Cargotalk FEBRUARY 2011
Express Cargo in India Adequate speed required to go with the post recession time
Where does the forwarding community stand?
Vizhinjam Port in Kerala
likely to be operational by 2015
Vol XI No. 3 Pages 50 Rupees 50 cargotalk.in A DDP Publication
SOUTH ASIAâ€™S LEADING CARGO MONTHLY No.1 in Circulation & Readership
contents February 2011 DEPARTMENTS National News UPS Celebrates Annual 10 Volunteer Month in India Take Solutions acquires 10 100 per cent of UK based WCT Consulting Group ECS Group plans more global 12 expansion including India Darcl Logistics strengthens 12 ODC movements
International News Global Air Cargo Advisory 14 Group emphasises on security with minimum disruption
Equipment Services Gandhi Automations 16 Dock levelers from Campisa
International Airport Mumbai International 18 Airport increases cargo volume by offering incentives
Calendar of Events Calendar of International Events 20
Express Cargo FedEx Express to enhance 26 connectivity to Asian market
Emerging Technology Carrier Transicold introduces 28 natural refrigerant container technology
Cargo Performance Airlines wise cargo 30 performance from Delhi
6 CARGOTALK FEBRUARY 2011
Publisher: SanJeet Editor: Rupali Narasimhan Sr. Assistant Editor: Ratan Kumar Paul Assistant Editor: Ipshita Sengupta Nag General Manager: Gunjan Sabikhi Sr. Manager Advertising: Harshal Ashar Sr. Manager Marketing: Rajiv Sharma Asst. Manager Marketing: Roland Dias Marketing Co-ordinator: Gaganpreet Kaur Designer: Parinita Gambhir Advertisement Designer: Vikas Mandotia Production Manager: Anil Kharbanda Circulation Manager: Ashok Rana Durga Das Publications Pvt. Ltd. New Delhi: 72 Todarmal Road, New Delhi – 110001, India. Tel.: +91 11 23731971, 23710793, 23716318, Fax: +91 11 23351503, E-mail: firstname.lastname@example.org, Website: www.cargotalk.in Branch Offices Mumbai: 504, Marine Chambers, New Marine Lines, Opp SNDT College, Mumbai – 400020, India Tel.: +91 22 22070129, 22070130 Fax: +91 11 22070131, E-mail: email@example.com Middle East: P.O. Box 9348, Saif Zone, Sharjah, UAE Tel.: +971 6 5573508 Fax: +971 6 5573509 Email: firstname.lastname@example.org CARGOTALK is a publication of Durga Das Publications Private Limited. All information in CARGOTALK is derived from sources, which we consider reliable and a sincere effort is made to report accurate information. It is passed on to our readers without any responsibility on our part. The publisher regrets that he cannot accept liability for errors and omissions contained in this publication, however caused. Similarly, opinions/views expressed by third parties in abstract and/or in interviews are not necessarily shared by CARGOTALK. However, we wish to advice our readers that one or more recognized authorities may hold different views than those reported. Material used in this publication is intended for information purpose only. Readers are advised to seek specific advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the readers’ particular circumstances. Contents of this publication are copyright. No part of CARGOTALK or any part of the contents thereof may be reproduced, stored in retrieval system or transmitted in any form without the permission of the publication in writing. The same rule applies when there is a copyright or the article is taken from another publication. An exemption is hereby granted for the extracts used for the purpose of fair review, provided two copies of the same publication are sent to us for our records. Publications reproducing material either in part or in whole, without permission could face legal action. The publisher assumes no responsibility for returning any material solicited or unsolicited nor is he responsible for material lost or damaged. This publication is not meant to be an endorsement of any specific product or services offered. The publisher reserves the right to refuse, withdraw, amend or otherwise deal with all advertisements without explanation. All advertisements must comply with the Indian and International Advertisements Code. The publisher will not be liable for any damage or loss caused by delayed publication, error or failure of an advertisement to appear. CARGOTALK is printed & published by SanJeet on behalf of Durga Das Publications Private Limited. and is printed at Cirrus Graphics Pvt. Ltd., B-62/14, Phase-2, Naraina Industrial Area, New Delhi – 110028 and is published from 72 Todarmal Road, New Delhi – 110001.
contents February 2011
Airport in December 2010 Airlines wise cargo 31 performance from Mumbai Airport in December 2010
Need of a fair Ground Handling Policy
Family Album ACCB’s merry making 32 at Christmas function
The proposed ground handling policy, which was approved by the government of India in 2007, has created a commotion in the airline community at large. The airlines are yet to hear the final verdict on their plea, of trade rights, before the Delhi High Court.
ACCD organises 33 ‘Maro Rajasthan’ trip in style Celebi celebrates first 34 year of operation in Delhi International Airport
Ground-handling services include check-in, baggage handling, cargo handling, aircraft cleaning, ferrying passengers to and from planes, etc. Hence, the gravity of the services is huge from security aspect. In view of the increasing security threats, the Indian Parliament approved a policy to bar private carriers from ground-handling activities at the six metro airports: Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Kolkata. It was proposed that these activities will be undertaken by the airport operators, National Aviation Company of India Ltd. or their joint ventures and one third party, specialised in ground handling services. The policy also restricts foreign airlines.
Cathay Pacific presents annual 36 “CX Star Performer Awards” CII Logistics Summit urges for 37 capacity building
Trade Associations FIEO submits memorandum, 40 targets 500 US$ export by 2014
Shipping and Ports Vizhinjam Port in Kerala 42 likely to be operational by 2015
The policy looks like a pragmatic step aiming to safeguard the security of Indian airports. However, the government should also adhere to international practices, ensuring the trade rights of airlines. It should be kept in mind that all the major international airports in the world allow airlines to handle ground operations.
COLUMNS Face of the Month Ramu S Deora: The champion of 46 export issues
Hope, the court would look into all the critical aspects for an amicable solution to this deadlock...
E-freight: Where does freight 50 forwarders stand?
Express Cargo in India A recently published ICRIER (Indian Council for Research on International Economic Relations) study reveals that the express delivery services (EDS) and courier industry in India has undergone significant changes. Cargo Talk spoke to industry professionals about the current trends and their initiatives.
8 CARGOTALK FEBRUARY 2011
National News News in Brief
UPS celebrates Annual Volunteer Month in India the company’s 8th annual Global Volunteer Month. In India, 821 UPS employees and their families volunteered more than 4,900 hours to participate in 21 community activities in 12 cities. The range of activities included planting trees, leveling the ground and cleaning the road in Ambishivwadi, a tribal village in Mumbai; cleaning the premises of an orphanage and playing games with orphans in cooperation with the NGO Balagurukulam in Chennai; and painting traditional Diwali festival lamps to sell to augment the income of the families being supported by the National Association of Disabled Enterprise in Mumbai.
UPS employees and their families in the Asia Pacific Region contributed 24,000 hours of voluntary community service during
“Being sensitive toward social issues and giving back to the community is a culture we encourage at UPS. In this way, we hope to enrich lives,” said Mark Khambatta, managing director of UPS India. Last year, UPS employees donated more than 18,000 volunteer hours during Global Volunteer Month across the region.
TAKE Solutions acquires
100 % OF UK BASED WCI CONSULTING GROUP TAKE Solutions, the international business technology company with products and solutions backed by a strong domain expertise in life sciences and supply chain management, announced the 100 per cent acquisition of UK headquartered WCI Consulting Group. This acquisition also establishes a presence in Europe for TAKE Solutions, a market previously served remotely from the company’s established areas.
10 CARGOTALK FEBRUARY 2011
According to Ram Yeleswarapu, president and chief executive officer, TAKE Solutions, WCI complements and strengthens TAKE’s portfolio of offerings to the global life sciences customers at a time when it is increasingly gaining traction with global biopharmaceutical companies “This plugs a major gap in TAKE Solutions’ global reach and opens up the European market for us,” he added.
National News New Launch
ECS GROUP PLANS MORE GLOBAL EXPANSION INCLUDING INDIA generates 487,000 tonne of air cargo a year for over 100 airline customers and reports an annual turnover of US$600 million. After a highly successful year in 2010, it now intends to grow its operational footprint into more new markets.
ECS Group, world’s leading GSSA organisation, plans to increase its global network in 2011 with five new offices in the Far East as well as India and further expansion of its presence in Africa in 2011. The ECS network already incorporates 43 subsidiaries in 30 countries. In total, the group
According to Adrien Thominet, senior vice president, sales and marketing, 2010 was a great year for the company as it recovered the tonnage and turnover that had declined since the start of the economic downturn in 2008. “Our client Brussels Airlines, for example, achieved an average load factor performance with ECS of over 93 per cent and this was a similar story with other major customers including Aeromexico, Africa West, Corsairfly, Ukraine International Airlines and Garuda Indonesia.
Darcl Logistics strengthens ODC movements Darcl Logistics, which is one of the top leading logistics companies with a revenue of Rs.1158 Crores (audited results 2009-10) in India, has decided to strengthen its ODC (over dimensional consignment) operation. Seeing the potentialin projects and heavy loads, the company ventured into ODC segment in FY 2007-08 and currently operates 64 multihydraulic axles with Volvo prime movers /pullers and carries single piece weighing even more than 200 tonne. The company has executed contracts for reputed PSU and other leading private sector corporates. The company plans to scale up the business and is in the process of strengthening the team for the same. According to TS Narasimhan, executive director, Darcl Logistics Darcl Logistics has shown a consistent growth rate and has reported a turnover of Rs 1158 crore in FY 200910, a CAGR of 24 per cent in last 5 years. ‘Darcl’ hires 97 per cent of the vehicles it uses for its transportation needs. Reporting an average ROE of 22 per cent over the last five years, Darcl has become one of the leading Full Truck Load (FTL) companies. Darcl has a asset light business model currently, where the company caters to road transportation of short term to medium and long term Full Truck Load (FTL) / bulk transportation contracts of customers spread across the country based on owned/attached /hire vehicles as per the service level requirements. The company’s core competency is also in providing trailer loads and ODCs loads (through owned and hired Hydraulic Axle trailers) to cater to projects and other customers’ requirements. On an average, 1200-1400 vehicles (trucks, trailers/ multihydraulic loads etc) are loaded on a daily basis by Darcl across the country. The company moves around 8 million TPA (tonne per annum) of cargo across the country.
12 CARGOTALK FEBRUARY 2011
International News Trade Association
Global Air Cargo Advisory Group Emphasises on security with minimum disruption In view of the increasing security threats, the newly formed Global Air Cargo Advisory Group (GACAG), which comprises TIACA, IATA, FIATA and GSF, has decided to adopt a worldwide comprehensive programme to ensure safe and fast cargo traffic.
he air cargo industry has a good track record as far as ensuring security is concerned. However, recent incidents have raised the importance of security protocols, especially risk assessment. GACAG recognises the global challenge to an air cargo industry that operates at the heart of world trade and is a recognised driver of economic 14 CARGOTALK FEBRUARY 2011
development in both the developed and developing world. CAGA has decided to focus its efforts to enhance the security of the air cargo supply chain, defined as all components of the transportation chain from shipper to consignee. But, the forum made it clear that this must be done in a manner that results in the minimum possible disruption to the vital flow of commerce.
CAGA members feel that this will require a global push by the air cargo industry and the relevant authorities to improve risk assessment, tighten standard air cargo supply chain processes, develop viable technology for the air cargo environment, and improve compliance. GACAG members plan to expand engagement with relevant authorities as we address recent developments WWW.CARGOTALK.IN
and seek to further their joint goals of security and facilitation. In doing so, GACA urged for government-industry cooperation for cargo security decisionmaking. It observed that governments should establish mechanisms to mutually recognise comparable supply chain security regimes by their trading partners. According to the forum, ICAO should be the global focal point for collaboration on cargo screening requirements and both governments and industry should be part of the ongoing dialogue. ICAO should set global definitions and standards for air cargo security, including the definition of what constitutes “higher risk cargo,” and must do so on an expedited basis. In addition, national and regional regulators should adopt ICAO definitions and standards on an urgent timetable. According to GACA, industry and government should follow the international standard set by the World Customs Organisation (WCA) on advance cargo information to facilitate risk-assessment.
GACAG RECOMMENDATIONS ON SECURITY A comprehensive air cargo supply chain security solution should be built around a multi-layered set of actions guided by the “risk-based” concept Consistent with ICAO Annex 17, member states should introduce supply chain security programmes established on common principles and platforms, such as those contained within Regulated Agent and Known Consignor programmes To facilitate integrated supply chain transportation, member states should be encouraged to mutually recognise quality supply chain security programmes introduced by partner member states Enhanced data intelligence, leveraging standardised electronic advance cargo information and consistent with theWCO Safe Framework of Standards, should underpin secure supply chain solutions to target high-risk cargo Cargo security should be viewed on a holistic basis incorporating general cargo, express cargo, mail and baggage shipped as cargo, encompassing both freighter and combination aircraft Industry and government should also jointly develop and endorse a standard
electronic cargo security declaration process and its associated paper layout.
Equipment Services New Launch
Dock levelers from Campisa
he dock levelers are steel platforms connecting the dock (to which they are hinged) to the truck bed of the vehicle, allowing the fork lift trucks to load the goods by getting onto them. During all the loading operations, the dock leveler is only an inert bridge, which follows the lifting and lowering of the truck-bed of the vehicle on its suspensions, under the mass of the load and of the fork lift truck.Dock levelers must conform to several standard norms/European Norms EN 1398
16 CARGOTALK FEBRUARY 2011
and Gandhi Automationsâ€™ dock levelers too conform to the same. Followings are some highlights of EN 1398: The Norm defines that the nominal carrying capacity is considered as concentrated on only one axel of the fork lift truck, and discharged on two marks of 15x15 cm at 1 m of distance The carrying capacity of a dock leveler is to be reduced if the use of forklift trucks with smaller wheel marks than 15x15 cm is foreseen
Width of the dock leveler should be similar to the width of the truck-beds, and with at least 35 cm between the external wheel of the forklift truck and the rim of the dock leveler Walking surface of the dock leveler must be anti slippery, and it must be easy to clean without retention of liquids The unsupported dock levelers must have an automatic safety system, to prevent accidents. For example, in case of accidental departure of the vehicle.
International Airport Cargo Terminal
Mumbai International Airport Increases cargo volume by offering incentives
here are two custodians in Chhatrapati International Airport, Mumbai, i.e MIAL and Air India. Since the time MIAL took over from the Airports Authority of India (AAI) in May 2006, overall international cargo (export and import volume) at this airport has grown by 36 per cent. Significantly, MIAL itself has registered a growth of 81 per cent during the same period.
With an objective to increase cargo volume MIAL had adopted a two-pronged strategy— to improve efficiency and even out the cargo flow throughout the day (which is predominantly more in the evening). Accordingly, MIAL has introduced the following incentives, so that shippers benefit when they bring cargo to the airport during the lean time. “All these special measures have helped us in improving the overall performance,” said Govindarajan. Additionally, following short term measures have also been undertaken to expedite cargo handling from this airport; creation of two cold storage units of capacity 225MT for 2°-8° Celsius and 15°-25° Celsius in storage of import temperature controlled products, widening of the export admittance gate (work for which is in advance stage of completion), opening of additional Import Delivery Gate 18 CARGOTALK FEBRUARY 2011
Mumbai International Airport Limited (MIAL) is in the process of finalising Cargo Master Plan, which would address existing challenges and shortcomings. K Govindarajan, vice presidentcargo, MIAL, spoke to Cargo Talk on the present performance and future plans. SPECIAL INCENTIVES TO SHIPPERS 0 per cent discount in the terminal charges for the export cargo, which is admitted and customs cleared, up to 1500hrs. 5 per cent discount on terminal charges for import cargo, which is cleared/ delivered on the same day, up to 1400 hrs. Facility for advance generation of export terminal charges receipt for the next working day (This has resulted in increased inflow of around 10-15 per cent of export cargo during morning hours) Cargo vehicle entry fee of ` 70 has been dropped
with three truck dock areas and remodification of unaccompanied baggage section (work to commence shortly), shifting of car parking outside the air cargo complex, new state-of-the-art facility of 1850 sqm has been added to provide handling of export perishable cargo (this facility will be ready for operations shortly)
and heavy cargo export Shed (wo38 rk to commence shortly). All these interim measures will further ease the operations and improve the throughput.“We expect 2010-11 volume would be higher by 20 per cent over 20092010,” shared Govindarajan. He further added that the warehouse capacity at the airport (as planned in the Master Plan) would be enhanced to handle minimum one million MT of cargo per annum. Govindarajan informed that export cargos that MIAL is handling are pharmaceuticals, garments, electronics, engineering, leather, chemicals and project cargo. While import cargos include machinery, electronics, electrical and communication equipment, cars, hazardous cargo, food stuff and pharmaceutical products, etc. Contd. on page 20 WWW.CARGOTALK.IN
Events Calendar International Events
6th Philippine Ports and Shipping 2011
Australasian Ports and Harbours Congress 2011
Air Freight Asia 2011
February 21-23, 2011 Stamford Plaza, Brisbane QLD, Australia. Terrapinn email@example.com www.terrapinn.com
March 8-10, 2011 Asia World Expo Hong Kong Contact: Reed Exhibitions 39/F, Hopewell Centre, 183 Queen’s Road East, Wanchai Hong Kong
African Logistics Summit
5th Indian Ocean Ports and Logistics 2011
6th Southern Asia Ports, Logistics and Shipping 2011
Cold Chain Logistics China 2011
9th ASEAN Ports and Shipping 2011
China International Logistics and Transportation Forum
13th Annual Global Liner Shipping Conference
February 17 and 18, 2011 The Peninsula Manila, Philippines +60 87 426 022 firstname.lastname@example.org
March 10-12, 2011 The International Conference Centre Abuja, Nigeria Call: +234-8033177008 email@example.com
Air Cargo Europe
From May 10 to 13, 2011 New Munich Trade Fair Centre Germany Messe München GmbH 81823 München, Germany (+ 49 89) 9 49-1 13 68 firstname.lastname@example.org
9th Intermodal Africa 2011
September 21 and 22, 2011 Sheraton Hotel and Towers, Casablanca, Morocco +60 87 426 022 email@example.com
March 30 and 31, 2011 Hotel Carlton, Antananarivo, Madagascar +60 87 426 022 firstname.lastname@example.org
From June 1 to 3, 2011 Guangzhou Jinhan Exhibition Center Guangzhou China +852-2827-6766, +86-20-83642986 www.coastal.com.hk
October 12-14, 2011 Call: 001-213-628-9888 Fax: 001-213-628-8383 email@example.com
May 5 and 6, 2011 Sheraton Park Hotel and Towers, Chennai, India +60 87 426 022 firstname.lastname@example.org
June 22 and 23, 2011 Windsor Plaza Hotel, Ho Chi Minh City, Vietnam Call: +60 87 426 022 email@example.com
April 4 - 5, 2011 Radisson SAS Portman, London +44 (0) 20 7017 5510 firstname.lastname@example.org
Contd. from page 18
VOLUME WISE PERFORMANCE FOR THE YEAR 2009 - 2010 AND 2010 - 2011 2009 - 2010 Description
MIAL (in MT)
TOTAL CSIA (IN MT)
Air India (in MT)
2010 -11(UPTO DEC.10) Description
MIAL (in MT)
TOTAL CSIA (IN MT)
Air India (in MT)
Export (Per) Domestic
20 CARGOTALK FEBRUARY 2011
Cover Story View Point
Express Cargo in India Adequate speed required to go with post recession time
he ICRIER (Indian Council for Research on International Economic Relations) study revealed that in India family-owned courier businesses have grown and developed into EDS companies providing integrated services. There have also been a number of mergers, acquisitions and tie-ups, which has resulted in some consolidation. Nevertheless, the express/courier industry in India is still highly fragmented with a wide variety of companies offering different kinds of services. There are four main categories of express/courier companies in India, apart from India Post, which also offers express mail services. These include the global integrators, the large Indian companies, regional players and small courier companies. All the four global integrators (UPS, FedEx, TNT and DHL), are present in India.
A recently published ICRIER study reveals that the express delivery services (EDS) and courier industry in India has undergone significant changes. Cargo Talk spoke to industry professionals about the current trends and their initiatives. Global integrators have also acquired Indian companies who cater to the domestic market. These companies have well-developed logistics networks and infrastructure, including own aircraft, dedicated gateways for custom clearance, sophisticated globally owned networked IT and scanning systems, etc. The large Indian companies such as Desk to Desk Courier (DTDC), First Flight, etc. focus on the domestic market and most of them have a good, countrywide network. Some of these companies also service selected international markets.
The study highlighted that the courier/ express industry in India is fragmented and there are a large number of small players. It is difficult to estimate the total number of players in this industry. According to one estimate, there are more than 2500 companies, employing close to one million people directly and indirectly. Out of them, only a handful (between 20 and 30) belong to the organised/corporate sector, but they account for 70 per cent of the total revenue. There are about 2400 companies in the unorganised/noncorporate segment, which earn less than 15 per cent of the total revenue.
22 CARGOTALK FEBRUARY 2011
for 2,490 freighter deliveries over the next 20 years and the world air cargo traffic will be tripled. “With China and India leading the growth emerging in APAC markets, the region’s economy will grow at a rate of 4.6 per cent per year for the next 20 years, significantly outpacing the world’s average growth rate,” Monteiro emphasised to show the potential of the express cargo industry. The ICRIER study also unveiled that the sector was growing at a compound annual growth rate (CAGR) of 33 per cent in the last decade, the growth rate has since stabilised at 20-25 per cent per annum. There was a fall in the growth rate during mid 2008-2009 due to the global financial crisis, however, growth rates started to increase after September 2009. Industry estimates indicate that the express industry grows at two and a half times the Gross Domestic Product (GDP) growth rate. Hence, if India is expected to grow at between 8.25 and 8.75 per cent in 2010-2011, as projected in the Economic Survey (2010), then the growth of the express industry will continue to be 20-25 per cent. Since there is limited information on the courier/express industry, ICRIER and IIMC (Indian Institute of ManagementKolkata), conducted a survey to understand the express delivery and courier industry in India, its key drivers, barriers that the industry is facing and its future growth prospects. According to the survey, the future growth of this sector will depend on the forthcoming Postal Amendment Bill.
Industry’s Projection and Initiatives According to RK Saboo, deputy managing director, First Flight Couriers and chairman, Express Industry Council of India (EICI), post recession, industry is on a growth path and that too in double digits. The year 2010 has been good from growth point of view and this trend will continue in 2011 also. Malcolm Monteiro, senior vice president and area director for the South Asia region, DHL Express, observed that the demand for air cargo transport rebounded sharply in 2010 after a calamitous 18month decline that began in May 2008. As businesses continue to expand beyond domestic or nearby regional markets, the international express sector will continue to grow at more sustainable, long-term rates. Growing world trade, stringent inventory control standards, increasing demand for transport of perishable, timesensitive commodities and the need to replace airplanes, will create a requirement
Keeping the present scenario in mind, DHL has implemented a few strategies on a global level and the focus has clearly shifted to key areas and regions. “In the South Asia Area (and India in particular), we will continue to grow market share organically, by offering enhanced customer experiences through our highly engaged people,” said Monteiro. “Together with Blue Dart, DHL offers the largest domestic reach and retail footprint, dedicated freighter uplift and an integrated range of products and services all the way from a domestic document to an International Express Pallet to freighter charters,” he added. Mark Khambatta, managing director/area manager India, Bangladesh and Sri Lanka, UPS, said that the company’s international business has just been phenomenal and is on track to turn its best year ever in operating profit. “During the third quarter of 2010, we saw a 13 per cent increase in international volume, led by Asia exports jumping nearly 35 percent. China export volume was up more than 50 per cent, and U.S. export volume was up about 10 per cent,” he informed. UPS in India experienced more than 30 percent growth CARGOTALK
Cover Story View Point
R K Saboo
“The organised domestic air express market is pegged at around ` 1,500 crore, which grew at a CAGR of 7-8 % in the last five years, while the domestic organised ground express market is pegged at around ` 1,700 crore, which grew at a CAGR of 14-15 % ,” Suresh Bansal, director, DTDC Courier & Cargo, added another perspective. According to him, Indian market for express business is growing but slowly changing in its nature. For example growth for normal document business has slowed down whereas demand for time bound deliveries, high quality service and service by branded companies are growing. Similarly there is high growth in small parcels business.
in export volume. The company’s Asia-toEurope trade lane export volume grew by more than 30 percent. “We are determined to sustain the enhancements we’ve made to our cost structure and we will continue to invest for the future while remaining focused on disciplined and profitable growth. We will continue to offer services in India with unmatched capabilities, to help Indian businesses succeed in the global market place,” Khambatta asserted. UPS’s strategy is to continue building on its strengths, with a strong emphasis on building the UPS brand image. Khambatta believes that the Asia-Pacific region and specifically India offers a great opportunity for their business. Anil Khanna, managing director, Blue Dart, conveyed the same sentiment. In his opinion, the growth in the Indian economy and the overall economic scenario, fuelled primarily by domestic consumption,is promising. The Indian economy is poised to record robust growth between 8 and 9 24 CARGOTALK FEBRUARY 2011
per cent in the financial year 2011-12, the Indian express industry is expected to register double-digit growth over the next few years. This in itself is a strong indicator of the potential of the express industry. “The organised domestic air express market is pegged at around ` 1,500 crore, which grew at a CAGR of 7-8 per cent in the last five years, while the domestic organised ground express market is pegged at around ` 1,700 crore, which grew at a CAGR of 14-15 per cent in the last 5 years,” Khanna pointed out. Blue Dart is in the process of rolling out several sector-specific, innovative products and services in a phased manner, in line with specific needs and requirements of different industries. These products provide the much-required flexibility to the shipper and consignee. Some recent additions to the company’s product portfolio include Express Pallet, Smart Box: Ground Express, Time Definite Delivery, etc.
DTDC is expecting overall growth between 14 to 17 per cent. “We see that demand for premium quality time bound, day definite service is growing. We also see a larger growth in e-commerce business, home shopping, tele marketing, B2C business, COD business, gifts business etc,” said Bansal. DTDC has already invested heavily on new technology platform, new product line such as DTDC PLUS, DTDC Prime t i m e PL U S , DT DC B L U E, Pre mi e re Express Cargo etc. To meet the changing demand of customers DTDC has created a completely separate SBU with more then 500 people to cater to this demand. The company also set up a separate Supply Chain Solution SBU to meet logistics, warehousing and transportation needs of its customers. In the last two years, DTDC has doubled its infrastructure and expanded its reach by 25 per cent. DTDC has strengthened its manpower; 5200 strong team on its payroll and another 15000 through its partners. Abhik Mitra, managing director, TNT India said that after witnessing recession in the last two years, growth came back in 2010. The company’s base, Europe, has WWW.CARGOTALK.IN
thin. Retention of right talent would be the key challenge,” said Saboo. “Load retrieval at various Common User Terminals are taking a lot of time and that is affecting the overall delivery of shipments to consignees. Load retrieval at Delhi Common User terminal is becoming a nightmare as it takes invariably more than 2.30 hrs and some time close to 4 hrs. Similarly at Mumbai, Common User Terminal is located on city side, which is almost 5 km from the domest ic airport,” Saboo pointed out. At Mumbai airport, after the flight arrival load, which used to get retrieved within 45 minutes earlier, now takes almost more than four hrs. So shipments, which arrive by the late morning flights goes out for deliveries in the evening most of the time, whereas earlier the delivery of same flight shipments used to be over before lunch time.
International express cargo operation apart, TNT India will also continue to strengthen its domestic operation in the country organically. It will touch all the emerging sectors in India. In 2010 TNT India registered 36 per cent growth in domestic cargo volume compared to 2009. For international cargo, the company achieved 18 per cent growth.
Areas of Concern Suresh Bansal
been showing positive sign and the US market is also improving gradually. Mitra is also highly optimistic about increase in express cargo volume between India and China, particularly import shipments. Under these circumstances, TNT will strengthen its operations for export and import from Europe and also import from China. Mitra also shared that in 2011, TNT will launch its freighter aircraft services between Belgium and India. He, however, declined to comment on any specific time and destinations to be covered in India.
Mitra was buoyant about a strong growth of express cargo logistics industry in India. However, he observed that the infrastructure and procedure related issues need to be addressed by the government for the greater interest of the Indian economy. “Especially, government needs to offer more financial support for infrastructure building. EDI connectivity has to be strengthened further by weaning away faulty implementation procedures,” said Mitra. According to Saboo, courier and express cargo industry will have to go through a bumpy ride in the days to come. Continuous increase in petrol/diesel price is putting a huge burden on the industry’s bottom line. “The margins remain wafer
“Infrastructure, like Common User Terminal, should improve efficiency so authorities should help industry to ensure timely retrieval of load .There should be proper co-ordination between airlines and team of Common User Terminal with enough loader and trolley to get the load off within 30 minutes of flight arrival, and in another 15 - 30 minutes load should be handed over to respective courier / express companies,” Saboo appealed. In Bansal’s opinion, the biggest challenges faced by the industry are trained manpower, ever increasing cost of manpower, transportation and air line charges. In addition, pressure from changing customer demand requires continuous investments in technologies and training Khanna added that though express cargo is still the preferred option for those seeking reliability and speed, inadequate infrastructure, increase in fuel charges, higher operating costs, shortage of skilled personnel and adverse policy decisions are some of the major challenges. “Industry initiatives, as well as innovative solutions by individual players based upon current needs, will be required to overcome these hurdles and ensure that operating margins are not adversely impacted,” Khanna concluded. CARGOTALK
Express Cargo New Launch
FedEx Express to enhance connectivity to Asian market
ith record growth of over 30 per cent in international shipments for FY10 over FY 09 in India, FedEx Express, a subsidiary of FedEx Corp. is working on various plans to strengthen India’s connectivity with global markets in the coming years. The recent flight from Bengaluru, establishing direct connections to Europe, Middle East and the U.S was the first step towards the goal. The Company has also introduced direct connection from Mumbai and New Delhi to Guangzhou in China. The new dedicated A310 flight connects Guangzhou – Mumbai – New Delhi – Guangzhou, five times a week. Coupled with its international strategy, FedEx has confidence in the domestic market and has announced the expansion of its premium domestic express delivery service across India. The FedEx Priority Overnight and FedEx Standard Overnight services, will now include 331 destinations, up from 58 destinations previously. Talking to Cargotalk, Kenneth Koval, vice president – India Operations, FedEx Express said, “India is one of our key markets and it is important for us to invest in such a high growth market. We are recording an average growth of 30 per cent for international shipments from the Indian market year-on-year. Our recent flight launches are aimed at opening up India’s trade with key global markets. With the launch of the new flight from Bengaluru, it becomes the third Indian gateway for FedEx, joining Delhi and Mumbai and 26 CARGOTALK FEBRUARY 2011
After introducing FedEx Import services to enhance the service portfolio in India and expanding its domestic Express Service, FedEx Express in India is now looking at strengthening its connectivity with Asian markets. FAST FACTS
enhancing FedEx customers’ access to the global marketplace. Additionally, the new flight connecting India and Asia will enhance trade between the two regions. These, coupled with the expansion of our domestic connectivity will further enable us to facilitate unprecedented connectivity and widen our supply chain both domestically and internationally.” FedEx also recently introduced FedEx Import services in India, which will not only meet the growing demand of Indian importers, but will also complement its export and domestic services. While exports from the country grew by 23.2 per cent, imports posted a 26.1 per cent year-on-year growth in September 2010. Koval said, “We were looking at introducing our import services in India for quite some time but were waiting for the right time. After the recovery signs from global financial crunch and with the rising demand in the market, we thought
The Asia Pacific region is India’s largest region for trade and contributes to around 27 per cent of India’s exports and 32 per cent of India’s imports. The launch of FedEx’s new direct flight will help to boost the increasing trade between the two regions, especially between India and China. The latter is India’s largest trading partner, with bilateral trade expected to cross $60bn this year compared to $42.42bn in FY 2009-2010.
of introducing it. At the right time – for the right market with the right services! We are positive about the growth in this service area in India. We have successfully leveraged the strength of our vast network and flexible product portfolio, to drive the competitiveness of Indian businesses, by connecting them to an extensive network of global suppliers and customers.” Thus, the Indian importers now have access to the complete portfolio of FedEx services, for express and economy shipments, including dangerous goods, perishable and valuable shipments. Importers can also consolidate multiple packages into one shipment for ease of customs clearance and then deconsolidate into individual shipments, informed Koval. WWW.CARGOTALK.IN
Emerging Technology Cold Chain
Carrier Transicold introduces natural refrigerant container technology
arrier Transicold is a unit of Carrier Corp., the world’s leader in high technology heating, air-conditioning and refrigeration solutions. Carrier experts provide sustainable solutions by integrating energy efficient products, building controls and energy services, for residential, commercial, retail, transport and foodservice customers. The natural refrigerant container technology has been used in Carrier’s newest container refrigeration unit design, to be known as NaturaLINE. “Carrier’s NaturaLINE technology combines our industry leadership and our expertise in the use of natural refrigerants in other energy-efficient refrigeration applications,” said Chiou Fun Sin, vice p resid ent, Carrier Global Con t ainer Refrigeration. Carrier has already placed demonstration units in service, for aroundthe-world tests with Hamburg-based Hapag-Lloyd. In 2011, they will extend the programme with full field trials. “NaturaLINE technology is a revolutionary breakthrough for the marine container refrigeration market and advances Carrier’s natural leadership in environmental technologies,” said John. According to John Mandyck, vice president, Carrier, Sustainability & Environmental Strategies, “NaturaLINE technology also demonstrates how technological innovation can reduce the impact on climate change, continuing 28 CARGOTALK FEBRUARY 2011
Carrier Transicold, which is a leading company offering transport and shipping temperature control equipment, for refrigerated trucks, trailers and containers, has launched natural refrigerant container technology, for container refrigeration. Carrier’s long-standing commitment to providing sustainable solutions.” Carrier’s natural refrigerant container technology incorporates numerous innovations, some of which are new to container refrigeration applications. For example, the system includes a new gas cooler/condenser coil that wraps around the fan, to enhance surface area and maximize heat transfer. It also takes advantage of a new marine-duty, multistage compressor. New power electronics and an advanced software control system
“NaturaLINE technology is a revolutionary breakthrough for the marine container refrigeration market and advances Carrier’s natural leadership in environmental technologies. combine to efficiently optimise fan speeds and compressor capacity, to match cooling loads and temperature control. Commenting on the company’s plans and programmes to promote the technology in Indian market, Kartik Kumar, director of marketing and strategic planning, global container refrigeration, Carrier Transicold, informed that as this is in field trials (which is an advanced developmental stage),
Carrier Transicold is not actively marketing the product yet. “However, the eventual availability of refrigerated container units, combining both best-in-class energy efficiency and the natural refrigerant with the lowest global warming potential, will appeal to shipping lines, container leasing companies, exporters and importers anywhere on the planet, who are seeking the most sustainable solutions with the lowest carbon footprint,” Kumar added. WWW.CARGOTALK.IN
Cargo Performance Export/Import
(AIRLINE-WISE IMPORT/EXPORT CARGO PERFORMANCE FOR THE MONTH OF DECEMBER 2010)
S. No. Airlines
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55
Cathay Pacific Jet Airways Emirates British Airways Air India Thai Airways Singapore Airlines Lufthansa Cargo Airline Deccan Express Log Aerologic Etihad Airways Qatar Airways Swiss World Cargo(India) Fedex Express Corpation Malaysian Airline System Turkish Airlines KLM Virgin Atlantic Austrian Airlines Japan Airlines Finnair Air France Uzbekistan China Air American Airlines Cargo Saudia Eva Air Aeroflot Cargo Airlines China Eastern Airlines Continental Airlines Blue Dart Air China Indian Airlines Pamir Airways Kuwait Airlines Gulf Air Asiana Airlines Mahan Air China Southern Airlines Air Mauritius Oman Air Air Arabia Kam Air Ethopean Airlines Pakistan International Air Astana Ariana Afghan Airlines Royal Jordanian Airlines Sri Lankan Airlines Ltd Turkmenisthan Airlines Jetlite Royal Nepal Airlines Druk Air Air India Expres MIS
Total Cargo handled in Decâ€˜09 % VARIATION
Export Perishable Cargo (MTs)
Export (with Peri.) (UPL)(MTs)
All wt. in mt.
% of Total
9.2% 9.0% 7.3% 5.5% 5.1% 4.9% 4.6% 3.6% 3.2% 3.0% 2.9% 2.4% 2.4% 2.2% 2.1% 2.1% 2.0% 1.6% 1.3% 1.3% 1.3% 1.3% 1.3% 1.1% 1.0% 0.9% 0.9% 0.9% 0.8% 0.8% 0.7% 0.6% 0.5% 0.5% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 8.3%
971 984 645 795 675 297 606 392 166 531 288 216 382 431 258 426 315 300 239 183 230 262 192 111 158 221 63 203 111 164 191 106 96 137 30 83 45 74 26 47 38 54 54 32 28 36 31 22 19 15 3 2 2 0 1139
48 237 942 3 116 22 18 57 0 0 106 217 0 0 45 47 77 0 0 2 3 28 9 6 3 41 10 38 1 0 3 2 4 0 80 24 1 10 3 26 22 0 0 20 1 6 0 10 1 0 10 0 0 0 138
1019 1221 1586 798 791 320 624 449 166 531 394 433 382 431 303 473 392 300 239 184 233 290 201 116 161 262 73 241 112 164 195 108 100 137 110 107 46 84 29 73 60 54 54 52 28 41 31 32 20 15 13 2 2 0 1277
1739 1483 601 863 742 1150 764 624 792 379 477 300 342 227 342 146 211 188 167 218 166 93 182 230 131 14 194 19 141 87 3 77 52 0 14 5 66 6 50 2 0 0 0 0 24 10 4 3 11 0 1 3 0 0 1225
2758 2704 2188 1661 1533 1470 1388 1073 958 910 871 733 724 658 645 619 603 488 406 403 400 383 383 346 292 276 267 260 253 251 198 184 151 137 125 112 111 90 78 75 61 54 54 52 52 51 35 34 31 15 14 5 2 0 2502
13121 12611 3.89%
2437 2381 2.29%
15558 14992 3.64%
14570 13368 8.25%
30128 28360 5.87%
# Cargo Handled at Centre for Perishable Cargo
30 CARGOTALK FEBRUARY 2011
MUMBAI CSI AIRPORT EXPORT/IMPORT CARGO TONNAGE HANDLED IN DECEMBER 2010
(Including TP Cargo)
WEIGHT IN TONNES GENERAL S. No. Airlines 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46
Air India Jet Airways Emirates Cathay Pacific Lufthansa Singapore Airlines British Airways Federal Express Ethopian Airlines Etihad Airways Qatar Airways Air France Swiss Intl. Airlines Turkish Airlines Kingfisher Airlines Kuwait Airways Thai Airways Malaysian Airlines Korean Air Saudi Arabian Airlines Delta Airlines/KLM Kenya Airways South African Airlines Gulf Air Air Mauritius Oman Air Airasia EL-AL Airlines Air Arabia Qantas Iran Air UPS Pakistan Airways Continental Airlines Srilankan Air Yemenia Airways Blue Dart Egypt Air Nas Air Royal Jordanian Airways Indian Airlines Air Cargo Germany Austrian Airlines Jade Cargo Charters Others TOTAL
776.87 1649.51 1497.34 1031.88 974.73 622.00 720.86 583.16 572.34 487.91 418.75 509.07 417.77 410.95 379.59 101.42 253.41 301.42 296.73 211.32 247.83 242.88 223.76 77.62 120.80 15.40 87.26 80.03 47.98 71.90 59.60 62.38 36.38 47.25 40.51 25.87 37.43 35.45 10.63 9.70 1.34 0.00 0.00 0.00 0.00 92.85 13891.87
1433.95 947.47 592.45 47.34 16.69 146.67 89.94 0.00 4.87 77.97 194.22 5.33 3.35 0.00 0.00 174.40 35.16 0.57 2.73 88.14 0.00 0.00 9.96 143.16 8.29 150.86 0.00 3.29 52.23 0.00 7.19 0.00 29.95 0.00 3.73 10.58 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2210.82 1649.51 1497.34 1031.88 974.73 768.66 720.86 583.16 577.21 487.91 418.75 509.07 417.77 410.95 379.59 275.82 288.56 301.42 299.46 211.32 247.83 242.88 233.72 77.62 129.09 15.40 87.26 80.03 47.98 71.90 59.60 62.38 36.38 47.25 40.51 36.45 37.43 35.45 10.63 9.70 1.34 0.00 0.00 0.00 0.00 92.85
3644.76 2596.98 2089.79 1079.22 991.42 915.33 810.80 583.16 582.07 565.88 612.97 514.40 421.12 410.95 379.59 450.22 323.72 301.99 302.19 299.46 247.83 242.88 243.67 220.78 137.38 166.26 87.26 83.31 100.21 71.90 66.79 62.38 66.33 47.25 44.24 47.03 37.43 35.45 10.63 9.70 1.34 0.00 0.00 0.00 0.00 92.85
5855.58 4246.49 3587.12 2111.09 1966.15 1683.99 1531.65 1166.33 1159.28 1053.80 1031.71 1023.47 838.89 821.90 759.18 726.04 612.28 603.42 601.65 510.79 495.66 485.76 477.39 298.40 266.46 181.65 174.53 163.34 148.19 143.80 126.39 124.77 102.71 94.49 84.75 83.48 74.86 70.90 21.27 19.40 2.69 0.00 0.00 0.00 0.00 185.69
Family Album Club Function
Merry making at Christmas function Air Cargo Club of Bombay celebrated Christmas function on 10th December 2010 in Mumbai. The function was well attended by members alongwith their family and guests.
32 CARGOTALK FEBRUARY 2011
Family Album Club Function
‘MARO RAJASTHAN’ TRIP IN STYLE The Air Crago Club of Delhi (ACCD) organised a remarkable out station trip to Rajasthan from January 7 to 9.The highligts of the trip were fantastic music and dance events at Chokhi-Dani and a gala evening at the historical Amer Fort in Royal Maharaja style.
Family Album Aniversary
Celebi celebrates first year
OF OPERATION IN DELHI INTERNATIONAL AIRPORT Celebi Delhi Cargo Terminal Management India (Celebi) organised a gala evening on January 13 to celebrate the successful completion of its first year of operations in Delhi International Airport. Can Ă‡elebioglu, chairman, Celebi Holding; Sanjay Khanna, CEO, Celebi Delhi Cargo Terminal Management India and several DIAL officials were present on this occasion to honour their business partners with Annual Celebi Excellence Awards.
34 CARGOTALK FEBRUARY 2011
Family Album Awards
Cathay Pacific presents
ANNUAL “CX STAR PERFORMER AWARDS” Recently, Cathay Pacific Airways hosted “CX Star Performer Awards 2009” ceremonies in Mumbai, Delhi, Chennai and Bengaluru to honour majors of the cargo industry for their excellent support to the airline in 2009.
36 CARGOTALK FEBRUARY 2011
Family Album Industry Event
CII Logistics Summit
URGES FOR CAPACITY BUILDING
The CII Logistics Summit 2010, which was organised on December 13 and 14 in New Delhi witnessed a galaxy of speakers from India and abroad. GK Vasan, minister for shipping made a special address on this occasion.
Trade Associations Indian Export
FIEO submits memorandum,
targets 500 US$ export by 2014
The Federation of Indian Export Organisations (FIEO) recently met the Union Finance Minister where Ramu S. Deora, the recently elected president, FIEO, submitted a pre - budget memorandum for the greater interest of exports from India.
ccording to Deora, both government as well as the exporters should ensure that India becomes the globally preferred trading partner. “The government and the business community should work together in the interest of the nation to ensure uniform growth –across all sectors. The growth should also reflect an increase in government revenue. Our share of 1.52 per cent in global trade should increase to 3 per cent,” he said. While the Government is contemplating an export target of US$ 400 billion by 2014, Deora is optimistic that Indian exporters could touch US$ 500 billion provided adequate infrastructure is made available to cope with multi-fold increase in exports. “Looking at manufacturing growth and diversification of exports, we believe that the growing trade deficit could also be arrested,,” he observed. “We do not need any stimulus package. The government has done much at the policy level with meaningful policies, but their implementation at the ground level requires improvement,” Deora stated.
Nodal Agency: FIEO urged for
a nodal agency to tackle export related matter under the Finance Ministry. In his opinion, policies are unclear, with 38 CARGOTALK FEBRUARY 2011
(L-R): Ajay Sahai, DG, FIEO; Ramu S Deora, president, FIEO and J K Jain, VP, FIEO
references being made to various old circulars, notifications, amendments, etc., leading to varying interpretations and conflicting decisions being taken by government authorities and courts. He also pointed out that exporters are compelled to enter into litigation with tax authorities on numerous issues concerning customs, excise, service tax, income tax, VAT, etc., due to which government as well as the funds of exporters, are blocked in litigation. Therefore all old notifications and circulars should make way for the issuance of new, simple and clear policies. Furthermore, there should also be a high power executive appointed under Finance Ministry, to deal exclusively with export related issues.
FIEO welcomed the introduction of an online system for various statutory and other requirements. “However, in spite of online system there i s s t i l l a h u ge am o u n t of p a p e r w or k involved, which needs to be resolved. In addition, the servers need to be equipped to handle the load. Many a times site is not working or is under maintenance eg. DGFT and Customs website at times are not functioning and problem of 1.5 version has not been addressed fully,” said Deora.
Refund of Service Tax:
Despite procedural simplifications carried out by the Ministry of Finance, refund of service tax is still beset with problems and delays. WWW.CARGOTALK.IN
Trade Associations Indian Export
IMPROVEMENTS REQUIRED Simplification of procedures Reduction in paperwork Clarity on policies Quick decision on litigations Reduction in transaction costs Quick dispersal of refunds where due Greater coordination between various government agencies Vast improvement in infrastructure SMEs should be given more importance and encouraged as they are contributing for more than 45 per cent of manufacturing, more than 40 per cent of exports and employing more than 60 million people
While exemption from service tax on all output services used during the course of exports is an ideal solution, the list of item not available for refund should be made clear. The FIEO president recommended that the Ministry of Finance can alternatively work on a mechanism to allow an All Industry Service Tax rate for different product groups, as is the case with All Industry Duty Drawback Rate. Exporters, not satisfied with the All Industry Service Tax rates, can always apply for refund on actual basis like Brand Rate of Duty Drawback.
in India for foreign agents rendering services outside India. Hence, provision of Tax Deduction at Source (TDS) should not be applicable to commission paid to foreign agents. However, Income Tax Authorities are not accepting the above plea and are raising demands resulting in unnecessary Litigation.
Extension of tax benefits:
The income tax benefit available to Export Oriented Units & Software Technology Park Units is expiring on March 31, 2011 and may be extended till March 31, 2014.
The recent problem of ACU (Asian Currency Unit) mechanism has exposed the problem of settlement of foreign trade in a few specified currencies. This also increases the conversion cost for the exporters as at times they have to first convert the currency of importing country into US$ and then convert US$ into Indian rupees for making remittances.
Waiver of TDS: Overseas agency
Opportunities and challenges
There are large numbers of small scale entrepreneurs who are exporting more than 75 per cent of their production without enjoying the Income Tax benefit as available to Export Oriented Units (EOUs). Such units may also be given Income Tax benefit under Section 10-B for a period of Three Years up to 2014.
commission is paid to foreign agents who procure orders and ensures realisation of export proceeds for the orders procured by them. The services are rendered outside India. Income does not accrue or arrive 40 CARGOTALK FEBRUARY 2011
Elaborating on the memorandum Deora maintained that the government
should recognise the requirement of the desired infrastructure to meet this milestone (US$ 500 billion export target by 2014). Deora added that quantum jump in investment would be required in roads, ports, airports, containers, power and telecommunications, cold storage and refrigerated vans and warehouses for perishable commodities, so as to augment the installed capacity. The present bottlenecks in various segments of infrastructure calls for immediate intervention. Deora also explained that out of US$ 500 Billion exports, major chunk will be contributed by Asia with a share of US$ 230 billion, with the ASEAN countries alone importing more than US$ 100 billion from India. On the other hand, export to Africa will zoom to US$75 Billion while LAC will touch US $50 Billion. Share of Europe and North America will be down to 15 per cent and 10 per cent respectively as growth in the advanced economies will taper off. Export to Europe will reach US$ 75 billion while North America may see export touching US$ 50 Billion. With Russia leading the way, Central Asian Republics and CIS countries will be market for US$ 20 billion exports by 2014-15. WWW.CARGOTALK.IN
Shipping & Ports Southern Region
Vizhinjam Port in Kerala likely to be operational by 2015
ISL is a special purpose company, fully owned by the Government of Kerala (GoK) with a mandate to attract private sector participation for the port’s development and to set up the external infrastructure. VISL is taking the advice of various international consultants, such as International Finance Corporation (IFC) who are the lead transaction advisors and market leaders in PPP transaction advisory. VISL plans to implement the project (Vizhinjam Port) on a Public Private Partnership model. The company had recently published a Request for Qualifications (RFQ). According to Kaushik, in order to make Vizhinjam an attractive investment opportunity, GoK has positioned the port as an alternate gateway to serve shippers in the hinterland. As a multipurpose port, it will provide the flexibility to handle an optimal cargo mix, to maximise traffic volumes and revenue. In addition to meeting financial return objectives of the private partner, the port will be an impetus for economic development in southern Kerala, complementing local economic activities and providing opportunities for additional direct and indirect employment for the local population. The civil infrastructure is likely to begin early 2012. In the meantime, VISL will be focused on necessary hinterland and utility connections in 2011. The port is expected to start operations by 2015. 42 CARGOTALK FEBRUARY 2011
The upcoming Vizhinjam Port, located in Kerala and 16 km south of its capital Trivandrum, has chalked out an ambitious plan of handling 822,000 TEUs (20 -foot equivalent units) by the end of Phase I, in 2020. Sanjeev Kaushik, MD, CEO, Vizhinjam International Seaport Ltd (VISL) and secretary (Ports), Kerala talks about the port.
Infrastructure development Vizhinjam Port’s Phase I civil infrastructure development (to be spearheaded and funded by VISL) includes 3.3 km breakwater; reclamation of land of 650 m length and 400 m width; quay wall of 650 m length; and access channel of 300 m width and 700m diameter.
Based on estimates from Drewry Shipping Consultants, UK, container volumes at Vizhinjam Port are expected to reach 822,000 TEUs (twenty-foot equivalent units) by the end of Phase I in 2020; 1.76 million TEUs by the end of Phase II in 2030; and 2.82 million TEUs by the end of Phase III in 2044. Container revenues are estimated to be more than USD 7 million in the first year of operations, touching more than USD 35 million by 2020. Commenting on the location of the project Kaushik said, “The geographical location of Vizhinjam port is a major advantage to India, which is much closer to EastWest shipping route and offers close proximity to international route. Added to that, it is close to Trivandrum city that has an international airport, human resource and social infrastructure and can provide immediate access to road and rail network.”
“We have made significant progress on the base infrastructure, including road and rail connectivity and access to power and water supply, having already disbursed ` 450 crore for this purpose. With access to the Tamil Nadu hinterland, we are spending ` 30 crore to reinforce the existing 30 km road from Kovalam to Kaliyikkavilai on the inter-state border,” said Kaushik. Moreover, work has already started on building a truck terminal and establishing rail connectivity from the nearest rail head. The first phase of the project is estimated to cost ` 2,620 crore, out of which ` 970 crore would be borne by the private party/ consortium for the port superstructure. The remaining ` 1,650 crore, in civil infrastructure, will be provided by the GoK through an engineering, procurement and construction (EPC) contract, to be given out through bidding, in early 2011. VISL is raising this money through a consortium of banks led by State Bank of Travancore. WWW.CARGOTALK.IN
Shipping & Ports Southern Region
VISL project receives 14 submissions Vizhinjam International Seaport Ltd announced on January 10 that the project had received 14 submissions as a part of the RFQ process. The RFQ was announced on November 25, 2010 and January 10, 2011 was the deadline for submission. Major companies including large Indian infrastructure companies like GMR, GVK, and Reliance, in addition to consortiums of foreign players from Turkey, UK and Australia submitted the RFQ. Additionally companies like Gammon Infrastructure Projects; Mundra Port; Essar; Global Yatirim Holding and STFA consortium (Turkey); Jaiprakash Associates; Patel Engineering and Limak (UK) Consortium; Sterlite Industries; Consortium of SCI, SKIL, HCCL; Consortium of Welspun Infratech and Leighton Contractors; Nagarjuna Construction Company and Condor Brookfield Consortium also submitted RFQ. Announcement of pre-qualified applicants is scheduled to take place on January 19, 2011 along with distribution of the Request for Proposal (RFP) document Bid Evaluation/ Empowered Committee will be chaired by the Chief Secretary. On the same day, a meeting at the Ministry of Environment and Forests in Delhi will be held to approve the Terms of Reference for the Environmental and Social Impact Study – the first stage of the environmental and social clearance process. The RFP submissions are due on March 23, 2011.
Financial Aspects “In addition to meeting financial return objectives of the private partner, the port will be an impetus for economic development in Southern Kerala, complementing local economic activities and providing opportunities for additional direct and indirect employment for the local population,” Kaushik emphasised. He clarified that Vizhinjam Port will be managed as a “Landlord” port, similar to Major ports in India. In this model, the port authority, VISL, will own the land and the basic infrastructure and maintain 44 CARGOTALK FEBRUARY 2011
regulatory control, but will allow the private party/consortium, through a BuildOperate-Transfer (BOT) concession, to set up and operate the commercial facilities at the terminal. VISL will collect port dues and vessel related charges and provide operations and maintenance to the civil infrastructure (i.e. maintenance dredging), while the concessionaire will collect container related charges, providing operations and maintenance to the port superstructure (i.e. terminal, equipment). Vizhinjam will offer an optimal mix of domestic gateway containerised and general cargo and container transhipment. The GoK has already applied to the Government of India, Ministry of Shipping, for special exemption to cabotage restrictions restricting foreign carriers from calling at the Port.
s u c h as fert i l i z e r, raw c a s he w s , a nd petroleum products. Questioned about the marketing strategy, Kaushik informed that VISL had done a number of active investor outreach exercises both in India and abroad. In September, the company met with po rt o pe rat o rs t h ro u g hout E ur op e Paris, Marseille, Lisbon, Barcelona and Amsterdam. In parallel, VISL had organised several one-on-one interactions in Mumbai, and sponsored the Investor Roundtable in November in Trivandrum. Vizhinjam, with its plans to cater to large 12,000 TEU vessels is a new and exciting opportunity without legacy issues of existing ports.
Did you know
With transhipment, there is a high potential of other local ports in Kerala and the south and east coast of India to be connected to Vizhinjam. “Much of the partnership opportunities depend on the operator chosen through the bidding process, as high quality operators will be able to attract premier shipping lines to the port,” Kaushik maintained. The port has received considerable domestic and international interest from top maritime companies; 31 major national and international players have shown interest, while 19 parties had purchased the RFQ document. Many of these interested parties participated in the Investor Roundtable Meet, held in Trivandrum on November 25. The bid criteria will be the Net Present Value (NPV) of the absolute amount of revenue share (or grant subsidy in the form of negative revenue share) plus upfront concession fee from concessionaire to the authority. The highest NPV would be the selected bidder. “In the case of no positive bids, the lowest negative NPV would be the selected bidder,” added Kaushik. The forecast from Drewry specifies container (gateway and transhipment) as the primary cargo for the port. However, the port may also attract general cargo
The Minister of Shipping G.K. Vasan has announced the Maritime Agenda 2010-2020, a perspective plan of the Shipping Ministry for the present decade. The objective of the agenda is to create a port capacity of around 3200 MT to handle the expected traffic of about 2500 MT by 2020. The minister stated that Rs 165000 crore would be the investment in the shipping sector by 2020. The total proposed investments in major and non-major ports by 2020 is expected to be approximately Rs 287000 crore. The Maritime Agenda projects a total traffic of 2494.95 million tonnes for all major and non-major ports taken together. WWW.CARGOTALK.IN
Face of the Month FIEO
Ramu S Deora
The champion of export issues Born in 1937, Ramu S. Deora is a multi-faceted figure on the Indian economic scenario and an acknowledged leader on the export front. He has won several laurels for his outstanding contributions to promote international trade, exports from India and investment in the country.
Ramu S Deora
eora was recently elected as president, Federation of Indian Export Organisations (FIEO) for the third time. Earlier he had been president, FIEO from 1987 to 1991 and from 1997 to 1999. Deora’s present term will continue until 2012. Deora has held various positions: chairman of CHEMEXCIL (Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council); director of ECGC (Export Credit Guarantee Corporation of India Ltd); member of SCOPE (Standing Committee on Promotion of Exports); Trustee of Bombay Port Trust; member of RBI Committee for Banking, Export Advisory & Exchange Control, etc. He is also a member of BOT (Board of Trade), set up by the Ministry of Commerce & Industry, Government of India; chairman of ASCOBIPS (Association of Shippers Councils of Bangladesh, India, Pakistan & Sri Lanka) and chairman FTFF (FICCI – Trade Facilitation Forum). He believes that “Export is the only business”, as it creates maximum employment and generates foreign exchange for country’s development. He has led Indian exporters in favour of simplification of trade and fiscal policy and brought about several benefits to the 46 CARGOTALK FEBRUARY 2011
exporters, particularly complete exemption of Income Tax on export profit (under section 80HHC). He was also instrumental in curtailing the ‘license raj’ and reforming the fiscal and trade policy. When India’s foreign trade was at an infant stage, Deora played a crucial role by taking
Chambers and Federations. Deora’s own a company, called G. Amphray Laboratories, is headquartered in Mumbai and a manufacturer of Active Pharmaceutical Ingredients (API’s) for the food, pharmaceutical, veterinary/animal health and other allied industries since
Export is the only business, as it creates maximum employment and generates foreign exchange for country’s development. initiatives across the country and abroad along with the exporters. He took intensive export promotion campaign to Chile, Argentina, Mexico, Venezuela, Bogota, Portugal, Madagascar, Mauritius, South Africa, Soviet Union, Hungary, Poland, Romania, Indonesia, Philippines, Thailand, South Korea, Taiwan, Malaysia, China, Hong Kong, Singapore, Japan, U.S.A., Egypt, Iran, Dubai, Turkey, England, France, Germany, Switzerland, Belgium, Netherlands, Italy, Spain, Australia, New Zealand, etc. He signed many MoUs (Memorandum of Understanding) for the promotion of trade with their respective
1966. The company’s products have won several National Awards for Outstanding Export Performance from the President of India, the State Government & Councils, etc. The company has been the first Indian company to have warehousing facilities overseas, in Hamburg, Germany and in Mexico City for the distribution of their products. Deora was honoured for with the most coveted “ Lifetime Achievement Award” for “Outstanding Contribution to India’s Exports,” by the Union Minister for Commerce and Industry. WWW.CARGOTALK.IN
Guest Column Current Issue
Where does the forwarding community stand?
One has been hearing of the E-freight project for quite some time now.The International Air Transport Association (IATA) embarked upon this project sometime in 2006. However, the progress has been very slow, says Keshav Tanna
o go paperless or E-freight, is a very ambitious project in the entire process of air freight. IATA claims that the air cargo industry can fill up 39 Boeing 747 freighters, each year, with paper, wasted on documentation, and this is something E-freight could address. It is believed that the industry could save US$ 1.2 billion each year. IATA also states that the current six day in transit shipment average, will reduce to just four days with E-freight. If all this is true then the question is why is it that the E-freight programme is taking so long to become a reality? IATA’s projected time lines, by end 2010 were 44 locations and 76 airports live, which account for approximately 80 per cent of international trade. However, it is understood that currently, eventhough over 12,000 shipping lanes are in theory E-freight enabled, only four per cent of air cargo shipments on those lanes are paperless— a figure that represents just one per cent of all air cargo shipments globally. A major reason for this has perhaps been the ‘wait and see’ policy of the forwarding community, because they do not see any direct benefit for themselves by embracing the E-freight programme. The main questions to be addressed therefore are—What is in it for the f orward ers? W h y sh ould t h ey in vest in E-freight until they see clear benefits for themselves from the same? Is the programme only meant to benefit the airlines? 48 CARGOTALK FEBRUARY 2011
THE REALITY OF TODAY’S AIR FREIGHT MOVEMENT Forwarder requires to deliver a signed airway bill to the airlines Most of the airlines accept only FORM-SET Airway Bills (No E-Airway Bills) Carting still has to be released physically by numerous airlines (AWB Copy Faxed/Telephone Calls)
The programme must be so designed, that it is beneficial not only for the airlines segment but also the forwarding community; thus, making it a win-win situation for both segments of the global supply chain. While we all know that the business world is going paperless, and everyone should support such initiatives, there are certain realities in the air freight industry which on the ground level are quite different. Some of the realities that are still prevalent in today’s market place are given in the box. The argument of course would be that E-freight could perhaps be the answer to these issues. With the world realizing the benefits of E-freight, what is it that makes the Indian forwarders averse to the idea of adopting this phenomena. Are there factors unique to the freight community here? Perhaps this has to be identified
The physical requirement of a dangerous goods certificate Statutory documents like Certificate of Origin / Carnets etc. required in hard copy
first before the freight in India can go paperless! (Keshav Tanna is managing director, Links Forwarders and former president of ACAAI. )
Did you know Emirates skycargo flight ek702 recently operated its first paperless flight from mauritius to dubai. The Boeing 777-300 ER aircraft, with a capacity of tonnes, transported various cargo including bank notes, flowers, fruits, clothing, textiles and courier items.
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