A Logistics and Infrastructure 6 Aug

8/7/2019 A Logistics and Infrastructure 6 Aug

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Logistics and inrastructureExploring opportunities

Business BankingYour Partner In Growth


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Contents

1. Executive summary 3

2. Macro-economic overview 6

2.1. I - I 6

2.2. T w I 10

2.3. I w w 10

2.4. T 12

3. Logistics industry overview 13

3.1. E 13

3.2. O 14

3.3. T I 16

3.4. S SME I 23

4. SMEs in logistics: Succeeding in the market place 24

4.1. C SME 24

4.2. A & 31

4.3. S-W-O-T A 31

5. Transport inrastructure 33

5.1. T 33

5.2. Rw 34

5.3. R 36

5.4. P 38

5.5. A 41

5.6. I 44

5.7. T PPP 45

6. Conclusions 46

Abbreviations

Bibliography 49


3/52

3

1. Executive summary

Macro-economic outlook

C

w

w

w

, w,

I

. Hw I A

. T GDP w 6.7

2008/09,

2009. A ,

, w,

w .

H w - w

w. T

w ,

z SEZ, FDI -

. Hw

(

, , w),

w. G

w

.., G , , ,

. T

. I ,

w . T

I ( 13-14 GDP )

w U.S (9.5 ) & E

(7.15 ). T

,

.

Logistics industry overview

T

.

S, ,

,

.

A ,

w - z

, - .

C

. I

D, w

w w . T w

,

. S

w /

-.

Largelogisticsspend

Relativelyhighvalueproducts

Manageacrossmultiplemodes

Managecomplex,timesensitivesupplychains Diversesupplychainfootprintsincludingtheirown

,

Maturityinoutsourcingcycle(currentlymanaging

3PLs)

Decentralizedmanagementoflogistics

Complementarytocurrentbaseof4PLbusiness

Highcubeandhighweightproducts

Competitiveness o SMEs in logistics

T SME

w . A z

,

SME . T, ,

, I

SME ,

w

. S S &

M E

, w

SME w

.


4/52

4

D S & M

,

I

,

particularlyfromtheperspectiveofaLogisticsService

Provider(LSP).Thesurveycoveredplayersacrossa

w

w, , , , w, -

&

.

T

thebiggestgrowthopportunitybytheIndianLSPs.

B, , z

w

. I w, w

, . T

w

w

w

. G ,

competitivenessofIndianLSPs.

O

, , ,

- .

Further,theLSPsaretypicallyresortingtoinitiatives

,

z, , w

,

. W

-

w & ,

G

S T (GST) G

. O

, j

I . T ,

, .., ww

. T

,

w . O ,

, w .

Transportation inrastructure outlook

T 11 A P

4.6

GDP, w 7 & 8 . T C

R I M

S P I,

w

FY 2008-09. T I

w 2008-09 833

850 . T Rw M

- w

. T Rw w

w - .

P

w. F, w

,

.


5/52

5

T j 530.35

2008 2009, w w 7.9

w

2.1 519.31

. T

j

. I ,

, , /

. O , w G

,

-j

. T w G

w 6

20 PPP R. 3300

, w 3 ,

w . W w

,

w . S

, ,

, w,

, , ,

. I

, ,

MRO , ,

w, w

.

I

j

. H , w

,

. A

R 1,00,000

12,000 F.Y 2009-10

- , w

. I j ,

w ; F I (FI)

w . Nw w -

, , - ,

/ w /

j.

T w

w. T

, w,

j, / -

j.

P P P (PPP)

. G

, PPP

w ,

.

Conclusions

Gz, ,

w

w

. F

,

w . A

w

. I

. T w

w

SME

. T

w

.


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6

US $ 251.7 2007-08,

w 14.3 . I

w

I ,

w

.

Indias EXIM trade trends in billion US $

S : D G F T

2. Macro-economic overview

2.1 Indian economy - Impact o global economic

decline

M

w . I

w w G

D w w,

. A ,

. T

j , w -

w ww. C

w

w

w

, w,

,

I

.

T w I

w :

TradeDecit:Astheglobaleconomyshrank,so

w I . T

w w w

. F,

2008 ,

. I

2008-09 w US $

168.7 US $ 163.1 2007-08,

w 3.4

. O ,

2008-09 w US $ 287.8

A are up in petroleum prices in 2008 led toa sharp rise in import bill, thereby adding tothe amount o net imports

$

300

250

180

120

60

0

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

E I


7/52

7

Fiscaldecit:Fiscaldecitisaneconomic

, w G

(

w). I

w .

I C

9.5 GDP 2008-09

w. I 4 j

(.., 2008-09 -- 2007-08). T

w 2007-08

2008-09

G w

ww w

. T , F M,

, A

A .

Combined scal decit (as a % o GDP)

S : M F, GOI

A j

w, w

, w

w . F,

w

2009-10 -

5.5

w . A ,

w

G z

.

IndustrialProduction:Closeontheheelsofglobal

, I 2.6

2008-09, w 8.5 2007-08.

I 0.75 M 2009.

M 1.4

R.1.25 J-M 2009,

j 0.9 2008. I , A w

1.4

. T

. T

A 0.7

. T

. Hw,

w

. I , - w

j .

Indias combined fscal defcit o the Centreand the states at close to 10 per cent o GDPin 2008-09 is among the highest in the world

10%

8%

6%

4%

2%

0%

2005-06 2006-07 2007-08 2008-09


8/52

8

Ination:ConsumerPriceIndex(CPI)-based

--

. T,

j RBI

, ,

CPI- .

C w

9.6 F.

A , w 8

. A 6

2009 4.7 2010, w

A & w .

T ww I

,

w

w 2003/04 2007/08.

Nw , I

A

.

Percentage Y-o-Y GDP change

S : IMF, WEO

I w M

2009,

w . T

I w

& . A

w

w 5.8

-- M 2009.

T GDP w 6.7 2008/09,

2009.

10

8

6

4

2

0

2004 2005 2006 2007 2008 2009 2010

Consumer price infation (average %)

S : E I U E

W A ( J) I 2010 2009

-10 10-5 50

V

T

M

I

C

S

K

H K

J

I


9/52

9

Real GDP growth (% change)

S : E I U E

Industry Q1 Q2 Q3 Q4

A 3.0 2.7 -0.8 2.7

M & 4.6 3.7 4.9 1.6

M 5.5 5.1 0.9 1.4

E 2.7 3.8 3.5 3.6

C 8.4 9.6 4.2 6.8

T, , . 13.0 12.1 5.9 6.3

F, 6.9 6.4 8.3 9.5

C 8.2 9.0 22.5 12.5

GDP 7.8 7.7 5.8 5.8

S : M F, GI

The real GDP grew by 6.7 per cent in 2008/09,

and expects a revival in the latter part o 2009

10

6

2

-2

-6

2004 2005 2006 2007 2008 2009 2010

W A ( J) I

Quarterly estimates o GDP or 2008-09 (at 1999-2000 prices) % chg


10/52

10

2.2 The way ahead or the Indian economy

I

, ,

w

ww. A

, ,

w, w

. F Oz EC- D (OECD), A

D B (ADB) E I

U

. T OECD j

2009 w, 5.9 . T

ADB w w w ,

5 .

N z

bouncebackuntilmid-2010.Lookingatabroader

, I C

M I E (CMIE) 5.8 w 2009-10

w 9 w 2011, w

w .

W B j 8 w

I 2010, C w

7.7 .

T w . O

, w

6 , w

w , .

T w

w . W

w , w

w w

w , -

. I w

w .

T

- PSU,

, w, , ,

.,

. F

, , W B

,

.

2.3 Interlinking sustainable economic growth

with logistics

T, - w

w. T

w ,

z SEZ,

FDI -

. Hw ,

w. A

w, w

. T

w EXIM , w

w .

G

w ..,

G , , ,

. T

.


11/52

11

A w

w ,

,

w, w, . I

w

, j

z 37 w

I , .

A E F Y P

w. Hw, w - w

ww,

. B , w

w, w

w w w .

Transportation inrastructure Decit, eleventh plan targets, & permissible FDI

Sector Defcit Eleventh plan targets FDI Envisaged

investment size

R / w 65,590

w:

Compriseonly2%ofnetwork

Carry40%oftrafc

Ofwhich12%is4-laned;50%

2-; 38%

6-lane6,500kminGQ

4-lane6,736kmNS-EW

4-lane20,000km

2-lane20,000km

1,000kmexpressway

100 % FDI US$ 78.5

P I

Berths

Rail/roadconnectivity

Nw :

485millionMTinmajor

345millionMTinminor

100 % FDI US$ 22

A I

Runways

Aircrafthandlingcapacity

Parkingspaceandterminal

Modernize4metroand35

-

3greeneldinNorthEastern

R (NER) 7othergreeneldairports

100%FDIforexistingairports

(FIPB FDI

74%)

100%FDIunderautomatic

49%FDIispermissiblein

,

US$ 7.74

Rw Oldtechnology

Saturatedroutes

Slowspeeds(freight:avg

22; :

50)

Lowpayloadtotareratio(2.5)

8132kmnewrail

7148kmgaugeconversion

Modernize22stations

Dedicatedfreightcorridors

100% FDI w

US$ 65.45

S: P C, IBEF


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2.4 The logistics cost actor

Logisticscostisanimportantfactorthataffectsthe

w . Hw,

I w

U.S. & E,

I . I

w j ..,

60 . I I, 13-14 GDP

US (9.5 ) E (7.15 ).

A , I .

D j

, w

w

. T j

z ,

w, providing3PLservices.Themajorelementsoflogistics

I I ,

w, -

. T

,

.

W I

, w

.


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13

3. Logistics industry overview

Logisticshasalwaysbeenacentralandessentialfeature

. D ,

z

. T

.

Hw, ,

,

z w :

Appreciationofhighlogisticscostandopportunities

j

Increasingcompetitionforbothusersandprovidersof

, w

Newtypesofoperations,whichcanforcechanges

j--,

, ,

.

Needforimprovedtechnologyforidentifying,

R , w w

,

w

. A,

.

3.1 Evolution o the global logistics industry

Gz, ,

w

. T

w w

. A

, w

- z ,- .

Evolution o the logistics model

S : D R

C -

w

. T

, ,

IT

. T

specializedfunctiontofourthpartyLogistics(4PL)and

fthPartyLogistics(5PL)companies.

FirstandSecondPartyLogisticshandlealllogistics

, w, w

w

w . W

one-stopsolutions,many2PLhaveevolvedinto3PL

w

. T

;

to2PLs.Whilethe2PLputsinhardcashtangibleasset,

the3PLputsinintellectualproperty.

F

, , w

z z , . T

gurebelowillustratesthegamutofservicesthata4PL

w .

5PL(electronicco-ordinationof

-- w)

Reducedassetinte

nsity

Increasedinformation

intensity

3PL(Supplychainexpertise

w )

2PL(pre-dominatly

)

4PL(SCMlimitedassetprovision)


14/52

14

A ,

4PLmustcomprehendbroadanddeepexpertiseand

capabilities.Sincetheadventofthe4PLservice,the

- ..

z - -.

Akeyfunctionofthe5PListoaggregatethedemands

ofthe3PLintoabulkyvolumefornegotiatingmore

w

w

.

3.2 Opportunity indicators or global logistics

sector

I

D, w

w

w

. T w

,

. T w

. T

w /

w -

Largelogisticsspend

Relativelyhighvalueproducts

Manageacrossmultiplemodes

Managecomplex,timesensitivesupplychains

Diversesupplychainfootprintsincludingtheirown

,

Maturityinoutsourcingcycle(currentlymanaging

3PLs)

Decentralizedmanagementoflogistics

Complementarytocurrentbaseof4PLbusiness

Highcubeandhighweightproducts

The 4PL will serve as the single point o contact orcustomers, managing a comprehensive set o supply chainand logistics services that are executed by other providers

4PL Provider managed services

4 P L

Order to deliver supply chain services

Transition & support services

Provider managed services

3PLprovidedservices D C

C T

F

Fw T T

B W O

S : D R


15/52

15

Largelogisticsspend Industrieswhoselogisticsspendissignicantrelativetothevalueofitsproductsnaturallyplaceahigh

R Industrieswithhighvalueproductsplaceahighdegreeofimportanceonlogisticswhichcanimpact

M Logisticsfunctionsoperatingmultiplemodesoftransportfacesignicantissuesindealingwiththe

M ,

Themorecomplexasupplychain,andthemoreimportantitistomanagetimeacrossit,themorelikely

D ,

w ,

Diverseandwidespanningsupplychainsarecomplexanddifculttomanage.Companieswithsuch

w

M

(currentlymanaging3PLs)

Historyhasshownthatoutsourcingisanevolutionaryprocessandthatindustriesthathavealonger

w

Dz

Thelogisticsfunctionisdifculttomanageacrossgeographicboundaries.Companieswithdecentralized

C

of3PL/4PLbusiness

Industrieswhoselogisticsand/orproductattributesarecomplimentarytothe3PLs/4PLsbaseofbusiness

( w , .) (..,

z )

H w

Industrieswiththeseproductattributesoffergreateropportunitytoleverageandbetterutilizecommon

The description o the logistics requirements or each o the attributes, is mentioned below:

B , w w

.

A OEM & Thisindustryoffersobvioussynergies,largemarketpotentialandthemostimmediateopportunitiesfor

3PL/4PL

However,autosuppliersarehighlyfragmentedwithveryfewhavinglargelogisticsspend

H Thisindustryissimilartotheautoindustryintermsofshipmentattributes

Howevertherearechallengestopenetratingthisindustry,duetothesmallersizeandregionalfocusof

M Logisticsowbalanceopportunitiesexistwithintheindustry;majorityshipmentsowtoautomotiveand

However,theseindustriesarefairlyverticallyintegratedandtraditionallymanagelogisticsoperations

-

T Thisindustryisattractiveintermsofmajorityshipmentattributesinclud ingcomplexsupplychainswith

--

R Thisindustryofferstremendousopportunitiesfromsynergiesinshipmentattributes;largeplayersare


16/52

16

3.3 The Indian logistics sector

T I

w /

w

,

/ w, -,

, , w

. I w GDP1 R31,297 13

GDP z R.

4,068 . T w

-- w 2002

USD 120 ( R.5,400 )

2015.

W w I

z

w, z

z . Tw

w- w

I 80% . T

w

& w

, w .

I

, I

w

third-partylogisticsserviceproviders.TraditionallyLSPs

(LogisticsServiceProviders)concentratedmainlyon

j

. Hw, w

, w

,

, .

Transporters with eets smaller than fve trucks accountor over two-thirds o the total trucks owned and operated

in India and make up 80% o revenues

3.3.1 The growth drivers

T

,

w

. F , w z

I

w.W ,

, z ,

w I,

w:

Key growth drivers or the logistics sector

Riseof3PLservices-Thelogisticscostisad irect

. I ,

-

shareof3PLserviceprovidersvis--vistheshareof

.

S

I of3PLservices

R

Gz

I

w

I

Gw D


17/52

17

I J,

U S, C E U

,

,

w

. T

hasindeedbeenderivedfromtheshareofthe3PL

. H

w (I, C, Bz).

National logistics cost vis--vis the share o 3PL in the

logistics market

T

w

3PLsinnationallogisticsmarket.Thegreaterthe

shareof3PLsthelesseristhenationallogisticscost

thushighlightingtheimportanceof3PLsinlogistics.

M I z

w

.

C

requirementofspecializedThirdPartyLogistics

S P w

. A

estimates,itisexpectedthat3PLsolutionsinIndia

w w CAGR 20%

2009-15.

Investmentsininfrastructure-Awell-knitand

w

. I

w

w w . T

I

w, . T w

w w ,

. W j

,

j N M

D P

,

I .

G w ,

w 4.6% GDP C w 10% GDP. T P

-

8% 2011-12. P

w w

j . I

2009 w w w

I . T

j

,

w, w, w, , w

. I

PPP j

w w

w

PPP w .

T

, w w w

.

Country Logistics cost as a

% o GDP

Share o 3PL

I 13.0 14.0% Lessthan10%

C 18.0% Lessthan10%

USA 9.9% 34%

E 7.1% 54%

S : V


18/52

18

Recognitionoflogisticsasanintegralpartof

-O ,

I .

T w

w

- w

.

F ,

w .

A ,

, ,

.

A w

/

.

Qualiedworkforce-Foranindustrytoprosper,the

w. W

w

w w

w . Hw w

w

, w

w .

F w ,

w

z :

Toleadthedesign,creation,congurationand

Tocreatetheframeworkandthedialoguethat

w

Todrivethesystemsandmonitorandreportthe

Toreviewhowproblemscanbesolvedand

Relationship o logistics with other corporate unctions

With production With marketing With fnance

P

P

P w

Rw

C

P

D

I

O

S-

S

E

D

S

Source:HandbookofLogisticsandDistributionManagementbyAlanRushton,PhilCroucherandPeter

B

There is an inverse relationship betweenlogistics cost o a nation and the share o 3PLsin national logistics market. The greater theshare o 3PLs the lesser is the nationallogistics cost


19/52

19

E I

, ,

,

w .

I ,

HR w

. G

I , I

w w

w .

Streamliningoftheindirecttaxstructure-InIndia,

w

. M

w

C & FwA (CFA) , w ,

- C S T (CST). S

w 25 50 w I,

w

( 5) C (

10). T V A T (VAT)

G

S T (GST)

w,

,

.

Globalizingofmanufacturingsystems-

Gz

w

. T

, w

.

3.3.3 Opportunities in the logistics space

T I

w ,

, , ,

FMCG ,

z .

S w

.

Cold chain storage and related logistics

C

. E z I -

R. 8,000-10,000 (US$ 1.80 - US$ 2.27

) w 20 25

. I w w

R. 40,0002 (US$ 9.09 B) 2015.

A ,

4,762 I w 196 , w

81

.

I w

w, .

P - w,

. T A-

- ,

, ,

.

There has been a growingimportance o the role and

contribution that the logistics /distribution manager makes tocorporate strategic planning


20/52

20

Volume wise perishable products share in India

N: O ,

S: V

A , 104

/

. O 100

- 4

. O

100 96

. O

, 86

w

w w

10

w

. A

.

S

-

ContainerCorporationofIndia(CONCOR)ismoving

w

w --

.

Withaviewtoincreaseshareofprocessedfood 20% 6%,

30 2012

- . T

w w,

. T

SEZ

. C

,

w R 50

.

Thegovernmentplanstoestablish50coldchainw,

, w w

- .

I , -

, w.

TheAgriculturalandProcessedFoodProductsExport

D A (APEDA)

C P C B, Nw

D, C, T, H,

M . T

CPC 2.16

. T

CPC. I ,

APEDA MU CPC

C, A, A, K, B,

Lucknow,andGoa.

M

F

F

O

57%

1%

39%

3%


21/52

21

Air cargo

T

w .

W

w ,

. T G

w

. I

. A

N M C A. T

.

A I 1% w

. T j (M, D,

K, C B)

88% I. Gw

/ - ,

. I j

. T

( F.Y 2008-09) w

w

. T 2008-09

ww.

Cargo volume handled at international and domestic

airports in India

S: A A I

T j I

, , ,

, ,

, w, . D

C ,

, & jw, , IT &

ITES . T C A M

w

. T w

j . U w

, C P C (CPC)

w , w w

.

C 000 T

2000

1600

1200

800

400

0

2004-05 2005-06 2006-07 2007-08 2008-09

I

D

T

The Civil Aviation Ministrys

proposal to rame a policy or thedevelopment o airportsexclusively or cargo operations isencouraging and oncommissioning o these cargoairports in due course o time will

provide a much needed trigger tothe air cargo segment


22/52

22

S w

:

Providingvendorsandindustryinthenon-metrocities

w w

Investmentinaircargoinfrastructurewould

w

w, , D

C .

Theefciencyandthereachoftheexpresscargo

w

IndiancompaniescanexploittheirinherentIT

, ,

-

Domesticairlinescanleverageonthedevelopment

H--

Material handling equipment

T I M H E (MHE)

R 5,000 . T

I

. M

, , ,

, , .

T, w

, w

w ; w

w . T w ,

, ,

w.

D

w . O

w w

. A w

, w

. S

w ,

, ,

, . I ,

j w

,

w .

Reverse logistics

M

. T

, ,

,

/ - .

R w ,

, .


23/52

23

W

I ,

w

w w .

T w

. A w

j w w-- .

W ,

-,

w

w . Hw

w

,

w w

, .

T

w

. A,

w,

w

. F ,

w

. T

w

, w

C C

w. W

;

I. T

w .

T w I, w

.

3.4 Signicance o SMEs in the Indian logistics

industry

S -z (SME) ,

.

A W A S M

E (WASME), 5 SME

I 80%

. I

, 20

, 35%

40%

.

T SME

w . I

z

SME I . T

S M

E (SME) w j

. I

w

4 .

T

.

W , G I

,

w

. S S & M

E

, w

SME w

.


24/52

24

4. SMEs in logistics: Succeedingin the market place

T w

w . T,

j

. T

w w

w, .

T j SME ,

, w . R,

, w w ,

w,

.

Logisticsserviceprovidershavinginvestmentin

( )

R.10 (US$ 0.2 ) R.2 (US$

4.1 ) S

R. 2 R.5 (US$10.3

) M 3 . T,

w ,

. T

, , w

inthelevelofcompliance.Landtransportationin

w

w

,

.

U

zzw ;

. H, SME

.

SME

. M SME

w-,

w w

.

A I

, w

I. M

I w : w , ,

w . T w j

,

-- .

I ,

- w

, w SME

ww.

4.1 Competitiveness o SMEs in logistics

D S & M

I

,

particularlyfromtheperspectiveofaLogisticsService

Provider(LSP).Therespondentcompaniesbelongedto

w

w, , ,

, w,

- .


25/52

25

A , D

, w w

-- . I

, ,

,

w

. T , w.

4.1.1 Internal actors aecting competitiveness

Services

I , w

w

z w

w T

. T w

, w

w .

F,

w

z

/ . W

w

, z

,

w

. Oz

j .

I I, w

w ,

w

.

Foreign alliances

Anothertrendwhichisfastpickingup,isthatofLSPs

w

. H ,

SME

. I ,

, w

.

Key value propositions o alliances

S: D

Cost

T ww

j . T

w w

w w 10 30

70 .

R

I

Sz

P

C

C

T

F

M

V

K

Users o logistics services are no longer lured by

buzzwords or big names; the ocus is clearly on costs anddelivered value. Hence, the emergence o SMEs as strongregional or sectoral players is imminent


26/52

26

The ear o price sensitive Indian market, notbeing able to bear the additional cost otechnology acts as an impediment

W j

,

. : B

I U.K. w US $1000

TEU , w US $300 TEU. U

w ,

.

T ,

. T

. Oz

w w

w SME

. T

.

Training

A

z,

w

. T

, w

w w ,

w .

A

/ w w, w j

, w

. A

,

, w

j . T

,

.

Technology

G,

z . Hw,

implementedbytherespondentLSPsismoreorless

,

. A ,

--

. T z

G P S

(GPS), W M S (WMS), R

(RFID) SME I

w.

T I ,

. A, w

& w, w w

z.

T w w

theperceptionofLogisticsSMEsthatwerecoveredby

. T w

w, w

UPS, SME I. T

w

, w w

D . F , w

thebiggestgrowthopportunitybyLogisticsSMEstoday.


27/52

27

Perception o growth opportunity by logistics SMEs

P w

. Nw ,

thecustomerschoiceofanLSPisdrivenbyasetof

, w

.

Key determinants o choice or selecting a LSP

S: D

R SME

R w w

35%

30%

25%

20%

15%

10%

0%

Oz I w

M

F &

IT

0 1 2 3 4 5 6

Choice o an LSP

T

C

&

Sz

Nw

C

S

E

R

S: UPS A B M 2009; D S A


28/52

28

I ,

/

w

& w . B

, z

,

quantumofordersexecutedbytheprospectiveLSPin

. T , , IT , --

, , .

O

:

Transactionalrelations:Thisismostlydrivenbythe

& w

theservicesoftheLSP.Althoughonanaveragemost

-- ,

LSPsaretryingtopitchinforlongerrelationshipsas

w w .

Servicelevelagreements:ServiceLevelAgreements

(SLAs)setoutperformancestandardstobe

, ,

, . S

efciencyandaccountabilityinthebusiness.SLAsare

w

. I

w, ,

likelytodemandstringentSLAs.Itisunderstoodthat

adherencetoSLAsinIndiaisaround80to85per

w 95

. T

aboutSLAsastheyaremoreworriedaboutthecost,

ascomparedto3PLswhomonitortheSLAsclosely.

Benchmarking:Eachplayerseemedtobeguided

w . I

w

w SOP

,

w, ,

. E , w, widelyundertakenbytheIndianLSPsyet.

Innovation:Thisisonesuchfactorthatcanhelpa

.

T

,

. I

, , ,

.

U, I

SME

4.1.2 External actors aecting competitiveness

T

. I

, w, , ,

I C D (ICD) & C F

S (CFS), w

& .

The survey responses indicate that pure play transporters

generally are not very conscious about SLAs as they aremore worried about the cost, as compared to 3PLs whomonitor the SLAs closely


29/52

29

C

Nature o

bottleneckArea Cause Eect

I

P

I j H j

U -j

O I

Lackofwarehousing Longwaitingtime

A

Fw (D, M, K,

C, B, H)

C

N &

Lackofequipmentforodd-sizedpackages,

,

I /

H (

)

R

B D w &

I / B ,

I I

Rw

T /

/

C w & w

Limitednetworkandterminalsofprivateplayers

( )

T &

I / T

C

C/ CFS/ ICD

U / z Lessintegratedservices,inefciency&resultant

I I

R

C

O . H

E EDI

I &

C C

I w

T NCR

C

B

A ,

M, P, .

I &

w

I

(.

)

E B ,


30/52

30

T ,

respondentLSPsareresortingtothefollowing

:

Negotiating&re-negotiatingcontracts

N w w

, w

. N w (

) w

w -.

Loadoptimization

T j

w &

z.

EfcientRoutescheduling

T w

w w

, &

w

w. T

w

advantagebytheLSPs.

Nature o

bottleneckArea Cause Eect

A ,

. B ,

. : T

timeforcontainerfromLudhianaJNPT(1500kms)

2-3 . Hw,

, w .

TheLSPshavefoundawaytomitigatethisproblem

w , w

ww. T

, w,

-j . F,

w

w .

F , w

& ,

:

Variablevesselchartercosts

Fluctuatingoil/fuelprices

Fluctuatingexchangerates

Non-availabilityofreturnloads

Highhaulagerates

R

T

A

/

w

D w

H P / A,

j w

M (T + 12

)

R I

R /

I

C M ICD / CFS / SEZ,

, M S

T R, & S M P

/ S

C , &

Law

A Rw A,

M S A, I P A, MMTG

A

Sj -


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31

Areas or improvement / challenges

T j

w ,

I .

T w ,

SME. R

, I,

w w ,

.

4.3 S-W-O-T Analysis

S

. T, ,

&

w (), & ().

The ability to provide the most cost eectivedistribution network is being used as acompetitive advantage by the LSPs

Levelofimprovementdesired

R w w

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

R

I

IT A

A

Qualityofmanpower

T

0 1 2 3 4 5 6 7

IncreasedadoptionofIT

T IT

w

w . T w

w .

A w MIS

,, ., S

IT

w

ERP .

Savingonlogisticsrelatedcommunication

I

,

w. M w . T

,

.

Cuttingdownonmanpower

T ERP

, w

. M w

j

.

Othermeasures

T w ,

w .

4.2 Assessment o challenges: Internal & external

A

, w

w SME

, w:

S: UPS A B M 2009; D S A


32/52

32

A

, w,

,

w . T

S-W-O-T w I

LogisticsSMEs,whichiselaboratedinthegurebelow:

Strengths

Mostenterprises,byvirtueofbeingownerdriven,

Relativeeaseatllingupvacanciesinoperations

Withoperations&agencynetworkprimarily

, j

Lowattrition,partlyaidedbythecurrentdownturn,

&

HR

Weakness

Thefragmentednature,aninherentweaknessof

,

, ,

AcommonproblemfacedbySMEsisthatoflimited

,

( ) z

SME

Lackofuseofstateofarttechnologies,ifsuitably

I , w

Inadequatecontrols&costconsciousnessamongstdriveLSPs,particularlyroadtransporters,oftenlead

w :

Opportunities

AlikelyboominConstructionandPharmaceutical

/ H w

opportunityforLSPsintermsofincreasedmultimodal

w & ,

w .

ProgressivereformssuchasintroductionofsingleG S T (GST) w z

w -

LSPstotrimtheirlogisticscosts

Governmentsplantoawardprojectsworth

R. 3,300 (US$ 67.9 )

/

schemeofIIFCLprovidethemuchnecessarypushto

w

theLSPs

Threats

Competitionfromlargeforeignplayerscanbe

,

&

Thedealtodealtransactionsandpricesensitive

natureofIndianmarketscompelstheLSPstocharge

w , w ,

Theimpactofglobalmarketconditionsonlogistics

w

,

w

S-W-O-T Analysis or Indian logistics SMEs

S: D

Strengths Weaknesses Opportunities Threats

Ownerdriven

Adequate

Regional

Lowattrition

Highlyfragmented

Lackofaffordable

Lackofuseofstate

Lowsafety

Promising

( &

)

Progressive

(GST)

Infrastructure

Competition

Pricingpressure

Inuenceof


33/52

33

5. Transport inrastructure

T 11 A P

4.6%

GDP, w 7 & 8%. W 8%

11 10% w I

,

w w

; w

, FDI I.T C R I

M S P I,

w

FY 2008-09. A

.

5.1. Trac perormance

R T w

2008 2009 833.31 MT w 2.0 w

, w

4.9 20072008.T 2008-09 833

850 . F

w,

w , w . T

882

PT j 530.35

2008 2009, w

w 7.9 w

. A 80

w ,

w ,

z

Trac handled at the major ports

S: M S

I

600

500

400

300

200

100

02004-05 2005-06 2006-07 2007-08 2008-09

(P)

Railways reight loading in million tonne

M Rw

I

1000

800

600

400

200

0

2005-06 2006-07 2007-08 2008-09(RE)

2009-10(BE)


34/52

34

A: T j (M, D,

K, C B)

80-85 I.

T I A 5,3,382

2008 2009, w w 3.4

. T w ,

w, w w 7.5 2007-2008.

F, 4,29,527 w

w 5.7 . T w

w 19.7 2007-2008.

Air cargo trac handled at Indian airports.

S : A A I

T w

,

.

5.2 Railways

I Rw (IR) I

,

w

. T z w A

w

63,332 . F

65% . T Rw M

I 000

1200

900

600

300

0

2004-05 2005-06 2006-07 2007-08 2008-09

I D

(

& ) R

5,479 C w R 8,722 , 31%

w R 12,683 () 2008-09.

T w z

w

, z

( ),

w R 2,642 R 6,356

2008-09. A, RwM

- . T

w , z

, .


35/52

35

5.2.1 Development needs

T w w

. T

j w

. T w

(DFC) ( w D

F C R B) ,

w I 2,739 . O

, DFC w w

. I

100 ,

. T j

2016-17.

Proposed dedicated reight corridor

Source:DedicatedFreightCorridorCorporationofIndiaLimited

5.2.2 Challenges

T Rw

. T Rw

R.6,600

R. 7,000

F.Y 09-10. A 60%

2009-10.

T w ww w . I w , Rw

R. 28,000 w .

T w

92.5%. S

Rw z ,

w ,

.

w ,

, ,

w

.

5.2.3 Opportunities

T J 2006

w

. A 16

. I

, w

Rw w w

w

- . P

w.

Ludhiana

D

Kj

A

V

S N

Hw

JNPT

Implementation details o the Dedicated Freight Corridor Corporation o India Limited


Western corridor Stretch Implementation period

P I Rw V (920 ) 2009-2016

P II V JNPT (430 ) 2010-2017

P III Rw D (140 ) 2010-2017

Eastern corridor Stretch Implementation period

P IA S M 2009-2016

P IB M Kj (710 ) 2010-2016

P II KhurjaLudhiana

(D)

2011-2017


36/52

36

T w

w .

T

--

. T w w

,

.

I Rw C T C

(IRCTC)

, z j

.

IRCTC

j w P

P . 20

w. S

:

Multi-functionalcomplexeshavingshoppingfacilities,

, 50

w ,

Privateownershipofspecialpurposerollingstock

w

MegalogistichubsbeingplannedalongsideEastern

W D F C

5.3. Roads

A w

w

. R

- ,

w , w . I

w w,

3.34 U S.

I 61

85 . A w

w 66,000

( 2% ), w 40% .

5.3.1. Development needs

Road sector breakup

S : M R T Hw

T w,

N Hw

D P (NHDP) .

T N Hw A I (NHAI)

NHDP T NHDP w

50,000

R.3,000

w w

I.

80%

4%

14%

2%

N w

S w

D

R


37/52

37

T

j .

H , w

, .A

R 1,00,000 12,000

F.Y 2009-10 -

, w .

I -

. R j

R 2,00,000 w,

M R T Hw

w

j

. E

, ,

w , ,

. T

w 20 .

5.3.2 Challenges

T

. T

Hw, w j

,

. I

. T NH w w,

G

N Hw.

Requirement o unds or maintenance o Highways as per the norms and unds provided

Phase Length(km) Description Target completion date

I 7,521 Comprises5,846kmofGQ,981kmofNSEWcorridor,380kmof

315 w

December2009(GQby

D 2008)

II 6,805 C 6,319 NSEW 496

w

D 2009

III 12,109 F- 12,109 w w ,

P IIIA IIIB, BOT

M 2012

IV 20,000 Tw- w 20,000

w BOT

D 2015

V 6,500 S- 6,500 w DBFO D 2012

VI 1,000 C 1,000 w DBFO D 2015

VII - C , , , . BOT D 2015

Year Requirement

as per norms

Amount

provided

Shortall % Shortall

2002-2003 2200.00 800.00 1400.00 63.64

2003-2004 2200.00 731.74 1468.26 66.74

2004-2005 2480.00 745.56 1734.44 69.94

2005-2006 2100.00 868.10 1231.90 58.66

2006-2007 2012.00 814.38* 1197.62 59.52

A ,

w

, w ,

,

,

w

NH w.

H

N Hw.

S ,

w,

, , w

, w ,

, . T w . O

, C V

I 240-280, 680-700

.

S: R w R ( 2007-12) 11


38/52

38

D C (DFC)

D-M I C (DMIC)

5.3.3 Opportunities

The Delhi-Mumbai Industrial Corridor

I w

w I

. O I

j , D-M

I C (DMIC) j

1,500 w N. D M. I

. J

j,

T-O

. DMIC w

,

. T $ 90 j

.

T w w 150

1,483 w

. I w I

D (22 ), H (148 ), U P

(22 ), Rj (578 ), Gj (565 )

M (148 ). T w

, 4,000 MW w

w I w 10 w

D, F, M, J,

A, V, S, N, P G

M. T

(MIR), DMIC.

5.4 Ports

P w

- . I

12 j (K, M,

Jw N, M, Nw M, C,T, C, E, V (Vz),

P K H 187

-j . O -j ,

48 ; .


I 11 j , 1

&187 -j . O -j

, 48 ;

. A 7 12 j I

100 ,

70-80 z.

Road projects in the country require around Rs 2,00,000crore over the next three years or which, the Ministry o

Road Transport and Highways are considering innovativefnancing instruments

Stretch covered by DFC and DMIC


Rj

Gj

M P

I

M

J

A

S

U

P

H D

I


39/52

39

Capacity utilization at the major ports ( 2007-08)

S: I P A

F, w

j

. W w 14.8 456.2

M MT j 2005-06,

2006-07 w 10.6

. D 2007-08, w w

5.4 j

4.4 2008-09.

M % C z

70

60

50

40

30

20

10

0

140

120

100

80

60

40

20

0

K H P Vz E C T C NMPT MGPT MPT JNPT K

13.74 43.58 42.43 64.59 57.15 11.56 21.48 15.81 36.01 35.12 57.03 55.83 64.92

14.56 46.70 56.00 61.15 53.35 13.00 20.75 28.37 43.50 33.05 44.70 54.34 62.60

94 93 76 106 107 89 104 56 83 106 128 103 104

T C Uz (%)


40/52

40

5.4.2 Challenges

Lackofproperfacilities,deeperdrafts,goodconnectivity

/

. A , w

- . T j I 1.77

4.82 . Dw EXIM

I w 1-3

adayatSingapore.Largervessels,havingthepotential

, I

. T

12 23 w, I

K, M,

E, G & K,

8 12 T

w w

w I C

T T V, C P.

P w

. M

j.

T j P

Commission,LawMinistry,andMinistryofFinance.

T

- , C

. T ,

N M D P (NMDP)

w w j

. S , 41 253 j 5 111 j

. O I

,

-j . A, j

, w

j.

G w, w

. F, w

.

A , w j

. W j w ,

j w

.

5.4.3 Opportunities

O , w G

, -j

. T -j

w 26 28

2004-05. W -j

2008-09 228.3 M MT, w 220 M MT.

T w G w 6

20

PPP R. 3300 , w

3 , w .

P w w

-

w

,

. F

I

I

w

.

Container TEUs handled by oreign operators at various

Indian ports (2008)

Foreign

operator

Million

TEUs

Ports

M 1.48 JNPT, P

D W 2.85 JNPT, C, K,

V, M

PSA S 0.45 T, C

S: B I M 31, 2009

Aggregate capacity & capacity additions at major ports (2005-2009)

Year Capacity in

million tonnes

Additional

capacity in

million tonnes

% Increase

A 31-03-2005 397.50 - -

A 31-03-2006 456.20 58.70 14.8

A 31-03-2007 504.75 48.55 10.6

A 31-03-2008 532.07 27.32 5.4

A 31-03-2009 555.67 23.60* 4.4

S: M S


41/52

41

PSA ABG K C T,

w K P. D &

G M O

C T

T - SEZ

I

M P SEZ. I

-,

.

5.5 Aviation

C A w

. A

,

I,

j . I $100

$325

100 j

610 w j. H z

, I

, 2004.

C w

, .

Private Equity investments in non-major ports

Company PE Investor Amount (Rs. crore)

Gj P P IDFC PE 192

SICAL IDFC PE 116

M P GIC, 3 450

C C

T

G I

P

25%

D P IL&FS 20%

K P 3 994

G P W P 150 (30% )

S : B I M 31, 2009


T w w

. A , I

w w

. T

w

, . Hw,

w , w ,

z

, w w B H,

D M.

T 454 / w

,

, w w

w:

Ownership pattern o the airports/ airstrips (operational /

non-operational) in the country (2008)

21%

14%

35%

30%

AAI

P w

S

D

S: 11 F Y P C w

C A


42/52

42

T G w

w

(z D M ,

G j H

B, z 35 ).

T D

R. 7,531 ; w M R. 11,553 .

G j

G, N M, P, G N K.

T j

,

j . AAI

. T C A

M 500

2020. T w

, G

, w

.

5.5.2 Challenges

D w w

,

z . T :

Highwaitingtimeandcongestioninairportscausing

w

Airlinesincurringlosses

Taxationissues

Aviationsecurity

Shortageofskilledtechnicalmanpower

Highairportandsecuritycharges

Inadequatenightparkingfacilities

Lessnumberofgatesandcounters

Inadequatesecuritymachinesandshortageofsecurity

Requirementofgoodbaggagesystem

Lackofmaintenancefacilitiesatairports

I , w w

,

w .

5.5.3 Opportunities

Maintenance and repairs overhaul

MRO . T ,

,

, j

. A , j MRO w

I

E S. W

- MRO

, MRO

I . T I MRO

w 15 . T A

P MRO

US$ 12.9 2011. Mj MRO I

. T, 60

MRO .

The Civil Aviation Ministry hasset a target o getting around 500

airports operational in thecountry by 2020


43/52

43

Ownership pattern o the airports/ airstrips (operational /

(2008)

S : www.w.

R, j w I

A, B

SIA E

MRO. A MRO C

A P. Gj

MRO

Gj, MRO .

Airport and ground support equipment

A

w

z US$ 359 I 2008

US $ 400 . W

- z ,

w. N , z

w w

w

. I

-

,

w

.

T w

D S C Nw

(DSCN), A M H S(AMHS), F I D S (FID),

A T Nw (ATN), V

C C S (VCCS)

. I 60%

. T AAI

US$ 60

. T

w

. G ,

I,

w , w z

w I.

Indiaas an air cargo hub

I

SAARC ASEAN

- w . T C A

N I

N. T

I w

w . T G

. C

G

w w 150

j

I .

LineMaintenance

C

M

A (H)

E O

O

17%

20%

40%

7%

12%

4%


44/52

44

5.6 Inrastructure nance

I j , w

; F I (FI)

w

. M j

: 70: 30. T w

:

MultilateralagencieslikeWorldBank,International

F C (IFC), A D B

(ADB).

DevelopmentFinancialInstitutionslikeIndustrial

F C I (IFCI), I

D B I (IDBI), S I

D B I (SIDBI), I

D F C (IDFC), Pw

F C (PFC) .

IndiaInfrastructureFinanceCoLtd(IIFCL),a100per

w SPV

J, 2006.

ForeignCommercialBanks

DomesticBanks

D

j

, w

. Hw w

, w

j. Pj

. T

,

w j. A

; w

. O w ,

,

j

, j.

Nw w - ,

, - , / w

/

j. T j

, j w

. T w

w. S

w, , ,

,

w . T

, w,

j, / -

j.

Civil aviation ministry proposalto set up dedicated cargo airportsand Governments plan to allowcargo airports within 150 kmsradius o existing airportsthrough automatic routes aremajor steps taken to the cause odeveloping India as a cargo hub


45/52

45

5.7 The PPP approach

S I w

w

. I I w

US$492

11 P P,

P C. S

,

(PPP) .

PPP

. G

,

PPP

w ,

.

I I, , P

P P (PPP)

w

w,

& . PPP

BOT, BOOT , w

M C A (MCA)

w. T

MCA PPP

. I j

-

,

40% w

, .

T j

PPP :

Astrongerpolicyandregulatoryframeworkbothat

Appropriatemarketinstrumentsandcapacitytoraise

Credibleandbankableinfrastructureprojects

StrengtheningofgovernmentcapacitytomanagePPP

j.

PPP I

w-w

.

Inrastructure development in India wouldrequire a massive investment o US$492billion during the 11th Plan Period, accordingto an estimate by the Planning Commission


46/52

46

6. Conclusions

T w

,

. Gz,

,

w

w

.

I w

interdependentfactorswillshapetheGlobalLogistics

I 5-10 :

Globalizationandconsolidation-Mergersand

. Gz

, w , , .

Increasedoutsourcing-Companiesareutilizing

. G

.

Securityandriskmanagement-SupplyChainSecurity

R M w

w, ,

, SARS, .

Technologicaladvancements-Rapidadvancementsin

( RFID) w

.

Increasedcustomerexpectations-Customerswillbe

w

.

F

, w . A

w

. USA

GDP 17% 1980 9.5 %

w

. I

. I w j .

T

w

SME

.

G SEZ,

, , z

, PPP .,

w

. M, w

, , ,

, , .

w ww w

.


47/52

47

India has got a huge opportunityo reducing its national logisticscost by studying and beneftingrom other success stories

D /

w

z, , ,

, w , w w

, ,

.

SME, , w

j w

w

, , ,

z, , ,

, ,

-

.


48/52

48

Abbreviations

2 S

3 T

4 F

A A

A A

A A

A A

A A

A A w

B B,

C C & w

C C

C C

C C

C C

C C

C C

D D, ,

D D D D w

E E

Erp Enterprise resource planning

Exim Export import

Fdi Foreign direct investment

Fids Flight information display system

Fy Financial year

Gdp Gross domestic product

Gps Global positioning system

Gq Golden quadrilateral

Gst Goods and service tax

Hr Human resource

Icd Inland container depot

Idbi Industrial development bank of india

IDFC I D F

C

IFCI I F C I

IIFCL IndiaInfrastructureFinanceCompanyLimited

IRCTC I Rw C T

C

ITES I T E S

JNPT Jw N P T

LSP LogisticsServiceProvider

MHE M H EMIR M I R

MRO M R O

MT M T

MW M W

NH N Hw

NHAI N Hw A I

NHDP N Hw D P

NMDP N M D P

NSEW N S E W

OECD Oz E C-

PFC Pw F C

PPP P P PRBI R B I

RFID R F I

SAARC S A A R

C

SCM S C M

SEZ S E Z

SIDBI S I D B I

SME S M E

SOP S O P

SWOT S-W-O-T

TEU Tw E U

VAT V A T

VCCS V C C S

WMS W M S


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49

Bibliography

Websites

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www.-.

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www..

www..

www...

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www..

www...

www..www...

www.w.

www...

www..

Others

C R I

2008-09, M S A P

I

CygnusResearchTransportationandLogistics

E S 2008-09

GlobalLogistics&DistributionPlanning:Strategiesfor

M D W

HandbookofLogisticsandDistributionManagement

A R, P C P B UPS A

B M 2009

11 F Y P W C R A S / R T / A

I I

B I P P S

T G C R 2008-09, W

E F

D ATS R w APAC

End Notes

1 GDP :1999-00

2 F SCS A C (S A

I A R

W (IARM))

3 USD / INR = 48.63 16 J 2009


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50

Contacts

Mr. Hemant Bhattbhatt

S D

DeloitteToucheTohmatsuIndiaPvt.Ltd.

31, N B S,

A

B-390 007

T.: +91 (265) 2333 776

M: +91 98240 14075F: +91 (265) 2339 729

E: @.


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