Delivering the keynote address, the chairman of Logistics Summit 2009, organised by the CII Institute of Logistics in Chennai on October 5, B Sridhar, director, Bengal Tiger Lines, called for the setting up of an industry body. Speaking on 'Competitiveness through efficient logistics', he said: "There is a need to create an apex body for logistics integrating all modes of transportation, systems, processes and related documentation issues. As the CII Institute of Logistics proposes to take up transaction cost assessment with respect to Indian logistics, the cost content and elements under the prevalent global process are to be identified and reassessed."
Good infrastructure is critical to the growth of the industry, he added. “Good infrastructure and efficient logistics are important drivers for the economy, which in turn will drive also down costs," he said.
L Ganesh, former chairman, CII-SR, said, "Logistics costs in India are about 12-13 percent of Gross Domestic Product against 8.7 percent in the US, 10 percent in Europe and 11.37 percent in Japan. Given this, a one percent reduction could result in huge savings."
Government steps in
Meanwhile Srinivasa R Naik, director, Ministry of Shipping, Government of India, said: "The Eleventh Five Year Plan (2007-12) emphasises the need for increasing infrastructure investment from 4.6 percent to eight percent of GDP, with a focus on augmenting capacity and enhancing the quality and productivity of transport infrastructure through technology interventions. It is envisaged that the overall investment requirements on infrastructure will be about $320 billion which are expected to be met through a combination of public investment, public-private-partnerships (PPPs) and exclusive private investments.”
Based on the estimates made by the Committee on Infrastructure, the Eleventh Five Year Plan includes an outlay of $135 billion for modernisation and upgradation of some of the key transport infrastructure sectors including highways, civil aviation, ports and harbours and railways.
Talking about ports, Naik said that they handle over 90 percent of India's foreign trade in terms of volume. Of this, Jawaharlal Nehru Port, India’s largest container port, handles nearly 50 percent of total container traffic handled at all ports.
The government has also identified 12 rail projects to improve connectivity. According to Naik, “The government has realised the importance of improving logistics, therefore the rail connectivity between port and the hinterland is being strengthened with double stack container trains being introduced, a dedicated freight corridor both in the eastern side and western side being taken up, private parties allowed to operate container trains and logistics park and multi-operator use facilities are also being developed”.
Emerging trends
Speaking on emerging trends, Professor S C Lenny Koh, director – Logistics and Supply Chain Management, University of Sheffield, UK said that climate will undergo change in the next 50-100 years even if CO2 emissions cease immediately. “It is unlikely that we will be able to limit the maximum increase in global mean temperature to a two-degree Centigrade warming by mid-century due to the rapid energy growth especially in the developing world.” She called for collaboration between India and the UK in research, exchange of knowledge and expertise in best practices towards decarbonising the world supply chain and reducing the impact on the environment.
According to S Ravichandran, president, TVS Logistics, efficiency in the industry means delivering upto the customer’s demand and expectations.
Speaking on skill gap and manpower training Robert J Bell, Group CEO, Archomai said: “The key sectors that need skilled manpower in India are port, construction, energy and airports. While the requirement in India is for 500 million skilled workers by 2022, our current training capacity is only 3.1 million annually, so this area needs to be addressed urgently.”
N Ramachandran, chairman of the Cochin Port Trust, spoke of the success of the PPP model at the Cochin Port Trust where about Rs 15,000 to Rs 17,000 crore of projects have been executed and is due for completion by 2010.
Vincent DeSaedeleer, vice-president, Port Authority of Zeebrugge, spoke on some distinctive differences between India and Europe in the context of efficiency and competitive logistics. "In Europe there is fierce competition between ports to serve the same markets and they try to differentiate themselves by improving access to markets by smart logistics. In comparison, in India, ports serve virtually unique vast regions with little or no competition." Growth in India, he added, has been so speedy that it is difficult for infrastructure to keep pace or even stay ahead. He said that existing road, rail and port capacities lag behind requirements.
DeSaedeleer continued: “India and China, Chindia as you may call it, will be the growth engines of our global economies. It’s not the innovativity and the productivity of India that will be the determining growth indicators. In the future, it will be the connectivity of its producing centres versus the markets versus its ports."
VGS Mani, country logistics manager, Nokia India, outlined three major trends in the supply chain: increased customisation of products, online sales and modern retailing and blurring between manufacturing and logistics. This could only be addressed through increased transparency,
he said.
Green logistics
The Logistics Summit also saw a Memorandum of Understanding signed between the University of Sheffield and the CII Institute of Logistics by Professor S C Lenny Koh, director – Logistics and Supply Chain Management, the University of Sheffield, UK and B Sridhar. The purpose of the MoU is to initiate collaboration between the two institutions through exchange of information, consultation, joint participation in seminars and workshops and sharing of knowledge and best practices focusing on green logistics. The Management School at the University of Sheffield has a strong regional and international orientation, with its Logistics and Supply Chain Management (LSCM) research group enabling research to drive and be driven by new outreach and knowledge transfer initiatives and link up the school’s contribution to the South East European Research Centre.
The CII Institute of Logistics is a centre of excellence in logistics and supply chain management (SCM) and facilitates Indian industry to be referred in global business for its
best practices in logistics and SCM. n