Complete solution is the key
The domestic cargo industry needs more support from the policy-makers, and particularly from facilitators. Of late though, the cargo infrastructure is being modernised and more state-of-the art facilities are being created by the air cargo terminal operat
The domestic cargo operators are witnessing a gradual change in the way cargo movement happens in India. More and more companies are looking for value addition in the transportation system. “We see some large companies actively pursuing a total revamp of their distribution models, reorganising the current transportation setup by eliminating multiple distribution centres and moving towards direct distribution from regional distribution centres-probably a step towards post-GST readiness,” said Srinivas Sattiraju, CEO, Delex.
Besides the reorganisation of distribution set-up, the industry is also witnessing some key value additions like specialised packing, use of temperature-controlled boxes and RFID in package-tracking. “These, and many other solutions for the movement of time-sensitive and critical cargo, are gaining importance, and we at Delex are actively moulding ourselves to match customer requirements by redesigning our internal operations strategies and system upgradations. Besides, we are also adopting to the new VAS trends of some of our major customers,” added Sattiraju. According to him, these value-additions to customers from service providers ensure long-term partnership for mutual benefit, and is good for the industry as well.
“Every customer we engage with has unique requirements and they are dynamic in nature. We have to be in tune with the changing consumer trends. So the challenge we see is to quickly alter course and adapt processes that suit customer requirements. It puts us in a continuous learning mode. Besides, most of such new process requirements do not come with additional cost approvals, but at the prevailing cost. This means we do not have to be on constant overdrive to innovate processes that the customer needs,” he pointed out.
“Due to high interest and cash-flow problems being faced by some of our customers (which has an immediate effect on us), we have been constrained from increasing fleet in view of the pick-up in demand. Over the last one year, the new fleet addition has been negative. Also, as more and more customers are demanding single-window logistics solution providers, we are facing challenges for setting up other infrastructure facilities apart from trucking,” added Gagandeep S Klaire, Director, Marketing, Majha Transport.
Providing the air cargo perspective, Suraj Agrawal, Director, Monopoly Carrier & Cargo and Vice President, DACAAI, said that after the grounding of Kingfisher Airlines there was a space shortage in domestic cargo, specially on premium flights. Carriers had increased rates under FSC and other charges like AWB fees and surcharges. Airport charges
is another factor which has affected the air cargo business adversely.
Present market Scenario
According to Sattiraju, with the rupee falling and US economy looking up, there is scope of growth of the export market with the downtrend in the domestic consumption (as experts say). As a result, Indian domestic logistics market is likely to be affected, in addition to the adverse affect on operating costs and margins, because of the impact of fuel price increase.
Klaire, pointed out that the extra capacity (supply of vehicles) created during the last two quarters of the recession in India has just started being utilised. Because of this additional capacity, the freight rate was not moving upwards in spite of increase in fuel prices and other costs. However, as the extra capacity has already been created and new vehicle orders are not being placed by truck operators (whereas old depreciated vehicles are being phased out), it is likely by the end of fourth quarter we can see a scarcity in trucking capacity resulting into mismatch in demand and supply. “If there is an improvement of our economy, then this will further aggregate the pressure on existing trucking capacity. Already, white and agricultural goods are looking at increasing freight rates. The existing demand, which was met by imports, is shifting towards domestic procurement due to depreciation in the rupee,” he observed.
“Increasing costs, falling service level, duplication of tax like TDS, service tax only on air cargo and absence of government policy to monitor the same, are the serious concerns before us,” Agrawal maintained.
Appeal to policy makers and facilitators
To streamline domestic cargo movement for the greater benefit of the country’s economy, Sattiraju urged for implementation of uniform transit documentation for all cargo movement across the country. “Today, we have better IT solutions to replace different forms with some better tax-tracking systems,” he said. He also recommended better, ‘future-ready’ design for building a robust infrastructure for logistics operation. “Have a better tax system for trucks and air cargo, so that there are no multiple check-points to collect toll fee, entry fee, handling fee and the like, complicating the cost structures. It just confuses the end users of services, besides pushing up overall costs,” he emphasised.
In Agrawal’s opinion, industry stakeholders should think seriously about how to improve services. “The government has formed the Air Cargo Logistic Promotion Board under the Ministry of Civil Aviation. We expect it should work under time-frames and give equal importance to the demand of domestic air cargo. The government should also put down guidelines for carriers by introducing a regular monitoring system.”
“There has been unnecessary delay in implementation of GST. Because of this, the individual tax barriers are still there and valuable time is wasted on road. Secondly, though roads infrastructure is steadily being built for faster and smoother movement of trucks, the toll barriers are being run inefficiently, resulting in wastage of time at each barrier,” highlighted Klaire. He also pointed out that the new Motor Vehicle Act is still awaited and implantation of Carrier Act. 2007 is still being resisted at the state level. Though insurance companies have been very pro-active in spheres such as health, life, car, and establishments, but availability of options for trucking industry has not been worked out yet by them. “The government should put serious thought to resolve these pressing issues,” he appealed.
Suraj Agrawal Director, Monopoly Carrier & Cargo and Vice President,
Gagandeep S Klaire Director, Marketing, Majha