INTERVIEW DR P K GOEL
SPECIAL FEATURE THE TALKING WAREHOUSE
PROFILE AKASH BANSAL
Can UP become a logistics hotspot? I
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Can UP become logistics hotspot?
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34 SPECIAL FEATURE
Dr P K Goel
Frost & Sullivan
Utopian idea? Not really! In all candidness, let me admit that initially I was not too keen to deal with the theme which finds the prized position of cover feature in this edition. The state of Uttar Pradesh and development including the capability of becoming a logistics hotspot appeared out to be a far-fetched idea. The popular perception about the state administration is no secret to anybody and you can’t help not buying some of those gloomy theories which exist. However, the assertiveness expressed by some speakers at a seminar in Noida last month that the state has the positive trappings of being a hotspot in the next growth wave convinced me to look at the theme from a fresh angle and new perspective. And then things fell in place. Agreed, that the borrowed prism, if I may use that term, brings the view of potential mostly at this juncture as there are fewer signposts. But then isn’t potential talks often turn out to be the trigger point for the large scale developments in the future even as there are a host of doomsayers in the beginning scoffing at the idea? At a broader level which underlines the churnings at different points in history that redesign the economic fortune of a subdued zone, aren’t we noticing noted global enterprises and even countries backed multi- billion dollar investments in Africa today? So if there are people out there in the world ready to bet on a zone which till other day symbolized everything wrong with human life, then what is wrong in imagining UP’s renaissance? Most of the contributors to the central theme of this edition have pointed at concrete push factors which could propel the turnaround in state’s economy in general and quite obviously its logistics infrastructure in particular. The state has a huge domestic market of its own, it already has bustling pockets close to mega-consumption centers , it is at confluence of two megascale infrastructure projects (likely to gather momentum in the near to medium run), could well become the fulcrum of an agriculture corridor comprising some neighbouring states, has surplus manpower, and most importantly the advantage of location itself – the geographical blessing to become the vibrant point connecting east of the country with the rest of the country. An analyst even went to the extent of telling me that even if government does not do much, new centers would come up given the fact that the largest chunk of eastern corridor of Dedicated Freight Corridor (DFC) would be passing through the state. “Entrepreneurs would ultimately jump in the fray to make the most of the opportunity. Such projects are most robust catalysts you can think of,” was his crisp remark. The verdict is clear. With a serious push from the administration, the state can do wonders and it would obviously reflect in logistics infrastructure. No doubt, there are enough policy provisions on the paper to suggest that the government has a broader economic agenda but the failure of PPP mechanism clearly indicates that players in the fray are not convinced. If we look at Indian growth story and typically the sectors which have done well, a popular feeling is: those sectors soared to new highs because of change in the attitude – from ‘can we’ to ‘we can’ even as this transformation has been a painstaking effort. Probably UP’s story lies somewhere in the middle of the two extremes today. And surely elevating to ‘we can’ stage can’t be looked upon as an altogether utopian idea. Hope you would enjoy reading this edition. Waiting for your feedback. Ritwik Sinha firstname.lastname@example.org
LOGISTICS TIMES August 2011
Logistics Leaders Optimistic Early this month, the 18th Annual Survey of Third-Party Logistics Providers was released in the US and the key finding revealed logistics companies experiencing improved economic conditions in 2010, with 88 percent of companies surveyed in North America meeting or exceeding their revenue projections, as compared with only 50 percent in 2009. The survey was presented at the Council of Supply Chain Management Professionals Annual Global Conference by survey author, Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University, and Joe Gallick, Senior Vice President of Sales for Penske Logistics. The findings analyzed responses from 36 third-party logistics company CEOs across North America, Europe and Asia-Pacific whose companies were responsible for generating approximately $58 billion in revenue in 2010. Economic conditions appeared to slightly improve for third-party logistics companies surveyed in 2010 in North America. None of the companies were unprofitable and none of the CEOs believed the regional third-party logistics industry operated at a loss for the year. In Europe, economic conditions continued to be challenging for third-party logistics companies with only 55 percent of companies surveyed meeting or exceeding their revenue growth projections for the year, as opposed to 90 percent of companies
surveyed in Asia-Pacific. Growth projections are most optimistic in Asia, with companies expecting to grow 15.8% in the next year, as compared to 10.8% expected in North America and 8.4% in Europe. The Asia-Pacific market is expanding, according to the survey findings, with CEOs seeing a variety of growth opportunities in the region, including increased volumes in China and India. The report also cited more extensive road transport services to support manufacturing in China as it moves inland.
Ground Express Service FedEx Express, early this month, announced the launch of FedEx Economy - an intra-India, door-to-door, day-definite express delivery service for ground consignments. According to a company release, the launch of FedEx Economy means company offering businesses in India a complete portfolio of domestic shipping services, presenting customers with a choice of air and ground services, thereby improving domestic connectivity. The service will be available from 116 origin cities to 262 destination cities within India. “FedEx has consistently leveraged the strength of a vast network and flexible service portfolio to drive the growth and competitiveness of Indian businesses by providing them with connectivity throughout the country,” Kenneth F Koval, vice president, Operations, FedEx Express India commented. “The deployment of FedEx Economy—new domestic ground express service—provides an extensive domestic portfolio offering both air and ground services, and underlines our commitment to offering unparalleled connectivity and seamless shipping to our customers in India.” The FedEx Economy service provides customers with unique features such as Online Tracking with Proof of Delivery via the FedEx website, money back guarantee, the option to ship both international outbound as well as domestic consignments through a single FedEx account and customer support with access to consignment information. The service also grants customers ease of use and utility, support for regulatory/state border clearances with value added services such as Collect On Delivery (COD), Delivery on Invoice Acceptance (DIA), Freight To Collect (FTC) and Freight On Value (FOV). LOGISTICS TIMES October 2011
Ojhar Airport HALCON, a joint working group between Hindustan Aeronautics Limited (HAL) and Container Corporation of India Ltd (Concor) along with the terminal operator – Clarion Solutions recently announced the commencement of air cargo services at Ojhar airport, Nasik. The infrastructure developed by Hindustan Aeronautics Ltd (HAL) at Ojhar will now be utilized for export and import activities by facilitating air cargo services from its Nasik base situated in Maharashtra. The entire state-of-the-art facility is managed and operated by Clarion Solutions, which is assigned as a terminal operator, ground
handling operator and regulated agent. Commenting on the commencement, Ganesh Krishnan, CEO, Clarion Solutions said, “We strongly believe that Nasik has all the potential to develop as a hub for air cargo services in western India. Being situated at the center of various industry verticals and its proximity to Mumbai Agra National highway, Ojhar airport becomes a real viable alternative solution for the EXIM trade.” Discussing on the investments made by HAL at Ojhar airport PV Deshmukh, Managing Director (MIG), Hindustan Aeronautics said, We have invested nearly Rs. 70 crores to upgrade the existing infrastructure.” The facility at Ojhar airport comprises of full-fledged Air Cargo Complex, warehousing, integrated packing center, etc.
` 3,141 cr investment
Connecting South India with Europe DHL recently launched a Boeing 777F freighter service between Bangalore and Leipzig, in response to the growing air cargo demand into and out of South India. Originating from Bangkok and Singapore, the new service will operate five times a week between Bangalore and DHL’s European hub in Leipzig, Germany. The new freighter will be operated by AeroLogic, a joint venture cargo airline of DHL Express and Lufthansa Cargo. According to a company release, South India is an important region in the country’s economy and the launch of the freighter at Bangalore is a key step towards facilitating growth in this region. DHL Express also has in-house customs clearance facility at Bangalore. Commenting on the new initiative, Mr. R.S. Subramanian, Country Head, DHL Express India said: “It is our focus to align our network and services to the needs of our customers. The freighter in Bangalore is a part of this focus in boosting our air network capacity and will help our customers in South India enhanced transit times to Europe – which continues to be a key market across industries, especially for the textiles, automotive and leather industries. It will also provide improved connectivity from key Asian markets into South India.”
According to a recent report published in a leading business daily, the Centre has proposed to scale up capacity of the Paradip port from 76 million tonne per annum (tpa) to 133 mtpa by 2015 and the proposed investment for this scaling up exercise would be to the tune of Rs 3,141.01-crore. Referring to a written reply given by Union minister for shipping G K Vasan in Rajya Sabha during the last session of the parliament, the report says that the proposed expansion would include installation of the second and third Single Point Mooring (SPM) by Indian Oil Corporation Limited (IOCL) at an estimated cost of Rs 1,492.33 crore and construction of Southern Oil Jetty at the port, involving an investment of Rs 191.01 crore. Similarly, the Ministry of Shipping (MoS) has also planned for construction of a deep draft iron ore berth, deep draft coal berth and multi-purpose berth to handle clean cargo including container at an investment of Rs 591.35 crore, Rs 479.01-crore and Rs 387.31-crore respectively. While the SPMs are scheduled to be completed by December 2012, the oil jetty is set for completion by December 2013. Similarly, the three proposed berths proposed to be constructed on the built, operate and transfer (BOT) mode are scheduled to be completed by September 30, 2015, the Union minister informed. After expansion, the capacity of the port would be increased to 133 mtpa, when an additional 57 mtpa capacity would be added, Vasan said.
LOGISTICS TIMES October 2011
INTERVIEW OF THE MONTH
We want to go beyond
transportation LOGISTICS TIMES October 2011
Going by popular perception, Indian Railways is not doing enough, especially in qualitative terms, for being a vibrant enabler of a seamless logistics regime in the country. But in a candid conversation with Ritwik Sinha, Chief Commercial Manager (Northern Railways) Dr P K Goel asserts that the organisation is well prepared to meet the challenges of the future. Edited excerpts of the conversation: Let me begin with a simple question. Its no secret to anyone that in pure commercial terms, freight movement is the mainstay of railways. And volumes have certainly consistently increased in last ten years thanks to the overall positive economic climate. However, there is a strong perception that railways is not doing much to meet the freight challenges in the future – both in quantitative and qualitative terms. How will you respond to this argument? Let us put the whole scenario like this. First of all, as far as railways’ commitment to carry the traffic is concerned, we have not failed on any of the commitments. This year itself there is a growth of 8-10 percent. Second issue is the infrastructure and third issue is the rolling stock. These are the three basic pre-requisites for the movement of more traffic. As far as infrastructure is concerned, every year we have planned of investing about Rs 12,000-13,000 crore and we are consistently meeting that commitment. But what is basically required at this juncture is big bang investment. And
this will only come through Dedicated Freight Corridor (DFC). The project is in place and agreement with Japanese agency has been signed. This would be an unique project of its kind. Traditionally, railways has built infrastructure on the basis of its understanding of passenger and freight growth. But this is the first time an infrastructure is created only for freight. It will do three things when it is ready. Right from Delhi to Mumbai, an alternative high speed corridor will be available. Lot of freight traffic which move between Delhi-Mumbai route or the main routes of central railways and western railways would get offloaded to the corridor is ready. You are right in a way that right now the pace of development is not as fast as it should have been. But nonetheless, we are meeting with the present demands. If the economy grows by 8-9 percent, that generates trasnportation demand of 1.4 times of GDP – something in the range of 12-13 percent. Of course, 13 percent will be difficult for railways to sustain. You recently commented in a seminar that railways would like
to become a larger logistics player. Please elaborate that point. Ans: It is absolutely necessary. The issue is, right now we are only in transportation segment meaning thereby we only carry the goods from point a to b.But customers are looking for total logistics solutions. If you look at total logistics, it has three components – transportation, warehousing and inventory management. Inventory cost is a critical exercise and everybody wants it to be minimised. Of the three components, 50 percent of the cost goes for transportation and approximately 25 percent each in warehousing and inventory management. The point is, railways has traditionally focussed only on transportation. But the moment they decide to go ahead and benefit customers by being facilitator of other two components, then the total logistics cost for the customer would come down. Let me illustrate this with an example. Railways has 4.2 lakh hectares of land all across the country. For us to make warehouses on these lands is very easy. Railways sidings are already there. So once we make the warehouse, put up the IT system like WMS and integrate LOGISTICS TIMES October 2011
INTERVIEW OF THE MONTH
that WMS with our Freight Operating Information System (FOIS), we will have a composite solution. So the customers can avail other two services from us as well. Our FOIS would also give them the information of the wagon movement and they can track the cargo. In that sense, railways can concentrate on a larger role which is provision of complete logistics solutions. And it would not require major change in the working of the railways. We already have a tie-up for rail side warehousing with Central Warehousing Corporation (CWC). They are setting up 100 warehouses on the rail site. A beginning has been made on this front. What is kind of timeline you are looking at construction of these 100 warehouses? 100 units are countrywide. 20 have already been developed. In Shakurbasti, Delhi now we have a rail side warehouse. Other sites are: Ghaziabad, Shahjahanpur, Alamnagar near Lucknow, Whitefield in Bengaluru, etc. This is one part of larger freight business. Second part is express cargo and logistics. We run Rajdhani Express. Delhi- Mumbai or Delhi-Howrah which usually take 1516 hours. It is quite possible for railways to run express cargo trains. Once we run the express cargo trains, then in-transit inventory cost comes down because there is a faster movement. Secondly, in this express cargo we again connect these warehouses. So this is another product which can be positioned very quickly. In this manner, if we do well we have certainly all the chances to become a logistics major. There is hardly any organisation in the country which can claim to integrate the entire country. Our major strength is: we have land all across the country and we have network all over the country. This express logistics idea which you talked about, are you toying with the idea at this juncture or any definitive decision has been made? The policy is on the anvil. The draft had come to us and we called the logistics LOGISTICS TIMES October 2011
services providers, asked for their suggestions on the whole scheme. They have given some suggestions which has been sent to the railway board. So it will be announced shortly.
terminals. But prospective investors are demanding some modification in the policy. And we are studying those demands. Once it gets going, things will happen at a very fast pace.
You are talking about developing railsides into warehouses in association with CWC. Will you also invite private parties for similar project? Yes, of course. This can’t be done by us alone. We are certainly in favour of inviting private parties in this particular area.
The other day at a seminar, I heard you saying that a very robust freight specific IT system has been put in place by railways. Please share some details on it. We now have very strong IT system in place. One system is Freight Operating Information System. It has two components – one is TMS (Terminal Management System) and RMS (Rake Management System). In the TMS, there is component of creating railways receipt through ERR. This system is working and about 80 percent of our traffic is now goverend by e-payment. It amounts to Rs 50,000 crore of collection annually by this mode. We are currently testing one more system which I hope would be rolled out in the first week of November. It has basically four applications on passenger business side and one application each on parcel and freight business. The applications which are there on freight business- you can track the location of your rakes online wherever it is there. We will further modify it so that the customers can to put up their demand on the system on the basis of which rakes would be alloted to them. Alongwith this, we would put up our own SMS gate server. All the SMSs, push and pull both would be through our system. And SMS system and internet system would be integrated with each other. So the point is if you send an e-mail, you will get an SMS. Through the SMS you will know the rake position. All communication systems, servers and applications are in place. Even claim settlement system is up though it requires more modification. Another system which is under development is Parcel Management System (PMS). We have already sanctioned a project of Rs 115 crore to put up a PMS at 340 locations in the country. Initially, we are taking four corridors – Delhi-Mumbai, DelhiKolkatta, Chennai- Delhi and ChennaiMumbai. This system would be place in
But public-private-partnership (PPP) is an area where railways does not have much to talk about. Yes, it has not taken off in a big way. The basic perception is that we should go for a lot of PPPs. The only thing is railways mechanism is a little complex because it is too huge. Every project requires examination from various points. Of course, there is an active cell in the ministry to facilitate PPP. And there are lot of schemes where private parties can join hands. The schemes which we have: Special Freight Train Operator (SFTO), ATFO, Cold Chain, Kisan Vikas Train, etc. All these schemes have very strong component of PPP. Nobody says that you don’t have policy provisions. The grudge is on the point of implementation. We talk to players from a lot of sectors. And they say your policies are good. But when we ask them to invest, they find fault with the policy. But we have patience and we are pursuing it with them. I think, things will change going ahead. Similarly, one scheme which we keep on talking about is Private Freight Terminal (PFT). We have hundreds of sidings all across the country. They are suitable sites to be converted into logistics hubs. Investors can turn them into air-conditioned warehouses, temperature controlled warehouses, autohandling facility, handling of domestic and international containers, etc. So policy is there for setting up private freight
next six months to twelve months. This would ensure whenever your parcel is loaded through GPS enabled hand-held appartus, information will go into the system. And you can know where your parcel is at any point in time. Right now, we are using a bar-code. But ultimately adopting RFID technology is also part of the project. Are you telling me that old modalities of doing frieght business would be replaced by state-of-theart systems? Absolutely. When I say that 75 to 80 percent of transaction has come on ERR, it means all reports are prepared by the system only. We have stopped manual preparation of RRs. I would like to specifically ask you about the preparedness to cater to auto industry. This market is booming but auto-manufacturers and those involved in their supply chain believe that if railways facilities improve, it would be a great relief for them to transport
their product. We want to make better state-of-the-art wagons for carrying cars. The prototype has already been made. As a matter of fact, we want private parties to come, own the rake and run the services on railways network. This is where right now the things are. We recognize this is an important traffic for us. Coupled with that we want to create auto-logistic hubs where the cars and also the auto-components, the complete logistics systems can be designed for it. We have made a beginning in eastern railways where a hub has been created. We are trying to create one near Delhi in Manesar. There is also a scheme wherein companies can invest in wagon. They can own these wagons and start their operations. But in every forum, the players in the business talk very big and when we ask them to invest, they back out. That is the situation. This scheme too is available on PPP basis. I would like to tell you a lot of investments have been made in different kinds of wagons operated by railways. Tank wagons are owned by oil companies, milk wagons are being operated on our tracks. So for auto
carriers also there is a big opportunity. You are also going to introduce road railers by the end of the year. Please share details on this initiative. The prototype has been developed by Kirloskar in association with Indian railways. The prototype has been tested and it has also got all required clearance. It is now fit to run. Its economics has also been worked out. Right now we are providing services from station to station. Track canâ€™t be taken every where. Road railer overcomes our door to door service handicap. We are finding that this product would help us in getting better market share from the road. We have some advantages also. If we pick up goods from a customer from his doorstep in a road railer, he would be more comfortable. Our timing would be much better because we run 10,000 trains and running time bound road railer would not be difficult at all. We would be running the first train from Palval to Chennai. This is a very futuristic initiative.
LOGISTICS TIMES October 2011
Prima facie, UP and development hardly seems to be terms in alignment. But a theme paper released by noted infrastructure consultancy firm Feedback Ventures recently (on the occasion of a seminar organised by CII, Northern region) strongly asserts that an economic turnaround of the state is very much within the realm of possibility since UP has a host of advantages. The report points out strong chances of logistics infrastructure revamp which would fast track stateâ€™s development. Of course, all this entails serious administrative push. Excerpts from the theme paper:
Can UP become a logistics hotspot? LOGISTICS TIMES October 2011
Uttar Pradesh is poised for High Growth with Major Thrust from the State Government With an area of 2, 36, 286 sq km, Uttar Pradesh is the fourth largest and the most populous state in India. It is the second biggest state economy in the country, contributing 8.34% (FY 2010) to the GDP. The state recorded a growth of 6.20% from 2002-03 to 2009-10 and its GDP is expected to touch Rs 4,43,000 crore by 2019-2020, a 63% increase from 2008-2009. Agriculture & allied services accounts for 32% of state’s GDP, industry accounts for 26% and the services sector accounts for 42%. The industrial sector is expected to grow substantially with renewed thrust from the state and central government. And like every growing economy, Uttar Pradesh too needs a strong logistics backbone to ensure fast pace industrial development. Uttar Pradesh’s Current Logistics Infrastructure is Inadequate to meet its Growth Aspirations Uttar Pradesh, with a population density of 689 persons per sq km against the national average of 312, accounts for only 7.33% area of the country but houses 16.16% of the country’s population. It does not have the facility of a direct sea port. Easy and” quick movement is also affected because of very dense population. The railway network in Uttar Pradesh is the largest in the country. The state is well-connected to other parts of the country by a railway network spanning over 8,703 km. However, over the years there has been no significant improvement in the railway and civil aviation sectors in the state. Also the dispersed nature of agricultural and to a lesser extent industrial production in this vast state has resulted in the road network being a critical element of the economic infrastructure. Increased flexibility in road transport and the virtual cessation of the carriage of piecemeal wagon loads by rail, has led to a significant shift in the road/rail modal split in the state. Uttar Pradesh has the highest length of National Highways at 6,774 km in the country and the road
While major investments on the infrastructure front have come from government agencies like CWC, SWC, CONCOR etc., private sector participation have remained small and sporadic. Serious logistics constraints Limited road capacity to evacuate the generated cargo & bring in supplies Suspect quality of roads & last mile connectivity Rail capacity for cargo movement fully utilized & strained No significant improvement in the rail & aviation sectors in the state in a long time 24 position among 28 state in terms of road intensity (road length per capita) Road intensity of 147.08 km per lakh population against a national average of 259.54 Lack of planned multi-modal logistics network comprising logistics parks, warehousing zones, transport centres, ICDs, etc Operational issues such as high transportation lead time, pilferage and high costs
density is also pretty good at 28.11 m/sq.km. However, due to its large population Uttar Pradesh’s road intensity (road length per capita) is pretty low. It has road intensity of 147.08 km per lakh population against a national average of 259.54 and stands at 24th position among the 28 states. At present, only eight out of every ten villages and seven out of every ten habitations are connected by black top roads. These are indicators that state lags on this front and needs urgent improvement to come at par with the national average. The state lacks a planned multi-modal logistics network comprising logistics parks, warehousing zones, transport centres, ICDs, etc. The constraints being currently faced by industries in Uttar Pradesh include the quality of road and rail connectivity, available haulage capacity and operational issues such as
high transportation lead time, pilferage and high costs. While major investments on the infrastructure front have come from government agencies like CWC, SWC, CONCOR etc., private sector participation have remained small and sporadic. Public-Private Partnership (PPP) projects have played an important role in economic growth and development of Indian states. The central and state governments need to involve the private sector as well as foreign capital to fund the highly capital intensive infrastructure projects. Thus the need for a robust and sustainable pipeline of PPP projects is paramount in nature. Projects involving central government, state governments, multilateral funding bodies and private players have been implemented across states to promote infrastructural development. However, Uttar Pradesh has been lagging behind LOGISTICS TIMES October 2011
Uttar Pradesh has seen a total investment to the tune of Rs. 33,000 crore in heavy, medium and small scale industries from 2007-08 to 2010-11. This increased industrial production calls for establishing well connected warehousing zones and logistics parks to ensure safe storage and transportation of the produce.
Advantage DFC UP strategically located en-route both the western and eastern DFCs ~ 55% of the total 1,839 km of the eastern DFC passes through UP Potential to attract large investment from public as well as private entities State government has planned more than 3,500 acres of SEZs, multiple railway terminals, container depots, etc Indian Railways to develop Multi-modal Logistics Park through PPP at Kanpur DMIC envisages an industrial region (Dadri-Noida-Ghaziabad) with Greater Noida Industrial Development Authority as nodal agency Another industrial area (Meerut-Muzaffarnagar) envisaged with UP State Industrial Development Corporation Ltd nominated as the nodal agency in the award and implementation of PPP projects. The state has only 5 PPP projects which are underway out of a total of 450 nation-wide. The total value of the PPP projects is Rs. 2,108 crore which is less than 1% of the Rs. 2,24,175 crore total worth of projects underway. Logistics Infrastructure is the Key to Change the face of Industrial Development in Uttar Pradesh and Position it amongst the High Growth States in India Uttar Pradesh has seen a total investment to the tune of Rs. 33,000 crore in heavy, medium and small scale industries from 2007-08 to 2010-11. This increased industrial production calls for establishing well connected warehousing zones and logistics parks to ensure safe storage and transportation of the produce. Ambitious plans of the state government combined with major investments from LOGISTICS TIMES October 2011
the private sector, means that Uttar Pradesh needs to have sufficient logistics infrastructure in place to ensure smooth industrial development. In addition to improvement and addition of stretches of road, the state, like the rest of the country, needs a revamp of the regulatory and operating structure of the logistics sector. A holistic infrastructure and logistics policy is the need of the hour to support integrated logistics operations, thereby promoting service providers with end to end service offerings as well as tilting the scale towards integrated logistics hubs. A few key and diverse areas the state and the private sector need to urgently look into which can have a substantial salubrious effect on logistics as well as the overall GSDP of Uttar Pradesh are: Developing a robust PPP policy framework for state run projects Developing the infrastructure and providing incentives for greater use
of inland waterways especially along National Waterway 1 Robust policies and state led incentives in place for the establishment of industrial hubs along the Eastern and Western DFCs Uttar Pradesh has taken steps to develop PPP but Better Planning of Projects and a more robust PPP Policy needs to be in place Given the large size of the state and its high population density, Uttar Pradesh needs enormous capital to invest in infrastructure projects. The state government has not been able to garner adequate funds for these projects from its budgetary allocations. The state has realized its limitations and has taken limited steps in inviting private sector participation through PPP projects. Several ambitious projects like Yamuna Expressway, Ganga Expressway etc. have been conceived by the state under its PPP policy. A network of other linked expressways is also planned to connect all corners of the state, along the rivers of Yamuna, Betwa, Ghaghara and Ramganga. Other important infrastructure projects undertaken under PPP are the Meerut international airport and the Taj international airport & aviation hub. The state government has constituted the Uttar Pradesh State Highways Authority for up-gradation and maintenance of state highways. About 2,158 km of state highways have been selected for upgradation and maintenance through PPP. The issues which the state is grappling with are improper development and planning of projects, faulty selection procedures and investorâ€™s lack of confidence. The state government needs to get its act together and come up with clear and transparent guidelines and a competitive and fair selection process. This needs to be done to ensure projects incubated under the PPP model receive a strong response in the future. Initially a couple of high visibility projects may need to be handheld through till the investor confidence is back. A half-hearted attempt will not do and the political will
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and commitment needs to be in place to involve the private sector and develop a healthy pipeline of PPP projects. Incentivizing Greater Usage of Inland Waterways Eco-friendliness, safety and efficiency
friendly option especially due to the large distances involved. These are major issues which result in increased lead times and landed costs. NW1 directly connects the Haldia and Kolkata ports to Allahabad and can be a great boon for the industries in Uttar Pradesh. The major beneficiaries
are likely to be the cement, fertilizer and power sector in the region. Unfortunately, this route is seldom used for transport due to a variety of constraints and issues. The draft along the Patna-Allahabad section of NW1 is only 1.5 meters and thus moving large
DFC, Eastern Corridor will have its largest stretch running through UP. Will it propel emergence of new business centres?
make inland waterways a preferred mode of freight transport in many developed countries. Compared to road and rail, inland waterway transport has the lowest specific energy consumption and the substantial ability to move large volumes of goods. India has about 14,500 km of navigable waterways, of which nearly 3,600 km are navigable by larger vessels. However, only about 2,000 km are used. The maximum stretch of these navigable waters lies within Uttar Pradesh. The National Waterway 1 (NW1), which connects Haldia to Allahabad, has great potential for the movement of cargo from landlocked Uttar Pradesh. Evacuation of cargo from the major ports in West Bengal is hindered by the lack of rail capacities. Also movement by road is not a cost effective and environmentally
Inland Waterways Large stretch of navigable inland water lies within Uttar Pradesh The National Waterway 1 (NW1), connecting Haldia to Allahabad, has great potential for the movement of cargo to and from landlocked UP NW 1 can help to greatly decrease the burden on road & rail to evacuate cargo from Haldia and Kolkata ports to the hinterlands of UP Cement, fertilizer & power sector likely to be the major beneficiaries in the region
Hindrances Draft along the Patna-Allahabad section of NW1 is only 1.5 meters and thus moving large volumes of cargo via this route becomes extremely difficult. Return cargo from UP/Patna to Farakka/Haldia is not readily and consistently available, thereby driving up the logistics costs Availability of barges, night navigation and taxation are major areas of concern for companies
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Inland Waterways could be a vibrant and beneficial transportation channel for the state.
India has about 14,500 km of navigable waterways, of which nearly 3,600 km are navigable by larger vessels. However, only about 2,000 km are used. The maximum stretch of these navigable waters lies within Uttar Pradesh. volumes of cargo via this route becomes extremely difficult. Availability of barges, night navigation and taxation are other major areas of concern for companies. Thus the states involved and the centre needs to improve the infrastructure and provide additional incentives and stimuli to encourage industries to use this mode of transport. DFC has the Potential to Transform the Logistics Landscape of Uttar Pradesh The Dedicated Freight Corridor (DFC) is poised to be one of the biggest industrial development projects of India. Being strategically located en-route both the western and eastern DFCs, Uttar Pradesh has the potential to attract large scale investment from public as well as private LOGISTICS TIMES October 2011
entities. The state government has already planned more than 3,500 acres of SEZs, multiple railway terminals, container depots, etc. The private sector is also expected to play a critical role in boosting the capacity of logistics infrastructure within the state. Uttar Pradesh serves as the first junction on the eastern dedicated freight corridor and about 55% of the total 1,839 km of the eastern DFC passes through the state. Indian Railways intends to develop Multi-modal Logistics Parks (MMLP) through PPP along the proposed eastern DFC at strategic locations. Given the fact that Uttar Pradesh is a critical state on this corridor, an MMLP is proposed to be set up at Kanpur. The park is to be developed on a PPP mode as a common user facility with direct rail connectivity
and state of the art infrastructure. The western corridor of the Dedicated Freight Corridor (DFC) between Delhi and Mumbai covers an overall length of 1,483 km, with end terminals at Dadri in Uttar Pradesh and Jawaharlal Nehru Port at Mumbai. The government of India has proposed establishing, the Delhi Mumbai Industrial Corridor (DMIC) along the alignment of DFC between Delhi and Mumbai. DMIC is conceived to be developed as global manufacturing and trading hub supported by superior infrastructure,connectivity,communication and an enabling policy framework. DMIC envisages one industrial region - Dadri-Noida-Ghaziabad - and one industrial area Merrut-Muzaffarnagar - within Uttar Pradesh. The state government has been proactive and Greater Noida Industrial Development Authority and Uttar Pradesh State Industrial Development Corporation Ltd. have been nominated as nodal agencies for Dadri-NOIDA-Ghaziabad investment region and Meerut-Muzaffarnagar industrial area respectively. These regions/ areas are proposed to be self-sustained industrial townships with world-dass infrastructure, road, rail & air connectivity, quality social infrastructure and provide a globally competitive environment conducive for setting up businesses. DFC will go a long way in providing fast and efficient connectivity from hubs in Uttar Pradesh to ports at Mumbai and Kolkata. The projects linked to DFC, which have already been identified are: Development of railway station at Boraki, Greater Noida, as a passenger and a commercial cargo hub Multi modal logistics hub at Dadri Power project at Greater Noida Development of international airport at Greater Noida Dadri is the junction point of eastern and western Dedicated Freight Corridors. It is close to the advanced industrial and commercial hubs of Noida and Greater Noida. Dadri has the potential of transforming and changing the logistics landscape within Uttar Pradesh, like Mundra did to Gujarat. Courtesy: Feedback Ventures
UP has a host of advantages~
Talking to Logistics Times, Monika Sood, President & CEO (Infrastructure Advisory Division), Feedback Ventures explains the major highlights of the report which underline that Uttar Pradesh has the trappings of becoming a logistics hot spot. According to her, location coupled with the benefits of mega infrastructure projects can bring an unprecedented economic windfall to the sate if the administration adopts a broader progressive agenda. LOGISTICS TIMES October 2011
Your report talks about the great potential which Uttar Pradesh has in terms of economic development and logistics infrastructure. This almost seems like a contrarian argument since the state is hardly known for progressive economic agenda. What’s your take? If we look at what’s exactly happening all across the country in last few years in terms of investments, we have some states which have got bulk of investments. Gujarat is an example. And then there are states which are showing promising signs where investments could be routed in the future. Today states like UP and Bihar can be placed in this promising league. Bihar for instance is very seriously attempting an image makeover and though large investments have not flown in as yet, the good news is: investors have begun evaluating Bihar. Similar thing needs to be done by UP in terms of creating facilities for the industrialists. The government just needs to send a strong message that it is serious about the industrial growth. UP has a host of advantages. The biggest probably is its location. It is located very close to large consumption centers - not only Delhi but other markets in north too. There is a huge catchment market for UP. So from consumption perspective, it is a good market to be in. If you look at other things like availability of manpower, it shouldn’t be a problem because it’s the most populous state. The issue here is that of skilled manpower but that is something which can be taken care of. Central government has a lot of projects which can be used for skilling up people. If you look at land availability in terms of creating industrial clusters, the state has no dearth of it. It has proximity to Delhi which is the hub and Noida and Greater Noida are good examples of how big centers can come up within the state. So factors which could attract new industries are there. But there are two-three serious deterrents. Law and order is the big issue and it needs to be corrected. Moreover, the perception has to be corrected that law and order is bad. There are industries in Noida, Greater Noida and Ghaziabad which are flourishing. Secondly, the government has announced PPP projects. But actual implementation of those projects has not
been very high. This has to be improved. And then creation of more projects and ensuring that they are structuured in a manner they can be implemented. Any project which is offered under PPP should have fair return proposition for the private sector. So the first important step in this direction could be the creation of a PPP cell within the government machinery. Other states like Punjab, Haryana, Gujarat have it and even Bihar government has set up such an unit now. UP also needs to look into for building better infrastructure by creating an institutional mechanism. The PPP cell could facilitate creation of project across different sectors and obviously logistics could be one of it. UP’s major strength is agrarian output and there is potential of looking at certain kinds of
surrounding Delhi. These areas, in fact, are extensions of Delhi. People are not choosing UP, they are choosing extension of Delhi. Meerut and Muzaffarnagar have also been somewhat benefited by this trend.
Your report strongly advocates that going ahead the state needs to have a very strong logistics infrastructure. What precisely is the big picture you are trying to draw when you are making this assumption? Owing to location advantage, UP is best poised to connect east with the rest of the country in a very robust manner. But if we look at existing connectivity infrastructure, it is in a poor state right now. There are several pointers in our paper. Per capita road length
Most of the development is in the west side surrounding Delhi. These areas, in fact, are extensions of Delhi. People are not choosing UP, they are choosing extension of Delhi. Meerut and Muzaffarnagar have also been somewhat benefited by this trend. industries coming in because of that. I have already spoken about the quintessential advantage. The state is well positioned to serve both northern and eastern markets. The issue is what will government do to take advantage of the available advantages or opportunities.
You have spoken about some of the industrial hubs which have come up in UP in last 10-20 years. But they are mostly in the western parts of the state. Have you noticed any economic churnings in the eastern parts in the recent years? Not much right now. And that is the issue because disparity is clearly visible whether in terms of social infrastructure which is available like colleges, schools, quality of employment opportunities, etc. in eastern zone of the state. There are probably a few road projects currently underway. Most of the development is in the west side
is quite low and the quality of the road network leaves a lot to be desired. So if we have to attract industry in the state, we will have to create right connectivity whether its in respect of carrying raw material or finished products to markets elsewhere. So the connectivity infrastructure has to be improved significantly. Now we are talking about a large chunk of DFC passing through UP and the possible benefits. Thanks to this DFC passing, we have the potential to create industry around it. This essentially means there would be a lot of evacuation capacity available and the cost of transportation would come down. Economies of transportation would improve significantly. What we have to ensure to make it function well and attract new industries is creation of aggregation hubs wherein the role of container transportation would be very critical. Today we have CONCOR and some private players which are moving the container traffic. But they can’t create LOGISTICS TIMES October 2011
infrastructure in terms of aggregation hubs. That is something which government should look at doing in UP. Here you can aggregate a lot of cargo moving from north to south and container transportation can significantly increase. Additionally, if you look at the location of UP, there is a huge potential for warehousing. Let’s look at Ghaziabad or Dadri and given that they are so close to large domestic consumption centers, what is going to happen with GST coming in is that people would prefer to keep large, high-quality warehouses. We will move away from state specific warehouses. Most of the players are determined to do regional warehousing. UP can actually benefit a lot from this trend going ahead by catering to a sizeable demand of north India. So by creating adequate warehousing
would happen in Ghazaiabad, Merrut, Hapur, and Noida. But some of the cold storages and related infrastructure can actually get into eastern UP. You look at the mango belt, it is in the eastern part of UP. So processing zones for fruits as well as cold chains which are required can actually be done in that part.
Do you really subscribe to the theory that DFC could be the real game changer in UP? It could be if the right steps are taken to develop the areas through which it would be passing. At the end of the day, it’s a linkage. I need to create an infrastructure to use that linkage. It is giving me the benefit of linkage. The state will have a very vibrant rail network either using the JNPT
Some of the cold storages and related infrastructure can actually get into eastern UP. You look at the mango belt, it is in the eastern part of UP. So processing zones for fruits as well as cold chains which are required can actually be done in that part. infrastructure, you can actually get a lot of large companies especially FMCGs. This, in turn, would benefit in myriads of other ways. When you are creating warehousing hubs, you are also creating jobs because the goods need to be transferred. You need right kind of connecting infrastructure. All this leads to creating a secondary economy. Since DFC is coming, you can improve your last mile connectivity by providing better road linkages. And then look at warehousing, domestic container terminals. Lastly, UP is rich in farm produce. So the government in association with private parties can look at cold storage facility and also larger agro processing zones.
Have you identified the new business centers which could come up if things go right? Some of the benefits let’s say again would come to western UP because of proximity to Delhi. For instance, more warehousing LOGISTICS TIMES October 2011
route through Dadri or using the eastern side. That opportunity exists. But the state will have to facilitate the creation of the manufacturing and processing zones.
UP does not have a port which can be looked as a serious natural disadvantage. But your report suggests that inland waterways can be significantly improved to compensate for this missing link. Please elucidate this point. What we are saying is that if you look at the cost of transportation by road, rail and inland waterways, the cost of the latter is significantly lower. So if you provide better connectivity for raw materials to move from the east of the country where you have the surplus of some of these raw materials, then some industries let’s say cement or power can be set up in UP. Today, logistics cost is a big cost for any of these industries. So if you can reduce the
transportation cost of the raw materials as well as of finished products, then economic feasibility of locating the manufacturing facilities in UP goes up significantly. This mode of transportation is not necessarily linked to exim trade but primarily meant for domestic consumption. So if coal comes from eastern part to UP, then we can have more thermal power plants in the state. Similarly for cement, you can use waterways to procure raw materials. And the markets are there in the state – you can’t put up a cement plant in Delhi. Railways connectivity will take time, its not that government can influence it significantly. Road connectivity will happen and government can fast-track the process but again it is a costly initiative. Therefore, its time we start evaluating the inland waterways route. There are, of course, concern and issues. For instance, the channel width which is available is a constraint. There are also environmental concerns which need to be addressed. But this has to be looked upon as an alternate option which is available.
What would be three advise you would like to give to the state government? Most importantly, you need to change the perception of the state in the mind of the investors. Creating the development agenda a providing no hassle regime is important. Also important is ensuring land availability to large projects. They need to create right framwork for PPP. The government will certainly not have that kind of money to finance large projects on their own. They will have to get private investment. Creating skill development initiatives is equally crucial for vibrant employability base to absorb the large workable population the state has. And here the panacea could be promoting agri-based industries.
Even if you are hopelessly optimistic, do you reckon the state really emerging as logistics hotspot in the forseeable future? Yes, it can. The state has its set of advantages and so positive trappings are there. Geography has put it in an advantageous position and you have to leverage on that.
New Business centres will emerge in the state Sankalp Shukla, Chairman, Infra One and Director, Inlogistics is a leading voice today supporting the theory of possible turnaround in UP’s logistics infrastructure. In an interview with Logistics Times, he pinpoints the rationale behind his optimism. Excerpts: To say that Uttar Pradesh could emerge as logistics hotspot almost appears out to be an antithetical stance vis-a-vis popular perception.How would you counter this argument? UP has the potential to emerge as the hotspot. The railway network in Uttar Pradesh is the largest in the country. The state is well-connected to other parts of the country by a railway network spanning over 8,703 km. Uttar Pradesh LOGISTICS TIMES October 2011
has the highest length of National Highways at 6,774 km in the country and the road density is also pretty good at 28.11 m/sq.km. However, due to its large population Uttar Pradesh’s road intensity (road length per capita) is pretty low. In your view, what are the factors which could support and propel UP’s new positioning which you are talking about? There are a few key and diverse areas
which the state and the private sector need to urgently look into. They can have a substantial salubrious effect on logistics as well as the overall GSDP of Uttar Pradesh. The urgent steps can be broadly classified as: Developing a robust PPP policy framework for state run projects Developing the infrastructure and providing incentives for greater use of inland waterways especially along National Waterway 1
Robust policies and state led incentives in place for the establishment of industrial hubs along the Eastern and Western DFCs
The largest chunk of the eastern corridor of DFC would pass through UP. Do you think, this is going to become the game changer? The Dedicated Freight Corridor (DFC) is poised to be one of the biggest industrial development projects of India. Being strategically located en-route both the western and eastern DFCs, Uttar Pradesh has the potential to attract large scale investment from public as well as private entities. The state government has already planned more than 3,500 acres of SEZs, multiple railway terminals, container depots, etc. The private sector is also expected to play a critical role in boosting the capacity of logistics infrastructure within the state. Uttar Pradesh serves as the first junction on the eastern dedicated freight corridor and about 55% of the total 1,839 km of the eastern DFC passes through the state. Indian Railways intends to develop Multimodal Logistics Parks (MMLP) through PPP along the proposed eastern DFC at strategic locations. Given the fact that Uttar Pradesh is a critical state on this corridor, an MMLP is proposed to be set up at Kanpur. The park is to be developed on a PPP mode as a common user facility with direct rail connectivity and state of the art infrastructure. DMIC envisages one industrial region - Dadri-Noida-Ghaziabad - and one industrial area - Meerut-Muzaffarnagar - within Uttar Pradesh. The state government has been proactive and Greater Noida Industrial Development Authority and Uttar Pradesh State Industrial Development Corporation Ltd. have been nominated as nodal agencies for Dadri-NOIDA-Ghaziabad investment region and MeerutMuzaffarnagar industrial area respectively.
one industrial region - DadriNoida-Ghaziabad and one industrial area - MeerutMuzaffarnagar -
UP being the fulcrum could emerge. Do you subscribe to this theory? The state has been experiencing growth in the services and manufacturing sector but agriculture has traditionally been the mainstay of the state. It is the largest producer of food grains and oilseeds in the country. It is also the leading producer of wheat, barley, gram, sugarcane and potatoes in the country. But the state is not able to take advantage of this due to the lack of good agriculture infrastructure. State should strengthen the supply chain management & logistics for the Agro processing facilities through PPP model. If the state can invest in the agri infrastructure then it can form the fulcrum for an agriculture corridor.
within Uttar Pradesh. These regions/areas are proposed to be self-sustained industrial townships with world-class infrastructure, road, rail & air connectivity, quality social infrastructure and provide a globally competitive environment conducive for setting up businesses. An economist who is now a cabinet minister in the present government had once famously remarked that in geographical sense, the development and growth zones in the country could be broadly defined as lying West of Kanpur and East of Kanpur. The meaning is quite obvious. Now this observation was made more than a decade ago. My question is: have you noticed any economic churning in the east of Kanpur zone in the recent years? Have you seen emergence of some new economic centers in the eastern part of the state which hold promises for the future? Some of the centres that hold promise are Rae Bareilly, Faizabad, Unnao, Varanasi. There is also a theory doing the rounds now that an agriculture corridor comprising UP and neighboring states in the east with
The PPP record of the state is too poor. Going by the findings of Feedback Venturesâ€™ only five PPP projects are currently being implemented in the state. This clearly shows the lack of interest of the investors. How could this be dramatically changed? Compared to other states the PPP record is pretty poor in UP. However, we are seeing a change in the govt. attitude and this is an encouraging sign. I believe that developing a robust PPP policy framework will be key. Finally, do you expect any significant change happening in practical terms on logistics infra front in the state in the foreseeable future? Or the idea of logistics hotspot would continue to remain just that. Political will afterall could drive this kind of change and this quotient seems to be seriously missing when it comes to development. I am very optimistic that the DFC and DMIC project will give a huge fillip to the logistic infrastructure in the state and will have a spiraling effect. Of course, political will is a key ingredient. LOGISTICS TIMES October 2011
UP represents new growth wave Arshiya International is soon going to unveil its second defining Free Trade Warehousing Zone (FTWZ) in Khurja, UP. But why did it choose UP to set up this largescale project? Pawanexh Kohli, Senior VP of Arshiya International responds... Arshiya International’s second Free Trade Warehousing Zone (FTWZ) unit is going to be soon unveiled in Khurja, Uttar Pradesh. It’s going to be truly state-of-the-art unit covering a sprawling 315 acres land area. It is demarcated into two main sections – one is called free trade warehousing zone which is cordoned off as a deemed foreign territory and outside the tariff zone of the country. The other is the domestic distribution park where we would service the domestic businesses. Across one end they are stitched with our railways sidingssix rail lanes across. In terms of scale, this unit would comprise a score of warehouses covering a footprint of over 100,000 square feet each and would be 13 meters high. Besides these warehouses, we have also built nearly half a dozen container and open yards. In terms of logistics infrastructure in the state, Khurja facility is all set to be a definite signpost. And contrary to popular perception about the administrative hurdles in the state, we received a positive support from the UP government in setting up this unit. In fact, they have been party to our vision of how industrial growth and development is going to unfold in this country going ahead. Most of the development typically LOGISTICS TIMES October 2011
worldwide including China is happening around ports. But here India can boast of offering a contrarian trend. Historically, Maharashtra and Mumbai have emerged as trade centers because of ports. But how would you explain the developments in hinterland pockets like Punjab and Haryana? The point is: India has not typically limited itself to economic growth around ports only. And today Indian market condition is unique in the sense that it has a population with a very high aspirations level which would trigger further churnings in terms of new pockets assuming prominence. As in anything else, growth too is bound by cyclical rules. Catching up games is probably always in play between different pockets. If we look at historical perspective, then UP and Bihar were very developed pockets around independence. But then they went through a slump in terms of economic development and reckoning. The good news is: its their turn in the future again. The growth story of India, resides in the aspiration level of the people, which is more now in states like UP and Bihar. These states have the manpower, there is the need and talking specifically of our Khurja unit, we found the government understood our concept and they supported us. We are often asked that if Arshiya wanted
Views of the upcoming Khurja FTWZ unit to have a strong presence in North India, then why did we choose UP? We could have easily chosen Haryana. There are various reasons for it. Firstly, we got the clear support and direction from UP government. Secondly, it is the confluence of the two freight corridors which are under implementation. Three, Haryana has already reached to a particular stage of development and exists as the ready market for supply chain solution providers like us. From our standpoint, we opted to be part of the growth story of the future whilst being close to a ready market. Our company’s vision is: we are going to change the face of the logistics in the country. To contribute to the new wave that comes across, UP cannot be ignored
as it is going to be the new future. Personally, I do strongly subscribe to the theory that UP has an ideal location to serve the markets in the east as well as north. Speaking in terms of constitution of markets in north India, the existing markets typically have been for quite a while around urban centers. In earlier part of this evolution, there was only Delhi. Then other markets were added – Chandigarh, Ludhiana, Jaipur, etc. The earlier thought process was: growth happens when you become urbanized. But now the scene has changed. Growth no longer is perceived as urbanisation of space. The new belief is: march to the rural markets, tier-I and tier-II cities. In that context, UP is an ideal place for
the country’s future businesses. It is surrounded by ready markets and has its own developing markets. So future lies here and the same fate probably awaits Bihar. But there aren’t too many players preparing to serve these emerging markets. We as a company have decided to be in forefront of this positioning drive. The demand in these pockets is people driven and changes are bound to unfold. We can distinctively notice that rural industries are emerging and agricultural business itself is evolving as a major revenue spinner. Robust growth of Indian Economy in general and states like UP in particular will have direct impact on derived demand of Integrated Logistics infrastructure. To meet the demand world class logistics infrastructural facilities needs to be developed. Arshiya is taking first of its kind initiative in India to develop and operate state-of-the-art Modern Freight Terminal at Khurja (80 Kms from Delhi) with FTWZ and Domestic Distribution hubs ‘Distriparks’ as a “One Stop Shop” for all the logistical needs. Arshiya’s integrated Khurja facility will enable companies to minimize their infrastructure cost, leveraging the potential of UP as India’s emerging trade hub. Now that our Khurja unit is being labeled as a new signpost even before it has become operational, there certainly is pressure of performance on us. But it also allows us to ask more from the government. While we have put a state-ofthe-art infrastructure, we would also like to see the surrounding hinterland improving particularly the road infrastructure. We are relying a lot today on our rail connectivity but road infrastructure has to improve considerably. We would also like to sit and interface further with our decision makers to see how we as enablers and believers of the story of UP can bring actual growth in the state. Our unit should not end being a signpost in the dark. It should ultimately become a lighthouse which attracts more business. For this, we look forward to more support from the state government, towards promoting fresh industrial trade in UP and in levering us as the enablers to service and attract that growth. LOGISTICS TIMES October 2011
Professor Samir Srivastava of Indian Institutute of Management (IIM), Lucknow strongly argues that the task of making UP a logistics hotspot is quite tall an order at this juncture, if not impossible.
Logistics infrastructure is a key enabler for sustainable development today as inclusive value chains could be a pathway out of poverty. Having spent most of my life in the heart belt of Uttar Pradesh, which still suffers from abject poverty despite being endowed with natural and human resources, a question keeps on haunting my mind - can a fast-improving transport infrastructure help UP to become a hub for the logistics industry? It may seem a utopian dream but certainly needs some pondering and analysis. What comprises logistics infrastructure? - Primarily roads, railways, civil aviation, ports, power supply, mobile network and warehouses. The establishment of a logistics hub therefore presupposes full electrification and power supply, proper road, rail and air infrastructure, excellent mobile network and good port connectivity. Have we missed something? Yes; we need production facilities and markets along with supportive and progressive governance; additionally we need enough of food security, water sources and basic health amenities for the population. What is the current state of affairs on the
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above? Agricultural commodities account for about half of the total logistics market and the state has a relatively under-developed transportation network. There is a lack of good warehousing in and around the major trading centres despite a high demand for warehousing of agricultural and perishable products. Barring the impact of proximity of the NCR districts to Delhi, most of the state, particularly east of Kanpur, lacks in multi-modal logistics network comprising logistics parks, warehousing zones, transport centres and Inland Container Depots (ICD). The intermodal transportation capabilities are limited and a majority of the gross tonnage is being transported by trucks. The road infrastructure is marginally better than the rail as some of it is part of the National Highways and Golden Quadrilateral. Cold Chain infrastructure is quite poor and concept of â€œIntegrated Cold Chainâ€? is practically non-existent. IT and mobile penetration is reasonably sufficient. Power supply is inadequate even at present demand and power companies have been facing supply loss even in urban UP. As per the prevalent policy, UPPCL
supplies the selected franchisees with only prefixed power for every city, which generally is far short of the demand and results in franchisees having the option between load shedding or purchasing it at a higher price from the open market to supply it to the consumers at the same tariff. Understandably, they prefer the former. Higher operating costs, shortage of talent and inefficiencies result in lower productivity and margins. Consequently, the state has failed to attract talent and capital investment. So, road and rail connectivity, available haulage capacity, quality power and operational issues need urgent attention. Holistic infrastructure and logistics policy is the need of the hour to promote sustainable development for the state. The state is in dire need of self-sustained industrial townships with world-class infrastructure, road, rail & air connectivity, quality social infrastructure that provide a globally competitive environment conducive for setting up businesses. The state government has already planned more than 3500 acres of Special Economic Zones (SEZ), multiple railway terminals, container depots,
etc. All these SEZ (central, state and private) are confined to in and around NCR region. Even the Taj International Aviation Hub (TIAH) is in the same region. The least focus of government seems to be on ‘clearing infrastructure bottlenecks’ as none of the SEZs focuses much on logistics. In fact, quality standards or benchmarks have generally been not followed in infrastructure development. In eastern UP, LucknowGorakhpur expressway and an airport at Kushinagar have been planned. This area offers huge business opportunity for creating warehouse infrastructure with warehousing partners of commodity exchange. There is an urgent need to create modern agro warehouses and Integrated Transport Centres. UP also offers good opportunities for contract farming, organic farming, floriculture, call centres, artisan products, carpets and handicrafts. Varanasi silk, mangoes, guava, papie mache, cement, fertilisers, limestone, sugarcane and cash crops also offer tremendous production and trade opportunities Being strategically located en-route both the western and eastern Dedicated
Freight Corridors (DFC), Uttar Pradesh has the potential to attract large-scale investment from public as well as private entities. Western corridor is from JNPT to Dadri and just touches on fringes of UP. However, Uttar Pradesh is a critical state on eastern corridor with 1002 km stretch and will be the centre of whole activity. DFC will provide fast and efficient connectivity from hubs in Uttar Pradesh to ports at Mumbai and Kolkata. Indian Railways intends to develop Multi-modal Logistics Parks (MMLP) through PPP along the proposed eastern DFC at strategic locations including one at Kanpur. The park will be developed on a Public-Private-Partnership (PPP) mode as a common user facility with direct rail connectivity and state-of-the-art infrastructure. Finally, how do we realise the utopian dream? Policy hurdles and red-tape need to be addressed quickly. The use of public–private partnerships (PPPs) for infrastructure development also needs significant attention. Primary objective of all stakeholders should be to create trade related infrastructure, envisaging excellent infrastructure for warehousing and transportation of various products.
There is a huge opportunity for organised players and this will encourage international players like DHL, Warburg Pincus and DB Schenker who have already increased their infrastructure presence in India. Firms are also exploring new distribution and manufacturing models. Mega Logistics Parks” integrated and modern logistics cum transport centres should be established across major locations in the state on PPP format as has been the case in Karnataka. Along with improvement of the physical aspects of infrastructure, there is also an ongoing need to rationalise and improve the regulatory environment. Innovative practices and better technology can be great enablers. A technology driven and infrastructure supported integrated approach can be useful. Tax rationalisation and improved fiscal management by the governments (both state and central) and increased mobilisation of capital (especially foreign direct investments) for infrastructure investment may help in successfully tackling many of these challenges. (The views expressed are personal)
LOGISTICS TIMES October 2011
THE TALKING WAREHOUSE
LOGISTICS TIMES October 2011
Noted supply chain specialist Roger Byford* and journalist David Maloney* have authored an e-book called ‘The Talking Warehouse’ which deals with the efficacy of voice-based solution in product distribution. Logistics Times brings excerpts from the chapter titled – Solving Warehouse Challenges Using Voice published in the e-book. This feature is the first part of the series. “The block of granite which was an obstacle in the pathway of the weak becomes a stepping stone in the pathway of the strong.” —Thomas Carlyle, 19th century writer and philosopher Every business faces obstacles. It is how a leader deals with challenges that determine success. Distribution today must be lean, productive, and accurate. If a company fails to gain efficiencies, it will not be able to maintain its competitive advantage and the leader will not maintain his or her position for long. So, what are challenges that rob the sleep of supply chain leaders. For many, they relate to a changing business environment, sometimes planned and sometimes reactionary. Just as the economy goes through ups and downs, with some doing better than others at any given time, distribution curves tend to reflect similar patterns. Some businesses experience tremendous growth, with the need to quickly add distribution capacity. Other companies are in more mature industries. For them, the challenge is to squeeze more from thinning margins.
And still others face slowing growth or even contraction, which forces them to consolidate distribution networks and make remaining facilities more efficient than ever. Voice systems provide tremendous flexibility to help companies adapt to a variety of business conditions. Due to their portable design, they can be used just about anywhere within a facility, as well at any other facilities that may be added or deleted from a network. This provides consistency that is scalable as conditions change. And the sweet spot for voice is in delivering gains in productivity and accuracy, which helps to keep costs low to deal with shrinking margins. Good labor practices are also essential for success. Labor is the largest single expense in most distribution centers, so managing it properly can bring substantial revenue to the bottom line. As a result, labor management is where the most significant administrative opportunities lie. A voice system, working in conjunction with a good warehouse management system (WMS), can help companies manage their labor. The systems provide the data and the performance metrics to keep workers
busy and productive, to weed out poor performers, and to provide incentives for exceeding objectives. Workers can easily move to where they are needed most, as they are not strapped to a fixed-in-place technology. This allows managers to make certain that workers keep working and products keep flowing. Workforce ageing is a further important consideration that managers in certain countries must face over the long term. Baby Boomers throughout the developed world, particularly in the United States, Europe and Japan, will not be able to retire as early as generations have before them. Distribution centers in these countries will have to adapt to older workers who may not have the physical capabilities found in younger workers. This will require warehouse designs to be more user-friendly. Voice can help here too, as its hands-free design allows older workers to more easily handle the cartons they must move. SKU proliferation is another factor that adds to management headaches. Companies that once had to handle thousands of stock-keeping units today must deal with tens of thousands of
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SKUs. That means the handling and picking systems, not to mention the software that drives them, must be robust enough to track all of those products. It also means that storage and picking systems must be designed to handle the additional complexity that more SKUs require. Voice systems are inherently SKU-independent. They work just as well with 50,000 SKUs as with 100. And of course, the more the SKUs, the greater the chance for errors. Adopting voice helps companies manage the complexities a high number of SKUs brings, while still achieving exceptional service levels.
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If a greater number of SKUs were not difficult enough, an additional problem is the fact that these SKUs are continuously changing. Seasonal businesses are accustomed to working with products with short shelf life, but a continuous churn of new products is prevalent in just about every vertical market today. The systems that handle and manage an ever-changing product mix have to be flexible, scalable, and adaptable, which voice clearly achieves. Another challenge is the effect of increased regulations. All around the world, governments are increasingly
demanding that companies distributing foods, beverage, pharmaceuticals, and certain health and beauty products be able to track and trace product lot numbers from the manufacturing step through the supply chain to the retail outlet. A chain of custody must be created for each order to meet newer regulations designed to protect consumers from tainted products. In the event of an emergency, consumer alerts and recalls can more easily be put into effect to thwart any potential public health threats. The need to know where any product is at any given time is a challenge that adds tremendous complexity to today’s supply chains. Along with track and trace requirements, the collection of accurate data is also needed for enhanced security measures in today’s perilous times. Importers and exporters must now file additional customs statements detailing the origins of products and where those products have been throughout the supply chain. While the exchange of data has increasingly been mandated by government agencies, customer demand for information is also increasing. It used to be that a customer would send a purchase order and not see any information on that order until he opens a carton and reads the packing slip. That is not enough today, as customers demand real-time visibility allowing them to see the current status of each product in an order, as well as the order history. Voice’s capability to capture and deliver data in real time allows for accurate and immediate information management. Advances such as the ‘Voice Pick Code’ endorsed in the U.S. and Canada by the Produce Traceability Initiative allow for the tracking of goods with negligible productivity impact. Collected data can be easily exported to document-reporting software that meets governmental requirements as well as customers’ needs. In addition to these demands for information, customers also want their orders delivered faster, with the right product, in smaller but exact quantities, on time, and in perfect condition. Voice helps users to meet these challenges by picking orders accurately and completely. While the challenges that keep distribution leaders up at night are many, voice — by no means a panacea — is one solution that can not only help them survive, but
excel in turning the obstacles in their paths into the stepping stones that lead to success. Now let’s look at some examples of how companies around the world have faced many of these challenges and found voice to be a major contributor in their supply chain achievements. Productivity is just the beginning The primary goal of most warehouse upgrades is to make operations more efficient. But in today’s distribution world, it is simply not enough to improve to the point where a company keeps pace with its competition. Systems have to show multiple benefits that allow performance to leap forward in meaningful ways. Wherever possible, they must be extensible — able to expand or adapt to all-new applications for the same investment. Voice-directed systems have the capability to drive performance in a number of measurable areas. While many users have specific business challenges that they intend to address with their initial decisions to move to voice-directed distribution, they find that the systems improve processes in many unforeseen areas as well. Companies almost invariably implement voice because of the huge gains it can bring in productivity and accuracy. It is not unusual for companies to increase their productivity by anywhere from 10 percent to even 100 percent in moving from paper or RF to voice. Similarly, accuracy can also rise substantially, with error rates decreasing by as much as a factor of five. Fewer errors lessen returns, improve customer service and reduce costs. Take Sony of Canada Ltd. for instance. This Canadian arm of the international electronics firm wanted to maintain its competitiveness by making its distribution operations more efficient to decrease costs and improve service levels. The company operates two facilities in Toronto and
Vancouver for distributing Sony’s wide range of products throughout Canada, including its consumer electronics and its line of broadcast equipment. Sony of Canada initially used paper-based systems in its distribution operations, and then it began implementing RF-based systems before eventually adopting voice. Sony of Canada was actually the first Sony operation worldwide to implement voice. “We wanted to have efficiencies through voice-directed work, such as being hands-free, which is a huge benefit for us,” says Gary Davis, Operations Support Supervisor for Sony of Canada. “Voice makes the process very fluid. It’s not a stop-start type of scenario like we have with RF, so that was very beneficial to us.” Sony of Canada pulls product from its warehouse as a batch, which it then sends to an area of the building where the batches are staged and sorted. Voice then directs “cluster-picking” of items to specific orders accumulated within the sorting area. Since moving to voice, Sony of Canada has seen a 20 percent increase in throughput and it has also reduced errors by 20 percent. These achievements have allowed the company to reduce the number of temporary workers it adds during peak seasons. The operations have also netted better customer service, including an ability to address the order trend of customers wanting fewer quantities in each order, but placing those orders more often. This trend reduces carrying costs for customers, but requires that Sony of Canada be flexible to respond quickly when those customers need additional product. “There is always the challenge to bring product forward, to get it picked, and to get it out quickly. We need to have a very efficient process to do that,” says Rick Courtin, Supply Chain Business Process Manager of Sony of Canada. “We rolled out voice in order-picking and cyclecounting and we want to get it utilized in all aspects of the operation,” adds Paul Kirkpatrick, Vice President of Supply Chain of Sony of Canada. “The ability
to do more with less at a reasonable cost to the organization was a simple concept that management could embrace,” he says. Japan-based IHI Construction Machinery Limited is another company that has made huge jumps in productivity since moving to voice-directed distribution. IHI is a leading manufacturer of largescale construction equipment, such as excavators, hydraulic shovels, and cranes. Its Yokohama distribution center provides some 60,000 different replacement parts and supplies for its equipment. IHI sought to standardize its work processes, simplify its operations, and gain efficiencies. Prior to implementing voice in June of 2008, the company used a combination of paper and RF-directed systems. But the RF system transferred its data as a batch, so there was no realtime information on current work. The paper, of course, also did not offer true visibility into operations. Implementing voice changed all of that. “Real-time control of work processes has been enabled through Vocollect Voice without having to replace our existing ERP system,” says Satoru Hanazono, Manager of the Information Systems Group at the IHI corporate administration office. Since moving to voice, IHI has standardized its processes and gained an average productivity improvement of 46 percent. Over a period of months, the company has also applied voice successfully for cycle-counting, receiving inspection, storage, and shipping inspection. Along with significant productivity and labor gains, accuracy has also improved tremendously. After the first year on the system the company had cut work errors by 70 percent and had attained operating accuracy rates of 99.993 percent. “The effect of these improvements in work efficiencies from voice is so great that I anticipate additional future benefits,” adds Satoru. (To be continued in November edition) Courtsey: Vocollect
* Roger Byford is Co-Founder and Chief Technology Officer of Vocollect, the world leader in voicecentric solutions for mobile workers. Roger’s career spans more than 20 years in the industrial application of voice technologies. A business journalist for over 20 years, David Maloney is senior editor of the leading North American distribution industry magazine DC Velocity. LOGISTICS TIMES October 2011
Believing in perseverance 37 could hardly be considered as too ripe an age to shoulder the responsibilities of marketing head of a logistics firm which is in the league of front ranking enterprise in its space in the country. The hurly-burly situations that primarily mark the logistics operations in general is believed to be something that needs decades of experience to handle deftly. And by the time you reach to the pole position on operational scale, chances are you might have become an exhausted frame with plenty of grey tuffs on your forhead. But meet Akash Bansal, National head of Om Logistics (with a topline of around Rs 700 crore and positioning in nearly half a dozen verticals), and he belies the stereotyped ‘uneasy lies the head’ image. Still three years short of his forty mark, Bansal had to go through the rigmarole of learning too soon and too fast but he rather seems to have relished it than being unnerved by the taxing demands and situations. Heading a team of dedicated strong work pool of Om Logistics on a pan-Indian basis, Bansal today probably testifies what a believer in perseverance mantra can achieve. Bansal’s report card boasts of an unique distinction. In terms of employment equations, logistics industry is often looked as a land of shifting sand but barring Om, Bansal has not worked for any other company. His has been typically rising through the rank story as he had joined Om as a management intern in 2002 and then went on become its national head by responding to all challenges which were entrusted to him. In fact, the big opportunity came quite early – just one and a half years after he had joined Om. Due to a sudden change in the spearheading logistics team which was responsible LOGISTICS TIMES October 2011
for logistics management for OEM manufacturers, a serious void emerged. “It is at that time that our chairman asked me to take over the baton. And next one and a half years was my defining spell. I had become totally workaholic since I knew the enormity of the responsibility. This phase taught me a lot including the art to sustain the customers. But it was a great learning experience, something which has stayed with me,” So yes, today in hindsight I can say that I got my big chance by default,” this is how he recalls that definitive turn in his life. Born in a middle class family in Haldwani (his father worked in UP State Electricity Board), Bansal had his primary education in Lucknow. He then moved on to obtain an engineering degree from Aurangabad in electronics stream. His next educational abode was Pune where he enrolled for MBA. And it was there that he had first brush with logistics, something which he immensely liked and decided to make mainstay of his life. “After the first year course, I went for summer training in Panasonic. There I understood the importancee of material handling and n Dow logistics. That is & UpsSign where I perceived ader ss le Star e n i s that logistics ni bu Gemi dmired scenario in India is ta tal s t i o M M harti e liner B l i not up to the mark Sun on cy urite t poli and a lot of churning Favo is the bes sty Hone ite book is bound to happen. I ur v ny a F o dfather was guided by a senior mpa o G d co e r The i professional (Prabhat S t adm Mos MOTOR A Rastogi) there who told me T TA vies od mo tination bies in no uncertain terms that Hob g Hollywo es d ay hin Watc ite holid this is the in thing and you r u Favo and, Goa should go for it. Even as not ie zerl Swit Mov urite Favo or iat Glad
too many MBA aspirants were interested in this stream then, my decision was made,” says Bansal. Bansal was picked up by Om in a campus placement drive but the initial months brought in some rude shock resulting in some strong moments of self doubt. “Couple of students from my batch had also joined Om. But within four months, all of them left
saying that this is not a lucrative option whereas I decided to stay. But their departure had indeed created serious doubts in my mind.Everybody is right or I am right?, that was the question. Six months after joining here, I rushed to my father and sought his guidance. And his suggestion was simple: if you feel that this is the right direction for you, then stick to it. Since then no self-doubt
has ever clouded my mind scape,” Bansal explains. Considered to be a strong pillar in taking Om Logistics to new heights especially in last five years, Bansal does not mind being labeled as Mr. Loyalist asserting that his involvement with the company is not merely functional but it has strong emotional quotient too. “I am a thorough professional but yes I do have some emotional affliation with this company. I was just a fresher and OM gave me the opportunity to prove my worth. And therefore I have always been driven by the desire to pay the organization back.” And, therefore, all the feelers made to him to move to proverbial greener pastures have failed to cut any ice with him. “In a booming market scenario, everybody get feelers and so do I. But its very important to analyse the opportunities that come your way. What does a professional want from an organisation? Three things primarily - trust from the management, growth in alignment with the organisation, and you should have job satisfaction by way of challenges in the position which you would like to maintain in an organisation. And I personally believe that if you are getting these three, what is the reason to move? Just some extra bucks. To me it hardly makes any sense,” he strongly reasons. Father of two children – a son (5 years) and a daughter (3 years)Bansal’s ultimate wish is to take on entrepreneurial baton one day. But he is quick to point out it is unlikely to happen anytime in the near future. “I see myself staying with Om and working dedicatedly towards the company’s objective of emerging as top notch supply chain service provider in the country. Its only when time comes , that I would tend to give shape to my entrepreneurial dreams. I have not even decided on what precisely I would be doing. But one thing is sure: it would not be clashing with any interests of Om,” he underlines. For Akash Bansal , the pay back time clearly is far from over. - Ritwik Sinha LOGISTICS TIMES October 2011
CAMPISA Dock Leveler An electro-hydraulic dockleveler is not simply â€ža bridge for connecting a vehicleâ€°. Frequently the important characteristics that this tool needs are undervalued, in order to guarantee an efficient working environment to comply with the safety in work regulations. Since the invention of the hydraulic dock-leveler, very poor design improvement has been implemented by manufacturers of the traditional types, and the result is old concept products with poor characteristics in respect of safety in work and installation. CAMPISA dock-levellers have been manufactured since 1975. In 1983 a completely different concept was applied to satisfy different customer needs, offering new advantages and often-cheaper costs. The most advanced concept of the CAMPISA dock-leveler is to have the whole drive unit contained in a wall box, which is installed On a wall inside the warehouse, at eye level, which allows for easy and economical maintenance, without the necessity to maneuver under the platform or inside the pit, where traditional Power packs and controls are usually installed: an undoubtedly dangerous, dirty and uncomfortable operation. A wide study of previously installed power units motivated us to design the MULTIPLE CONSOLLE. Depending on the type of installation it can hydraulically power several docklevelers with only one CONSOLLE (drive unit), each dock-leveler controlled separately by its own control pad. They can also
work simultaneously. With these solutions we have dramatically economized by optimizing the function of the single parts so successfully that We have practically eliminated, for several years, any repair intervention. Further dramatic economies are obtained by reducing the electric mains supply points to one per CONSOLLE instead of one per dock-leveler. The reduction is about 65% in dockleveler installations and about 75% in dock-leveler and powered sectional door installations. This reduction normally result in important economies when installing the mains distribution box. Consequently by reducing the number of motors there is a dramatic saving on electricity costs, as the global mains power engagement is radically reduced. Radius lip dock-levelers allows the dock to connect with the truckbed, therefore making it possible to drive directly on and off with fork-lift trucks, roll containers etc. Loading and unloading operations become
quick, safe and economical. CAMPISA dock-levelers can be easily positioned. They come with the most secure safety devices. They are built in conformity with the EN 1398. Telescopic lip dock-levelers are ideal for connecting vehicles unable to drive near to the dock (e.g. sea containers, side loading railway wagons etc.), or where it is imperative to reach a longer total length of the dock-leveler itself. These types can be supplied with A lip extending up to 1 m. The CAMPISA dock-leveler is supplied complete with: Platform and lip in almond antislip steel Single effect lift cylinder, double effect lip cylinder Safety stop in case of accidental departure of the vehicle Maximum pressure valve Side foot protection steel sheets Rubber bumpers 300 mm x 55 mm x 60 mm Wall CONSOLLE containing the whole drive unit and control, with low-level conduit protection, or motor underneath.
For further details, Contact: Gandhi Automations Pvt Ltd, 2nd Floor, Chawda Commercial Centre, Link Road, Malad(W) Mumbai 400064, Off : 022- 66720200/66720300(200 lines), Fax : 022-66720201, Email :- firstname.lastname@example.org, Website : www.geapl.co.in
LOGISTICS TIMES October 2011
Time is ripe for Collaborative Logistics
Frost & Sullivan successfully hosted its Second Annual Strategy Workshop for the Logistics Sector, titled ‘Future Supply Chain Strategies – THE WAY AHEAD’, from September 14-16, 2011, at the Zuri White Sands Resort, Goa. Progressing from last year’s event, which enabled logistics service providers (LSPs) and end users to understand the state of supply chains and identify core challenges, this year’s workshop explored the critical areas of focus for the logistics sector and essential next steps in achieving ideal future supply chains for key industries such as Automotive (auto components), Healthcare, Retail, Electronics, IT, and Telecom. Through this workshop, Frost & Sullivan aimed to facilitate ideation and evaluation among participants regarding the emerging focus areas for future supply chains, the best possible methods of collaboration between LSPs and end users, and desired practices for supply chain optimization. The workshop commenced with a session on ‘Frost & Sullivan’s Perspective on Future Supply Chain Strategies’, which provided strategic insights on the key trends impacting the logistics sector, key needs, challenges of end users, and the
critical aspects to be focused upon while building future supply chains requiring collective efforts by LSPs and end users. This was followed by an interactive session comprising of renowned executives from LSPs and end-user industries to enlighten the logistics fraternity on the collaborative logistics scenario in India, its viability, and importance. Subsequently, leading LSPs provided their perspective on the logistics scenario and challenges in key industries, the scope as well as potential means of mitigating them. Following this session, two intense activity workshops spread over two days
were conducted involving eight multidisciplinary expert groups — five working on an industry-specific theme, and three working on overall logistics sector issues. Each expert group comprised a mix of top executives from end-user industries, LSPs, and thought leaders. The expert groups deliberated on the critical factors to be focused on for future supply chain strategies by the logistics sector, within their respective themes. The major areas of discussions in the workshop included mega-trends impacting the logistics sector, key needs and challenges of end users, and the LOGISTICS TIMES October 2011
required initiatives to address the needs. Mega-trends that are likely to impact the Indian logistics industry include emerging new trade corridors due to the rising share of Asia within global manufacturing and consumption, GST implementation in the country, emerging importance of coastal shipping, and green logistics, among others. The discussions focused on how LSPs and end users can deal with these mega-trends and benefit from their impact. Furthermore, discussions within various industry specific groups confirmed the findings from Frost & Sullivan studies, that end users are expecting LSPs to take the lead in making gains from the mega-trends; as well as in addressing major challenges faced by the logistics sector, such as lack of funds to invest in technology, shortage of skilled LOGISTICS TIMES October 2011
professionals, and lack of complete transportation solutions. Both LSPs and end users need to develop mutual trust and collaborate in order to address the identified challenges and enhance the performance of both parties. This was the most important and underlying factor established from the deliberations in the workshop sessions. The workshop had another expert panel discussion on one of the critical issues faced by the entire logistics sector, which is scarcity of skilled and specialized human resources. The panel deliberated on the reasons for scarcity and practical initiatives that can by adopted by both LSPs and end users to address this issue. The workshop witnessed participation from top logistics executives from leading
end-user companies such as Tata Motors, Toyota Kirloskar, Mahindra Navistar, Volvo Eicher Commercial Vehicles, Fenner India, Amara Raja Batteries, Federal Mogul, Pricol, Apollo Tyres, Acer India, Bluestar Electronics, AlcatelLucent, Xerox, Samsung, Novartis, Abbot Labs, Dr. Reddy’s Labs, Alkem Labs, Himalaya Healthcare, B Braun, Hyper City Retail, Mahindra Retail, Nilgiri’s Retail, Café Coffee Day, ITC, Globus, Raymond, Anchor Electricals, etc. Leading participant organizations from the LSPs included Safexpress, Allcargo, APL, TNT, CHEP, TCI, Uniworld Logistics, etc. - Srinath Manda (The author is Program Manager, Transportation & Logistics Practice, Frost & Sullivan, South Asia, Middle East, and North Africa.)
Top Honours for Safexpress Domestic logistics major Safexpress won two prestigious awards - ‘Best Supply Chain Company of the Year’ and ‘Best Express Logistics Provider of the Year’ - at 5th Express Logistics & Supply Chain Conclave 2011. These awards were given in a colorful ceremony that took place on 21st September at Hotel Taj Lands End in Mumbai. Accepting the award, Pawan Jain, CMD, Safexpress said, “We are very happy to have received this ultimate honor. It feels great to be declared as the ‘Best Supply Chain Company’ in the country. This Award is a tribute to all our employees, partners and customers, who have contributed tremendously in making us reach this huge landmark.”
Lifetime Achievement for Malcolm Monteiro The jury of 5th ELSCC adjudged Malcolm Monteiro, Senior Vice President & Area Director, South Asia, DHL Express, for the ‘Lifetime Achievement award’ for his contribution to the industry. In addition, DHL was bestowed upon a host of awards in a range of categories. The ‘Best Express Provider’ of the year-International’ went to DHL Express, whilst the ‘Best Logistics Service Provider of the year for Air Freight’ was bestowed on DHL Global Forwarding. In the category for ‘Best Air Express Provider of the year-Domestic’, Blue Dart was declared as the winner and the award for ‘Innovative Logistics Company of the year’ went to DHL-Blue Dart for Smart Truck. LOGISTICS TIMES Octoberr 2011 2
Ajay Chopra is Face of the Year
At the ELSCC event, Ajay Chopra, CEO, DIESL was bestowed with “Face of the Year Award.” The award went to him for his immense contribution as a spokesperson for the industry and his remarkable efforts in the field of Indian logistics industry through the IILF (India International Logistics Forum) and ideating and executing the very popular, ‘Captains Of Logistics’ series of multicity events, which are held by DIESL every year across India. In addition, the company also won the best 3PL of the Year Award.
Global Volunteer Day
DHL and Blue Dart celebrated Global Volunteer Day on September 16 and 17, 2011. More than 7600 employees across India took part in various activities including blood donation, volunteering in old age/children’s/destitute homes, organizing painting competitions for underprivileged children and sponsoring saplings as part of its global drive to give back to local communities and to inculcate a passion for volunteerism among employees. LOGISTICS LOG GISTICS TIMES October 2011
Global FedEx Cares Week Team members across FedEx Express energetically participated in the seventh annual FedEx Cares Week, which kicked off globally in the week of September 12, 2011 In India, more than 450 FedEx employees participated in blood donation and tree planting activities in Mumbai, Delhi, Bangalore, Chennai and Hyderabad in celebration of FedEx Cares Week. The employees donated over 144 litres of blood and planted over 90 trees at a wildlife sanctuary in Delhi and at city schools in Mumbai and Bangalore, where school children also joined in the activity.
Empowering underprivileged youth
Blue Edge: Empowering Lives, an initiative by Blue Dart in association with Oasis India (NGO) celebrated its 1st Graduation Day in Chennai. Inaugurated in April 2011, the 1st batch comprising 30 young adults from the marginalized section of society received certificates and trophies from the Chief Guest, Gopa Kumar, Senior Vice President, South, Blue Dart Express, and Dr. Shantanu Dutta, Executive Director, Oasis India for their performance and successful completion of the six month programme. LOGISTICS TIMES October 2011
CI conference on CII logistics infrastructure logi CII Western UP org organized a conference on Logistics Infrastructure: Key enabler for Sustainable Development last month in Noida. The conference partic particularly focused on logistics infrastructure in Uttar Pradesh. The key speakers at the conference ence were: Sankalp Shukla, Director, In Log Logistics Ltd. & Chairman, Infra One (also conference chairman); Vibhav Kant Upadhyay, yay, Chairman - India Center Foundation; P N Sh ary, Company Secretary, Shukla, Director – Operation & Business Development, DFCC; Abhishek Chaudhary, DMICDC; SK Shahi , Secreta Secretary - Inland Waterways Authority of India; Pawanexh Kohli, Senior Vice President, ent, Arshiya Internationa; Tushar Pandey – Group ExecVP-Yes ExecV Bank; Sachin Bhanushali , President – Gateway Rail and Bharat Joshi, shi, Director – BD, ACTL. The session was well attended by more than 100 participants from companies representing various logistics gistics sector.
LOGISTICS LO OGISTICS TIMES October 2011
Interactive Session on Duty Drawback Transition from DEPB to Drawback were on the basis of DEPB Rates prevailed before Oct 2008 and the calculations were broadly done accordingly minus Ad hoc 1-3%. This was stated by R.S. Gujral, Secretary, Finance & Revenue, in an interactive session organised by the Federation of Indian Export Organisations (FIEO) in New Delhi late last month. Speaking on the occasion S. Majumder, Chairman, Central Board of Customs & Excise said that transition from DEPB Scheme to Drawback Scheme should be taken as simplification of procedures and reduction of transaction cost and time of the exporters.
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Ethical supply chain – not only about targets Scenario 1: A large organization is floating a RFQ (Tender) for transportation and warehousing business to shortlist suppliers/vendors/ service providers. Before the tender the company’s purchase manager (who has been earlier proved as an unethical person) has completed the supplier short listing formalities, but due to his financial background stays with the company. Do you think the short listing procedure would have been done ethically considering the above background? Scenario 2: There is a truckers strike announced because of increase in the toll charges across the country due to which many supply chains have taken a hit. But an employee thinks “out of the box” and informs the management that he knows the ambulance driver of a small hospital. If the company tips the driver, the ambulance can be used as ‘MilkRun’ vehicle to collect material from the suppliers. The company records the expense as maintenance charges (Corporate Social Responsibility) to the hospital in the financial books, transports the goods and achieves its target for the month. The employee who thought out of the box is rewarded, but should have rewarded for thinking ‘out of the mind’. We all understand it is not easy to manage a seamless supply chain without hiccups, bottlenecks. It is fun and challenging to solve these bottlenecks and finally achieve our targets - managers are happy, management is happy. Let us look at a specific issue in mind. Ethics! As an individual, we all have been instructed strictly by our parents not LOGISTICS TIMES October 2011
to lie, hurt others or cheat someone. It is in our sub-conscious mind. We think twice before doing anything unethical as taught in our first school (home). But who teaches the company? It has to be us. Company is made up of people, the same set of people who have heart full of ethical values as learnt during childhood. But it does so happen that ethics take a back seat (only sometimes) when we enter the company’s door. It is not that companies are unethical, but it only takes a back seat sometimes when it comes to certain critical situations. It is because we all turn into so-called professionals working for the betterment of the company in terms of revenue, targets and in turn self. Let us consider some ethical issues in a supply chain. They range right from marketing of a product or selecting a supplier until delivery of the product and enjoying the receivables. In between is a long story that can house lots of issues on ethical values. Below are some of the common issues heard often1. During supplier selection 2. Price negotiations 3. Procurement / inventory call offs 4. Payments before credit period 5. Supplier performance and ratings 6. Storing buffer stocks at customer’s end 7. Labour working conditions 8. Environmental issues etc The list is endless. Dealing with ethics includes designing a supply chain program that should include all the stake holders that the company deals with until delivery of the product. The company’s liability doesn’t end here but reverse logistics, services should also be considered and until the end of the product life. This is because the product/
service is owned by the company and it represents the image, literally like a brand ambassador! Some of the steps that companies can initiate are1. Create company values from supply chain angle. 2. Introduce the good practise, company’s code of conduct and values to the suppliers and sub suppliers. Though the liability of the supplier/sub supplier ends once it delivers the product to the company, ultimately the product bears the company’s name and it is answerable to the end customer. As we all know, there are lots of instances where companies have recalled their products getting a beating on their name & brand image and suppliers are nowhere in the picture. 3. Create transparency along the supply chain through effective use of Information Technology. This can help you catch the culprit who works against the values. 4. Map your supply chain network and share experiences on various issues that include small unforgetful experiences (No. of schools present in the route – risk of children running by) till critical bottle necks (Toll, Dangerous roads etc) along your supply network. 5. Practise Corporate Social Responsibility in all aspects of the company’s administration. Meaning, developing image by contributing to the hospital/ NGO at one end and engaging ambulances to get materials on-time doesn’t prove anything. (Revisit your policies and procedures) etc Its ultimately your brand image that counts! PAVAN.V (Author is Implementation Analyst - GT Nexus)
RNI No. DELENG-17848/2010-TC