Freight cost forms 11% of the landed costs, as compared to the 6% in the developed countries Standard transit time

from shop-floors in India to retail stands in EU/USA much higher compared to other countries Bottle necks: Delayed documentation processes, vast areas & complex locations to cover, delays due to lack of planning & connectivity in multi-modal logistics, very few service providers offer skilled expertise Lack of visibility in the entire chain Every piece handled approximately 15 times from shipper to aircraft Complex and time consuming requirements of various government departments 85% unorganized sector, very few national players

India Fast Facts

Total area 3,287,590 sq. km. Coast line approx. 7,000 km. 28 States and 7 Union Territories and territorial borders with 6 countries Population - 2007 estimate 1.12 billion (2nd) largest in the world Multi-ethnic, multi-lingual, multi-cultural people. More than 96 living languages with only 46 technically written. Land of all seasons and diverse terrains Although India occupies only 2.4% of the world's land area, it supports over 15% of the world's population. Only China has a larger population. Almost 33% of Indians are younger than 15 years of age. About 70% of the people live in more than 550,000 villages, and the remainder in more than 200 towns and cities. Religion, caste and language are major determinants of social and political organization in India today. Although 82% of the people are Hindu, India also is the home of more than 126 million Muslims--one of the world's largest Muslim populations. The population also includes Christians, Sikhs, Jains, Buddhists and Parsis. World's fourth largest economy in-terms of PPP World's second fastest growing economy with a GDP growth rate equals to 9.6% 2006-07 Exports $125 billion (Financial Year 2006-2007) Imports $187.9 billion f.o.b. (2006-07) Indias share of world trade was 1.5% in 2006-07 and is estimated to reach 2% by 2009.

Logistics in India
Despite its favorable location between Asia and Europe and a population of more than 1 billion people, India has hardly been able to position itself on the economic market. It has only been in recent years that the country has been able to increasingly flex its economic muscle. But, India has much catching-up to do in logistics terms before it can reach the same level as the worlds leading industrial nations.

Transport hubs in India This article contains additional information and interactive features. Open the Flash version of this article here.

Geographic challenges in India

India is bordered on the north by the Himalaya Mountains. For this reason, creating road and rail connections from this direction is a major undertaking. In the south, though, the Indian peninsula is well suited for sea harbors. India is indeed the country with the worlds second-largest population. But the population is unequally distributed, creating a major challenge for logistics service providers.

Core countries for trade

The most important export countries for Indian products are the United States, the United Arab Emirates, China, Singapore and Great Britain. The biggest import trading partners are China, the United States, Switzerland, the United Arab Emirates and Belgium [1].

Indian infrastructure
A vital step in Indias further development is expanding the road and rail networks, and modernizing harbors and airports. In the process of globalization Globalization , which is expanding Indias position in world trade, transport volume has climbed rapidly in recent years. The expansion of the logistics infrastructure has been unable to keep up with this pace. For this reason, transport capacities have already reached their limits. The transshipping times for ships in Indian harbors are three to four times longer than the average time in the West. Logistics costs are also very high in international comparison because of the poor infrastructure. For this reason, India will have difficulties positioning itself as a global logistics hub in years ahead. Road transport is especially important for Indias transport system. After all, India has one of the worlds largest road networks, with a total length of 3.3 million kilometers. But much of this network does not meet Western standards. For instance, a truck takes five to six days to cover the 2,061-kilometer-long route between Bangalore and Delhi. The government is indeed trying to introduce counter-measures and shift freight transports from the roads to the rails. But, first, the rail infrastructure must be expanded and the connections to harbors and airports improved. Many sub-areas of the 63,000-kilometer-long rail network still use the technology of 1947, the year that British colonialists left. Only about one-quarter of the routes are electrified. One other challenge is the four gauge widths used in the rail network [2, 3].

Logistics requirements and service areas

Road transports are characterized by small forwarders who frequently use antiquated technology. In addition, the splintered political structure requires an excellent understanding of local conditions [4]. As national highways in India are built and road transports Road transport are increasingly liberalized, the productivity of road shipping will rise in years ahead. The network business with LTL [Less than truck load] in India has excellent potential. The Indian road-transport market is forecast to rise to $40 billion by 2012 - it is currently $28 billion [2]. The CEP market Courier, express and parcel services on the subcontinent is growing rapidly. In the last five years, revenue has experienced double-digit growth, climbing to about $650 million. Its share of the entire logistics market totals only about 3 percent. International service providers are working to set up or acquire domestic networks in India [3]. Logistics service providers have been focusing more extensively on traditional storage functions and distribution. But the number of high-bay warehouses that meet European standards is extremely small. Typical added-value services that meet Western standards also are hardly offered. For this reason, the contract logistics market Contract logistics in India has a share of only about 6 percent of the entire logistics market [4, 5].

Logistics centers in India

In terms of logistics, India remains a developing country in many areas. For instance, it has hardly any multimodal logistics centers. Despite its good geographic position, India has also been unable to evolve into a hub for international freight transports, like Dubai. In regional terms, India lags behind logistics centers like Singapore, Thailand and Hong Kong. Currently, India is moving

forward with a plan to turn the countrys 12 main harbors into integrated freight hubs. Many of these harbors do not have the rail and road connections needed to handle the transport volume of ships. Containers Container frequently sit for weeks in the harbor before they can be transported [2, 4].

Important logistics service providers

The largest Indian logistics service providers are Shipping Corporation of India, Container Corporation of India, Great Eastern Shipping, Reliance Ports / Terminals, Essar Shipping, Transport Corporation of India, Reliance Logistics, Blue Dart Express, Varun Shipping Company and BLR India. International service providers are Schenker, DHL, Arvato, Khne & Nagel and TNT [2]. PDF view Recommended reading Fundamentals of Logistics Management | Grant / Lambert / Stock / Ellram 2005 References [1] The World Fact Book | Central Intelligence Agency 2007 [2] Indien | Alex 2006. In: Transport und Logistik | Bundesagentur fr Auenwirtschaft (Hrsg.) [3] Stckgut steckt noch in den Kinderschuhen | Jahncke 2007. In: DVZ 61(2007)122 [4] DVZ Sonderbeilage - Indien | 2006. In: DVZ 60(2006)58 [5] Indien boomt, ist aber kein zweites China | Gillies 2006. In: Logistik Inside 6(2006)5

The best way for better reach

By road, rail, air or water - goods can arrive at their destination in many ways. The choice of the right means of transport depends on many factors - including flexibility, costs and transport volume. In order to choose the optimal means, an understanding of the strengths and weaknesses of the individual means of transport is essential. A distinction is drawn among road transport, rail transport and pipeline transport, inland waterway and ocean shipping and air transport.

Goods transports in comparison (Germany)

Strengths and weaknesses of road transport

Road transport is suited for door-to-door transport and widespread distribution of goods in the 24-hour cycle [1]

Strengths

Weaknesses

High flexibility in terms of transport jobs and changed plans

Limited transport volume

Fewer idles and waiting periods

Traffic jams

Relatively low transport times for short and medium distances

Legal restrictions

Weather effects

Restrictions on transport of hazardous goods

Ecological aspects

Strengths and weaknesses of rail transport

Rail transport is suited for bulk shipping (several wagonloads) of many types of goods (coal, raw materials) over distances of 300 km and more [1].

Strengths

Weaknesses

Higher speeds and economical solution for longer distances

High fixed costs

Environmentally friendly

Schedule and rail-network Inflexibility

No road traffic

Inadeqate for short-distant transports or with frequent cargo changes

No driving bans (e.g., Sundays, holidays)

Monopolistic position of the main operator

Strengths and weaknesses of pipeline transport

Pipeline transport is used solely for a limited range of products, including natural gas, crude oil, petroleum products, water, chemicals and liquid products. Natural gas and crude oil are the main products transported by pipeline [1].

Strengths

Weaknesses

Economic

Small pipeline network High fixed costs

Safe

Environmentally friendly

Strengths and weaknesses of inland waterway transport

Inland waterway transport is suited for large cargo shipments covering longer distances [1].

Strengths

Weaknesses

Economic

Limited waterway network

Environmentally friendly

High handling and transshipment costs

Availability of specialized ships

Dependency on weather (water level)

Strengths and weaknesses of ocean shipping

Ocean shipping is suited for the intercontinental shipment of bulk cargo, bulky goods and dangerous materials such as oil and gas over large distances [1].

Strengths

Weaknesses

Economic

High capital costs

Environmentally friendly

Slow

Large transport volume

Tied to the water network

Independent of weather

Dependency of large container ships on specially equipped ports

Strengths and weaknesses of air transport

Air transport is suited for valuable goods and high-speed shipments [1].

Strengths

Weaknesses

High speeds, frequency and security

High transport costs for bulk goods

Little capital tie-up

Relatively low transport capacity

Low risk of theft and damage

Need for development of a network

Cost-efficient transport of light parts

Ground time is approx. 73 percent of total transport time

Ecological aspects

PDF view

From the producer to the customer

The focal point of distribution logistics is the shipment of goods from the manufacturer to the consumer. Here is an example: In the early morning, a major supermarkets own truck delivers fresh supplies to replenish those that were sold on the previous day right to the loading ramp - all pre-picked for the retail outlets. At the same time, the specialty-food retailer next door is buying goods for that particular day from the wholesaler. Distribution logistics addresses these types of deliveries and others as well. In the process, distribution logistics covers much more than the simple shipment of a product from Point A to Point B.

Allocation of distribution logistics within the logistics system of an industrial company

Concept and scope of distribution logistics

Distribution logistics comprises all activities related to the provision of finished products and merchandise to a customer. The products can be delivered directly from the production process or from the traders stock located close to the production site or, possibly, via additional regional distribution warehouses. Like procurement logistics, distribution logistics is a market-linked logistics system. It links a companys production logistics with the customers procurement logistics. In distribution logistics, customer orientation plays a special role because of the close link to the customer. Workers in a distribution center frequently have more contact with the customer than sales representatives do. The tremendous significance of service thinking in distribution logistics arises from this customer orientation. The aim is to constantly search for innovative ways that offer the customer improved logistics solutions. In the process, special requirements are being made as the traditional marketing principle of produce in a market-focused manner is being replaced by the future-oriented marketing principle of sell first, produce later. Furthermore, service is increasingly being provided to the customer in a multi-faceted way based on the principle of just for you. Both trends require a great amount of service speed and flexibility [1].

Marketing with a delivery service If the delivery service Delivery service is considered to be an instrument of marketing strategy, interdependencies with other instruments must be considered. This is because the instruments used in marketing strategy have an effect on the customer only when combined with the marketing mix Marketing mix . Information about the current interdependencies will be provided in later articles about distribution logistics. In the process, marketing instruments are combined into tools of product strategy, contract policies or terms & conditions, communications strategy and distribution strategy [1].

Only India among the BRIC nations has slipped on the World Banks Logistics Performance Index.
July 15, 2012:

Indias ranking slipped to 46th in the 2012 World Banks Logistics Performance Index, which measures logistics efficiency and is now recognised globally. Five years ago, India was ranked 39. The drop in ranking is a matter of concern for the country, which is expecting a lot of foreign investment across sectors that require an efficient logistics system. A countrys ability to trade globally depends on its traders access to global freight and logistics networks. And the efficiency of a countrys supply chain (in cost, time and reliability) depends on specific features of its domestic economy (logistics performance).

Better overall logistics performance and trade facilitation are strongly associated with trade expansion, export diversification, attractiveness to foreign direct investment and economic growth, says the World Bank. Based on a global survey of freight forwarders and express carriers, the Index is a benchmarking tool developed by the World Bank that measures performance along the logistics supply chain within a country. Allowing for comparisons across 155 countries, the Index helps countries identify challenges and opportunities and improve their performance. The World Bank conducts the survey every two years.

weaknesses
Expressing concern on the low ranking, the Union Shipping Minister, Mr G.K. Vasan, recently in Chennai, said that it reflects some weaknesses in our logistics system. Logistics cost in India is high at 13-14 per cent of GDP compared with 7-8 per cent in developed countries. India is emerging as one of the worlds leading consumer markets. It expects to sustain strong growth over the coming years and strives to become one of the top three economies in the world by the middle of the century. The logistics sector plays a major role in supporting this cause and the connectivity and convenience in operations is key for sustaining global trade growth. Mr Vasan said that infrastructure development was essential for the growth of an economy. Logistics infrastructure covering road, rail, waterways and air network is the backbone of the economy. An ideal situation would be to have adequate infrastructure capacity riding on which the various modes could form a logistics chain for seamless flow of goods and services. The current situation offers us a springboard from which the Indian logistics industry can take a giant leap, he said.

Several complexities
Mr Vishwas Udgirkar, Senior Director, Deloitte India, said the low ranking is matter of concern. In the era of globalisation, Indian products will lose the competitive edge if not backed by efficient logistics support. Despite holding promise, the logistics sector in India remains mired in several complexities which could hold it back. These include significant inefficiencies in transport, poor condition of storage infrastructure, a complex tax structure, low rate of technology adoption and poor skills of the logistics professionals. There is still no multimodal solution. Warehousing is still considered as a real-estate than a logistics service. Pending resolution of the Goods and Service Tax has hampered the warehousing industry. Optimisation by pooling of infrastructure has just started, but has a long way, he says.

exim volumes
According to Mr Srinath Manda, Program Manager, Transportation and Logistics Practice, Frost and Sullivan South Asia, Middle East and North Africa, the situation becomes more of a concern when Indias performance is evaluated along with frequently compared economies of China, Russia and Brazil together commonly referred to as BRIC. Each of the other nations has enhanced its rank, while India has declined.

China improved its rank from 30 in 2007 to 26 in 2012; Brazil from 61 to 45; and Russia from 99 to 95. A detailed evaluation of the performance by category reveals that Indias ratings on logistics infrastructure, international shipments, logistics quality and competence declined significantly. This indicates that the scale and pace of development of logistics infrastructure has seriously lagged behind the required pace and standards, and that growth in international trade shipments has also been below the desired/expected levels. Severe congestion at major seaports resulting in significant delays in cargo clearance as well as vessel turnaround times may also be a reason for slower growth of export-import (EXIM) volumes.

Solution
Above all, it also indicates that improvement in quality standards of logistics services and competence of the countrys logistics sector participants is lagging behind when compared with global standards, he said. India needs an accelerated development of logistics infrastructure; focused measures to push up EXIM volumes by the Government and serious initiatives to improve competencies and quality of services by logistics sector participants are the need of the hour to avert this decline on global logistics performance, said Mr Manda. The government needs to bring about rapid development of national highways, dedicated rail freight corridors, cargo capacity and capability to accommodate larger ships at sea ports. The Government should also work together with various industrial consortiums to enhance business scenario and EXIM competence of our industries. Logistics service providers need to improve their competencies by investing in infrastructure and technology, gaining skill sets, and adopting best practices from developed logistics markets, he said. According to Mr Udgirkar of Deloitte, there is a need to create an environment to graduate the Indian logistics market to provide value propositions in logistics solutions. Also, the capability of the Indian logistics industry to provide such solutions should be increased. The Government and other regulatory mechanisms need to provide an enabling environment for value propositions in logistics services, he said. raja.simhan@thehindu.co.in Keywords: India among the BRIC nations, 2012 World Banks Logistics Performance Index, poor infrastructure plague logistics sector, Transportation and Logistics Practice, Frost and Sullivan, India is a very interesting place to be in terms of logistics
Sandeep Menezes Wednesday, August 11, 2010, 17:22 Hrs [IST]

 Lars Sorensen, Chief Executive Officer - South Asia, Damco India Pvt. Ltd Damco International A/S, headquartered in Copenhagen, Denmark, is one of the world's leading providers of freight forwarding and supply chain management services and is an independent business activity within the A.P. Moller-Maersk Group. Sandeep Menezes interviews Lars Sorensen on a range of issues in the "growing" logistics market in India. Logistics infrastructure spend has tripled from $10 billion in 2003 to an estimated $30 billion this year. How do you see this sector in near future? I think we have witnessed a positive development over the last few years; there is much more awareness from government institutions and private investors that transportation infrastructure needs to improve if manufacturing costs are to be reduced. We need to ensure that logistics providers and other stakeholders push for infrastructure development such as ports, roads, airports, railways and other transportation modes. I am confident that the government authorities and private investors will continue their focus on infrastructure improvement in India. India spends around 13 per cent of its GDP on logistics, which is higher than in USA (10 per cent), Europe (11 per cent) and Japan (10 per cent). Inefficient practices have inflated the size of this industry. How can we improve supply chain efficiency? India's logistics costs are higher when compared to China, Asia- Pacific, Europe and USA. It is essential to improve the logistics infrastructure so that we can compete and lower our logistics cost. We have seen developed and developing markets spending billions of dollars to ensure better roads, rail and other transportation infrastructure. This has helped them to establish strong industries that flourish on the developed logistics infrastructure. Logistics costs go up when there is a lack of visibility and reliability in the supply chain. Infrastructure improvements will greatly help to improve reliability and thereby reduce overall costs. Investment in technology will improve visibility of the supply chain and this will also reduce overall logistics costs. With good transportation infrastructure and systematic planning, we can improve the efficiency and reliability of the Indian logistics supply chain and decrease our overall logistics spend. India's logistics market, including transportation and warehousing, is expected to go up from $75.19 billion in 2009 to $120 billion in 2014. What will be the main drivers leading to this growth? India is a large country and with growth in consumption there will be demand to move significant volume of merchandise between different locations and import goods from overseas locations. India is also emerging as a key manufacturing location for several industries and these trends will mean that India will have higher share of global trade in the future, and this will increase the demand for logistics activities in India. The export containers will specifically witness significant increase over the next five to 10 years; this will also lead to overall logistics industry growth. Also, India is witnessing the rapid development of logistics intensive industries like automotive and retail which are increasing demand for logistics services. India's rapid industrialisation and infrastructure development is boosting the demand for project cargo. There is also an increase in the outsourcing of logistics activities by Indian companies to capable 3PL partners. All these factors are playing an important role in driving the growth of the logistics industry in India. What are the main challenges facing the Indian logistics

sector in next 10 years? Apart from logistics infrastructure, one of the main challenges is the different state taxes while moving cargo across various states in India. The logistics industry and providers are very fragmented across India. For example, it is very tough to go out and find one trucking company that can serve entire India; it is also tough to find one warehousing company serving entire India. In such a fragmented industry one has to involve a number of different players to work efficiently. In future, we will see consolidation in the industry and more players capable of offering services across the country. What is the current size of the global project logistics industry? What is the estimated growth rate of the industry? The key is that it is a growing market. In India, we are witnessing a lot of industrialisation and infrastructure development. The government and private sector is investing in energy, irrigation projects, roads, ports and these investments are resulting in increased demand for project logistics. Many Indian companies are also winning turnkey contracts in overseas locations like Africa and Middle East, so there is demand for project export logistics too. How does the Indian logistics market compare with the global market? If one divides the global logistics market between developing and developed nations then India is definitely growing faster than the mature markets. Our estimate is that India, China and some of the African nations are growing fastest right now. India is a very interesting place to be in terms of logistics. Damco has been in India for nearly 18 years. What are your company's main achievements and future plans? As a foreign player it is always difficult to convince local customers to use you. It is a natural challenge since one has to build trust in the market. In the beginning, we mainly serviced overseas customers, but looking at our customer portfolio now it is predominantly driven by local customers. We have managed to use our global experience and tie that into local knowledge developed over the years. We do not try and impose global solutions to Indian challenges. For us, India is a different market and needs to be dealt with differently. But we do believe in sharing our global experience here in India while focusing on local requirements. Our aim is to grow our current size by two to three times in India over the next four to five years. Bilateral trade between India and Africa is expected to touch $70 billion in next five years. Tell us about Damco's recently created India-Africa trade lane. Historically, there have been close trade relations between many African nations and India and this will continue and expand further. Damco has a strong network in Africa which allows us to offer reliable and competitive services in the hinterland through an integrated, one-stop solution. We have set up a team of Africa specialists to offer our customers unique and value adding solutions on the India-Africa trade lane. This initiative will help us to bridge the knowledge gap about Africa and will enable our customers to create a competitive and reliable African supply chain with an improved speed. Why did Damco merge its supply chain management services (Maersk Logistics) and freight forwarding activities (Damco)? The main aim of merging the brands was that we wanted to be easier to do business with from the customer's point of view. Secondly, we wanted to move away from the Maersk brand as many customers saw us as closely connected to Maersk Line even though over half of our overall volumes were shipped on non-Maersk carriers. We are a very neutral forwarder and we work with all major carriers. The new Damco brand helped us to establish this neutral image in the market.

Logistics infrastructure is marked by high cost and low service Lalitha Rao Wednesday, June 27, 2012, 17:04 Hrs [IST] Dilip Ahuja, Managing Director, Neptune Container Line & Logistics Pvt. Ltd Dilip Ahuja is a shipping professional with more than 25 years of experience in the industry. Neptune Container Line & Logistics Pvt. Ltd was established in Mumbai in 1998 to handle the growing demand in containers and cargorelated logistics. Dilip Ahuja, in an email interaction with Lalitha Rao, discusses the broad outlook for the Indian logistics industry. What is your outlook for the Indian logistics industry in the current decade? In my opinion, the Indian logistics industry is in its nascent stage as demand is big while supply is not up to the mark owing to the inadequate infrastructure at its disposal. I look forward with optimism hoping that the desired change (progress) will be seen in the near future which will augur well for the logistics industry in India. How is the cost of logistics in India comparable with other countries? Contrary to expectations, cost of logistics is high in India in proportion and comparison with the global scene. If we can bring our costs down, we shall be able to increase our international trade by becoming competitive in the international market. We have the scope to out beat competition (China is one of our major competitors) provided we improve our infrastructure and bureaucracy both of which are now a main reason for our products and services being out priced. What is your view on the current levels of infrastructure in the Indian logistics sector? Our infrastructure is far from good. We need better roads, better railways, vast improvement in port and related activities, facilities for augmenting and promoting export (even import for that matter) in a modern and professional method. What is your company's market share in the logistics sector? That is difficult to determine but a mid-sized company like ours has a turnover of 15,000 TEUs per annum (combined group turnover is around 30,000 TEUs per annum) and that is quite a sizeable volume in Indian terms. The brand Neptune has been around for 15 years and has grown with each year passing by. We work with sound business principles, ethics and high emphasis on customised solutions tailor made for all sizes of customers. The industry is becoming more competitive with the entry of global players and mergers and acquisitions. We can see competition flow in but we have a firm base and are undeterred by newcomers and competitors alike. We are growing steadily by penetrating into new markets and extending our brand image pan-India and even globally. Innovation in service and working methods is helping us to be ahead of such competition. Warehouses have become key growth drivers in logistics though, in India, this segment is mostly with unorganised players. Do you see a change in this trend? Yes, I agree, and do see a change with more organised warehouses coming up on the scene which will help in a big way with cost savings, better packing, reduction in damages, reduction in handling costs etc. What are the main areas of concern in transportation of goods and services? The main areas of concern in transportation of goods and services are:

Inadequate infrastructure in the form of roads, highways and bridges Infrastructure does not permit a scaleable transportation solution Unsafe practices leading to high risk on the existing infrastructure network Statutory and regulatory constraints

What are some of the key areas requiring attention in logistics chain? India's logistics infrastructure is illequipped and ill-designed to support the expected growth rate of 7-8 per cent

over the next decade. Indian logistics infrastructure is characterised by high costs and low service levels. Logistics infrastructure investment tripled from $10 billion in 2003 to around $30 billion in 2010. Still, the country's network of roads, rail and waterways will be insufficient as freight movement increases threefold in the coming decade. Logistics in India aggregate an annual spend of about 12-13 per cent of gross national product. Transportation alone accounts for 40 per cent. If logistics costs in India are reduced from the current 13 per cent of the gross national product to 8-9 per cent (level in the US), annual savings would be around $20 billion-a potential 4.5 per cent cut in prices of Indian goods globally (a study by logistics institute, Asia-Pacific). Logistics business is no longer limited to basic transportation. It encompasses services such as warehousing, distribution, inventory management, order processing, packaging, labelling. India leads the table of world's major developing logistics markets, as "the most attractive market for logistics companies," Brazil, Indonesia, Mexico and Russia being others in the top five bracket. Can you tell us about Neptune's operations as well as future plans? Neptune began as an international freight forwarder with an agency network developed by its first partner InterContainer Lines Pte. Ltd, Singapore. In due course we moved into container liner agency and later into nonvessel operating common carrier (NVOCC) and project cargoes. Currently, Neptune is competent in handling all aspects of logistics including transportation, warehousing etc. With some activities being outsourced the entire operations and documentation is done in-house with a team of efficient and enthusiastic professionals at all locations across the country. Consolidation of its services at all locations and increasing its focus in project cargoes and NVOCC activities are its high priority in its near future plans. An independent office in Dubai, which will act as a hub to cover the Middle East, has been opened in June this year. The entire logistics gamut of services will be offered in Dubai as well and with its existing network of around 150 agents in around 100 countries, will now have a reliable office in the Middle East to bank on.

GST impact on Logistics Industry in India

Few days ago, I was having a chat with some of our customers and clearly one of the key focus areas that they are looking into is, the impact of GST(Goods and Service Tax) on the overall operations in their sectors. GST is just a tipping point from what we see in the market as other governmental interventions like NREGS has resulted in a consumption boom in Tier 2 and Tier 3 cities.

Few days ago, I was having a chat with some of our customers and clearly one of the key focus areas that they are looking into is, the impact of GST(Goods and Service Tax) on the overall operations in their sectors. GST is just a tipping point from what we see in the market as other governmental interventions like NREGS has resulted in a consumption boom in Tier 2 and Tier 3 cities. We started discussing on the impact in Logistics industry. The impact or rather the opportunity is huge for both them and their customers to completely relook at their supply chain. This essentially means a significant opportunity for Logistics companies in India to revise their infrastructure to deliver as well as reverse logistics for spares and replacements. Just looking at the stats in terms of volumes that need to be managed signifies the huge potential for both Logistics companies and their customers as well to tap new markets. It is no surprise the industry is quite upbeat about it. The opportunity to reduce costs by realigning supply chain is immense. Let us look at prevalent tax structure in India, before we dwell into benefits that GST would supposedly bring in. The current tax structure is quite complex - there are central level taxes in form of excise, customs duty and CST, and then there are varying state level taxes in form of VAT and other levies like Octroi, state level cess etc. The problem is that, state level taxes are applicable on top of central taxes. Which means the manufacturer/supplier is paying taxes on taxes. Only way to avoid this multi tax scenario is to create a stock transfer between inventory stocking points within states! Hence, most industries - like manufacturing/third party logistics players - generally have warehouses/offices in each state to reduce tax burden of Central Service Tax(CST). Thus, planning is more driven by logic of saving taxes, rather than achieving operational efficiency.

Any large LSP, manufacturer or CPG player hence maintains warehouses in all the states of operations. With 33 states in India, that accounts to 25-40 small warehouses (depending of regions and scale of operations) instead of 6-8 large warehouses which would be needed for geography of this size. For some manufacturers/CPG corporate with countrywide operations, we have seen the number of warehouses as high as 55-60. Adding to this inefficiency is the fragmented structure in Indian Logistics industry which results in extreme competition. With such cost structures, and margins less than 5% on turnover of few millions, implementation of ERP/technology at multiple warehouses is costly affair. Hence, most small to medium businesses in this space have stayed away from technology implementations that can result in long term profits. In any case, with smaller warehouses, the automation will not yield great benefits; hence most of the warehouses are semi automated or completely manual. Labour in India is still quite cheap, and considering SLAs are not that strict - the efficiencies are generally compromised. You cannot really fault them, can you? After all, the competition is so intense, that the purse strings are already very tight. This impact of inefficiency and cost burden is passed to end consumer, either in terms of quality/SLAs or/and in terms of cost. With GST coming in, the key advantage will be re-aligning/merger of the smaller warehouses to most productive and logical locations - without having a tax burden to think of, which when automated will give excellent cost benefits. With government all geared up to release the GST regime, the businesses also need to plan accordingly. They will need to take a fresh look at their supply chain to cater to existing geography and should also look at the new business areas that this impending legislation is due to bring. With so much focus on existing operations, it will be almost difficult for the management of these businesses to plan for revamping. Hence, best way would be to look at external experts to provide the guidance. What they may also want to look at is outsource to LSP who have planned for post GST regime. It is quite obvious that LSPs, who can adapt the changes due to GST will be at higher advantage to others. All in all, the post GST regime should provide exciting times for logistics - and particularly so for 3PL/Warehousing industries. * LSP - Logistics Service provider, GST - Goods and service tax

RFID Technology - Next Generation in Automatic Identification (Future is here)!

RFID has come a long way since its early stages in 1980s. Seventeen years ago when Internet was commercialized, only few people thought it would become part of daily operations. RFID is like the Internet -Read on to know more on RFID and the various options it opens up. Few months back, I had the opportunity to attend a web seminar from one of leading technology provider who enables the production of self-identifying packages like RFID, Barcode solutions etc. I had come across this term RFID few years back when US started incorporating RFID techniques on the Passports and had a fair idea on what it really means -without much expectation, I attended the Webinar. The session was pretty much interesting and was amazed to learn the advantages the solution has for current market needs (especially Logistics, the intended audience was also from Logistics) and the level of penetration it could have on current and future market. This for sure has been changing the way things are being done in few sectors like Defense and Healthcare already and is really going to change the way things are being done in warehousing industry.

RFID is Radio Frequency Identification, a tracking system that uses intelligent barcodes to track items and is used in many industries. In Logistics sector, these are used for Electronic Product Code compliance (EPC as known in the market where major retail players in US are moving towards enforcing this compliance). This is currently being achieved in different ways by leading Apparel companies from source tagging to exception handling validation in order to improve supply chain management. The unique advantage of using RFID is that it removes human intervention completely thereby providing high business value.

RFID tags contain electronic information and can be affixed to any object which can be read at the same time -multiple items, containers at the same time by a RFID reader. Unlike standard barcodes that are being used widely in the market today, these can be read from up to several yards away and doesn't require being within the line of sight of the reader. This replaces the point and scan labor intensive method of scanning cases, cartons,

pallets in a typical warehouse operation. Analysts point out that this would reduce at least 60 to 70% of time that would typically take to unload/ship goods in a warehouse, not to forget that it would completely remove human intervention. Each Tag is programmed in such a way that it is one of a kind with a unique serial number (based on the need) and this cannot be changed.

As with any new idea, this also has its own disadvantages, the primary one being its cost. This technology has been available for several years now and the main factor that is affecting the global market penetration is the cost involved in coming up with such RFID tags for different sectors. Few years back the cost involved to incorporate this technology was so huge that it got confined to few critical industries like Defense and Healthcare. With standards being drawn for such usage of tags for common compliance and the cost factor coming down drastically, this has started moving slowly into each and every sector that we are aware of and that too globally.

The market penetration has been slow and steady, and of course there would be questions raised here and there w.r.t the impact it could have on labor market (statistics point out that this technology is 99.9% accurate and drastically reduces the involvement of human intervention). Being part of Logistics sector and having known warehouse operating model, my mind started engaging on the benefits it holds, I had already drawn pictures connecting various dots from the webinar. Just like many others in the market, I am crossing my fingers and will be closely monitoring the way it changes the operating model of Warehouse Logistics operations across the world.

Railroads : Some Insights

I love the smell of diesel fuel in the morning! Is this a famous movie line? Is this from someone working at the fuel rack? It is not from the shipper fuel procurement person who is seeing prices on the rise. It is not from all of us who are watching the birth of new "democracies" in the Middle East that are causing the rise in prices. However, it is an opportunity for all of us to save fuel by putting more trailer, container, bulk and boxcar loads on the railroads in North America. Capacity is available on existing trains and there is capacity to add more trains and services. This convergence of opportunity for shippers and the railroads is not one to be missed. While this is going on, it is time for the railroads to consider making it easier to do business with their customers. How does a railroad do this? Pull out your Smart Phone and think about the way this instrument can be the simple interface between you and your customer think SmartRailroading (SR). If I can do banking, pay bills, make reservations, check routes and rates, scan a bar code with my Smart Phone, buy a plane ticket and show the bar code to TSA, then there is no reason you cannot interface with a railroad and move a container (even with hazmat inside) on the North American Railroads. I don't know about you but I can figure out how to navigate between all of these features on the first try. It is simple because the seller wants the business and wants to get my cash as fast as they can and it is always before I have the goods or services! While it does take some investment to develop a Droid, Apple, BlackBerry, and Palm app to cover the SmartRailroading universe making it simple is part of capturing the shipper to easily interface with the railroad and know it is easy to do business with them. Large scale shippers are dealing with trucks, ships, railroads, and 3PL's to move their goods. The railroads need to remove the obstacle of having a hard to navigate interface to do business. A shipper should be able to order equipment, make appointments for a spot/pull, a drey, make a waybill, prepay the shipment, provide weights, hazmat information, and execute the transaction anywhere an antenna is available or dock their device from loading dock to office to transmit the data and receive confirmation. Likewise track and trace with shipment trip plan should be just as easy. The ability to look at financial transactions with the railroad should be just as easy as looking at my bank account in the middle of the mall. SmartRailroading-shipper satisfaction and faster cash flow a winning combination.

Railroads - Taking the "On-Time" Bug head on

Are you stuck by or running from the "on time" bug surrounding the Railroad industry? Read on - this article might just be on time for you.

Well, the every first quarter weather operating excuse is about out of the way for winter 2011 and in April it went out with a bang in Northern California and the Pacific Northwest with near record snows, rain, mudslides, and avalanches. The Northeast was no piece of cake with heavy snow in place for several months. The 400 plus tornadoes this month cause delays waiting out storms, electrical outages and debris littering the mainlines. So as we dry out and wait to see what the Mississippi is going to offer up and how flooded Fargo and area will be, we can get freight moving "on time" again. Have you done a study to see what the value of "on-time" would be for your railroad and customers? Do you have an on-time budget and a historical here is how we normally do budget? What is the delta between the two? If you are moving on-time how much more capacity do you have with locomotives, cars, crews, terminals, to handle more business from existing customers and attract new ones? With the price of diesel and growth in everything except housing now is the time for on-time? What can you do with pricing based on capacity and demand? How can you be more flexible for spot demand and long term demand? There are several ways to attack this opportunity-simulation of moving business over your network with your "ontime" plan and comparing your actual results. Looking at new blocking schemes, and schedules to move traffic over the network. Review operating priorities, setting new processes in place, rewarding on-time and safe performance. Getting the company word out about "on-time", talking with your customers about what on-time is for them and updating measurement systems. It takes comprehensive planning, communication, execution, and evaluation to produce a plan out there, go for execution, and make changes for the better. The other priority is to talk with your customers and see what is changing for them in the way of demand, production, days and hours of operations, to determine what the "new on-time" is for them and start the planning and scheduling process. This is never ending and if your organization is good at this, it is part of the culture and money in the bank. The opportunities are there, the support technology is available, so go for it!

Container Logistics (CFS & ICD) Market in India 2012

Netscribes (India) Pvt. Ltd. July 6, 2012 89 Pages - SKU: NBS4862870

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Add to Cart Abstract Table of Contents Search inside this report Related Reports Detailed Contents Countries covered: India The rise in containerized cargo traffic has led to the growth in CFSs and ICDs. Development of a dedicated freight corridor running across India is expected to be beneficial for CFS/ICD providers. Strong growth and high profit margins are acting as incentives for existing and new players to make large investments. The report begins with an introduction section, projecting the evolution of containerization globally as well as in India. It then shows the value chain in the logistics market and the container logistics market. Market overview section provides a brief snapshot of the Container Logistics Market. This section includes the market size of the container logistics market in India in terms of container cargo traffic in 12 major ports in India, demonstrating the forecasted growth over the period FY2011 - FY2016. The section then gives a snapshot of the market in the three container logistics segments. This section also shows the current scenario of the container logistics infrastructure and the estimated investment needed in it by 2020. Further this section maps the major

maritime states & ports in India and highlights the ICDs in India. It then points out the ICDs/CFSs operations followed by their functions and benefits. Pre requisite & regulations section deals with the set up requirements ICDs/ CFSs in India followed by regulations for approval of ICDs/ CFSs and the archaic legislation attached with it. Further, export & import procedures through ICDs and CFSs are also explained. Government initiative section emphasizes on the investment in logistics infrastructure, container terminal privatization, logistics support at JN Port Indias largest container port, planned investment on projects at JN Port till 2019-20, future expansion projects at JN Port and projects in progress at JN Port. Foreign investment section points out the channels of entry in India for the foreign investors, some recent inbound M&A transactions and joint ventures in India in container logistics sector. Subsequently, the pros & cons for foreign investors in storage based segment such as CFSs / ICDs are also shown. Market Influencers section in the report provides a comprehensive set of factors which boosts and hinders the growth in the market. An analysis of the section brings forth the key drivers fueling growth in the market including growth in containerized cargo, improvement in custom clearance activities, higher margins in comparison with other logistics activities, and construction of dedicated freight corridor. While the challenges identified comprises of high costs entailed for the development of a facility and archaic procedures for the movement of containerized cargo. Improvement needs at dry ports section highlights the development requirements at the dry ports i.e. ICDs and CFSs in India. The competition section profiles the major players in container logistics market in India in details within the report which enables readers to get a clear picture of the current competitive scenario. The section lists the basic details of the players such as corporate information, business highlights and key members. The section also features financial analysis of key vendors which in turn provides us with the financial health of players. The strategic recommendations section highlights the opportunities of the investors in container logistics sector in India in the current scenario. It provides investment recommendation for investors and recommendations for foreign investors while entry.