Dilip Ahuja is a shipping professional with more than 25 years of experience in the industry. Neptune Container Line & Logistics Pvt. Ltd was established in Mumbai in 1998 to handle the growing demand in containers and cargorelated logistics. Dilip Ahuja, in an email interaction with Lalitha Rao, discusses the broad outlook for the Indian logistics industry.
What is your outlook for the Indian logistics industry in the current decade?
In my opinion, the Indian logistics industry is in its nascent stage as demand is big while supply is not up to the mark owing to the inadequate infrastructure at its disposal. I look forward with optimism hoping that the desired change (progress) will be seen in the near future which will augur well for the logistics industry in India.
How is the cost of logistics in India comparable with other countries?
Contrary to expectations, cost of logistics is high in India in proportion and comparison with the global scene. If we can bring our costs down, we shall be able to increase our international trade by becoming competitive in the international market. We have the scope to out beat competition (China is one of our major competitors) provided we improve our infrastructure and bureaucracy both of which are now a main reason for our products and services being out priced.
What is your view on the current levels of infrastructure in the Indian logistics sector?
Our infrastructure is far from good. We need better roads, better railways, vast improvement in port and related activities, facilities for augmenting and promoting export (even import for that matter) in a modern and professional method.
What is your company’s market share in the logistics sector?
That is difficult to determine but a mid-sized company like ours has a turnover of 15,000 TEUs per annum (combined group turnover is around 30,000 TEUs per annum) and that is quite a sizeable volume in Indian terms. The brand Neptune has been around for 15 years and has grown with each year passing by. We work with sound business principles, ethics and high emphasis on customised solutions tailor made for all sizes of customers.
The industry is becoming more competitive with the entry of global players and mergers and acquisitions.
We can see competition flow in but we have a firm base and are undeterred by newcomers and competitors alike. We are growing steadily by penetrating into new markets and extending our brand image pan-India and even globally. Innovation in service and working methods is helping us to be ahead of such competition.
Warehouses have become key growth drivers in logistics though, in India, this segment is mostly with unorganised players. Do you see a change in this trend?
Yes, I agree, and do see a change with more organised warehouses coming up on the scene which will help in a big way with cost savings, better packing, reduction in damages, reduction in handling costs etc.
What are the main areas of concern in transportation of goods and services?
The main areas of concern in transportation of goods and services are:
- Inadequate infrastructure in the form of roads, highways and bridges
- Infrastructure does not permit a scaleable transportation solution
- Unsafe practices leading to high risk on the existing infrastructure network
- Statutory and regulatory constraints
What are some of the key areas requiring attention in logistics chain?
India’s logistics infrastructure is illequipped and ill-designed to support the expected growth rate of 7-8 per cent over the next decade. Indian logistics infrastructure is characterised by high costs and low service levels. Logistics infrastructure investment tripled from $10 billion in 2003 to around $30 billion in 2010. Still, the country’s network of roads, rail and waterways will be insufficient as freight movement increases threefold in the coming decade.
Logistics in India aggregate an annual spend of about 12-13 per cent of gross national product.
Transportation alone accounts for 40 per cent. If logistics costs in India are reduced from the current 13 per cent of the gross national product to 8-9 per cent (level in the US), annual savings would be around $20 billion-a potential 4.5 per cent cut in prices of Indian goods globally (a study by logistics institute, Asia-Pacific).
Logistics business is no longer limited to basic transportation. It encompasses services such as warehousing, distribution, inventory management, order processing, packaging, labelling. India leads the table of world’s major developing logistics markets, as “the most attractive market for logistics companies,” Brazil, Indonesia, Mexico and Russia being others in the top five bracket.
Can you tell us about Neptune’s operations as well as future plans?
Neptune began as an international freight forwarder with an agency network developed by its first partner Inter-Container Lines Pte. Ltd, Singapore. In due course we moved into container liner agency and later into non-vessel operating common carrier (NVOCC) and project cargoes.
Currently, Neptune is competent in handling all aspects of logistics including transportation, warehousing etc. With some activities being outsourced the entire operations and documentation is done in-house with a team of efficient and enthusiastic professionals at all locations across the country.
Consolidation of its services at all locations and increasing its focus in project cargoes and NVOCC activities are its high priority in its near future plans. An independent office in Dubai, which will act as a hub to cover the Middle East, has been opened in June this year.
The entire logistics gamut of services will be offered in Dubai as well and with its existing network of around 150 agents in around 100 countries, will now have a reliable office in the Middle East to bank on.