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The top seven warehousing clusters in India are expected to add 218 mn sq ft of space over the next four years, considering the demand for large warehousing in the period after the GST regime comes into force, says Captain Ramanujam, Chief Executive Officer, Logistics Skill Council (LSC).
How are you gearing up for this surge in demand for mega-warehousing (for logistics providers)?
The Logistics Sector Skill Council (LSC) trains candidates at the entry level for the warehousing sub sector. Training is done on specific job roles such as pickers/ packers/ binning /kitting/labelling and forklift and reach truck operators, and warehouse supervisors i.e., an ´outcome´ based training, which ensures candidates are job ready from day one. Trained candidates will ensure better productivity and lesser rework and contribute to the efficiency of warehouses. To cater to the future trends, we will be training warehouse automation technicians who would be able to not only operate but also maintain such automated systems as well. Further, existing employees are being trained through a programme called ´Recognition of Prior Learning´ (RPL). This multi-pronged approach of the Ministry of Skill Development and Entrepreneurship (MSDE) under the leadership of Rajiv Pratap Rudy, Hon´ble Minister MSDE, is paying dividends.
It may be noted that the first time in 70 years, staff engaged in logistics functions are getting trained in the jobs they do. Further, it would be noteworthy to mention that under the present government, the budgeting is being done through the parent ministries, for e.g, training in warehousing is budgeted through the Ministry of Road Transport and Highways. In essence, the entire training is being institutionalised.
The industry too has realised that it is in their best interest to take advantage of the enabling skill eco-space and ensure the workforce is job ready. The organised companies are showing the way by ensuring a certain percentage of the staff are Logistics Sector Skill Council Certified. R Dinesh, Chairman LSC and CMD TVS Logistics Services Ltd, is himself advocating this to the industry.
The GST and flagship scheme of ´Make in India´ will create a large demand for warehouses and push manufacturing and e-tail away from the taxation avoidance way of doing business thus far (having smaller warehouses across all states in India) to a tax compliance way of doing things through strategic warehousing.
Is ´Big´ going to be better business as far as warehousing is concerned? Kindly elaborate on this aspect to show how the scale of size of warehouses will impact the warehousing and logistics businesses in India.
It will lead to a higher quantum and velocity of logistics. Just as sales ideally should drive operations, similarly, the capacity increase in warehousing and land transportation will translate to a scaling up of cargo handling and evacuation capacity at ports.
How does Indian business go about reducing its logistical costs to improve profitability of the business? Is it a reasonable expectation that logistical costs can be brought down to 12 per cent, as is being espoused by many stakeholders?
A few emerging trends are as follows:-
a)Transportation telematics to provide visibility of carriers and cargo leading to optimisation of cargo carriage and resulting in higher profitability to the transport owner driver. Since 98 per cent of land transport is unorganised, many start-ups offering technology solutions for ensuring cargo availability have come up which will lead to better resource utilisation and thereby reduce logistic costs.
b)Certain regulatory changes are also happening in licensing of drivers and the prime mover- trailer rules for coupling. It is understood that the licensing period which is presently at three years plus for HMC drivers is being reduced to five months. Further the rule to have prime mover and trailer as one rigid unit has been relaxed. With this prime movers can be on the move with load, and this will again reduce logistics costs.
The business cost of delays on the transportation side of these businesses is pegged at $ 6.6 billion per year due to truck stoppage time. What needs to be done to rectify this? What is the likely reduction in these costs after the GST tax regime comes into force?
As brought out earlier, the measure to permit the decoupling of trailer from the prime mover will ensure significant reduction in stoppage times
What are the actionable imperatives for the logistical players in India post GST in keeping with the unravelling dynamics on the side of transportation, distribution and storage, failing which their business would not be able to keep pace with the developmental blueprint launched in India?
Here are a few of the actionable imperatives for Indian logistical players:
a)Use of technology for routing, cargo optimisation;
b)Periodic and regular training of drivers to ensure lesser accidents;
c)Driver welfare measures;
d)Reduction in inland haulage times.
How is the current scenario in the logistics industry in terms of different transport modes (road, rail, air, and water), and technology?
The modal mix is heavily skewed in favour of land transportation. Coastal shipping has not caught on despite the government´s best efforts.
How is the third party logistics (3PL) market in India? What are the growth drivers and inhibitors for the logistics market in India?
Outsourcing of logistics and non-core functions has become the norm in almost all automobile and engineering companies. This has led to better efficiency in ´in-plant logistics´
How will the move of this government to focus on infrastructure benefit the industry? What is your opinion about this year´s budget?
Focus on ports and port connectivity and development of highways will tremendously improve the velocity of the supply chain. This will also result in equitable distribution of companies in the manufacturing sector and hence a more balanced socioeconomic growth.
Do you have any plans for expansion/diversification in the near future? How is your international business panning out?
LSC is interested in acquiring parity with International Certifications so that our trained candidates can proceed abroad.
Finally, how is the demonetization exercise likely to impact the Logistics and warehousing sector? Is there a high level of cash based operations that have been impacted?
Land Transportation was a cash-driven sector as it is a very fragmented and unorganised sector. Transition to a ´Plastic economy´ would obviously remove hidden costs. This is a cultural change.