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.

Cargo Talk - - Front Page - KAL­PANA LOHUMI

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)

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