) were present as the Chief Guest and the Special Guest on the occasion. They formally inaugurated the ceremony with a lamp-lighting ceremony along with Satish Lakkaraju, CCO, Agility Logistics Pvt Ltd; Yashpal Sharma, MD, Skyways Air Service Pvt Ltd; Smiti Suri, Publisher, Surecom Media and Ajit Suri, Director, Surecom Media. Dr K Bangarurajan in his brief remark talked about the regulatory part and said, “We have been continuously revising the existing Drugs and Cosmetics Act and amendments are being done for the continuous betterment of the pharma supply chain.”   Tushar Jani, President, Air Cargo Forum of India, on the occasion highlighted the importance of Internet of Things (IoT) in the business world and said, “IoT, Artificial Intelligence and Robotics have become pillars of business. Companies should embrace IoT and start looking for the Artificial Intelligence to establish their supremacy in the business.” Bharat Thakkar, Joint Managing Director, Zeus Air Services was the Guest of Honour on the occasion. Thakkar while moderating one of the sessions said, “Forwarders are the unsung heroes of the global economy. If we have to take the business on the growth path then the industry must collectively embrace the agenda dedicated to enhanced quality efficiency and security.”        Four intriguing panel discussions tried to address the pressing issues of pharma supply chain in which professionals of Logistics Service Provider (LSP) companies, Pharmaceutical Companies, Freight Forwarders, Airlines, Airports, Ports, Research Agencies, Shippers, Pharma Associations of the logistics industry kept their view point and brain stormed on the ways through which an efficient and cost-effective pharma supply chain could become a reality. Manas Sahoo, VP Supply Chain, Fresenius Kabi; Yogesh Lawania, General Manager – Supply Chain, Biocon Ltd; Raja Sundaramurthy, DGM –  FDF Logistics, Mylan Lab; Surendra Deodhar, Assistant VP, Reliance Life Sciences; Amrinder Singh, Associate Director – Supply Chain, Dr Reddy’s; C Gopalakrishna, Associate Vice President – Corporate Affairs and Logistics, Hetero Drugs and Ashish Ranjan, Manager - Procurement, Novartis Healthcare Pvt Ltd participated in panel discussions and kept their view points of the pharmaceutical industry.    Apart from panel discussions Foster McDonald, CEO, Cold BOX Express; Harsh Kumar, Co-founder, Cogoport; Srinivas Cherukupalli, Principal

80 CargoConnect - february 2018


events Research Scientist, Dupont; Gunjan Sachdeva, Senior General Manager, Panasonic and Ibrahim SIPAHI, Cargo Development Specialist, Turkish Cargo gave engaging presentations in between panel discussions. India Air Cargo Handbook 2018 powered by CARGOCONNECT magazine was also released in the gracious presence of all guests and delegates in the conference.         Many more companies which partnered with the conference were Jungheinrich and Dupont (Silver partners), Raghava Warehousing (Registration partner), Panasonic (Technology partner), Spoton Logistics (Delegate Kit partner), Everfast Freight Forwarders (Coffee and Tea partner), Skyways Group (Lanyard partner), Cogoport (Connecting partner) and CELEBI Delhi Cargo Terminal Management (Logistics handling partner).         

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FIATA & FFFAI leaders announce “FIATA World Congress 2018” Federation of Freight Forwarders’ Associations in India (FFFAI), which is the apex body of 28 customs clearance and freight forwarders associations from across the country will be hosting the first international logistics congress: “FIATA World Congress 2018” from September 26-29, 2018 at Pullman-Novotel Hotel, Aerocity in New Delhi. FIATA World Congress is the most prestigious event in Logistics and Freight Forwarding industry in the world. To provide an update about the FWC-2018 at a well-attended press conference FFFAI office bearers and FIATA leaders from abroad announced that the World Congress will be attended by more than 1500 Indian and overseas delegates from different parts of the world. The Press Conference was addressed by Stanley Lim, Past President, FIATA and Chairman, FIATA World Congress Committee; Hans Gunther, Director General, FIATA; Elena Primitzhofer, Co-ordinator, FIATA World Congress Committee; Ashish Pednekar, Chairman,

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FFFAI; AV Vijaykumar, Chairman-elect, FFFAI; Debashis Dutta, Past Chairman, FFFAI and Chairman, FIATA World Congress 2018 Committee and Amit Kamat, Hon. Secretary, FFFAI and Congress Co-ordinator, FIATA World Congress 2018. The speakers focussed on the tremendous importance of logistics industry in India in view of present government’s impetus on manufacturing, trade facilitation, exim trade and infrastructure development. “We were trying to organise this most important and prestigious international logistics event in India for last couple of years. We are happy about huge success of this event in New Delhi. Our government, which is very pro-active to facilitate logistics industry in the country, has promised full support to make FWC 2018 a grand success. We are happy to inform that Nitin Gadkari, Minister for Shipping, Road Transport and Highways, Government of India, has already confirmed his participation as Chief Guest.” informed Pednekar.


events

JNPCT awarded for maintaining low dwell time Jawaharlal Nehru Port Container Terminal-the Port owned Container Terminal was awarded for its exemplary performance in maintaining low dwell time for handling their EXIM containers (both Rail and Road bound) by DLDS (DMICDC Logistics Data Services Ltd). JNPCT has consistently cleared majority of its Truck bound containers in minimal time, for both Export and Import cycle which showcases efficient planning and optimisation of resources. JNPT was also recognised for playing a pivotal role in the launch of DMICDC’s Logistics Databank\Project across its Port Terminals. JNPT is the first port in the country to have implemented Logistics Data Bank Tagging of containers. The tracking which happens on almost real time-basis allows the importer/exporter to track the shipments during the entire transit from the origin of the cargo till the final destination. JNPT launched LDS as a part of ‘Ease of Doing Business’ initiatives in June 2017. Accepting the award on behalf of JNPT, Shri Neeraj Bansal, Chairman-in-charge said,” JNPT, in its journey to become a world-class maritime hub, has always promoted innovation and usage of technology for bringing in radical changes and efficiencies and providing LDS service is one of the many ease of doing steps measures aimed at empowering the EXIM trade.”

Lufthansa Cargo invests in US-based tech startup “Fleet Logistics” Lufthansa Cargo intensifies its ties to the global startup scene by investing significantly into tech startup “Fleet Logistics”, headquartered in Portland, USA. The strong collaboration between Lufthansa Cargo and Fleet Logistics will connect extensive airfreight experience with a technology-driven, fresh view on global logistics processes. Fleet Logistics was founded in 2014 and acts as an online marketplace, matching customers’ demand for freight services with free capacity provided by logistics companies. Fleet Logistics is growing fast and addresses customers’ inherent desire for convenience in – traditionally – complex cross-border freight shipping processes. “Fleet Logistics is a perfect match for us as the company combines innovative and visionary thinking with a strong intrinsic motivation to improve air cargo booking and shipping efficiency and, finally, our customers’ overall experience”, says Peter Gerber, CEO of Lufthansa Cargo. “We expect substantial learnings with regard to our product and service portfolio. Thus, we are sure that Lufthansa Cargo and Fleet Logistics will mutually benefit from sharing concepts and ideas.” At the same time, Fleet Logistics will expand its Board of Directors with the new seat being held by Lufthansa Cargo’s CCO Dr Alexis von Hoensbroech. Recently, a large number of startups pushed into the logistics industry upgrading connectivity between various players of global air cargo supply chains. Consequently, also traditional logistics companies have become aware of the opportunities they can realise by investing into new digital business models. By acquiring shares in Fleet Logistics, Lufthansa Cargo underlines its strategic commitment in lifting the airfreight industry to a superior digital maturity level. The acquisition is part of the Lufthansa Group’s overall digitisation strategy and was strongly supported by the Lufthansa Innovation Hub in Berlin. february 2018 - CargoConnect

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APPOINTMENTS

upcoming events Air Cargo India 2018 Three days event from February 20, 2018 to February 22, 2018 at The Grand Hyatt, Mumbai organised by The Stat Trade Times.

Shipping, Marine and Ports World Expo One day event on February 21, 2018 at the CIDCO Exhibition Centre in Mumbai.

SCTECH Show 2018 Three days event from February 22, 2018 to February 24, 2018 at Bombay Convention and Exhibition Centre (BCEC) in Mumbai.

Conquest 2018 Business Forum on Infra and Logistics One day event on February 23, 2018, at the Eros Hotel in New Delhi organised by EXIM INDIA.

Global Logistics Show Three days event from February 22, 2018 to February 24, 2018 at Bombay Convention and Exhibition Centre, Mumbai organised by Infinity Expo.

Shipping and Logistics India Three days event from March 01, 2018 to March 03, 2018 at Chennai Trade Centre in Chennai.

ChemLogistics India Two days event from April 26, 2018 to April 27, 2018 at the Bombay Exhibition Centre in Mumbai.

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Jochen Müller becomes COO Air & Sea Logistics at Dachser Jochen Müller took up the role of Chief Operations Officer (COO) for Dachser’s Air & Sea Logistics business field on January 1, 2018. He replaces Thomas Reuter, who retired at the end of last year after 39 years at Dachser. Müller joined Dachser on October 1, 2016 to prepare for his duties as COO. As COO Air & Sea Logistics and a member of the Executive Board, Jochen Müller will continue the work of Thomas Reuter. His core duties include the further expansion of the intercontinental air and sea freight network and the connection of this network with the European road network in order to add value for customers through intermodal logistics.

Snijders becomes UK Managing Director at Jungheinrich Jungheinrich UK has appointed Luuk Snijders as its Managing Director. Previously Managing Director of Jungheinrich Russia, Snijders succeeds Jan Lorenz, who will return to a senior management position at Jungheinrich Group headquarters in Hamburg, Germany. Snijders first joined the company in 2004, and has held senior roles across the business, including five years as head of sales in rental and used equipment (UE), two years as Rental/UE Director in Spain and two years as Sales Director in Russia, before his appointment to Managing Director, Jungheinrich Russia, in 2014.

Delhivery adds new members on its board E-commerce logistics firm Delhivery Pvt. Ltd has appointed Hanne Birgitte Sorensen and Deepak Kapoor – former executives of Maersk and PricewaterhouseCoopers respectively – as additional directors on its board. While Sorensen was formally appointed last month, the move to bring Kapoor aboard was formalised in November. Sorensen previously served as chief executive officer at Damco International, the freight forwarding arm of Danish conglomerate Maersk. A Danish citizen, she has spent a large chunk of her career with Maersk. Kapoor was formerly chairman and managing director at audit and consulting firm PricewaterhouseCoopers Pvt. Ltd. He spent his entire career with PwC India after joining as a trainee in 1978.


PEOPLECONNECT

“Success comes from satisfaction and what you do.” Having been associated with the industry for about 37 years now, Vipan Jain, Chief Operating Officer, Delhi Cargo Service Center Pvt Ltd is a man of principles and values. In a candid conversation with Deepashree Banerjee, he talks about his journey in the industry from a small sub-agency to IATA agent to the role of a terminal operator. He also shares his interest, hobbies, beliefs and values and challenges he has faced so far. Excerpts:

What motivated you to be a part of the logistics industry and how has your experience been so far? I have thoroughly enjoyed the logistic industry way back from 1980 and in my every role starting from a small sub-agency to IATA agent, to Airlines and now role of terminal operator. I was so deeply involved into each activity that never felt bored or disgusted and therefore never looked outside the logistic industry.

Where do you see the graph of the logistics industry moving in the coming decade? As per the current and previous trend, India is on rise and we do hope to grow at a rate of 7-8 per cent per annum at least.

How has the industr y changed from the time you stepped in? What major transformations have you observed in the industry in terms of technology, manpower, practices, government regulation etc.? When I joined the industry, everything was manual beat; AWB typing or shipping bill/bill of entry and typewriters were

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used like computers today. Transformation from physical documents to IT is the main change. The second change is the dwell time from 21 days to 2 days on an average which is a major milestone. The third change is the approach and accessibility of all the agencies including government is the major one as today sometimes we feel Government is more active than all the private players. In terms of infrastructure, we had warehouses at major airports in India and it used to look like a house and we were building up pallets on road. But, now due to high security requirement and available infrastructure, it looks much organised. Technology has played a vital role in the development especially from Customs side and today we are all able to see the status of our cargo just by accessing a mobile app.

What was the biggest challenge that you have faced till date? Integration of IT systems with all the players is still a big challenge as nearly all the players like shipper/forwarders, carriers, Customs, terminal operators etc. are using their own I.T. system. But, when

it comes to connectivity, we are missing “Cargo Community System”. Beside this one, we do have a long list of “Request for change” or to do but this is part of normal business development and will continue.

What specific beliefs or value that you live and work by and how do you define success? Success comes from satisfaction and what you do. One must respect the current position and profile and then look for more. I think it is an important message that people must deliver as expected and not always look on the other side where the grass definitely looks greener. Rather, we should look down and see people below us to realise what God has bestowed upon us.

Do you have any message for those who aspire to work in the logistics industry? We have so many industry leaders who started their career as an assistant and today they are known internationally. The best part of the logistics industry is that it gives you insight of your own country as well as global exposure.


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CARGOCONNECT - Feburary issue 2018  

Leading Logistics monthly magazine of India.

CARGOCONNECT - Feburary issue 2018  

Leading Logistics monthly magazine of India.

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