2017: A year that witnessed ups and downs
As the year comes to end, CARGOTALK delves into the year that was and the projections by eminent industry experts of what the upcoming new year has in store for the logistics industry.2017 was very good as compared to the previous years. There is growth in tonnage and turnover. After two to three years down fall, we have seen some growth in cargo movements this year. We are expecting the same growth in future also. At the same time, we need some relaxations from customs side to operate bonded trucking. Rules for bonded trucking are not friendly to trade. We have bought this matter to the concerned custom officials.
We are planning to start our bonded trucking operations from Amritsar and Jaipur in 2018. In November 2017, we started our bonded trucking movements from Vishakhapatnam to various other airports in India to achieve 25-30 per cent growth in tonnage and turnover compared to 2017.
Transportation industry is one the most affected industries after demonetisation. We need cash of two to three lakh daily in each station, to give amount to drivers for their diesel and toll charges. As cash withdrawal limit was there, our business became stand still. But, somehow immediate arrangement was made with Petrol Pump Owners to give diesel to our trucks. We made payments to Petrol Pump Owners directly by bank. Later it got streamlined. After GST implementation, the transit time has drastically reduced, as there is the any check post in the state borders. Earlier, our trucks use to stand hours together to cross the check post, verifying the documents, etc. Now, it’s been removed and free flow of trucks into the city has helped us a lot
Barring the initial uncertainties during the early implementation of GST, overall it has been a good year for TVS Logistics. In terms of revenue, we had a high-teen growth spurted by the underlying volumes of our customers and also due to the new contracts signed in this period. TVS Logistics also realigned their India structure to consolidate the business in this region and provide a stronger seamless supply chain suite to our customers. We were recognised for our operational excellence and expertise in supply chain management by the industry and our peers in the form of 12 awards in the last 8 months. From an auto sector perspective, we are growing faster than the industry.
India is the fastest growing economy in the world and as the reform impetus continues, the surging GDP is expected to grow even faster in the coming months. I expect 2018 will see stronger 3PL performance, and realignment of supply chain in favour of optimisation of warehousing space and network capabilities to drive greater efficiency – in line with GST. In the long term the government and industry should partner to introduce initiatives to reduce the cost of logistics and bring it on a par with international standards at 8-9 percent of GDP. I therefore, look forward to more investment in better road networks, higher adoption of rail networks and waterways, more mechanised operations and development of supply chain professionals and skilled ground staff across all levels.
An easy CAGR growth of around 35-40 per cent is very well planned and established with long term contracts and projects we have signed with our global clients. We will continue to grow and expand our network in Indian subcontinent, specially Colombo and Bangladesh, etc. 2017 was not a very endearing year for the industry as a whole with various new changes and reforms by the government especially with demonetisation and GST all being enforced in very short intervals, but I personally feel these measures are aimed towards building a more structured and well stable and regularised economy, so I think it would be very beneficial for India and recovery and growth should be good in 2018.
Despite challenges like demonetisation and GST, we are still carrying on our business and being on track is the biggest achievement.
Thoughtful changes expected for 20182017 has been a great year. The industry has experienced better volumes and higher revenues as compared to the last year. There is a lot of positivity around and speculations are that 2018 will be even more better. DIAL has opened doors for transit shipments via Delhi airport which was the most excellent move. It made Delhi airport transit hub for freight generating out Bangladesh, Sri Lanka and China to Europe and USA. This opened doors for many airlines in and freight forwarders holding capacity to cater more beyond the local originating freight. I am predicting at least 15 per cent growth in air freight and 10 per cent growth in ocean freight segment in terms of tonnages, whereas the revenue would be approximately 25 per cent in 2018 as compared to this year. India as a country is going strong and has great years lined up ahead for the manufacturing and supply chain industry.
GST implementation will also support LSPs by consolidation of warehousing locations and move towards 'hub and spoke' system. LSPs are now spending a significant amount of money on adaptation of cloud computing, Internet of Things (IoT), robotics. The development of transportation and logistics infrastructure, dedicated freight corridors, logistics parks, free trade warehousing zones, port modernisation, development of inland waterways are adding to competence and will be the driving force to growth.
A ‘cube’ to cement the supply chain gaps
R Shankar, CEO, TVS Logistics Services India, shares his billion-dollar vision and how the company will push forward with its ‘CUBE Strategy’ on the three pillars of customer, capability and geography.
The industry at large is moving towards organised 3PL players and that puts TVS Logistics at an advantage in the GSTWhat are your further plans?
TVS Logistics is focussed on providing end to end value added supply chain solutions to our customers by identifying gaps in the market in terms of service delivery and anticipating future trends and business requirements. We are the leader in automotive supply chain in India and one of the top service providers for Consumer Durables and Engineering sectors. This apart, TVS Logistics is entering many new sectors and introducing specialised capabilities that are enabling us to develop deeper partnerships with our stakeholders.
The model that we are following includes taking a consultative approach towards our customers’ supply chain challenges and also actually executing the co-created solutions on ground for them. Home grown customised IT solutions, along with mindful investment and application of technology to operations has further strengthened our position as one of the preferred supply chain partners in India.
Our global acquisitions are giving us access to international best practices and technical know-how and we are continuously applying these to the Indian market to create a differentiation. As an Indian company with deep knowledge of ground level realities of doing business in India but with global capabilities and footprint, we are able to deliver true value to our customers. All this has enabled us to participate with some customers in their strategic planning exercises and evolve long-term contracts with them.
How are you aiming to achieve the target of making TVS Logistics Services, a billion-dollar player in India alone?
In our quest to provide customers with competitive advantage, we have set up an enviable footprint in India through 300 plus facilities spread across 29 states.
To achieve the billiondollar vision, we are entering new sectors and verticals and our asset light operations are enabling us to scale quickly and add quality infrastructure as needed. To fuel this expansion phase, TVS Logistics will push forward with its CUBE Strategy which focusses on the 3 pillars of customer, capability and geography.
- We will expand with our existing customers by entering new geographical regions where our clients want to grow.
- In addition, in our existing operating locations and with our current customer partnerships, we will introduce our global/ new capabilities in line with customers’ developing requirements to service their larger value chain.
- We will proactively enter new sectors and add new logos to our portfolio, in regions where we have an established base and will offer capabilities which we have polished and stabilised over the years.
We have made a head start with respect to GST by staying proactive and responsive to the developments in its rules and regulations. TVS Logistics took timely steps to make certain that our IT and accounting systems are modified and made capable to handle the migration into the new environment. The realignment of processes in anticipation of postGST changes helped us to successfully transition in this period with seamless customer operations.
The industry at large is moving towards organised 3PL players and that puts TVS Logistics at an advantage in the GST era. Customers are increasing demanding high level of transparency, discipline to timelines, adherence to compliances and investment in technology platforms to stay competitive in this scenario. With the steps that we have taken in last few years; we are rightly positioned to form the perfect alliance with customers. As an organised 3PL and with the capabilities of a 4PL, TVS Logistics is able to bring in knowledge services, understand and use technology and operate logistics and supply chain more efficiently. Our wide network footprint and proximity to consumption and manufacturing locations is proving valuable for us during empaneling decisions. Any expansion plans?
TVS Logistics is an entrepreneurial company and with the aim to become the preferred partner and one stop shop for our customers’ supply chain requirements. We have assimilated capabilities and technology in the form of domestic and international acquisitions. In line with this approach, we will continue to look at future expansion and acquisitions by how they synergise and complement our existing structure and add value to our customers’ operations.