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

Cargo Talk - - View Point -

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,

DACAAI

Ga­gan­deep S Klaire Di­rec­tor, Mar­ket­ing, Majha

Trans­port

Srinivas Sat­ti­raju

CEO, Delex

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