Logistics is on the cusp of a new generation of intermodality. Findings say the crisis presented opportunities for logistics firms to revisit their business models, enter new markets, and innovate around new service offerings. Apparently, growth strategies now focus on four directions: growing the core business, undertaking geographic expansion, undertaking value chain expansion, and moving into adjacent industries. The most resilient logistics players are using this difficult environment to position themselves for future growth while remaining flexible enough to respond to shifting conditions. And, there is unlikely just one technology transforming operations, instead the interplay and overlap between different solutions that has become crucial for success. Perhaps, in today’s hypercompetitive business environment, the product alone is not enough – everyone can replicate and improve upon it. Logistics that is adaptive to real-time constraints, constantly incorporating regulatory and infrastructural developments, can only build on profitability over time. Rubal Jain, Managing Director, Safexpress believes boosting main competencies can help companies bolster their existing competitive advantages, improve economies of scale, while expansion of operational networks necessitated by the sheer size of the market alone will go a long way to include one of the most critical factors for success—Trajectory of Capacity. Upamanyu Borah puts it succinctly, fitting his critical overview into one concise statement.
INCLUSIVITY: BETTER COSTS REDUCTIONS, IMPROVED SALES STRUCTURE, SOLUTIONS EFFICIENCY
The world is not yet out of the woods and it offers an opportunity to manufacturers and within development studies to reshape operative and business strategies which are not only productive and sustainable but also inclusive.
While there cannot be one-shoe-fit all solution, it is important to realise that from primary goods to consumer-ready products, the world of value chain today is more connected and inter-dependent. Resultantly, a disturbance here or a deflation there can have a debilitating worldwide pressure. What is therefore required is a responsible and social sourcing which generates a social value that integrates nearby demography. This not only makes the manufacturer resilient but also minimises the impact of crises, prices stabilise and produce becomes more efficient. This offers an incentive for decentralised manufacturing or regional trading centres.
Second, logistics and supply chain operate as an extension of manufacturing in the value chain and end-to-end integration which has already been afoot at the macro level will now have to position more vigorously. An entrenched network which is energy-efficient and employs sustainable models will always be cost-effective.
A DYNAMIC MULTIMODAL NETWORK COMMANDED BY AN AGGRESSIVE ‘LOGISTICS CONTROL TOWER’
A cloud-based supply chain tower that looks to integrate multimodal networks is a genuine and refreshing idea which will gain traction as we progress. It is already operating in many ways but what is lacking so far is an integrated mechanism that cloud-based arrangement can offer – reduced cost, enhanced efficiency and transparency. Basic question that an LSP is confronted with is its potential value for money. This value for money question is a sum-total of the questions of efficiency, security, capability, and now also of sustainability. Second, not all the products need to be multi-model dependent. And third, the operative sphere of the LSP in terms of geography and clientele. If an LSP, for that matter, is not primarily into primary goods and restricts itself to a well-defined geography, developing a multimodal network of its own should be the basic consideration.
For domestic logistics service providers like us, it all boils down to the surface, combined with air movement depending upon scale and speed. There is no denying the enormous benefits that cloud technology will offer in a sustained period. Also precisely why, Safexpress has a steady investment focussed on cloud and security architecture enhancing our integrated solutions as tangible business drivers.
HEART OF MODERN INTERMODALISM LIES ON ECONOMICAL AND EFFECTIVE DISTRIBUTION DECISIONS
It’s not that intermodal integration is a new thing on the ramp; it goes by decades in operation. Integration of multi-network offerings is something that is going to distinguish intermodality of tomorrow with intermodality of today. Intermodality, theoretically offers the best case solution in supply chain efficiency when every cog in the wheel is in complete harmony of the others and runs to its fullest potential. However, intermodality to go big and gaining on traction has to find a footing on operating spheres.
Perhaps, the value chain is beset by imponderables because of layers of inter-engagements between different stakeholders. Furthermore, several reports published since last year points out steep rise in freight rates to a number of key ports up to by over 300 per cent. Add to this, the turnaround time for a container in India which is about 2.7 days compared to 23 hours internationally, we are aware about the woes of the shipping industry. So, there are structural issues like hoarding and efficiency apart from the regular challenges of upgradation and imbalance in export and import. Apart from this, transload and drayage largely operate independently, the efficiency of which is again dependent upon inflationary pressures.
For shorter distances and low-volume distribution, in a country like ours, surface transport will still be the first call of choice with up to 20 per cent of which would be cornered for air movement. So, a value chain that involves continents, intermodal movement is sine quo non. However, for shorter distances and for low-volume movement, shipping would be a last option. Of course, this would not involve primary goods, minerals and fertilisers and heavy machinery which is best served by railways and shipping.
SAFEAIR: BUILDING A BRAND THROUGH DIFFERENTIATION TO STAND A FOOT TALLER
Safexpress offers a slew of services which is however, restricted within the national geography. We do not offer shipping or inland waterways as a mode of transportation nor do we offer rail service as an offering. So, in a nutshell, Safexpress’ integrated and multimodal offering involves optimum utilisation of SafeAir cargo movement and distribution complimentary to our surface distribution network. We are providing SafeAir connectivity to and from 54 airports, the largest amongst our competitors, well-connected to our SafeAir offices operating in close vicinity. These, are then connected to our surface network in feeder channel in an elaborate arrangement purposefully designed to reap the benefits of faster turnaround times.
Our idea has always been to strengthen our network to a level of structure that is so well connected that all parts compliment the whole. SafeAir which is a premium service and very much time-sensitive and where customer satisfaction is paramount is given priority allocation in terms of availability of wherewithal that stands true to the demand.
Logistics and distribution in every way is about transparency in operations and an elaborate network that guarantees faster delivery. This becomes more manifested in SafeAir services.
‘NATIONAL RAIL PLAN’ TO CREATE SYNERGIES FOR ACHIEVING SEAMLESS MULTIMODALITY
The National Rail Plan (NRP) for 1930, the Western and Eastern Dedicated Freight Corridors (DFCs) targeted to be commissioned by 2022 are enormous infrastructure projects, perhaps the largest undertaken after the country’s Independence. All broad-gauge lines will be electrified by 2022 and because these corridors will be dedicated and rail transit time will be considerably reduced apart from doubling of carrying capacity. This will help competition evolve and prices to stabilise across the multi modular transit. Having said that, it would require multiple transnational entry points or corridors for truly cost-effective movements.
The landmark rail line to connect the North Eastern region with Bangladesh is also expected to be commissioned soon. This, apart from the existing rail connectivity between India and Nepal through Raxaul and the connectivity in South Asia has suddenly looked like so real with the entire rim of the BIMSTEC countries seeming so plausible.
MANDATES AND PROGRAMMES CONTRIBUTING THE RIGHT WAY TOWARDS DEVELOPMENT OF YOUNG TALENT
Traditional understanding of logistics and distribution has been that of a highly informal and labour-intensive industry and this is not without reasons. More than 90 per cent of the sector is still very informal and just about shaping up towards formal structuring.
Safexpress has, however, identified the values of integration of its entire network and infrastructure through a common IT platform since its very inception and has stayed true to it since then. Apart from this, management of a mammoth load in our hubs means that we also had to switch over to automation to a substantial degree. Both of these initiatives demand welcoming of fresh graduates with open arms.
Importantly, the traditional idea of the industry has also undergone some change on the campuses. Management institutes have adopted some interesting course materials and diploma and degree courses in logistics, supply chain and distribution businesses. This has opened up students to a whole new range of career opportunities which were not very common until a decade and half before. Logistics industry, in turn, has opened up itself and there is going to be a lot more value in the coming years.
Safexpress is campus recruiting from IIM as well as other management institutes and who develop to man our executive positions in business, operations, marketing and IT. Our approach has been strategically welcoming to the fresh blood that adds energy and brings in new ideas, proactively taking initiatives. Today, more than 20 per cent of our executive positions and three fourth of our business team are drawn from these institutions. Average age of our 3000+ workforce is around 35 years and we continue to recruit. Additionally, we provide opportunity with a stipend to undergo internship and a good number of students avail this opportunity every year. We never ever have resorted to panic pink slips and firings giving our employees a security on job.
Furthermore, we have a very elaborate training and development structure conducive to preparing our employees for different levels in jobs. Safeducate, our sister concern conducts a range of regular trainings right from induction; its course materials are developed keeping also in mind the practicalities of the industry. Safeducate has diversified its offerings and now providing skill-based short-term training in SCM, Logistics and Distribution to prepare young minds according to the emerging requirements of the trade.
MAKING ATMANIRBHARTA AND MAKE IN INDIA FIT INTO THE IMPENDING NLP
In November 2017, the then Finance Minister Arun Jaitley granted Infrastructure Status to the country’s Logistics and Transport industry following the recommendation of 14th Institutional Mechanism meeting. The IM meetings identified high cost of logistics in India as an impediment to growth while referring to “highly informal, localised and diffused nature of Indian logistics” as a reason for high logistics cost. This announcement was meant to enable the sector to avail infrastructure lending at easier terms with enhanced limits, access to large amount of funds as External Commercial Borrowings (ECB), access to longer tenor funds from insurance companies and pension funds and be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL). The announcement to recognise T&L as “Infrastructure” came into the immediate backdrop of implementation of Goods and Services Tax (GST), a uniform nationwide indirect tax system that held promise for an efficient, integrated and buoyed economy. Almost on cue, on Global Logistics Performance Index, India rose from 54th place in 2016 to 35th in ranking in 2018.
While presenting Union Budget 2020-21, the incumbent Finance Minister announced adoption of a National Logistics Policy (NLP) which is seen as the next logical step in the long-drawn process. The policy initiatives taken since then, such as Make in India and the recent Atranirbhar Bharat campaign, will require end-to-end logistics integration wherein manufacturers – traders are closely integrated with the logistics players and distributors for connectivity with hubs, and importantly, consumers. This can be done by efficient admission of a digital infrastructure.
Logistics and distribution in a way talk about integration of different markets with consumers of distant lands. Atrmanirbhar Bharat and Make in India in a way cannot be seen in isolation and the National Logistics Policy that is on the anvil will clearly be more inclusive and open in its contours and scale.
SMART AND TIMELY ACTION AT ALL LEVELS COMBINED WITH AN AGENDA FOR SUSTAINABLE DEVELOPMENT
Going by the happenings of the last two years, the least that is required is an acknowledgement that there is a limit to ‘just-in-time’ and a model of supply chain that evolved around to serve it. Once we acknowledge it, the thing will move in a direction where supply chain is more resilient to the maintaining equilibrium between demand and supply, rather less prone to effects of subliminal pressures and pulls.
A resilient supply chain would require a decentralised model wherein there will be a host of concentric supply chain models cross-feeding yet autonomous. Availability of products at shorter notice would demand leveraging the immense capabilities that cloud-based solutions will offer and this will go a long way in making the edifice of logistics and distribution leaner, resilient, and responsive. This will pull in local resources for optimum benefits to the surroundings and habitat and this would be clearly more sustainable. The urge to optimise, rationalise, and automate would be properly channeled.
This is how I look at things developing in the next five to ten years from now and our own investments and business strategies are mindful of this.