What 2016 brings for the logistics industry
While 2015 was a year of cheers and tears, 2016 will be a year of emerging trends. Industry players are hoping for a global economic boom and expect the domestic market to grow more.
India is in a very promising situation. The ‘Make in India’ project will work and give a boost to the logistics industry I hope 2016 brings good things for the sector because the PM’s ‘Make in India’ project is going to change the industry
We need to have more innovation and state-of-the-art technology because 2016 is going to require a lot of hard work The new civil aviation policy will definitely bring cargo on the world map. We expect our business to grow
The government has also taken an initiative to decongest the airport by building air freight stations across the country
We experienced the same decline in export tonnage. Fortunately, imports were at the same level which helped us achieve the targets
In 2015, there was improvement in the logistics infrastructure which is actually contributing to the emergence of India as a manufacturing hub, feel the veterans. But the adverse global economic situation did make the second half of 2015 a little tough for the sector. All in all, 2015 was a mixed bag.
On the cheery front, the increasing number of e-commerce players has contributed to the growth of the logistics industry players. In the skills’ area, the government adopted the concept of imparting skills in movable containers to provide skills in specific courses such as logistics, tourism, to name a few.
Ministry of Civil Aviation with the support of industry stakeholders also launched a basic one-day awareness programme. Infrastructure for education, training and research is needed to ensure availability of talent and skilled workforce to bring in efficiency and innovation in the sector.
The government has been proactive in 2015. And hopefully in 2016, more action will be seen on important issues. The logistics sector associations and other stakeholders have given a list of concerns to the government, in connection with the draft civil aviation policy.
To revive the Indian maritime sector, there is a need to simplify the taxation regime in the shipping industry. The passage of the long awaited GST bill will divide the burden of tax between the manufacturing and services sectors, besides promoting more exports and creating more employment opportunities. CARGOTALK spoke to some industry veterans to know what they are expecting in 2016.
SL Sharma, Immediate Past President, ACAAI feels that despite the slowdown in the industry due to global reasons but there was improvement in the country. “The new civil aviation policy will definetely bring cargo on the world map. We expect our business to grow. The GDP is growing and our economy is growing. Most importantly, in the global market now India has marked its presence. The government is also positive about cargo development and taking initiatives in infrastructure, tax matters, EDI, ease of doing business, to name a few. New trends would be updated technology and upgrading yourself too! In the next few years our industry will grow, as the government is paying attention to the needs of the sector. All these initiatives give a boost.”
Vipin Vohra, Chairman & Managing Director, Continental Carriers & Convenor, FFFAI found the 2015 was a little slow for the industry. “We saw the case with commodities that travel by air like textile out of Delhi, pharma, handicrafts and auto parts, to name a few. Textile was down by 22 per cent which badly impacted the air freight industry. Certain airports like Mumbai are doing pretty well because Mumbai airport handles pharma and the pharma business has picked up. Overall, 2015 was not a good year, ups and downs were there.”
But even then he feels that 2016 will be a good year. “The way government is thinking about ‘Make in India’, business is definetely going to increase. Now the only question is, how long it will take. Will it be one year or two year? But the moment production will start, logistics industry will get a big boost. The future seems bright. The government has also taken an initiative to decongest the airport by building air freight stations across the country. This concept will change the complete scene of cargo in India. Once there will be more AFS across the country, then the agent will be able to give pallets ready for carriage from the airport,” he adds.
Ramesh Mamidala, CEO, Celebi Delhi Cargo Terminal Management, said that exports had negative growth of close to 25 per cent . “Year-on-year it should be in the range four to five per cent. We experienced the same decline in export tonnage. Fortunately imports were at the same level which helped us to achieve the target. We roughly expect the same trend in 2016 as 2015 but we do expect a turnaround in the export business. This is the feedback we got from airlines and our analysis is coming to the same conclusion. Recovery in the third quarter and stability in imports are expected,” adds Mamidala.
Pukhraj Singh Chug, Managing Director, Group Concorde opined that “the cargo industry is evolving but the economic situation worldwide has not been good”. So he perceives many challenges. “The second half of 2015 was tough. But the trade has to grow and India is in a promising situation. The ‘Make in India’ project will give a boost to the logistics industry,” says Chug.
If the demand picks up globally, every aspect of our business will pick up, be it road transport, air freight, ocean freight and rail We have seen new trends like lots of import moving in and foreign companies are looking to invest in India To make the Indian shipping industry attractive and competitive the government needs to work on infrastructure
The year 2015 was a dicey one and the trend will continue till the third quarter of 2016. We will see a boom in the fourth quarter We still have to see how Europe reacts in terms of growth and how China will be dealing with foreign exchange, but the US will grow
The year 2015 was under pressure but the industry sailed through. Logistics will grow and I am looking forward to 2016
Vineet Chadha, Managing Director, Combined Logistics also felt that 2015 was not a good year. He goes on to say, “If we talk about different industries and different modes of shipments, being a neutral freight forwarder, air freight was pretty down, sea freight was also down. But altogether there are big projects to carry by ocean which were able to make the sector sail on a safer side. I hope 2016 brings good things to cargo because the Prime Minister’s ‘ Make in India’ project is definitely going to change the face of the industry.”
Sanjiv Edward, Head - Cargo, DIAL elucidates, “In 2015, the first six months were great after that it was a bit challenging. If we look at the Delhi airport we have done well, especially imports and domestic cargo have been excellent due to e-commerce but the exports were a challenge across the country. We need to have more innovation and state-of-the-art technology because 2016 is going to require a lot of hard work to sustain. The domestic and e-commerce segments will grow but the international business will have some pressure.”
Even Naresh Gehnaney, Vice President-Air Freight (India), Haiko Logistics found 2015 a dicey year. He expects this trend to continue till the third quarter of 2016. “We will see a boom in the fourth quarter and then we would be moving ahead in the right direction. GST is expected to get implemented in 2016 but the only question is whether GST is going to tabeled in Rajya Sabha this time or not. But if it comes up it is going to be a boom for the industry and things will definetely move in a right direction.”
Shubhendu Das, Managing Director, Hellmann Worldwide Logistics, says, “I would say there were some good wins and some not so good wins. Exports has not shown any bright colours. But if you are in a global network, you can work out with imports because imports are growing in India. So, I would say exports are going down and imports are at the same level.” Adding to this, Das says, “We still have to see how Europe reacts in terms of growth and how China will be dealing with foreign exchange, though I am confident US will grow. So, overall I am optimistic about growth of cargo industtry in 2016.”
Mahesh P. Trikha, Managing Director, Aargus Global Logistics feels that the industry was under pressure in 2015 but the GDP news is good, that is seven per cent. “The global economists say India can do nine per cent and we would be trying to do the same.”
Yashpal Sharma, Director, Skyways Group opines that the world has seen some difficult times in 2015. “But if a company evolves in this phase, the tough ones get more opportunities to establish themselves. Any company which can survive in this period can sustain itself. We are looking forward to 2016. The percentage would be different but every aspect will get a boost,” he asserts.
Ravinder Katyal, Director, Uti says, “I would rate 2015 as a nominal year but the future is bright. We are in a process of implementation of ‘ Make in India’. We have already seen lots of new trends like lots of import moving in and foreign companies are now looking for investment in India. We have to give time to the government to function and logistics will grow.”
Ravindra J. Gandhi, Regional Director–Indian Subcontinent, Peel Ports Group, finds that the prospects of the shipping industry are closely tied to global economy. “The Indian shipping industry has not grown as one would wish. Despite the uncertainty and the major cost pressures, we remain optimistic,” reiterates Gandhi.
Adding to this, Gandhi comments, “As a part of the ‘Make in India’ programme, the government has approved 88 projects involving investment of 380 billion over the last three years.
While the government has already started construction of new berths and terminals along with expansion and upgradation projects for berths, it would be interesting to see how the projects pan out in 2016.”
Manish Malik, National Sales Manager, Freight Systems (India) says, “The year 2015 can be rated as a productive year with e-commerce continuing its influence over supply chain industry, the falling prices of oil kept the freight levels in control, logistics and supply chain companies had their focus on technological advancements which relates well with desired demand for supply chain solutions. Indian logistics market is expected to grow at a CAGR of 12.17 per cent by 2020 and it is driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors.” But what is needed is effective functioning. Among the challenges and issues, “the warehouse market in India is expected to grow at a CAGR of 10 per cent whereas freight forwarding market is expected to grow at a CAGR of 12 per cent till 2020. This growth rate is based on the expectation that the new government will implement GST regime and the logistics companies can optimise their operations to reduce cost,” adds Malik.
It is an era of customer delight. We, as logistics companies, have a huge task to surpass expectations and add value to the supply chain Improving domestic economy has encouraged many foreign firms to set up their manufacturing base in India
Most feel that the boom in the e-commerce sector and expansionary policies of the FMCG firms has helped the logistics sector. This has increased the service geography of the logistics firms as they also have to meet the demands of quick delivery and tight service level agreements. So, e-commerce was the bright ray in 2015.
Akash Bansal, Business Head, Om Logistics, opines, “Rise of e-commerce logistics, ‘ Make in India’ campaign and increased domestic consumption has changed the trend for the industry in the coming years. e-commerce logistics industry in India expected to reach over US$2 billion by 2019. Improving domestic economy has encouraged many foreign firms to set up their manufacturing base her which in turn has given a boost to the industrial and logistics segments, which saw a 60 per cent growth in H1 of 2015. According to a research report around six million sqft was taken up by warehousing space occupiers, a growth of nearly 60 per cent from January-June 2014.” All in all, the experts feel that India’s logistics sector is poised for accelerated growth, led by GDP revival, ramp up in transport infrastructure, e-commerce penetration, impending GST implementation, and other initiatives.
Pukhraj Singh Chugh Managing Director Group Concorde
Vineet Chadha Managing Director Combined Logistics
Sanjiv Edward Head - Cargo DIAL
Ramesh Mamidala CEO Celebi Delhi Cargo Terminal Management
SL Sharma Immediate Past President ACAAI
Vipin Vohra Chairman and Managing Director Continental Carriers & Convenor, FFFAI
Ravindra J. Gandhi Regional Director – Indian Sub-Continent Peel Ports Group
Ravinder Katyal Director Uti
Yashpal Sharma Director Skyways Group
Shubhendu Das Managing Director Hellmann Worldwide Logistics
Naresh Gehnaney Vice President-Air Freight (India) Haiko Logistics
Mahesh P. Trikha Managing Director Aargus Global Logistics
Akash Bansal Business Head Om Logistics
Manish Malik National Sales Manager Freight Systems (India)