INDIAN SUBCONTINENT\\\


Patience is a virtue in the groupage game


It is possible to develop groupage services in the Indian subcontinent, but it does take time and patience, says Todd Moore. The head of route development for the Indian Sub Continent at independent UK forwarder Davies Turner has developed a range of ‘common user’ (as opposed to buyers’ consolidation) services from and, to a lesser extent, to various parts of the subcontinent but it has taken several years to reach this point. From India, Davies Turner now


has regular directly-controlled LCL services from Mumbai, Delhi, Tuticorin and Chennai. There are also services from Cochin, Calcutta and Ahmedabad that feed into these services. “It’s taken a long time to


develop, but there is a market for consolidation,” Moore explains. He stresses that Davies Turner operates its own services, rather than co- loading with other carriers. Keeping services running


smoothly takes up a lot of time because, as Moore says, “a lot can go wrong in India. For instance, there’s congestion at the major ports, there have been strikes at Nhava Sheva recently and space at the port is very tight.” India’s largest port has not been


lucky lately. Two vessels delivering new quay cranes collided with each other last year and the sunken MSC Chitra is still partially blocking the approach channel. “And sometimes, when there


have been strikes or go-slows, the port has had to shut the gates early to export cargo. So even though some of the carriers have been introducing larger ships, you sometimes miss them, not because there’s no space but because you can’t get to the ship before it sails. “But that said, we’re not seeing


too many delays. We have good relationships with the carriers we use – Hamburg Sud in the North, Safmarine and APL in Tuticorin and CMA in Chennai.” Todd Moore would like to see


more direct shipping services from southern Indian ports to Europe - a handful are available from Chennai and one was recently introduced at Cochin but oſten traffic is transhipped via Colombo in Sri Lanka – and some carriers even tranship as far away as Singapore or Port Klang, which extends voyage


times even more. The new port at Cochin has in fact been earmarked as a transhipment hub for southern India, although it will have to attract major operators before it can fulfil this role. The UK imports a bewildering


variety of products from India, from auto parts to footwear, brassware to clothing – virtually anything except electronics, other than those destined for the car trade. Getting goods


from inland


locations in India to the port is yet another story. Todd Moore says that Davies Turner is one of the few forwarders to offer an ex-works service, although again allowances have to be made for local circumstances: “Unlike Europe, where a lot


of goods are factory-packed, in India this is oſten done at the CFS (container freight station), at the depot or in port. You have to be customs-registered to load at the factory, which is possible, but you also have to consider whether you can physically get a truck with a 20-foot or 40-foot container into a lot of factories. You oſten find quite modern factories in places where the local roads are not up to scratch.” Once away from the towns, inter-


city roads have improved greatly, although they are still not for the faint-hearted - it’s quite common to see pedestrians strolling along three-lane toll highways. The airports have also improved


markedly, with most of the major hubs having been rebuilt in the past few years. Davies Turner airfeights a wide range of commodities – for example clothes urgently needed for the start of a new fashion season or car parts needed to keep a production line running. Finding a good partner in India


can also be hard, and needs a lot of hard work and research, Todd Moore continues. “Any number of people come to you saying they’ve got 15 offices and hundreds of staff but when you look more closely, you oſten find it’s one office, one man and a telephone. But if you do find a good agent, they’re worth their weight in gold.” An effective partner can, for iron out some of the caused by


instance, problems


Indian


customs procedures and general bureaucracy which, despite efforts at reform, is still pretty fearsome.


“It can still take a very long time to get things done, and customs still physically inspect perhaps half the cargo. Partly, it’s because a lot of people have jobs in the customs service and it’s not just employment – with the job comes their housing and other benefits – the Indian government is expected to look aſter these countless people and it all helps provide employment.” To those that deal with India,


none of this comes as a surprise, although for importers used to dealing with the speed with which China dispatches its exports, it can be frustrating. “But this is how India works and you have got to build it into your supply-chain.” Typically, goods dispatched


from an inland location, say, Delhi, will take a month to arrive at their destination in the UK, though a further week can be added if they miss the ship. When delays do occur, a good agent comes into play by telling their UK partner what is going on. There is some groupage export


business out of the UK to India. Davies Turner runs a weekly multi- port consolidation box to Colombo from where cargo is distributed all over India as well as to other locations such as the Maldives. “It is something we’d like to develop further, but there is much less traffic going that way,” explains Todd Moore. Bangladesh is another country


from where Davies Turner has developed regular groupage services into the UK. Again, there is already a lot of FCL business and retailers’ own consolidation traffic but now common user direct groupage services are becoming a possibility. “We’ve started a direct consol from Chittagong. It’s not been easy, not least because the term FOB means something different in Bangladesh – there, it means that


the shipper doesn’t pay anything, including local charges, so that has to be explained to the importer in the UK.” Paperwork is the other issue in


Bangladesh – a line master bill of lading is needed to match every house b/l whereas in India a single line b/l would suffice – so there is a lot more paper to process. “That has put other people off from running groupage services, but the big advantage, as well as the time saving, is that the cargo can be loaded in Bangladesh and not see daylight again until it arrives in the UK. If you have to rework the cargo at a transhipment port and use a third party unpacker, you lose a lot of control.” There is also a weekly consol


from Pakistan although traffic flows from here are nothing like as great as from Bangladesh or India. The country’s internal political problems


and the devastating


floods of 2010 seems to have put off a lot of importers, although Pakistan is a big producer of sporting goods and textiles. Ironically, paperwork is less of a problem here and there is a good choice of shipping lines. The same is largely true of Sri


Lanka, whose trade to Europe has suffered somewhat since the country lost the import duty concessions it enjoyed under the Generalised System of Preferences (GSP) last year, although the big retailers are still buying there. But again there are weekly groupage services with traffic augmented by that fed in from the south Indian ports. With Colombo a major transhipment hub, there is no shortage of fast and frequent direct liner services and there is less red tape. Most of the damage caused by the tsunami a few years ago has been repaired and the infrastructure is among the best in the region.


Yusen sets up Bangladesh company


Yusen Logistics will open a new subsidiary in Bangladesh on 15 October, with a head office


Dhaka and another at Chittagong. Yusen sees the country as an important strategic market in its mid-term business plan, with the recent upsurge in exports by


in


apparel and retailing countries. The logistics provider already has had personnel stationed in the country since 2011, and has offered buyers’ consolidations services in the country as well as air and sea freight forwarding since 2003.


Issue 5 2012


37


No recession here, says FPS partner


If the world is in recession, there is no sign of it in the Indian freight forwarding industry, says Unni Nair. The chairman of LCL Logistix, the local partner of FPS (and one of the global network’s longest-standing members) says that there are plenty of opportunities for forwarding businesses in his country. LCL Logistix in one a relatively


select group of companies in India that can offer a full logistics service, such as warehousing, customs bonded operations, trucking and airfreight. It is one of the largest players in its field in India, with 31 locations in India alone, plus others overseas in New Jersey, Toronto and Africa. “Freight forwarding in India has


traditionally been an asset-light activity in India,” says Nair. “But we have seen the opportunities – and there are others like us.” Traditionally, the local


forwarding industry was very fragmented,


says Nair, but the


major multinationals have started to penetrate the market and more can be expected to arrive. That said, locally-based firms can offer knowledge of the idiosyncrasies of


India although the global


knowledge of the multinationals is helpful too. “I don’t think local forwarders are nervous about the multinationals and in fact we can operate in partnership with them as subcontractors,” Nair argues. “Also, being part of FPS gives the best of both worlds.” The transformation of the


industry from simply booking freight to offering a full range of supply chain services is in part due to the transformation of the physical logistics infrastructure within India, Nair continues. “Ports, roads – it’s all come on a lot and especially in the past ten years. There has been a lot of private sector participation – it’s no longer just government.” India is also keen to promote inland waterway development, recognising that the


roads and railways cannot handle everything. India’s international freight


market used to be dominated by Europe and North America but there has been a big shiſt in the past decade or so, says Nair. “Now it’s as much intra-Asia – China and the other south-east Asian countries - and Africa is another emerging market.” LCL logistics in fact has four offices in East Africa – in Tanzania, Kenya, Uganda and Zambia - and India is an important market for commodities such as cotton, sugar, minerals or iron ore produced there. To a much greater extent than in Europe, forwarders in India are oſten involved in bulk commodity as well as container trades. There is still port congestion,


particularly as the vast majority of India’s container trade is concentrated on three major hubs, with Nhava Sheva alone accounting for 50% of it. But new ports have been built in the vicinity of the major hubs and are beginning to offer some relief. Many shipping lines have also


cut their capacity out of India, particularly to the US, with the result that freight rates have gone up quite drastically, although there are no such problems to Europe. Red


tape and bureaucracy


haven’t entirely disappeared – the proportion of consignments that customs insist on physically checking or examining may surprise those used to the largely electronicised procedures of north Europe. “You certainly can’t operate everything by sitting in your office in India,” Nair points out. But the Government has helped


in other areas, for example the setting up of special economic zones, of which there are now several dozen offering


traders


tax and cash-flow advantages. IT is also slowly spreading through customs processes, although computerisation hasn’t reached the levels of the UK or US yet.


Kerry adds two offices


Kerry Logistics has opened new offices in Sri Lanka and Myanmar (Burma) as part of its strategy of building its network in emerging markets across the region. Kerry already has offices in India and Bangladesh. The company’s executive of


director international freight forwarding, Kenneth


Ko, said: “The new office in Myanmar will help strengthen our growing capabilities in the Greater Mekong Delta while Sri Lanka is one of the fastest growing shipping and logistics hubs in South Asia...We are investing in our network to better support our customers’ supply chains.”


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