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Issue 5 2012 A region on the rise


Barring the recent downturn, the Indian economy has been growing at a steady pace in the last couple of years and we are confident that it will return to its pre-crisis levels sooner than expected, writes Lars Sorensen, chief executive officer of Damco’s South Asian region. But infrastructure development is vital to ensure sustainable growth in the economy and plays an important role in industry and the nation as a whole. The government has indeed


embarked upon an ambitious plan to improve ports, airports, the rail network and roadways. The National


Maritime Programme (NMDP),


Development formulated


in 2005 and which envisaged a public and private investment of over $20 billion is one such fast- track programme - more than 270 projects entailing construction and upgrading of berths, deepening of channels, rail and road connectivity projects. There has also been a great deal of private participation in port development which has helped to increase the freight handling capacity of the country and ease congestion at the busy ports of Mumbai and Chennai. The Indian government also aims


to build 7,300km of roads every year. Railways, too, have received the highest ever planned outlay of about US$12 billion for the year – these initiatives speak volumes about the government’s ambitious infrastructural development agenda. Once these road and rail development plans are executed, port handling capacity will further be boosted and bring about improved efficiency in the way goods move out of and within the country. The infrastructure sector in India


is surely going to prosper, riding on the support from the government and private players. Planned investments of around $250 billion in infrastructure development over the next five years will help the logistics industry provide integrated logistics solutions, providing a much needed boost to bringing in supply chain efficiencies and drive down the costs by significant percentage points. The Indian market is an important


market for us and we have been present here for almost two decades. We have grown impressively in the past few years, faster than the market. We were able to achieve this through customer retention, building a wide network of 20 offices across the country and maintaining long lasting relationships with suppliers and other industry stakeholders.


We also hope to make the most of the ambitious infrastructural developments outlined


in by the the pipeline, governmental


authorities. Elsewhere in the region, Pakistan


is focusing heavily on international trade but has not been able to catch up with UAE or India, its competitors in the region. Policy and incentive frameworks


are though being


shaped to attract foreign investors. Pakistan has been developing


its ports as hubs of trading activities within the region and to serve as transshipment points for the Middle East, South Asia and Central Asian trade lanes and the country has huge potential in global trade. Pakistan also serves as a critical gateway to landlocked economies in Central Asia. If the country increases it focus on socio-economic development and political stability, it has an immense potential as a key player in global trade. Damco’s presence in Pakistan


spans almost more than 16 years. It is one of the largest export supply chain coordinators in the country with volumes growing every year. While we are satisfied with our growth, we believe there is a huge potential in Pakistan owing to its growing importance in the global trade arena. Sri Lanka and Bangladesh also


have vast potential to affect how trade takes place in South Asia. The potential demonstrated by these two Indian neighbours makes them ideal hotspots to look out for in the future. Sri Lanka’s growth in the logistics


sector has been exponential in recent years. It has climbed more than 50 places to 81st place in the logistics sector in the World Bank logistics ranking for 2012. Development of roads, ports and airports has been on the rise and we see continuous ongoing progress in this area. Strong alignment between the public and private sector and a comprehensive approach in the development of services and infrastructure, have supported the logistics industry well in this country. Bangladesh is also doing well and


has received more than a billion dollars in foreign direct investment this year. The ready-made garment sector is flourishing as many global brands are looking there to source their products at cheaper rates and the industry contributes more than half the country’s total exports - and is expected to double by 2015 and triple within a 10-year horizon. Smarter and leaner logistics will lead


the country to greater fortunes in trade. Damco already has a strong


presence in all these countries and is providing end to end logistics services to big global retailers. In recent years, the Indian


subcontinent has witnessed an increase in the presence of multinational companies, with several global brands establishing offices in the region. Governments have capitalized on this trend and started liberalizing policies to further foster this development and policy decisions also reflect the growing emphasis being laid on increasing investor confidence in the region. While red-tape exists in every nook and corner of the world, the Indian subcontinent has shown a remarkable, positive change in its outlook towards foreign trade and is emerging as a cost-effective sourcing hub.


///INDIAN SUBCONTINENT


Norbert Dentressangle moves into India and Sri Lanka


Norbert Dentressangle is to take over the freight forwarding operations of Sri Lankan and Indian- based conglomerate, John Keells Group, following a share purchase agreement signed on 4 July. The transaction was due to be finalised at the end of August. The freight forwarding operations


employ 120 people and had reported revenues of nearly $10 million in 2011, with a network of six offices in India, covering the main coastal regions, plus another two in Sri Lanka. The acquisition gives the logistics


operators a foothold in the fast- growing Indian and Sri Lankan markets. “After the acquisition of APC Beijing International in China at the end of 2011, the acquisition of a reliable, recognised major Indian and Sri Lankan freight forwarding player means the Asian continent


Customs around the clock


The Indian customs service has agreed to introduce round-the-clock clearance at major air and seaports in a bid to reduce congestion. The facility will be available at Delhi, Bangalore, Chennai, and Mumbai airports and Chennai, Kolkata, Kandla and JNPT, Mumbai seaports. The 24x7 operations would begin


on a pilot basis for four months and, as well as customs will include other government agencies such as food


safety, drugs agencies and private sector operators including customs house agents and banks. The plan is then to extend the facility to pther ports and airports. The 24x7 operations would be


available for goods not subject to assessment or examination, which accounts for 70% of imports, says Indian customs. For exports, the facility would apply to goods not claiming benefits.


FPS goes weekly to Maldives


Famous Pacific Shipping (FPS) Lanka has launched a weekly ocean consolidation service from Sri Lanka to key points in the Maldives Islands, which lie to the south of India. The Maldives – a region of several


atolls and hundreds of small islands – provide many challenges for shipping, due to the widely-varying and restricted port facilities. Vessel draſts are generally very limited, yard space is severely restricted and discharge facilities are oſten rudimentary. The new FPS service operates


from the company’s bonded consolidation facility in Colombo port,


via the Maldives’ capital of Male, to all main islands and


locations including Hithadhoo, the Gan Islands, Kulhudhuffushi, Thiladhunmathi, Felidhe and Mulaku among many others. Onforwarding to final destination is within three days of arrival in Male Port, using a variety of local boat- (‘Dhoni’), barge- and landing craſt operators. The service includes Customs


clearance and documentation in Male, on-forwarding to islands, discharge and delivery to consignee. Customers can also track their shipments online. FPS Lanka MD Gihan


Nanayakkara says: “Many developments such as hotels and infrastructure projects are taking place across the Maldives.”


is now well served by the Group’s operations,” it said in a statement. It brings Norbert Dentressangle’s freight forwarding network to 50 offices and 600 employees operating in 12 countries on three continents. While the John Keells Group


does have remaining interests in shipping and transportation, much of its focus is on other areas such as retailing, leisure and hotels and financial services. The John Keells forwarding offices – at Delhi, Mumbai, Chennai, Cochin, Coimbatore and Bangalore in India, plus two in Colombo, Sri Lanka – will be rebranded as NDO (Norbert Dentressangle Overseas). David Barron, NDO’s global


commercial director, sees the Indian Subcontinent becoming another global economic powerhouse. While growth in the all-important and much larger China market will continue, the subcontinent is another region where it is absolutely vital that NDO has a presence, he says. “We were also very keen to have our own presence there,” he adds. “It means that we can put in our own policies and procedures and run the business exactly as we would like to.” NDO already had a strong relationship with John Keels prior to the acquisition. “China still has a long way


to grow, but we think India will develop in parallel, at perhaps around 9-10% a year he says.” In fact, the Chinese and Indian freight markets are bound up with each other; increasingly, NDO is moving project cargo from China to India – as well as retail goods - and this was another factor in the forwarder’s decision to acquire its own offices


in India. NDO already has a strong office network in China. To Europe, India exports a


lot of textiles, seafood and auto parts, along with stoneware and ceramics, but NDO is also expecting to build its trade back from Europe. “There’s a booming economy and a lot of the high street brands are setting up there. India also imports a wide range of other commodities such as gold and silver jewellery and chemicals.” Sri Lanka is a slightly different


market. Textiles and tea dominate northbound to Europe. The Indian subcontinent had


a fairly fearsome reputation for red tape and bureaucracy and while shades of this may remain, the situation has eased hugely in recent years, Dave Barron continues. “It’s no more difficult than other countries, as long as you have the necessary licences and arrangements with licensed brokers. One big change that there has been, also, is the relaxation of rules on foreign investment in India, which has allowed overseas companies to open their own branded operations.” This in fact was one factor in NDO’s decision to acquire the John Keells business. Moving goods around India


has also become much easier as the infrastructure has improved. The image in many westerners’ minds of a slightly quaint and rather decrepit country is now wildly out of date, at least as far as the main cities and the links between them are concerned. “There’s been a lot of investment, and its becoming one of the key strategic regions in the world for us,” says Dave Barron.


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