Cargo talk SOUTH ASIA’S LEADING CARGO MONTHLY No.1 in Circulation & Readership SEPTEMBER 2012 Postal Reg. No.: DL (ND)-11/6002/2010-11-12. WPP No.: U (C)-272/2010-12, for posting on 25th-26th of advance month at New Delhi P.S.O. RNI No.: DELENG/2003/10642 Date of Publication: 22/8/2012 Vol XII No.10 Pages 68 Rupees 50 cargotalk.in By DDP Publications PRESENT SCENARIO OF PORT INDUSTRY IN INDIA: A DELOITTE STUDY CUSTOMS CLEARANCE ON 24X7 BASIS becomes a reality GMR IGI AIRPORT AWARDS to outstanding performers ROLE OF SUPPLY CHAIN INDUSTRY to cope up with economic slowdown International trade from Indian Ports Capacity building needs to be complemented by industry-friendly policy
Transcript
CargotalkSOUTH ASIA’S LEADING CARGO MONTHLY
No.1 in Circulation & ReadershipSEPTEMBER 2012
Postal Reg. No.: DL (ND)-11/6002/2010-11-12. WPP No.: U (C)-272/2010-12,for posting on 25th-26th of advance month at New Delhi P.S.O.
RNI No.: DELENG/2003/10642 Date of Publication: 22/8/2012
Vol XII No.10Pages 68
Rupees 50cargotalk.in
By DDP Publications
PRESENT SCENARIO OF PORT INDUSTRY IN INDIA: A DELOITTE STUDY
CUSTOMS CLEARANCE ON 24X7 BASIS becomes a reality
GMR IGI AIRPORT AWARDS to outstanding performers
ROLE OF SUPPLY CHAIN INDUSTRYto cope up with economic slowdown
International trade from
Indian Ports Capacity building needs to be complemented by industry-friendly policy
cargo cover NEW.indd 1 8/29/2012 10:50:36 AM
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SEPTEMBER 2012
from the editor
Stepping towards a sea changeThe shipping and port industry in India is sailing through hope and distress. Despite huge coast line (7,500 km), cost-effective inland waterways and positive industry initiatives, gateway ports in the country often become chock-a-block. Shippers recurrently encounter harrowing experience at majority of Indian ports owing to paucity of space, poor management and cargo handling mechanism. Add to these, ambiguity in the government policies is reducing potential of some Indian ports (of becoming hub port in this region) to non-starters.
A recent study by Comptroller and Auditor General of India (CAG) also unveiled that cargo handling services at Indian ports were inefficient. Foreign carriers are reluctant to call at Indian ports because berths at the ports did not have dedicated facilities necessary for the quick handling of cargo. Since the average pre-berthing time on port account goes up to 23 hours and the average turnaround time varies between two to five days, foreign vessels gets diverted to neighbouring countries like Singapore and Hong Kong, where turnaround time is between four and six hours! Moreover, Indian ports are also suffering from inadequate drafts and poor connectivity with other modes and hinterland. The present Cabotage rule is also hindering the foreign vessels in calling at Indian ports.
On the other hand, high cost structures, different tariff setting frameworks for Major and Non-major ports, port security and land acquisition for capacity building, both at port and off-port areas are desisting private players to invest in port sector. The Ministry of Shipping is taking various steps to address these problems. However, there is a wide gap between the intent and action. Also, there is a serious lack of integration between various ministries and departments, resulting in unnecessary delay and cost escalation.
The Government of India has set a target to reach 943.06 million tonne and 815.20 million tonne marks at Major and Non-major Ports, respectively, by the end of 12th Plan, as against the present level of 560.15 million tonne handled by Major Ports and about 370.00 million tonne handled by Non-major Ports. However, it seems unrealistic unless a strong bond is created between policy makers and industry stakeholders. The proposed investment of Rs1,80,626.63 crore during 12th Plan would see red, if foreign large vessels find Indian ports commercially unviable. Hence, apart from capacity building and investment, the need of the hour is to bring in a sea change in the policy framework and mind set of policy makers from different ministries.
CARGOTALK is a publication of DDP Publications Private Limited. All information in CARGOTALK is derived from sources, which we consider reliable and a sincere effort is made to report accurate information. It is passed on to our readers without any responsibility on our part. The publisher regrets that he cannot accept liability for errors and omissions contained in this publication, however caused. Similarly, opinions/views expressed by third parties in abstract and/or in interviews are not necessarily shared by CARGOTALK. However, we wish to advice our readers that one or more recognized authorities may hold different views than those reported. Material used in this publi-cation is intended for information purpose only. Readers are advised to seek specific advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the readers’ particular circumstances. Contents of this publication are copyright. No part of CARGOTALK or any part of the contents thereof may be reproduced, stored in retrieval system or transmitted in any form without the permission of the publication in writing. The same rule applies when there is a copyright or the article is taken from another publication. An exemption is hereby granted for the extracts used for the purpose of fair review, provided two copies of the same publication are sent to us for our records. Publications reproducing material either in part or in whole, without permission could face legal action. The publisher assumes no responsibility for returning any material solicited or unsolicited nor is he responsible for material lost or damaged. This publication is not meant to be an endorsement of any specific product or services offered. The publisher reserves the right to refuse, withdraw, amend or other-wise deal with all advertisements without explanation. All advertisements must comply with the Indian and International Advertisements Code. The publisher will not be liable for any damage or loss caused by delayed publication, error or failure of an advertise-ment to appear. CARGOTALK is printed & published by SanJeet on behalf of DDP Publications Private Limited. and is printed at Cirrus Graphics Pvt. Ltd., B-62/14, Phase-2, Naraina Industrial Area, New Delhi – 110028 and is published from 72 Todar-mal Road, New Delhi – 110001.
Publisher SanJEEtEditorial DirectorrUPali naraSiMhanSr. assistant Editor ratan kUMar PaUlDesk Editor nEElaM SinghSub-Editor raMya J. S. D’roZariogeneral ManagergUnJan SaBikhiDeputy general ManagerharShal aSharregional Manager: Southk n SUDhEErregional head: north & west Shiv kUMarasst. Manager: westrolanD DiaSassistant Manager advertisingMUkESh gaMrEassistant Manager Marketingyogita BhUraniSr. Marketing co-ordinator gaganPrEEt kaUrDesignrUchi Sinhaadvertisement DesignervikaS ManDotiaProduction Manageranil kharBanDacirculation ManageraShok rana
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8 Sindhu Cargo ties up with SG Holdings
10 Customs Clearance on 24x7 basis becomes a reality
12 DHL express launches new service centre facility in Kanpur
14 Mahindra Logistics to go global through alliance
National News
15 Ahlers honoured at South East CEO Conclave & Awards 2012
News in Brief
16 Worldwide Flight Services appoints Jay Shelat in Cargo Terminal Services
18 Schiphol and China to start E-freight shipments from October
20 DWC witness 153 per cent growth in Q2 of 2012
International News
42 Indiaontime Express eyes domestic express market in a big way
44 Red Express launched to foray into express cargo business
Express Cargo
contents
DEPARTMENTS
46 ACCD gets new managing committee for 2012-13
48 DCCAA presents a spectacular evening for Annual Dinner
52 GMR IGI Airport presents awards to outstanding performers
52 FFFAI meets with WCO Secretary in New Delhi
54 CEVA Logistics launches ‘CEVA Mobile’ to track shipments’ location
Family Album
Product Launch
Present Scenario of Port Industry in India
Hike in Airport Charges: Delhi Airport to face consequences: IATA
Study Report
CEO Talk
56
66
32
International Trade from Indian PortsCapacity-building needs to be complemented by industry-friendly policyCurrently, 90 per cent by volume and 30 per cent by value of India’s international trade is performed through its ports. However, despite some significant initiatives by the Government of India and some private companies for creating capacity with a long-term goal, shippers often get stuck at Indian ports thanks to the lack of efficient port management, skilled man power and proper integration among allied organisations/ministries. Cargotalk spoke to industry practitioners and port association to highlight remedial measures for the greater interest of the country’s economy…
Cover Story 22
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29 Swisslog in India: Adding value to warehousing and distribution services
34 Airlines wise exim cargo performance from IGI Airport, Delhi for July 2012
35 Airlines wise exim cargo performance from CSI Airport, Mumbai for July 2012
Logistics Services
Role of Supply Chain Industry to cope up with economic slowdown
View Point
38
Air Cargo Operation: Enhancement of capacity and process is the key behind success
Guest Column
COLUMNS
SEPTEMBER 2012
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Sindhu Cargo Services, one of the leading logistics company in India, recently entered into a strategic alliance with SG
Holdings by fresh issue of 26 per cent equity share in the company. SG Holdings is one of the
major transportation companies in Japan and is the parent company of Sagawa Express.
Sindhu Cargo has been engaged into logistics business for over 25 years in the Indian market providing end-to-end customised logistics solutions. The company has a strong pan India presence through its network of 22 branches at all major airports, dry ports
(ICDs) and seaports, like Bengaluru, Chennai, Mumbai, Delhi, Kolkata, Hyderabad, Kochi and Tuticorin. Its services include custom brokerage, freight forwarding, transport and warehousing services. Sindhu is now expanding and
strengthening its business by further penetrating into expanding Asian markets.
SG Holdings provides various logistics services in 10 countries mostly in Asia. It offers surface, air and ocean transportation services; warehousing services; logistics services, such as inventory management, product inspection, storage, processing, picking, door-to-door delivery and payment collection services.
According to G Balaraju, chairman and managing director, Sindhu Cargo, with this joint venture, Sindhu Cargo and SG Holdings will complement each other’s strength to develop and augment growth in both domestic and international logistics arena. Sindhu Cargo with its expertise in Customs broking and international freight forwarding would harness SG Holdings’ proficiency and presence across Asia for developing markets in India and across the globe.
SiNDhU CARgO TiES UP wITh SG hOLdINGS
National NewsAlliance and Acquisition
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G Balaraju (right) with Eiichi Kuriwada, chairman & CEO, SG Holdings
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ThE 24x7 OPERATiONS wiLL BEgiN ON A PiLOT BASiS wiTh CUSTOMS OPERATiONS wiTh ALL OThER COMPLEMENTARy SERviCES
T his 24x7 facility is scheduled to be available from August 25 at Delhi, Bengaluru, Chennai and Mumbai airports. The four ports where this
facility would be available are Chennai, Kolkata, Kandla and JNPT, Mumbai.
The 24x7 operations will be available for certain categories of imports and exports. For imports, the category “No Assessment No Examination” will be covered. This would account for 70 per cent of imports. For exports, the facility could be extended to those exports that are not claiming benefits.
ì ExPANdING OPERATIONAccording to the PMO source, the 24x7 operations will begin on a pilot basis with customs operations with all other complementary services. Along with customs clearances, other government agencies such as the concerned port/airport authority, drug controller, FSSAI (Food Safety and Standards Authority of India), quarantine, etc., and private players such as custodians, CHAs (Customs House Agents), banks, transporters, etc., shall also have to work 24x7 to synchronise with the extended work hours. This would be initially for four months after which efforts would be made to expand similar operations at other locations.
The PMO decided that for smooth implementation of the 24x7 operations, the Commissioner of Customs concerned at these locations shall hold meetings with all stakeholders and additional staff required to start these operations shall be redeployed from existing resources. Secretary, commerce and the director general, foreign trade shal l a l so hold meet ings wi th other support agencies to facilitate and ensure 24x7 operations.
CUSTOMS CLEARANCE ON 24x7 BASISbecomes a realityin view of the fact that one of the major constraints for international trade has been the non-availability of customs clearance and other facilities at airports and seaports round the clock, the Prime Minister Office (PMO) has advised the Customs department to clear cargo on 24x7 basis, initially at four major seaports and airports in the country.
National News Government Policy
According to Rafeeque Ahmed, president, Federation of indian Export Organisations (FiEO), introduction of 24x7 Customs Clearance Operation will reduce transaction time and cost, and would help exporters to meet the stringent delivery schedule. while complimenting this decision of the government, Ahmed said that the exporting community had been requesting for this facility and implementation of the same will greatly help them in clearance of their import-export shipments. it will also lead to reduction of congestion at the ports and airports in india. According to him, india’s ranking will also improve as far as ease of doing business in india is concerned. Ahmed, however, urged that this facility shall be extended to all export consignments other than factory stuffed export containers and exports under Free Shipping Bills. “This trade facilitation measure will definitely encourage the exporters and india will be able to achieve the set export target,” said Ahmed.
ExPORTERS hAIL ThE mOVE
Rafeeque Ahmed
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National NewsNew Launches
R ecently, DHL Express opened a new Service Centre facility at Kanpur (UP). Inaugurated by Irshad Mirza, chairman,
Mirza International and Malcolm Monteiro, CEO, South Asia, DHL Express, the new facility is spread over 2,000 sqft with a capacity to handle a volume of close to 1,500 shipments a week.
Commenting on the new launch Monteiro said, “India is a key focus market for DHL Express and figures among the top five markets globally. For our business in India,
we are committed on enhancing our services and offerings by investing in infrastructure which means ground facilities, fleet and air capacity.” He also underlined that with the
new facility at Kanpur, DHL Express is now closer to the market around Kanpur. “DHL has been servicing clients at Kanpur over the last 30 years. The new service centre is a direct DHL operation facility which will improve service offering for international shipments leading to faster processing and reduced transit time,” he added. The new Service Centre will offer same day delivery for Unnao, Banthar, Panki, Jajmau and Chaubepur.
DHL’s customers in this region are mainly from leather and leather products, apparel and textiles, banking, and farm and industrial equipment sectors. “We are witnessing a double-digit growth in the Kanpur market and are strongly positioned in UP and Uttarakhand. We have a strong foothold in key cities including Kanpur, Allahabad, Lucknow, Jhansi, Farrukhabad, Gwalior, Shahjahanpur, etc. and the company will continue to invest in infrastructure.”
DhL ExPRESS LAUNChES NEw SERVICE CENTRE FACILITy
Ishad Mirza along with Malcom Monterio and RS Subramanian inaugurating the new service centre at Kanpur
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National NewsNew Initiatives
M ahindra Logistics, a well established logistics company in the domestic market, has decided to expand its
operation in the international market, through alliance with overseas companies. At present,
the company is evaluating several international players to partner with and grow this part of the business.
To make a foray into the international market, Mahindra Logistics (MLL) wants to partner with such players who support the issue of key lanes being developed, most importantly USA, Europe, South East Asia, China and Africa. MLL is considering venture
out for several Asian countries, including China, Indonesia and Thailand. This is part of its plan to gradually extend the 3PL solutions it provides beyond the borders of India and support new and existing customers with such solutions across the globe. This expansion will
focus on value added 3PL services to several large customers in these locations and will expand beyond that as well.
Mahindra Logistics Limited (MLL), a wholly-owned subsidiary of Mahindra & Mahindra, is a fully integrated third party logistics service provider and provides such solutions to companies across a diverse cross section of industries in India.
The foundation of Mahindra Logistics was laid in 2000 as a strategic initiative to enhance focus on logistics services to both internal and external customers. It was soon engaged in taking care of Mahindra’s complex supply chain needs including inbound and outbound logistics, inter-plant movement, warehousing, linefeed and value added services amongst other solutions. This supply chain expertise was then extended to other customers spanning various industry verticals.
MAhiNDRA LOgiSTiCS TO gO GLOBAL ThROuGh ALLIANCES
(L-R): Zhooben Bhiwandiwala, EVP, Group Legal, Mg Partner, Mahindra Partners Division and Pirojshaw Sarkari, CEO, Mahindra Logistics
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A hlers India, part of Belgium-based 103-year old international MNC Ahlers Group, was voted as the best in the category
‘Freight Forwarder of the Year - International’, at the recently held ‘South East CEO Conclave & Awards 2012’ in Chennai. Ahlers is involved in international logistics and maritime services. The Indian headquarters of Ahlers is based at Chennai, with 14 offices across India.
Eminent panelists, including the Who’s Who of the Indian shipping trade, finalised the winners for all award categories and the awards were presented at a glittering ceremony held at The Chennai Trade Centre. The event was attended by CEOs, senior professionals of all the leading shipping lines, freight forwarders, CFS operators, CHA associations, etc. On behalf of Ahlers India, the award was received by Pradeep Joseph, country head (India) and Kiran Gopi, corporate head – HR & Admin.
Although, Ahlers’ presence in the Indian market adds up to more than a few decades, Ahlers India became operational since 2004 with just three offices based in south. In a span of eight years, it has turned itself to a leading freight forwarding company in ocean and air, with a prominent place in project cargo movement in India. Globally, Ahlers has presence in 20 countries spread across Europe, Asia, CIS and Africa. Major global activities of Ahlers are agencies, international freight forwarding, contract logistics and maritime services. Ahlers’ major focus commodities are specialty chemicals, tobacco, machinery and Oil & Gas.
News in BriefSuccess & Achievements
AhLERS hONOURED AT SOuTh EAST CEO CONCLAVE & AwARdS 2012
Pradeep Joseph, country head (India) and Kiran Gopi, corporate head, HR & Admin receiving the Award
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Recently, Worldwide Flight Services (WFS) has appointed Jay B Shelat as senior vice president , Cargo
Terminal Services, based at its North America headquarters in Dallas, Texas.
Prior to joining WFS, Jay was with Jet Airways in India as vice president since 2007. Before this, he was with American Airlines Cargo, as director, Alliances & Interline in Dallas, for 12 years. He began his successful 25-year career in the air cargo industry with World Airways in 1984 and later worked for both Federal Express and Airborne Express in New Jersey until 1995.
During his tenure with Jet Airways, he helped the expansion of the airline’s network in India and internationally,
significantly increasing its cargo revenues. At American Airlines, he led the team that developed cargo alliances with most of the Oneworld members and negotiated contracts and managed the performance of 32 offline GSAs worldwide.
“With considerable experience of working for high quality airlines and a great track record for ensuring high quality performance, Jay brings to the position a very wide perspective, fully understanding an airline’s needs in terms of revenue management, sales and customer service, as well as its expectations of quality handling. Shelat is a great addition to our team in North America,” said Olivier Bijaoui, executive chairman, president and CEO of WFS.
international News Movements
Jay B Shelat
wORLDwiDE FLighT SERviCES APPOINTS JAy ShELATin Cargo Terminal Services
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Schiphol Cargo, IATA and China’s Central Customs Department have set October 1 (the National Day of China) as
the target date for the first e-freight shipments between China and Amsterdam. In a highly-symbolic celebration, they plan to exchange e-freight shipments of mooncakes, a delicacy eaten during China’s important Mid-Autumn Festival and Dutch flowers.
The decision was taken at the Schiphol Airport during a delegation of high-ranking officials from China’s Central Customs
Department. The group, accompanied by IATA representatives, led by Des Vertannes, Cargo Director met with senior executives of Dutch Customs, SkyTeam and member carriers Air France KLM, China Southern and China Cargo Airlines, Schiphol Cargo, Air Cargo Netherlands, Cargonaut, Damco and Rhenus.
The programme included tours of logistics facilities at Schiphol, the Customs Control Centre and the AFKLM Cargo handling base. Delegates learned about Schiphol’s extensive airline links with China, the alignment of e-freight with the World Customs Organisation SAFE standards framework and RKC (Revised Kyoto Convention), and SkyTeam’s progress with e-freight.
Commenting on the decision, Saskia van Pelt, director, Schiphol Cargo, business development, said, “China is the world’s biggest exporter and the single largest market for Schiphol’s logistics community. It’s clear that China Customs fully understands the challenges it is facing and its enthusiasm for e-freight proves its determination to take positive action.” According to him, e-freight will bring much greater efficiency and processing capacity to China Customs’ vast operations - benefiting Customs itself, Chinese and other carriers, and the global logistics industry.”
international AirportsE-freight
Representatives of IATA, China Customs, Dutch Customs, AF-KLM Cargo and Schiphol Cargo
SChiPhOL AND ChiNA TO START E-FREighT ShIPmENTS FROm OCTOBER
E tihad Cargo touched record monthly figures for July with network volumes approaching 33,000 tonne, an increase
of 18 per cent on the same month last year. The figures surpass a previous month record of 31,700 tonne which Etihad Cargo carried in March 2012. Total revenues for the month were up 4 per cent on June and 8 per cent on the corresponding period the previous year. Etihad Cargo also reported strong H1 2012 results, with tonnage up by 21 per cent.
Commenting on the airline’s performance Kevin Knight, chief planning and strategy officer, Etihad Airways said, “We’ve seen a good recovery in business from Europe after the second quarter. Also, the capability of our fleet with the addition of the 747-400 Freighter has enhanced our overall schedule flexibility, and helped support significant project work in what was also a record month for our Charter team.
He also shared that new routes including Etihad’s recently launched 6-times a week passenger service to Lagos and new freighter service to Dammam have strengthened the payload capacity. “Looking ahead, we expect to maintain strong freight performance over the third and fourth quarters of 2012,” he added.Etihad Cargo currently operates a fleet of six freighters, consisting of one Airbus A300-600F, two Airbus A330-200F, one McDonnell Douglas MD-11F, one Boeing B777F and one Boeing B747-400F.
ETihAD CARgO REgiSTERS RECORd VOLumE OF 33,000 TONNE IN JuLy
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international AirportsPerformance
n Dubai Airports owns and manages the operation and development of Dubai international Airport as well as Dubai world Central
n DwC has a cargo capacity of 2,50,000 tonne per annum, which is expandable to 6,00,000 tonne per annum.
KEy FACTS
DwC wiTNESSES 153 PER CENT GROwTh IN Q2 OF 2012
Opened for commercial operation in June 2010, Dubai World Central (DWC) is quickly establishing itself
as an emerging cargo airport in the region. According to the latest traffic statistics, cargo volume at this airport (Dubai’s second airport) surged 153 per cent to 56,271 tonne during the second quarter of 2012, compared to 22,252 tonne during the corresponding period last year.
According to DWC, the growth is mainly being driven by a number of large non-commercial contracts secured late last year as well as additional charter and scheduled services introduced during 2011. Significant developments during the first half of the year include the launch of thrice-weekly flights from Riyadh by Saudi Airlines Cargo. Additionally, in May, United States logistics provider National Air Cargo operated its 1,000th flight into the emerging airport.
DWC currently has some 36 carriers signed up and operating. Dubai International Airports’ total cargo volume is expected to top 4 million tonne by 2020 and an increasing portion of that growth is expected to spill over to DWC. Paul Griffiths, CEO, Dubai Airports maintained that the airport’s proximity to and bonded road connection with the free zone and port at Jebel Ali and the easy availability of take-off and landing slots are very attractive propositions for cargo carriers.
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Cover Story Indian Ports
capacity building needs to be complemented by industry-friendly policy iNDiAN PORTS
iNTERNATiONAL TRADE FROM
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According to the Working Group Report for 12th Plan for the Port Sector, Major Ports and Non-Major Ports in India are estimated to handle 943.06 million tonne
and 815.20 million tonne respectively by the end of 12th Plan, as against the present level of 560.15 million tonne handled by Major Ports and about 370 million tonne handled by Non-Major Ports. To meet the above projected demand, both Major ports and Non-Major ports have conceptualised various capacity augmentation schemes with an estimated investment of `1,80,626.63 crore during 12th Plan. The estimated capacity by the end of 12th Plan will be 2,686.66 million tonne.
According to the data published by the Ministry of Shipping, by the end of March 2012 the existing capacity of Major Ports was 689.83 million tonne per annum. As per the 12th Five Year Plan, the capacity of Major Ports will be increased to 1,229.24 million tonnes per annum by the end of March 2017. In the year 2012-13, 25 projects have been identified for awards at various Major Ports in the country under the Public Private Partnership mode.
Meanwhile, the Government of India has advised all coastal states in the country to explore the possibility of setting up of a new Major Port or new ship-building yard or as
a composite port-cum-ship-building yard in their states and submit a comprehensive proposal.
Proposals have already been received from state governments of Andhra Pradesh, Karnataka, Kerala and Gujarat. Technical Committees have been constituted to identify a suitable location for the development of Major Ports proposed by state governments.
It is pertinent to mention that as per Indian Ports Act, 1908, the responsibility of the development of Minor/Non-Major Ports lie with the respective state governments. As regards Major Ports, they are under the control of Government of India. In the 12th Five Year Plan, the Government proposed to invest `73,793.95 crore for the development of various projects in the port sector.
Recently, after a review of the infrastructure sector by Prime Minister Dr Manmohan Singh, a target has been set for the Shipping Ministry for award of projects for creating 244 million tonne of capacity during 2012-13 spread, across 42 projects at an estimated cost of ̀ 14,500 crore. The target also include obtaining approval of establishing two new Major Ports – one in Andhra Pradesh and another in West Bengal.
Remarkably, in the Union Budget 2012-13, the tax-free bond scheme has been extended for
ThE gOvERNMENT OF iNDiA hAS ADviSED ALL COASTAL STATES iN ThE COUNTRy TO ExPLORE ThE POSSiBiLiTy OF SETTiNg UP OF A NEw MAjOR PORT OR NEw ShiP-BUiLDiNg yARD OR AS A COMPOSiTE PORT-CUM-ShiP-BUiLDiNg yARD iN ThEiR STATES AND SUBMiT A COMPREhENSivE PROPOSAL
capacity building needs to be complemented by industry-friendly policy iNDiAN PORTS
Currently 90 per cent by volume and 30 per cent by value of india’s international trade is performed through its ports. however, despite some significant initiatives by the government of india and some private companies for creating capacity with a long-term goal, shippers often get stuck at indian ports thanks to the lack of efficient port management, skilled man power and proper integration among allied organisations/ministries. Cargotalk spoke to industry practitioners and port association to highlight remedial measures for the greater interest of the country’s economy… Ratan Kr Paul
GK Vasan
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ONE OF ThE MOST SigNiFiCANT DEvELOPMENTS iN ThE ShiPPiNg AND PORT iNDUSTRy iS ThE iNvESTMENT iN iNFRASTRUCTURE AND DEvELOPMENT OF NEw LOgiSTiCS hUBS, LOgiSTiCS CENTRES, CONTAiNER TERMiNALS, CONTAiNER FREighT STATiONS AND wAREhOUSiNg FACiLiTiES
one more year to enable ports to raise funds to the tune of ̀ 5,000 crore for various projects. The rate of withholding tax on interest payments on external commercial borrowings has also been reduced from 20 per cent to five per cent for a period of three years for ports and shipyards.
According to a recent statement by G K Vasan, Minister of Shipping, India’s external trade, as a proportion of GDP has more than doubled in last 10 years and is close to 40 per cent. Bulk of this international trade is carried through shipping. The Minister expressed hope that in future, high demand for energy will result in increased import of coal and oil. Similarly, the container volumes in India are expected to witness high growth in the years to come.
Vasan informed that the Ministry of Shipping has also taken up with the Ministry of Finance the need for exemption of Minimum Alternate Tax (MAT) on the book profit on sale of qualifying ships, and its inclusion within tonnage tax regime. The inclusion of interest income on funds, deployed out of tonnage tax reserve within tonnage tax regime, is also among various other issues that are being taken up with the Ministry of Finance.
ì INduSTRy PERSPECTIVEAccording to R Radhakrishnan, past president, Federation of Freight Forwarders’ Associations in India (FFFAI) and chairman, Clearship Group, the current scenario in the global shipping industry is characterised with weak markets, slow traffic, low margins, commoditisation and industry level consolidation. With the world focussing on the BRIC nations for growth opportunities, the altering landscape in the global shipping industry has had major implications on India.
“The global industry-wide consolidation is a coping mechanism for companies to sustain growth in this ever slowing and maturing industry. The shipping/port related industry in India is highly fragmented and the current trend of structured investments has to continue if we need to sustain growth in the future. This, along with the positive growth figures in emerging markets means that India will witness an increased influx of capital and market entry by global giants, each trying to bite off a piece of the cake,” he underlined.
In his opinion, one of the most significant developments in the shipping and port industry is the investment in infrastructure and development of new logistics hubs, logistics centres, container terminals, container freight
stations and warehousing facilities. This is going to help the sector in India with an introduction of sophisticated technological advancements and stable infrastructure facilities.
Radhakrishnan also maintained that a new competitive landscape is fast emerging. It has provided many avenues for growth, but poses several risks and challenges. The increased capital from private equity firms and acquisition by major global giants has not only altered the competitive landscape in the Indian transport and logistics industry, but has also
Cover Story Indian Ports
R Radhakrishnan
Recently, the government of india has constituted a committee under the Secretary, Planning Commission to scale up private investment in inland waterways Sector. The secretary, Ministry of Shipping, Dg of inland waterways Authority of india (iwAi) and a representative of Department of Economic Affairs will be the members of this committee. This Committee would undertake a systematic effort to identify new areas for private investment, both in infrastructure and in transportation. it will also identify multiple business models which could then be bid out through concessions. This will be supplemented by designing Model Concession Agreements (MCA) and other standardised documents for facilitating a rapid scaling up of investment.
PPP mOdE IN INLANd wATERwAyS SECTOR
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made it one of the sectors to look out for in the next few years. “Only time will tell whether this is for the better or worse for the Indian shipping and logistics industry,” he observed.
According to Prakash Iyer, vice president, Cochin Steamer Agents Association and branch manager, Cochin, NYK Line India, presently shipping in India is really booming and of course the imports are on the higher side. This will prompt the carriers to take strong action in promoting exports, while the shipping lines can enjoy the benefit of reducing loss on equipment evacuation. However, an improvement on investment in agricultural and
finished products will only help to reach the growth rate of 20-25 per cent on both imports and export together in the coming years.
hINdRANCES ANd BOTTLENECKS Radhakrishnan was of the opinion that the primary concern is the reliability of current infrastructure and procedures in India. “The ports, instead of extending reliability to our operations, are lending uncertainty, delays and anxiety. The increased frequency in unexpected events like port agitations and unrest has hindered efficient operations in the recent past. Our ports are not equipped to handle exceptions and unexpected risks. Anything out of the ordinary affects our operations which escalates and snowballs into new problems for all parties involved in the supply chain,” he stressed.
According to Radhakrishnan, although India operates some of the busiest ports in the world, the efficiency in Indian ports is way below the global standards. “Even with weak and slow markets, our ports are suffering from congestion which talks about our inefficiency. How will we manage if the market operates at full capacity is unthinkable?” he raised the vital question.
Radhakrishnan highlighted that extended delays in upgradation processes in ports are not helping us at all. The lack of proper infrastructure at major ports is also a matter of concern as it causes unhealthy competition in
GS Chawla
PhASE-wiSE RAiL-ROAD PROjECTS PLANNED By ThE MiNiSTRy OF ShiPPiNg
Prakash Iyer
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COST OF RUNNiNg ShiPS ARE A MAjOR ChALLENgE FOR ShiPPiNg LiNES DUE TO ESCALATiON ON BUNkER AND OThER COSTS, iNCLUDiNg DAiLy ExPENSES OF ThE ShiP. whEREAS, AgENTS FACE hUgE CRUNCh iN ThE REvENUE EARNED By ThEM. ThE DiFFERENCE BETwEEN REvENUE EARNED AND COST iNCURRED iS vERy NARROw, AND ThUS, ThE ShiPPiNg iNDUSTRy AND AgENTS ARE FiNDiNg iT DiFFiCULT TO RUN ThE ShOw
Cover Story Indian Ports
spite of increase in port capacity. “This cannot be seen as growth as we are only redistributing our traffic and not facilitating growth,” he said.
Taking cue from Radhakrishnan, Iyer viewed that shipping and ports are on the growing path, but increased number of ports with minimum capacity will not help in the future. In his opinion, the steep increase in all essential commodities makes the shipping industry shell out more money on administration cost. Considering the investment and recurring expenses, revenue earned is minimal.
On the other hand, cost of running ships are a major challenge for shipping lines due to escalation on bunker and other costs, including daily expenses of the ship. Whereas, agents face huge crunch in the revenue earned by them. The difference between revenue earned and cost incurred is very narrow, and thus, the shipping industry and agents are finding it difficult to run the show. Increased handling costs at the terminal make shipping lines unviable to operate on containerised liner services.
Radhakrishnan also expressed serious concern about frequently changing rules and regulations. “The increased frequency (every 2-3 months) of revisions and amendments to trade practices and procedures is not acceptable. We have to rethink and amend our supply chain schedules more often than necessary which is hurting our efficiencies and service commitments,” he pointed out. He further observed that the main expectations from regulatory agencies are to facilitate efficient operations and not promote anxiety.
GS Chawla, MD, Ocean King Shipping Services, maintained that ports in India have
to be provided with excellent infrastructure facilities, especially those ports which handle majority of the bulk goods. “By developing large number of efficient ports, our country can become the largest international hub to deliver goods from West to the East and vice-versa,” he said. However, he added, Indian ports are not having adequate infrastructure facilities. This non-availability of adequate infrastructure facilities is creating hindrances to attract investments from both domestic as well as foreign sources.
Ashish Mahajan, director, Perfect Cargo Movers, also felt that freight movement is facing challenges because of congestion and poor performance at Indian ports. “Its impact on the industry is quite serious. As a result, many exporters have to convert the ocean freight into air freight at their cost.
ì wAy OuT“We need to simulate more risks and develop effective troubleshooting mechanisms which reduce possible impact on Exim trade,” said Radhakrishnan. Controlling of tariff at major ports by TAMP is also a matter of concern. This needs to be reviewed to avoid trade blockage.
Iyer observed that ports (facilitators) should have a better understanding on their services as they are meant to serve the trade and industry through better and timely services provided to shipping lines and agents. The growth in the number of ports may not fetch good results unless the government takes serious action on the improvement in infrastructural facilities. “As a shipping person, I do not expect substantial increase in the number of ports with minimum facilities, but a horizontal growth based on draft, back up yards, connectivity and costs. Minimisation of paper work will help in cost reduction
Ashish Mahajan
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and corruption-free segment will make the business attractive,” he argued.
He further maintained that at present regulating authorities are looking into the cost side only, whereas it is their duty to ensure that overall performance of the ports/terminals are met with international standards and helps the export-import fraternity.
Chawla felt that the best way to overcome infrastructure problem is to optimise the available strength/space of the ports to handle cargo and to create required strength/space for the same. There is also a requirement to build deep sea ports to reduce the cost of transport. The Indian Ports Act, 1908 and the Major Port Trusts Act, 1963, govern some major ports. “Recently, greater administrative and financial powers have been delegated to ports. We still
have a long way to cover to reach international standards,” he said.
In Chawla’s opinion, major focus and improvement on infrastructural facilities should be on cargo operation from hinterland (dry) ports. The need of the hour is to change the way export entries are being made in customs. “We need to be at par with European and US systems where the shipper must make an electronic export declaration with customs directly through his own allocated user ID. This will ensure that no abuse and misuse of export licenses is taking place right under the nose of customs” he suggested. According to him, the role of CHA must be confined to further processing of documents, handling of material, having it examined and handover to the airline or shipping line. Each shipper should be allocated with their set of username so as to enable more control and a fool-proof operation.
“I am sure our Government, CHA associations and other trade bodies are taking up issues for improvement of the facilities and regulations for better and smoother operation at Indian ports. If our country can build and airport terminal like T3 at IGI Airport in Delhi, we are confident that the country can create port facilities like Shanghai, Hong Kong or Singapore,” Mahajan went on.
ì IndIan Port assocIatIonR Srinivasagopalan, ED, Indian Port Association (IPA) was quite bullish about attaining the target set by the Ministry of Shipping for the 12th Plan pertaining to capacity building and handling of cargo volume at Indian ports. He maintained that though presently there are some bottlenecks hindering the growth process, the same would be removed in the near future thanks to the joint initiatives (PPP model). “The ongoing capacity-building initiatives and fast cargo clearance mechanism will definitely position some of the Indian ports as hub ports in the Asia Pacific region,” he said. He, however, emphasised on development of off-port facilities like ICDs and CFSs, and hinterland connectivity through railways, roadways and inland waterways. In addition, adequate measures for dredging and drafting on regular basis are a must to attract more mother vessels to Major Ports in India.
Srinivasagopalan shared that IPA has placed several recommendations to the Ministry of Shipping for smooth functioning at Indian ports and attract foreign vessels to India. IPA also suggested for relaxation in the existing Cabotage Regulations, which restrict foreign shipping lines.
Cover Story Indian Ports
major foCuS and improvement on infraStruCtural faCilitieS Should be on Cargo operation from hinterland (dry) portS. the need of the hour iS to Change the way export entrieS are being made in CuStomS
the construction of offshore Container terminal in mumbai port will be completed by december 2012.
presently, both the ministry of Shipping and mumbai port trust are monitoring the progress of the work. meanwhile, mumbai port trust has appointed an independent engineer for approval of designs, quality control and monitoring progress of the bot operator.
a project management Consultant has also been appointed for preparation of estimates, tenders and supervision of works for mumbai port component.
MuMbaI contaIner terMInal
R Srinivasagopalan
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hE OBSERvED ThAT ThE 3PL AgENT iS ALwAyS SqUEEzED DOwN FOR ThE PRiCE hE CAN ChARgE FOR STORAgE AND ThE CLiENT hAS hiS iNTEREST TO DO SO. iNDiA iS A vERy COMPETiTivE MARkET PLACE wiTh MANy PLAyERS AND ONE wOULD LOSE hEAviLy iF iT wERE TO PASS ALL ThE COST iNCREASES TO ThE CUSTOMER
Though Swisslog had entered India market in 2011, the company did not start its operation. According to Behera, Swisslog has finished
the India discovery phase and it is now in expansion mode. “We are unique in India as we are a global leader when it comes to automated material handling solutions,” he asserted. He underlined the fact that there is a dearth of experienced System Integrators in India and this is where Swisslog adds value. “We are a one stop shop from consulting to system design to implementation and operational support. We will offer our complete portfolio of solutions and expertise. We are very excited to be here and are looking for long-term growth,” he added.
PRESENT SCENARIOCommenting on the present scenario of warehousing system in India, Behera was of the opinion that India is 20-30 years behind when it comes to the overall warehousing scenario. “I am not comparing India to the sophisticated west, but with regions in Asia Pacific such as Malaysia, Korea, China, etc. Warehousing in India is not looked as a value-addition, but rather as an unnecessary cost centre,” he explained.
According to him, when value-added activities such as picking, order processing, cross-docking and much more are performed at a warehouse, the true value of a warehouse is enhanced. In the Indian context, majority of the warehousing activity is an outsourced function. “Whilst I am not against the 3PL approach, it is pertinent to mention that accountability for improvement becomes nobody’s business in outsourcing,” he said. He observed that the 3PL agent is always squeezed down for the price he can charge for storage and the client has his interest to do so. India is a very competitive
market place with many players and one would lose heavily if it were to pass all the cost increases to the customer. In addition, the existing tax structure prohibits consolidation, resulting in fragmented warehouses.
PROduCTIVE wAREhOuSE“We bring in an in-depth experience when it comes to designing the most efficient and productive warehouse or distribution centre,” stressed Behera. He maintained that Swisslog makes its own Warehouse Management System and Programmable Logic Controller (PLC) which seamlessly blend in with the company’s Automated Storage and Retrieval Systems (ASRS), conveyors, etc. Apart from providing tailor-made solutions, Swisslog has Subject Matter Experts (SMEs) who study trends in the company’s focus segments of Food & Beverage, Pharmaceuticals and Retail. “As a result of the research done by the SMEs, we offer pre-emptive solutions to our client so they can act rather than react. Our website has a blog
SwiSSLOg IN INdIAadding value to warehousing and distribution servicesSwisslog, a 100+ years’ company headquartered in Switzerland, made a foray in the warehousing and distribution logistics market in india last year. The company is now present in over 25 countries. Asim Behera, general manager india, Swisslog, spoke to Cargotalk about the potential of this market for the company’s special services that are well established in other parts of the world. Ratan Kr Paul
Logistics ServicesWarehousing & Distribution
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Logistics ServicesWarehousing & Distribution
post wherein the SMEs continuously write on how environmental trends affect business,” he shared.
In Behera’s opinion, the India growth story will force companies to look at their back end. Warehouses are the very foundation of one’s back end operations. In today’s competitive world, two comparable companies will most likely buy their raw material from the same source and they will use the same 3PL providers. The only place where they can save money and be competitive is their back end operations.
ì ChALLENGESBehera, however, maintained that there are huge challenges before the warehouse and distribution sector in India. The biggest challenge is the tax structure. According to him, the current tax structure is a deterrent to consolidation, thereby eliminating the economies of scales that typically most companies harness overseas. It is not uncommon for a company overseas to have one mega-factory which is then supported by a handful of company-owned distribution
centres which can serve all customers. By doing so, companies can control their logistics cost because everything is in-house, so they can reduce the middlemen and reduce the touches per Stock-Keeping Unit (SKU). However, for its Indian operations it is not uncommon for the same company to have 10 factories, followed up by 25-30 distribution centres or warehouses most likely outsourced to 3PLs.
A point to keep in mind is that in most cases the total volume that the company manufactures for India may be significantly lower than what it does overseas. As a consequence, one has to establish ten times more basic infrastructure, have multiple touches, have more middlemen each carving out his share and as a result the profit margin is reduced, damage to product increases and a lot of uncertainty and dependencies creep in, because the processes are not in-house. “I sincerely hope that the current government approves and executes the GST alongside the multi-brand FDI. These two policies when implemented well will be the catalyst for modernisation to the Indian warehousing and distribution scene,” he viewed.
Asim Behera
A POiNT TO kEEP iN MiND iS ThAT iN MOST CASES ThE TOTAL vOLUME ThAT ThE COMPANy MANUFACTURES FOR iNDiA MAy BE SigNiFiCANTLy LOwER ThAN whAT iT DOES OvERSEAS
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TODAy, CONNECTiviTy AND COLLABORATiON ARE DELivERED By A SUPPLy ChAiN PORTAL. ThESE PORTALS ENABLE DEMAND, SUPPLy AND LOgiSTiCS ExECUTiON TO BE SyNChRONiSED. BUT ThE MOST DiFFiCULT COMPONENT TO ADDRESS iS ExECUTiON – ThE ACTUAL FULFiLLMENT
A ccording to Reddy, seizing the opportunity (from the financial crisis in 2007-08) has driven some interesting repositioning
of the leaders and laggards across different industries. The evolution from batch transfer of data using EDI through adaptive supply chains has been a rocky road. The focus on data standardisation was lost but more flexible mapping tools became available, so data transformation became the norm. Other technologies usurped EDI, with the extension of internet-based ‘track & trace’ into supply chain portals. These became the new starting point for supply chain connectivity; bringing new terminology, with ‘collaboration’, ‘agility’ or ‘synchronisation’ in every description.
In Reddy’s opinion, today, connectivity and collaboration are delivered by a supply chain portal. These portals enable demand, supply and logistics execution to be synchronised. But the most difficult component to address is execution – the actual fulfillment. This is because managing demand and supply is essentially ‘a closed loop’ involving formal relationships and defined information exchanges. Execution involves many parties with complex and changing interactions – from carriers, forwarders and agents, to government agencies and intermediaries, such as Chambers of Commerce. Each party requires a different view of the information to play their part.
Reddy underlined that many shippers use their 3PLs and forwarders to provide visibility but the leaders have now in-sourced this. They have realised the value of managing their own data while still outsourcing the actual activities.
ì ThE KEy CONSTITuENTSn Scope: He viewed that initially all supply chain partners – vendors; manufacturing plants;
customers; logistics; carriers; service providers, internal and external – must accept web-based sharing of information and facilitating collaboration. Each party will have their own ‘dashboard’ to quickly understand their actions and responsibilities, with personalised metrics and graphical reporting.
n Visibility: Each party must be able to ‘see’ that part which is relevant to their needs consolidated to one place. Visibility includes classic ‘track and trace’ but also information must be gathered, validated and presented so that each party has visibility of sufficient information for them to play their role without delays.
n document distribution: Even in today‘s electronic age, there are documents that are absolutely necessary at various stages of logistics. These documents must be uploaded as images to be shared at the appropriate time with the appropriate party.
n Event management: The system must be configurable to react automatically to events and non-events. This means that actual data must be compared to a plan and rules and tolerances set to proactively alert the relevant parties.
n Key Performance Indicators: While vis-ibility and event management can enable management by exception, this only applies to individual transactions. The data gathered from individual logistics life-cycles must also be retained for analysis. Key Performance Indicators should be used to monitor and control supply chains. Responsible parties can be alerted when a trend moves towards a tolerance boundary, rather than once it has passed, and a dashboard can provide the decision support for corrective action.
ROLE OF SuPPLy ChAIN INduSTRyto cope up with economic slowdownin the mid-2000s, global sourcing was the mantra and, with a booming global economy and cost reductions fuelled by emerging nations, an unstructured procurement scramble took hold. The financial crisis in 2007-08 saw a sudden end to all of that and created the moment for some businesses to pause for breath, take stock of their supply chains and look for opportunities that may be enabled by technology. mV BalaKrishna Reddy, head- Asia, Four Soft, highlights some key points…..
view Point Trends in Technology
MV BalaKrishna Reddy
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Cargo Performance Export/Import
dELhI INTERNATIONAL AIRPORT CARGO dEPARTmENT, IGI AIRPORT, NEw dELhI
(AIRLINE-wISE ImPORT/ExPORT CARGO PERFORmANCE FOR ThE mONTh OF JuLy 2012)
T he scenario of Indian air cargo at present is at 8-10 per cent declining stage throughout the country. The past continuous growth registered till
2010-11 has shown steep decline during 2011-12 and 2012-13. It has been mainly witnessed in the export cargo due to which the percentage of difference between the two (export and import) has come down very close to 55:45 ratio, respectively, which was once 70:30. Mainly observed in the northern region, this decline has affected Delhi airport grossly.
Though the cargo upliftment capacity of the airlines has increased significantly due to increase in the operation of passenger flights, there has been inadequate demand because of
slow down in the US and EU markets. About 70 per cent of the total cargo carried by airlines is uplifted by the passenger flights.
ì CARGO hANdLING CAPACITy AT dELhI AIRPORTThe capacity on the ground, particularly in Delhi, has increased almost 100 per cent after the commissioning of the 2nd cargo terminal. Delhi Airport has been lucky because of plenty of space available across the airport. It has two cargo terminals having almost equal terminal space and capacity. The built-up area has increased from 71,000 sqm to1,20,000 sqm. Hence, the cargo handling capacity of Delhi Airport has also increased drastically. Now it’s up to the airlines to choose the best cargo terminal. This increased cargo capacity will be sufficient to handle cargo for more than the next five years even if the growth picks up at more than 10 per cent annually.
As far as the cargo handling/storage capacity is concerned, Delhi Airport need not worry because of decline in volume at present and for immediate future. However, there is a need to introduce vertical automatic storage & retrieval system (AS/RS) to take care of long-term future demand and to improve quality and efficiency in the handling services. The automation in the cargo handling would certainly help in reducing the prevailing high dwell time of import (over four days) and
guest Column Air Cargo
AiR CARgO OPERATIONEnhancement of capacity and process is the key behind successThough the air cargo industry in india is witnessing lull at these challenging times, industry experts are quite confident about the upturn soon. however, challenges like capacity building in a balanced way and modernisation of cargo handling processes will have to be taken seriously for a sustainable growth of the industry as well as the country’s economy. Cargotalk presents the views, shared by KS Kunwar, ED, Air Cargo Forum india…
KS Kunwar
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guest Column Air Cargo
NOT ONLy ThE CARgO TERMiNAL OPERATORS (CTOS) BUT ALSO ALL ThE TRADE PARTNERS wiLL hAvE TO TRANSACT BUSiNESS ELECTRONiCALLy TO PROMOTE ENviRONMENT-FRiENDLy PAPERLESS TRANSACTiONS. CTOS NEED TO hAvE ENOUgh qUALiFiED AND TRAiNED STAFF TO hANDLE ALL TyPES OF CARgO
export cargo (two days) and to bring it at par with standards prevailing at any world-class international airports.
Not only the cargo terminal operators (CTOs) but also all the trade partners will have to transact business electronically to promote environment-friendly paperless transactions. CTOs need to have enough qualified and trained staff to handle all types of cargo. They must be geared up for clearance of cargo on 24x7 basis which is going to be introduced by Customs w.e.f September 2012. In a nutshell, the cargo terminal operator should be capable enough to handle the business coming to its door up to the satisfaction of the customer.
ì ON AIR FREIGhT STATIONThe concept of Air Freight Station (AFS) has been developed for promoting faster processing of air cargo away from airports similar to the concept of Container Freight Station (ICD) away from Sea Ports.
The AFS and ICD are there to decongest the main Airports and Sea Ports. This has many other advantages, i.e., the import/export shipments meant for places far away from the Customs Airports can finally get Custom clearance at the nearby AFSs/ICDs and then transported to the main airports/seaports. All the Customs formalities can be completed at the AFS/ICD itself. So, exporters/importers need not go too far away from main airports/seaports for Customs clearance of their shipments. He can get his drawbacks from AFS/ICD and pay the import duty.
This concept should be encouraged keeping in mind the future growth of the Indian economy. It will definitely increase the speed of air cargo operation and ease out the hassles faced by exporters/importers.
There are no disadvantages to CTOs as they are going to charge their usual handling charges on its arrival at their terminal. They will be benefited by a faster movement of import and export cargo by handling more cargo from the same facility. The terminal operators may also extend their services beyond their terminal by providing bonded trucking services up to and from the AFSs/ICDs which will generate more revenue to them. They should develop their terminals for handling SLUs (shipper-loaded units) of import and export cargo so that the SLUs are handled smoothly. This concept is prevailing worldwide and that is the reason they have bare minimum dwell time of not more than 12 hrs for both import and export.
ì mAJOR ISSuES ANd ChALLENGESAt present, there are five main challenges before the air cargo industry encountered in its day–to-day clearance of international cargo:
n High Dwell Time of import and export cargo at the ports and airports
n Rigid/outdated regulatory proced-ures which delay the clearance of cargo
n Customs single shift operation for the clearance of import/export cargo
n Traffic restrictions for transportation of cargo vehicles before 11am and 5-9 pm and harassments
n Customs EDI system is yet to come up with user-friendly and reliable operations
ì APPEAL BEFORE STAKEhOLdERS ANd GOVERNmENTn First, the industry should improve upon
the activities in their respective segments wherever possible to become a world-class player.
n Second, to form a bigger platform of all the segments of air cargo logistics trade for taking up issues of common interests for improvement with a single and strong voice. I am confident that together we can make the regulatory authorities listen to our requests for improvements.
n The Government should give air cargo logistics industry an Industry status.
n To promote the air cargo logistics industry, which contributes 0.5 per cent of the national GDP and is responsible for transportation of 30 per cent of the country’s international trade & commerce in value terms by air, the Government should establish a National Air Logistic Trade Facilitation Committee.
n Simplify Transshipment procedures for hassle-free transfer of cargo from one airline/aircraft to another.
n Bring all air cargo terminal functions under Free Zone regime/policy as has been done by Malaysia at KLIA, making it an air cargo hub in that region competing with Singapore.
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iNDUSTRy SEgMENTS LikE FiNANCiAL SERviCES, ELECTRONiCS AND ELECTRiCAL EqUiPMENT, PhARMA, AUTOMOTivES AND TExTiLES wiLL BE iNDiAONTiME’S FOCUS AREA. iNDiAONTiME wiLL BUiLD PRODUCTS AS PER CUSTOMER REqUiREMENT
w ith an objective to become contemporary express service providers, Indiaontime will be focussed and specialised
in eCommerce deliveries to position it as an eCommerce logistics expert. The company will offer services for express door-to-door logistics space.
According to Sudharsan, Indiaontime Express will be handling shipments of commercial as well as non-commercial value in cargo and non document in nature. It will carry any package weighing 1 kg and above. “These packages will be shipped through the company’s own dedicated surface network and confirmed belly space on Air Network arrangement from one of the existing airlines. We will also be conducting charter business as a revenue stream through strategic agreements with charter operators,” he said.
In his opinion, today, there is a huge gap between express cargo leaders and rest of the service providers in this industry. “IOT would like to position itself in this space and cater to both retail and regular big customers. eCommerce, air express, ground express and charters will be our major products and our USP will be flexibility,” he added. Industry segments like financial services, electronics and electrical equipment, pharma, automotives and textiles will be Indiaontime’s focus area. Indiaontime will build products as per customer requirement. The company will also focus on reverse pick-ups which has big potential in the coming years.
“Our immediate goal is to be in the space of the last mile for eCommerce companies – to be a specialist. Going forward, we plan to acquire company specialised in document product and migrate and set up last mile
delivery for eCommerce companies,” shared Sudharsan. Though, currently in domestic market, Indiaontime will expand its services to the international market within next three years’ time.
Headquartered in Bengaluru, Indiaontime already has opened 41 offices across India. The company has regional sales head and regional operation head models in every location.
The board members of Indiaontime include Mohan Kumar, former CFO of Air Deccan as the chairman, The co-founders of the company will be the chief operating officers. EV Shunmugam, director, who is based out of Abu Dhabi has been raising funds for Indiaontime from the UAE region. The total fund required to launch the company is about six million USD. Meanwhile, the company has invested four million USD primarily in IT development, hardware and real estate. It has investment plans in warehousing and later in cargo aircraft. The company has set a revenue target of Rs 27 crore in nine months of its operation.
iNDiAONTiME ExPRESSEyes domestic express market in a big way
Express CargoNew Kid on the Block
ES Sudharsan
The express cargo industry in india is apparently being strengthened with formation of new companies, primarily for catering to the domestic market in india. indiaontime Express is one of those new kids on the block. ES Sudharsan, chief executive officer, indiaontime Express, spoke to Cargotalk about the genesis of the company and strategy to establish its pan-india presence. Ratan Kr Paul
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Express CargoNew Kid on the Block
RED ExPRESS wiLL OFFER ExTENDED PiCk UP AND DELivERy SERviCES FOR BUSiNESS hOUSES OF ANy SizE. ThE SERviCE wiLL iNCLUDE SAME DAy DELivERy SERviCE AND ALSO COLLECTiON OF ThE vALUE OF CONSigNMENT, wiTh AN AiM TO TAP E-RETAiLiNg BUSiNESS
Speaking at a pre- launch meet , recently held in Gurgaon (Haryana), Shiv i Sur i , pro jec t head, RED Express, said that before launch,
the officials of RED Express studied the express cargo market for quite some time before taking the decision of this launch. “We are offering innovative services with a good balance of human touch, process and technology,” asserted Suri.
ì INNOVATIVE SERVICESAccording to him, presenting web-based booking is one of those innovations in this regard, which helps customers to avail of multiple frequencies, pricing, track ‘n’ trace, etc.
RED Express will offer extended pick up and delivery services for business houses of any size. The service will include same day delivery service and also collection of the value of consignment, with an aim to tap e-retailing business.
Commenting on maintaining quality of services, Suri said that the company will control service providers and franchisees through its own technology, which is completely transparent.
ì ‘huB ANd SPOKE’ mOdELThe company will follow the ‘hub and spoke’ model. The first phase will have 10 Operation Hubs or Master Distribution Centres (MDCs)) and 48 Sub Distribution Centres (SDCs) in over 23 major cities in India. This will be strengthened by the franchisee network in Tier II and III cities. The distribution network will be backed by fleets of RED Liners, operating on the principle of scheduled departure and arrivals with multiple frequencies.
He also informed that initially the company will invest substantially in technology, infrastructure and human resources. Also, RED Express will invest more than `2 crore to acquire vehicles for distribution. He, however, made it clear that the company would not invest in warehousing and this requirement would be fulfilled by outsourcing to 3PL service providers. RED Express will concentrate on small packages and general distribution services.
According to Suri, RED Express would be able to witness a turnover of `120 crore in the first year of its operation. He appeared to be bullish about achieving the target, thanks to the emergence of eCommerce. “We have a well experienced team in the cargo and logistics market. The company (RED Express) will be benefited by the existing cargo network of our team. We are also confident that the company will create a special niche in the express logistics market because of its innovative ideas,” stressed Suri.
RED Express has already received financial investments from a Singapore-based freight organisation with business operations in Malaysia, Philippines and other parts of the Asia Pacific region. Discussions are on with Asia Pacific and international Express operators for tie-ups.
RED ExPRESSlaunched to foray into express cargo businessRecently, some well known air cargo professionals have introduced a new company called RED Express, which will be operative by the end of 2012. Armed with complete express logistics solutions, the company will target both B2B and B2C customers.
Team RED Express at a press meet in Delhi
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Family AlbumClub Events
The Air Cargo Club of Delhi (ACCD) has recently elected its new managing committee for 2012-2013 at its Annual general Meeting held on july 27. j P Singh has been elected as its president. Other office bearers are yashpal Sharma, vice president; Ravinder katyal, hon. secretary and Sajan kallra, hon. treasurer. The immediate past president, Sunil kohli will continue to be with the managing committee as ex-officio for one year.
The Air Cargo Club of Delhi (ACCD) has recently elected its new managing committee for 2012-2013 at its Annual joffice bearers are Ravinder treasurer. The immediate past president, Sunil will continue to be with the managing committee as ex-officio for one year.
ACCD gETS NEw mANAGING COmmITTEE FOR 2012-13
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Continued on page 50 and 52 u
Family AlbumDCCAA Annual Dinner
DCCAA PRESENTS A SPECTACuLAR EVENINGThe Delhi Customs Clearing Agents Association (DCCAA) recently hosted their Annual Dinner at Taj Palace hotel in New Delhi. Najib Shah, Chief Commissioner of Customs (Dz) and vineet Ohri, Chief Commissioner Customs (Preventive-Dz) were present at this event with their entire team of senior officers from all the ports of the city to interact with industry stalwarts. The spectacular event was organised under the leadership of Raman Raj Sud, president, DCCAA.
� VK Goel, Commissioner Customs (Publicity & Public Relations)
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Family AlbumDCCAA Annual Dinner
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Family AlbumAward Function/Meet
gMR igi AiRPORT PRESENTS AwARDS TO OuTSTANdING PERFORmERSRecently, gMR-led consortium Delhi international Airport (DiAL) presented the first edition of the ‘gMR-igi Airport Awards’ to top performers from various sections of aviation industry in india, for their outstanding contributions towards the success of the airport. Several air cargo trade practitioners were also honoured at a glittering function.
FFFAi MEETS wiTh wCO SECRETARy IN NEw dELhIRecently, at the invitation of Sk goel, chairman, Central Board of Excise & Customs (CBEC), delegation of Federation of Freight Forwarders’ Associations in india led by Shantanu Bhadkamkar, chairman, FFFAi, attended a joint conference at the india habitat Centre, New Delhi with kunio Mikuriya, secretary general, world Customs Organisation, and senior members of the CBEC and Customs department, New Delhi.
n Aluminum safety bar, stopping descent of the platform on contact with obstruction
n Safety clearance between scissors to prevent trapping during operation
n Safety check valve to stop the lift table lowering in the unlikely event of the hose break
n Protection against overloading
n Low voltage control box with up-down buttons and emergency stop
n Maintenance props (for safe maintenance operation)
n Removable lifting eyes to facilitate handling and lift table installation
SALIENT FEATuRES OF ThE LIFT mOdELS
� The wide range of Bolzoni Auramo lift tables provides an effective
solution to most lifting problems. According to Gandhi Automations sources, the safety of the operator during the use of lift tables is paramount. Bolzoni Auramo lift tables comply with the European safety of machinery standards EN 292, Machinery Directive 98/37/EC and safety requirements for lift tables EN 1570.
ì TyPE 1-E ERGO-LIFT SINGLE SCISSOR FOR EVENLy dISTRIBuTEd LOAdIt is designed as a ‘work station’ to provide improved ergonomic conditions to ensure the health, safety and comfort of the operator together with improved productivity. Its load application is evenly distributed; top platform has smooth surface; having maximum 20 cycles-per-hour (one shift a day); single acting hydraulic cylinders with drainage; upper and lower travel limited by mechanical stops; self-lubricating bearings on pivot points; hydraulic power pack inside the table provided with relief valve against overloading and compensated flow valve for controlled lowering speed and electrical equipment controlled by electronic system.
� CEVA Logistics, one of the world’s leading supply chain management
companies, has recently launched its first mobile application, CEVA Mobile, which enables customers to track the exact location of every shipment using their iPhone or iPad.
According to Peter Dew, chief infor- mation officer, CEVA, the application is CEVA’s latest move in using technology to provide customer value and is a simple and flexible way to search and retrieve the status of air freight, ocean freight and customs brokerage shipments worldwide. CEVA Mobile provides on-the go access to shipment tracking using only customers’ shipment reference or house number.
“This new app is a clear example of how we are using technology and innovation to improve the overall service our customers receive. Visibility is an integral part of any supply chain and this app, in combination with our online CEVA Trak tool, makes it quick and convenient to see exactly where a customer’s goods are at any given point in the supply chain,” informed Dew.
In l ine with CEVA’s focus on continuous improvement, further development to the app includes: additional functionality; integration of more systems and offering the app to Android and Blackberry users. CEVA Mobile and CEVA Trak are supported by CEVA Matrix, CEVA’s technology solutions landscape that integrates best in class IT components and CEVA’s know-how and expertise to support leading supply chain solutions.
Logistics EventsNational & International Events
jBS ACADEMy CONDUCTS AwARENESS PROGRAmmE
w ith an objective of providing overview of Customs, WCO, WTO, Self Assessment, Valuation Rules,
Interpretation of Customs Tariff, etc., recently JBS Academy organised an interactive one-day programme at Gandhidham in Ahmedabad. The programme witnessed a good participation from the staff of custom house agents, exporters and importers and custodians. The event was conducted by Samir J Shah, chief mentor and director, JBS Academy.
The Academy also decided to run a weekend programme in Customs Clearance and freight forwarding through different programmes – Basic and Advanced – at Gandhidham.
In the recent past, the Academy also conducted a programme on handling of Dangerous Goods by Sea. Two new certificate
programmes in Customs Clearance and International Freight Forwarding had been announced to start at Ahmedabad.
Additionally, a new batch of Post Graduation Diploma in Shipping Management has also been scheduled at the Narottam Morarji Institute of Shipping, Ahmedabad. JBS Academy is also in the process of announcing programme for Custodians, Port and related agencies.
Samir J Shah
SCm Logistics world 2012October 16-19, 2012Marina Bay Sands – SingaporeCandy TanContact: [email protected]
2nd Logistics west Africa Conference & ExhibitionNovember 5-7, 2012Lagos. NigeriaDetails: www.cwc-logistics.com
Intermodal Europe 2012November 27-29, 2012Amsterdam RAiContact: Sophie Ahmed Event Director Tel: +44 (0)20 7017 5112 Fax: +44 (0)20 7017 7818
Automotive Asia CongressNovember 6-7, 2012Thailand, BangkokCandy TanContact: [email protected]
7th Philippine Ports and Shipping 2013january 30-31, 2013The Peninsula Manila, The PhilippinesContact: [email protected]
India maritime 2012October 17 -20, 2012Panaji, goa, indiaContact: Federation of indian Chambers of Commerce and industry (FiCCi), Federation house1, Tansen Marg, New Delhi-110001Ph: 011-23359734E-mail: [email protected]
1st Black Sea Ports and Shipping 2012 October 24-25, 2012Bristol hotel Odessa, UkraineContact: [email protected]
10th Intermodal Africa 2012September 6-7, 2012international Convention Centre Durban, South AfricaContact: [email protected]
international Shipping and Logistics Events
8th Trans middle East Bahrain 2012November 20-21, 2012gulf international Convention and Exhibition Centre, kingdom of BahrainContact: Tel: +60 87 426 022Fax: +60 87 426 223Email: [email protected]
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w ith this knowledge paper, Deloitte aimed to provide an overview of the policies and issues affecting the maritime
sector. This Paper includes various sections to provide a very high level overview of recent developments and identify several issues requiring deliberation and debate.
INdIAN SCENARIO IN ShIPPINGShipping is a global industry and its prospects are closely tied with the global economy. Any fluctuation in the global economy has a direct and indirect impact on the shipping industry. The industry is cyclical in nature
and is today struggling to navigate through the changing economic context. Supply pressure is making matters worse. Indian shipping industry is also not unaffected by the changing macro-economic factors. India has one of the largest fleet and is ranked 16th in the world. The total fleet size of the Indian shipping industry is 10 million gross tonne (GT). Still it forms a marginal share of only one per cent of the global fleet. On the other hand, India’s seaborne trade has been growing at a rate of over 12 per cent in the last 10 years. Consequently, the share of India’s vessels in carrying country’s cargo has been declining and is currently only around 8 per cent.
PORT iNDUSTRy PRESENT SCENARiO OF
iN iNDiA A deloitte study
Deloitte, world’s leading platform for audit, consulting, financial advisory, risk management, and tax services was the knowledge Partner for the recently held National Conclave on Shipping 2012, which was organised by the Federation of indian Export Organisations (FiEO) in Chennai, in association with the Ministry of Shipping, government of india. we are presenting the highlights of the Study unveiled by Deloitte as the Background Paper of the Conclave.
Study and Survey Shipping & Ports
ì PORT SECTOR IN INdIAPorts provide an interface between the ocean transport and land-based transport. They represent a promising sector for India, given the country’s 7,500 km long coastline, robust economic growth, abundant raw material, cost-competitive workforce and a strategic location on the trade map. The port infrastructure in India constitutes 13 Major Ports and 187 Non-major ports. Out of the total Non-major ports, only about 48 are operational; while the rest are only fishing harbours. The 13 Major Ports are administered by the Central Government through the Ministry of Shipping, and Non-major Ports are administered under respective state governments. The state-wise numbers of ports are given hereunder:
Gujarat has emerged as the leading state in cargo handling. While Kandla port in Gujarat accounted for the highest share (14 per cent) in Major Port traffic, Non-major Ports under the Gujarat Maritime Board collectively boasted the maximum Minor Port traffic (71 per cent). This can be attributed to its proximity to the northern hinterland, pro-business government and a dynamic business community.
ì KEy ISSuES IN mAJOR PORTS Although the sector witnessed significant growth in cargo traffic, it has still not been able to optimise operations owing to technical and institutional constraints (capacity constraint). As per the latest statistics (2009-10), 8 of the 12 Major Ports are operating at more than optimum range of 70-75 per cent utilisation. The ports of Vizag, Tuticorin, Mormugao and
PORT iNDUSTRy iN iNDiA
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CoNTAINEr TrAFFIC AT MAjor PorTS (IN MILLIoN ToNNE)
Source: IPA and Deloittee
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Study and Survey Shipping & Ports
Mumbai are experiencing more than 100 per cent utilisation. Correspondingly, the average capacity utilisation at Non-major ports was at 77 per cent in 2009-10. This sets the background for faster development of port projects to ensure smooth flow of traded goods and growth of EXIM trade.
ì INEFFICIENT CARGO hANdLING ANd LOw PROduCTIVITyA study placed in the Parliament in Feb 2010 by the Comptroller and Auditor General of India highlighted that cargo handling services at ports were inefficient. A predominant number of berths did not have the dedicated facilities necessary for the quick handling of cargo. Around 55 per cent of the equipment available at all ports, except at the Jawaharlal Nehru Port Trust, were running beyond their rated economic lives, resulting in low utilisation.
ì CAPACITy uTILISATION AT mAJOR PORTSWide variations were observed in efficiency among the 12 Major Ports. The average pre-berthing time on port account varies between 0.4 hours -23 hours. The average turnaround time also varies between two to five days. In contrast, the turnaroundtime at globally competing ports like Singapore or Hong Kong is between four and six hours.
ì INAdEQuATE dRAFTS ANd POOR CONNECTIVITyFuture shipping trends point towards larger vessels with a minimum of 6,000-8,000 TEUs and a few vessels with 12000-14000 TEUs. These future generation vessels would require drafts between 13 to 15.5 m. Due to current draft restrictions, several Indian ports are unable
to handle larger vessels typically with more than 9.5 m and 12.5 m draft. This could lead to shipping lines/large shippers moving to other ports. Therefore, there is a need to firm up dredging plans and also improve productivity through removal of constraints like inadequate infrastructure, absence of seamless connectivity with other modes, etc.
ì dEmANd-SuPPLy SCENARIO OF PORTSIndian ports have formulated ambitious plans for development of new ports, augmentation of existing facilities, mechanisation of ports, purchasing of modern cargo handling equipment and improvement in logistics to meet the challenges emerging from the anticipated growth in trade. The capacity at 13 Major Ports is likely to increase to 1459.53 million tonne by 2020. The capacity at Non-major Ports is expected to increase by 2020 to 1660.02 million Tonne. Thus, a surplus capacity of above 25 per cent over the projected demand is targeted by the Indian ports. This will enable the ports to provide berthing facilities on arrival of the ships, thus achieving zero pre-berthing detention for the vessels. The proposed investment during the next ten years is expected to be Rs. 2.77 lakh crore – Rs. 1.09 lakh crore for Major Ports and Rs.1.68 lakh crore for Non-major Ports.
ì CONTAINERISATIONThe development of container trade and infrastructure depends upon ports, railways, roads, warehouses, shipping and logistics companies because they are the primary players dealing with containers. The advancement in overall trade and benefits due to adoption of containers for transport has brought forward the term “Trading in the Box”.
While the Non-major ports contribute significantly to the overall traffic, the containerisation traffic mostly belongs to the Major Ports. Only select Non-major / intermediate ports like Pipavav Port, Mundra Port etc. cater to the containerised traffic. The container infrastructure and trade is largely untapped by the non-major ports in India. The key reasons for it may be the greater drafts required for the large container ships or due to the large investments needed for container-related infrastructure.
Dedicated container terminals have been constructed across almost all the major ports to cater to the demand of container traffic. Private players have set up the CFSs/ICDs in proximity of the major ports.
MAjor AND NoN-MAjor PorTS ACroSS THE 11 INDIAN CoASTAL STATES AND INDIAN ISLANDS
WEST CoAST oF INDIA EAST CoAST oF INDIAMaharashtra – 55 ports Andaman & Nicobar Islands – 24 ports
Gujarat – 41 ports Tamil Nadu – 18 ports
Kerala – 14 ports Andhra Pradesh – 13 ports
Karnataka – 11 ports Orissa – 3 ports
Lakshadweep Islands – 10 ports West Bengal – 2 ports
Goa – 6 ports Pondicherry – 1 port
Daman & Diu – 2 ports
Total – 139 ports Total – 61 ports
Source: Deloitte Analysis, Indian Ports Association
gUjARAT hAS EMERgED AS ThE LEADiNg STATE iN CARgO hANDLiNg. whiLE kANDLA PORT iN gUjARAT ACCOUNTED FOR ThE highEST ShARE (14 PER CENT) iN MAjOR PORT TRAFFiC, NON-MAjOR PORTS UNDER ThE gUjARAT MARiTiME BOARD COLLECTivELy BOASTED ThE MAxiMUM MiNOR PORT TRAFFiC (71 PER CENT)
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Study and Survey Shipping & Ports
whiLE ThE NON-MAjOR PORTS CONTRiBUTE SigNiFiCANTLy TO ThE OvERALL TRAFFiC, ThE CONTAiNERiSATiON TRAFFiC MOSTLy BELONgS TO ThE MAjOR PORTS. ONLy SELECT NON-MAjOR /iNTERMEDiATE PORTS LikE PiPAvAv PORT, MUNDRA PORT ETC. CATER TO ThE CONTAiNERiSED TRAFFiC
ì POLICIES ANd TRENdS IN CONTAINERISATIONMore companies are considering transportation and logistics as an important factor for cost reductions and more developers are becoming interested in establishing the requisite infrastructure. The transport sector in India as a whole is currently undergoing a regulatory and policy level change. The following section provides an assessment of the salient features of various policy and regulations affecting the development of container infrastructure and in turn growth of container movement in India.
Infrastructure development is of great importance to the containerisation drive. The salient points for FDI in transport infrastructure sector are given as follows:
n 100 per cent FDI in maritime infrastructure like ports, terminals, jetties, harbors, merchant shipbuilding
n 100 per cent FDI in support infrastructure like warehousing, roads, inland.
ì hINTERLANd CONNECTIVITy FOR PORTSOver the last two decades, India has seen multifold growth in its maritime sector, both in terms of number of operational ports and cargo volume. Adequate connectivity to the port acts as a catalyst to the growth of a port aiding better performance. Lack of proper connectivity has affected the growth and prospects of many ports. Despite having proper depth and adequate facilities, these ports are stranded for the want of containerised cargo, while the other ports are burdened with an excess they can’t handle. Keeping this in mind, the Government has already passed some regulations regarding the minimum required connectivity to the major ports. For
example, the Committee of Secretaries (CoS), Government of India has recommended that a minimum 4-lane road and double line rail connectivity be provided at major ports. Minor ports, which are now showing high growth, also consider connectivity as an important parameter to further growth in business.
The capacity and quality of the existing road/rail connectivity to Major Ports in India requires improvement to enable smooth inflow and outflow of cargo. The projects on rail and road connectivity are implemented by the Railways and National Highways Authority of India (NHAI) respectively, but in several cases, a significant financial contribution is also made by the ports. To understand the requirements of connectivity, we have to analyse the movement of cargo.
The requirement of ideal transport varies for different commodities. For example, coal is preferred to be carried through railway via rakes while petro-products are preferred to be carried through the pipelines or by lorries carrying huge containers so that it is easy for distribution to various users. The choice of development of the preferred/required mode of transport depends entirely upon the share of different types of cargo handled by a port. For example, if JNPT specialises in containers and its maximum connectivity projects should be focused on the road and rail connectivity. In addition to cargo-type, the place of delivery of cargo and the feedback from the current and probable customers should also be accounted for while assessing the connectivity requirement. Alternative modes of transport like coastal shipping which is more efficient, eco-friendly and cheaper must also be considered.
ì POLICIES ANd REGuLATIONS One of the functions of the Ministry of Shipping is to address the issues arising in the port sector and to facilitate the maritime development. The Ministry of Shipping and Directorate General of Shipping should also revise various rules / regulations meant for the promotion of the industry on a regular basis, in accordance with the international standards.
The prominent acts that guide the Indian Maritime Industry are Merchant Shipping Act, 1958, Major Ports Trust Act, 1963, The Draft Ports Bill, 2011, Cabotage Law, The Land Policy for Major Ports, 2010 etc. These policies and regulations should ensure that the Indian mercantile marine is efficiently maintained, safety in shipping and conservation of ports remain a priority, and stability is provided to the Indian bottoms.
Source: Indian Ports Association (IPA), Deloitte Analysis
CAPACITy UTILIzATIoN AT MAjor PorTS
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Port Performance Indian Ports
TRAFFIC hANdLEd AT mAJOR PORTS ( d u R I N G A P R I L T O N OV E m B E R ’ 2 0 1 1 V I S - A - V I S
T O A P R I L T O N OV E m B E R ’ 2 0 1 0 )
(in ‘000 Tonnes)
Port P.O.L Iron ore
Fertilizer Coal Container
Fin. Raw Ther-mal
Cook-ing
Ton-nage
TEus OtherCargo
Total %Var.against2010-11
Traffic period
% variation from previous year -3.33 -35.89 -28.23 -19.56 4.44 -9.20 3.20 0.69 4.12 -4.89
(**) Refers To Dry Bulk Cargo for Mohp (Mech) and Berth No. 10 & 11 (Conv.)
Source: Indian Ports Association
(*) Tentative Calculations (**) Refers To Dry Bulk Cargo For Mohp (Mech) And Berth No. 10 & 11 (Conv.)
Note : % variation in Negative Denotes improvement. Source: Indian Ports Association
Port Performance Indian Ports
FAULTy STEPS AND POLiCiES viz. ThE hUgE hikE OF AiRPORT ChARgES AT igi AiRPORT, ExORBiTANT TAxES ON AviATiON TURBiNE FUEL (ATF) AND ExiSTiNg FDi POLiCy FOR iNvESTiNg iN iNDiAN CARRiERS ARE ThE MAjOR FACTORS ThAT ARE jEOPARDiSiNg ThE FUTURE OF AviATiON iNDUSTRy iN iNDiA
hikE iN AIRPORT ChARGESdelhi Airport to face consequences, says IATAThere are huge possibilities of downturn of traffic at igi Airport owing to the hike of airport charges at this airport by 346 per cent. According to Tony Tyler, Dg & CEO, iATA, air traffic will be reduced from this airport if the same is not rationalised. Delhi international Airport Limited (DiAL), however, maintained that the hike was obvious and it would not harm consumers.
in view of the turbulence that the aviation industry is facing in India, the recent hike of airport charges at the IGI Airport in New Delhi will put the entire sector in
serious crisis. There is a strong possibility that consumers will bypass this airport by choosing alternative airports or mode of transport to avoid the extra burden on them. The ultimate loser will be the airlines and allied service providers, and of course the gateway airport itself. Experts believe that this would be a serious shock for the entire civil aviation industry in India.
ThE CRISISExpressing his concern while speaking at a CII-IATA Aviation Meet on ‘Building the Future of Indian Aviation’ in New Delhi, Tyler maintained that despite huge potential of becoming an aviation hub, India is in deep crisis as far as the growth of this sector is concerned. Faulty steps and policies viz. the huge hike of airport charges at IGI Airport, exorbitant taxes on Aviation Turbine Fuel (ATF) and existing FDI policy for investing in Indian carriers are the major factors that are jeopardising the future of aviation industry in India.
“It’s time for a grand plan to build India’s aviation future and thereby strengthen the Indian economy. Therefore, this crisis must be resolved with coordinated public policies. To do that, we need an ‘India Inc.’ approach that addresses the crippling issues of high costs, exorbitant taxes and insufficient infrastructure,” stressed Tyler.
According to him, expense is the prime concern for airlines at this moment. “Accordingly, low cost with sufficient and world standard facility would help an airport to become a successful hub,” Tyler maintained. He also observed that at present structural issues
and policies are spoiling the future of aviation industry in India. At the same time, foreign carriers are losing interest in this country.
Tyler underlined the fact that to operate IGI Airport, Delhi, DIAL pays 46 per cent of top line revenue to the Airports Authority of India (AAI) as a concession fee, much of which is used to subsidise other public sector airports. “This is in contravention of international standards. It distorts competition and compromises Delhi’s cost competitiveness,” Tyler argued.
Tyler urged the government to initiate deliberations on utilising the 46 per cent concession fee to offset the increase in aeronautical charges.
“This could be the basis for a way forward that protects the interests of DIAL, its airline customers, users and the economy. And it is important that we find a workable solution soon to avoid Mumbai, with a similar concession structure, falling into the same dire situation,” Tyler shared.
He also urged for quick decision and announcement of the much desired National Civil Aviation Policy, to end ambiguity in policy and clear strategy on the development of the aviation industry. “There will be no success if policies are not coordinated, or if they work at cross purposes. Aviation is the responsibility of the Ministry of Civil Aviation, though, its success rests on the coordinated efforts of other Ministries,” Tyler viewed. He strongly advocated that India needs to adopt an ‘India Inc’ approach for the greater interest of the civil aviation industry as well as the entire economy of the country.
