SER­VICES TAI­LORED TO CUS­TOMER NEEDS

Maritime Gateway - - Contents -

STEVE FELDER, MAERSK MD FOR IN­DIA, SRI LANKA, BANGLADESH, NEPAL, BHUTAN AND MAL­DIVES

“We strongly be­lieve in the In­dia growth story and will con­tinue to in­no­vate our ser­vices around the evolv­ing needs of In­dian cus­tomers,” as­sures Steve Felder, Maersk Man­ag­ing Direc­tor for In­dia, Sri Lanka, Bangladesh, Nepal, Bhutan and Mal­dives, as he touches upon In­dia’s strong con­tainer­ised trade in the first half of 2018 and the impact of cab­o­tage re­lax­ation

Q In­dian govern­ment has come up with a new Cab­o­tage pol­icy. What op­por­tu­ni­ties do you see here? A We wel­come the re­lax­ation of cab­o­tage leg­is­la­tion in In­dia. Cur­rently, around 30 per cent of In­dian con­tainer traf­fic is tran­shipped at ports out­side In­dia, and 78 per cent of cargo orig­i­nat­ing from or destined to the East Coast of In­dia is tran­shipped at ports out­side In­dia. The re­lax­ation of cab­o­tage reg­u­la­tions will help to at­tract more con­tainer­ized cargo by re­duc­ing time and cost for main­line ves­sels, thereby en­sur­ing that In­dian ports can com­pete eq­ui­tably for tran­ship­ment cargo. This will also aid in free­ing up rail and road re­lated con­ges­tion. Q How has been your ser­vice con­nec­tiv­ity to the east coast of In­dia? How is the cargo growth on this coast? A The port net­work on the east coast is more dy­namic than on the west coast. The net­work on the west coast is fairly set­tled as the ma­jor ports are quite clear. On the east coast, there is a trend away from Chen­nai -which has be­come con­gested due to the city ex­pand­ing around it - into En­nore, Kat­tupalli and Kr­ish­na­p­at­nam. Sim­i­larly, there is an­other trend away from Kolkata to­wards Vizag. In ad­di­tion, Paradip and Dhamra are also emerg­ing and there is a tran­ship­ment port be­ing de­vel­oped at Vizhin­jam to com­pete with Colombo. With the new cab­o­tage re­lax­ation law, we will see an in­crease in the im­port ex­port trade in the eastern and south­ern re­gion of the coun­try. As the mar­ket grows, it will make sense to de­ploy more di­rect ser­vices to the east coast. It is all go­ing to be mar­ket-led and it will take time. Q You have come up with store door ser­vice across In­dia? How has been the re­sponse? A Our cus­tomers have in­di­cated to us that they pre­fer to deal with fewer ac­tors in the sup­ply chain, thereby simplifying their busi­nesses. We are well equipped to ex­tend our of­fer­ing to in­clude in­land de­liv­er­ies, which has been well re­ceived by our cus­tomers. As an ex­am­ple, we have re­cently launched an end-to-end ser­vice of­fer­ing in Kak­i­nada, which is strate­gi­cally lo­cated close to Amar­a­vati. This will add to our hin­ter­land cov­er­age for re­gions such as Ra­jah­mundry, Bhi­mavaram, and Hyderabad. This will have a di­rect bear­ing on rice farm­ers and grow­ers in the re­gion that would ben­e­fit from the ease that it brings and makes cus­tomers com­pete suc­cess­fully in key ex­port mar­kets like Europe, Mediter­ranean, Mid­dle East and the United States. Q In­dian trade with North Amer­ica has reg­is­tered dou­ble-digit growth in 2017. What are the rea­sons for this growth? A In­dia’s ro­bust trade per­for­mance in 2017 re­flects the eq­uity the coun­try en­joys with its trade part­ners glob­ally. As the lo­cal mar­ket sta­bi­lizes fur­ther, we ex­pect to see more of such wins in near fu­ture, and are look­ing for­ward to par­tic­i­pat­ing in – and in­deed en­abling – the In­dia growth story. Also, as per our Trade Re­port Q1 2018, In­dia’s over­all reefer cargo trade growth wit­nessed a strong in­crease by ex­ports of phar­ma­ceu­ti­cals to North Amer­ica. Q Maersk has been very proac­tive in reach­ing out to Nepal? What are your plans for the Nepal mar­ket? A We have opened our new com­mer­cial of­fice in Nepal to fa­cil­i­tate the ease of do­ing busi­ness there. The es­tab­lish­ment of a fullfledged of­fice serves as a great op­por-

tu­nity to cater bet­ter to our cus­tomers by im­prov­ing sup­ply chain ef­fi­ciency and ex­pand­ing our foot­print in the mar­ket. We have also in­tro­duced the Kathmandu Ex­press - a block train to Bir­gunj (Nepal), which has de­par­tures ev­ery other day. The Nepal econ­omy has tremen­dous po­ten­tial and we will con­tinue to in­vest in this mar­ket.

Q What are the plans for in­vest­ments in the land-side in­fra­struc­ture?

A In­dia is blessed with im­pres­sive de­mo­graph­ics both in terms of the large young pop­u­la­tion and the up­com­ing work­force. The fo­cus that the cur­rent ad­min­is­tra­tion has on in­fra­struc­ture is very im­por­tant. We are as a com­pany, a very sig­nif­i­cant global player in con­tainer ship­ping, in lo­gis­tics and ports. We re­cently in­au­gu­rated our first state-of-the-art cold stor­age ware­house in Chen­nai, which will en­sure re­li­able and sta­ble trans­port of cargo, in­clud­ing goods such as fish, fruits, medicines, and spe­cialty chem­i­cals, which re­quire strict tem­per­a­ture con­trol through­out the sup­ply chain. Apart from that, we own stakes in 76 ports around the world which in­cludes two in In­dia. We be­lieve in­fra­struc­ture is key to eco­nomic growth and we will do what we can to de­velop in­fra­struc­ture in In­dia by in­vest­ing in ports, in in­land ports, and in­land con­tainer de­pots (ICD) to fa­cil­i­tate the de­vel­op­ment of lo­gis­tics in­fra­struc­ture

Q A lot of reefer ser­vices have been in­tro­duced by Maersk, con­nect­ing In­dia to Mid­dle East, Rus­sia and even Africa. How is the mar­ket re­sponse?

A In In­dia alone, the de­mand for re­frig­er­ated prod­ucts has been grow­ing at 18 per cent in the past years, and a sim­i­lar trend is ex­pected in the time to come. The cold chain in­dus­try in In­dia is ex­pected to dou­ble over the next 5 years. Maersk is well ahead in un­der­stand­ing and of­fer­ing spe­cial­ized cold chain ser­vices and thus cater­ing for the grow­ing mar­ket de­mand. The last few quar­ters have been quite in­ter­est­ing. We have had the first ever ex­port of Kin­nows from Sonepat, Haryana to Novorossiysk in Rus­sia; the first-ever ship­ment of ba­nanas and pomegranates from Kr­ish­na­p­at­nam in Andhra Pradesh to Dam­mam and Jed­dah in Saudi Ara­bia; and de­but ship­ments of pa­payas from Man­ga­lore in Kar­nataka to Jebel Ali, UAE. Our Re­mote Con­tainer Man­age­ment (RCM) for reefers has taken off well in In­dia, with al­most 100 cus­tomers sign­ing up. It pro­vides real time vis­i­bil­ity of the tem­per­a­ture, ven­ti­la­tion and air flow. One can say that the last few months have seen quite a few mile­stones for us in serv­ing cus­tomers in In­dia.

Q Re­cently we have been wit­ness­ing tar­iff wars among big coun­tries like USA and China. Does this af­fect trade in this re­gion in any­way?

A En­abling and pro­mot­ing trade is an in­te­gral part of our busi­ness and it con­trib­utes to pros­per­ity and de­vel­op­ment, glob­ally and lo­cally. While the scope of the pro­posed tar­iffs will pos­si­bly impact a few per­cent of US im­ports, there is no doubt that the in­tro­duc­tion of fur­ther as well as coun­ter­vail­ing mea­sures will harm global trade and in­crease pro­duc­tion costs in im­pacted coun­tries. Hence, we cau­tion any such de­vel­op­ment.

Q How have been the freight rates in first-half of this year? What are your ex­pec­ta­tions for the re­main­ing part of the year?

A If you look at the de­vel­op­ments that have taken place in the last 6-8 months, the fun­da­men­tals are much health­ier than they have been in a long time for the in­dus­try. The wave of con­sol­i­da­tion is en­abling lines to re­duce their unit costs, ex­pand port cov­er­age and har­ness syn­er­gies with the avail­able ca­pac­ity. Sec­ondly, de­mand has been much stronger than in the pre­vi­ous years. The global econ­omy is look­ing up, with the growth be­ing wide­spread and not just in pock­ets.

Q Global con­tainer de­mand is said to have slowed down in Q1 2018 as com­pared to the strong growth rates recorded in 2017. How do you an­a­lyse this drop-in de­mand?

A In­dia’s con­tainer­ized trade with the world has en­joyed a spir­ited uptick in the first quar­ter of 2018, as it beat the coun­try’s past per­for­mance in ex­port-im­port growth over eight quar­ters. Im­ports wit­nessed a ma­te­rial in­crease of 16 per cent, with ex­ports also grow­ing at a healthy pace of 7 per cent. To­gether, they led In­dia’s trade to a strong start this 2018. These num­bers be­come more rel­e­vant when viewed through a global lens. They are sig­nif­i­cantly higher than es­ti­mated global con­tainer­ized de­mand growth of 3-4 per cent. The first quar­ter has been a fairly con­struc­tive pe­riod for ex­port growth as well. As the ef­fect of pol­icy shifts faded and the in­flow of GST re­funds be­gan, it cre­ated sur­plus cap­i­tal in the hands of lo­cal man­u­fac­tur­ers. The mar­ket was fur­ther buoyed by a weaker ru­pee, which in turn in­creased In­dia’s ex­ports to the world.

Q The Maersk in­terim re­port men­tions that “fo­cus will over the com­ing years be on grow­ing the non-ocean part of the busi­ness dis­pro­por­tion­ally to the Ocean busi­ness.” Could you please ex­plain this strat­egy?

A It is our goal that we as a fo­cused trans­port and lo­gis­tics com­pany can grow. At the same time, we want to be a di­verse com­pany. We will achieve that by in­creas­ing and grow­ing the part of the trans­port and lo­gis­tics busi­ness which are in­de­pen­dent of freight rate de­vel­op­ments. There­fore, at the same time as grow­ing earn­ings in the rev­enue seg­ment, we need to grow earn­ings in lo­gis­tics and ser­vices dis­pro­por­tion­ally more. We have al­ready launched many good ini­tia­tives, which we can be proud of, for ex­am­ple Trade Fi­nance and Twill (our dig­i­tal for­ward­ing com­pany).

Q Maersk has an­nounced to im­ple­ment sev­eral short-term ini­tia­tives to im­prove prof­itabil­ity. Your com­ments?

A In gen­eral, there are two trends. One is to con­tinue to digi­tise the cus­tomer ex­pe­ri­ence. That means a cus­tomer can get a rel­e­vant quote on­line, book on­line, sub­mit ship­ping in­struc­tions on­line, print Bill of Lad­ing in his of­fice, get de­liv­ery or­der on­line, down­load in­voices, make pay­ments. So to­day there is the pos­si­bil­ity to in­ter­act dig­i­tally through­out the process. We will con­tinue to evolve that. The sec­ond part is global trade digi­ti­sa­tion. This is more at a macro level. We have started a divi­sion called global trade digi­ti­sa­tion where we are look­ing to part­ner with sup­ply chain ac­tors, in­clud­ing author­i­ties, on how to digi­tise sup­ply chain in­ter­ac­tions. To­day we still have paper doc­u­ments float­ing around, the need for stamps, etc. The aim is to digi­tise as much of that as pos­si­ble. It is a broader plan be­cause it in­volves work­ing with not just cus­tomers but also with the author­i­ties. Here a thing like blockchain be­comes rel­e­vant in terms of se­cu­rity and an or­derly trail.

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