Service providers gearing up with cautious optimism
Though presently sluggish, India is an emerging market for the automobile industry. However, are the 3rd party logistics service-providers in this country ready to cater to the demand from this sector?
Cargotalk presents the perspective of leading logistics service-providers in the automotive sector.
recent reports reveal that twowheeler market will be the only segment to register marginally positive demand growth in the near term. The sales of two wheelers have increased by 18 per cent in September and October 2013. Reports also unveiled that the auto component industry has been hit hard, except for the two-wheeler segment. The commercial bus and truck segment has suffered the most with sales falling 32 per cent yearon-year in October to 14,261 units. The segment has been seeing negative sales for the past 20 months.
However, from the long-term perspective, India would be the lucrative market for automobile/ automotive manufacturers and logistics serviceproviders for the same. Projections say India will be the world’s 3rd largest automotive market by 2016 ahead of Japan, Germany and Brazil, riding on its domestic automotive sales. According to IHS Automotive, a global market information provider, though the economic growth vulnerability and lower sentiment resulted in the market slowdown in 2012 and 2013, India is expected to regain strong growth trend from 2014 onwards.
“Yes, we are facing the pinch of the present slowdown prevailing in the market. The only growth is visible from twowheeler segments,” said Vipul Nanda, MD, Mercurio-Pallia, the leading name in the automobile logistics arena. According to him, thanks to new product ranges added to the company’s account, they have not seen any slide in performance. Commenting on the revival of the market, he said, “We are all waiting for the Parliament elections in the country due to take place next year. Till then, we will have to wait and watch. I think the period from January to March 2014 would be a very critical time for the entire industry,” he observed.
According to Nanda, an early implementation of GST would be the game-changer for the logistics industry. After introduction of the proposed GST, the company is expecting a quantum jump in long-haul goods movement in the country. To tap the logistics and warehousing market in post-GST era, the company has decided to launch ‘Car Compounds’ to cater to the demand of car-storage in different regions in India. The first one is likely to be either in East or North India.
Mercurio-Pallia is also planning an expansion of its operational area globally, initially with South and South-East Asian countries viz. Nepal, Bangladesh, Thailand, Indonesia and Vietnam. Already, the company has a liaison office in Singapore to explore business opportunities in that region.
Policy Framework & Customers’ Expectations
According to Areef Patel, Executive
We are facing the pinch of the present slowdown prevailing in the market. The only growth is visible from two-wheeler segments” Vipul Nanda Managing Director Mercurio-Pallia
Vice-Chairman, Patel Integrated Logistics, though India is emerging as a market for the automobile industry, the government duties/ levies issues need to be ironed out, if India is going to become a hub for this business. Moreover, the trucking industry, which has shown nearly double-digit growth for several years now, has slowed down for the past couple of years. The slowdown is due to the fact that the Indian automotive sector has not been able to keep pace with customer expectations. “The opportunities are tremendous, but if India can really gain from them is yet to be seen,” he said.
Patel Integrated Logistics is concentrating on direct to-and-fro services to all major markets with special focus on automobile manufacturing hubs like
Customers today are ever-demanding, very cost-conscious and want the best in quality & services from the logistics provider” Areef Patel Executive Vice-Chairman Patel Integrated Logistics
Pune, Chennai and Gurgaon. “We are also quickly ramping up our delivery centres to cater to the ever-expanding spare-parts sector. The idea is to provide just-in-time services, which is the need of the hour, and is being implemented across the automobile industry,” Patel added, informing that the company is currently covering nearly 80 per cent of the market.
“Customers today are ever-demanding, very cost-conscious and want the best in quality & services from the logistics provider. One should study the customer’s requirements correctly, should be flexible and provide a solution which fits his needs,” Patel pointed out.
Akash Bansal, Head-Logistics, Om Logistics, a core player for automotive
All 3PLs are ready to customise their network and deliverables to what is expected by the customers” Akash Bansal Head-Logistics Om Logistics
logistics, observed that Indian 3PL organisations in India are also gearing themselves to cater to the demanding need of the automotive sector. Though there are many challenges, but the organised 3PL industry in India is all set to bring in all possible improvements and are also ready to take up any innovative changes as it is a customer-driven market. “All 3PLs are ready to customise their network and deliverables to what is expected by the customers,” he said.
“We at Om Logistics are ready to adapt to any possibility that comes to us from our customers, which can be a win-win model. We try to incorporate best practices from our global partners and also from our customers to enhance our deliverables,” he added. He stressed that Om Logistics provides a single-window solution to all the elements of supply chain, i.e. road, train and air transportation and a comprehensive 3PL management which provides its customer with a singlesolution provider concept for all elements of their value chain.