We are very meticulous about delivering the best to our customers and want to ensure that we can offer end-to-end solutions. Having our own fleet of transport vehicles and equipment helps us do this effectively, says Umesh Shetty, Executive Director, Project & Engineering Solutions, Allcargo Logistics. Excerpts from the interview.
What was the impact of the economic slowdown on the All Cargo's performance? How do you view future growth trends?
This dip in the logistics business which has affected a majority of the big players in this arena is a temporary hiccup, given the slowdown in the overall EXIM trade. In the current fiscal year, we have augmented the annual handling capacity of our CFS facility from 341,000 TEUs to 441,000 TEUs which was led by increasing demand foreseen in the future, especially fuelled by the opening up of 51 per cent FDI in multi-brand retail.
We have been growing at a compounded annual growth rate (CAGR) of 28 per cent. With our presence in 89 countries through a reach of 189 offices, including our network of agents and franchisees, we believe that by 2014, we will be able to touch the $1 billion target from the current levels of $750 million for FY 2012.
What is your assessment of the Union Budget and its positive implications, especially on ports?
The budget has laid emphasis on building infrastructure for sustainable economic growth. Various projects are proposed through the PPP route which is very encouraging and the announcement to develop ports in Tamil Nadu, West Bengal and Andhra Pradesh will help ease port congestion and develop coastal shipping. We hope that over a period of time, the shipping ministry will promote coastal shipping in India by doing away with custom duty for ships which are built and operated in a foreign country, but which however flies the Indian flag. We also wish that the government of India finally accepts the long pending demand of the industry to abolish the custom duty on coastal ships thereby making it economical for the ships to operate in the Indian coast. As per several representations made, coastal shipping is the most efficient way to transport goods. It not only helps to decongest the Indian roads and burn less fuel, it also is cost-effective, thus helping Indian manufactures become more competitive in their products, helping the consumers and also helping in managing the inflation.
Compared to the developed markets where containerisation and palletisation is the norm, what does the Indian scenario look like?
The logistics market in India is hugely fragmented and has very few organised players, unlike in Europe, North America and the South Asia regions. There is also a huge difference in the quality of infrastructure to support movement of goods. In India, the trend of containerisation and palletisation is taking shape and along with warehousing and third-party logistics is also strengthening its roots. In the coming years, this will take on the format of an industry and will be driven with international best practices, similar to counterparts in developed markets. Also, in many parts of the world, the tariffs are market driven which help companies stay competitive. In India, the cost of logistics is between 10-11 per cent and in many places the tariffs are regulated by the Tariff Authority for Major Ports (TAMP) which affects our competitiveness.
As a logistic service provider, what are the challenges Allcargo faces?
The greatest challenges are lack of infrastructure and a proper policy framework for the logistics industry. Delays in ports, road and rail infrastructure have been affecting the sector significantly. We are not granted an industry status and are bound by archaic laws in shipping, transport, tax, etc. Our biggest challenge is to stay competitive despite such pressures. In addition, the last few years have seen us being impacted by the global slowdown in economy. We hope that we will be granted industry status in the next few years. The logistics industry is growing at a very fast pace and on the lines of telecom and oil and natural gas sector, this sector also needs a proper policy framework. As a leading player in this industry, we expect the government to pay some attention to fixing the challenges for the industry.
How do you look at the connectivity issues to the hinterland that may improve the role of ICDs?
Indian ports are well connected to the hinterland; however, these roads are not designed to facilitate smooth evacuation without creating bottleneck for the general cargo. Special permissions are required to be taken for the evacuation of such large sized cargo. The movement is possible only in night hours, to avoid congestion. Additionally, India is divided into various states geographically and all states have got their RTO authorities and hence needs multiple clearances to be taken for one path or movement. This results into elevated costs and waiting time.
Other than that, the cargo has to be moved through national and state highways and there the approval from the National Highways Authority of India (NHAI) and other road authorities are required to use the roads, bridges and other utilities.
Advance knowledge and best practice in equipment and technology play a crucial role in helping ports and terminals meet today's demands for productivity, efficiency, safety and sustainability. What is your take on this?
Allcargo invests hugely in implementing international best practices in its businesses. Our own equipment division with strength of more than a thousand pieces of equipment in the range of cranes, trailers, stackers, forklifts, hydraulic axles, barges, ships and RTGCs provides an edge to execute all its projects efficiently and independently. This also improves better coordination with port authorities and avoid bottleneck. This is also backed up by our skilled professionals having technical expertise on project and engineering. Allcargo is one of the first logistics companies in India to start using the RFID technology, the first implementation was done at our JNPT CFS, and on seeing the way it helped customers trace the containers efficiently, the implantation was extended to all our facilities.
Our CFSs and ICDs are abreast with international standards, with ISO 9001:2008 for quality management principles including a strong customer focus, the motivation and implication of top management, the process approach and continual improvement, OHSAS 18001:2007 certification for Occupation Health and Safety Assessment across all locations, and solar panel installation in CFSs and ICDs to meet our energy needs and making business sustainable. These are our steps to meet the best practices worldwide keep ourselves match modernity.
What are the strengths and competencies of Allcargo Logistics?
We are an integrated logistics service provider and our services cut across different verticals and industry sectors. That itself is a unique differentiator as we understand various industries and can provide specific solutions. We are very meticulous about delivering the best to our customers and want to ensure that we can offer end-to-end solutions. Having our own fleet of transport vehicles and equipment helps us do this effectively.
We have always believed in technology being an enabler to higher quality service, be it through investment in RFID at our CFS, our ERP systems for better asset management, e-freight system to get the best possible match for our NVOCC customers or the CRM for better customer management, all are factors which help us anticipate and address our customer needs. Our well connected infrastructure in terms of CFS and warehouses are another advantage that we bring to the table.
However, most of all, it is the people we invest in who are our greatest asset. We have some of the best people in the industry, who understand the nuances of each of our customers and constantly help deliver better. The training, respect for safety and high quality of services by our people is our greatest strength.