Industry Structure and Developments:
Logistics is regarded as the backbone of the economy, providing
efficient and cost-effective flow of goods on which other commercial sectors depend.
Logistic industry in India is evolving rapidly, it is the interplay of infrastructure,
technology and new types of service providers, which defines whether the logistic industry
is able to help its customers reduce their costs in logistic sector and provide effective
services. Despite of the weak economic sentiments, the logistics industry continues to
witness growth due to the growth in retail, e-commerce and manufacturing sectors. The
Global Logistics sector was expected to grow 10-15% in the period 2013-14. Logistics
industry is expected to reach over USD 2 billion by 2021. The recent Indian logistics
sector comprises of inbound and outbound segments of the manufacturing and service supply
chains. Of late, the logistics infrastructure has gained a lot of attention both from
business industry as well as policy makers. The role of managing this infrastructure, to
effectively compete has been slightly under-emphasized. Inadequate logistics
infrastructure has an effect of creating bottlenecks in the growth of an economy. The
logistics management regimen has the capability of overcoming the disadvantages of the
infrastructure in the short run while providing cutting edge competitiveness in the long
term.
Purpose of Logistics Industry
The purpose of logistics industry is to enable an effective
transportation or timely movement of goods from one place to another. This could be for
the purpose of industrial transportation or even private purposes.
Different mediums of Logistics services
There are three mediums of logistics services in India. These can be
categorized in the following way:
Air freight This is a modern and the safest mode to ensure a fast
delivery of goods. A chosen one by many because of the swiftness of the system there are
many Companies that are now even providing super fasts deliveries by airways even on the
same day.
Land transport This is a means of logistics support that has
withstood the test of time through the extensive network of roads in India. It has been
the popularly used method and used especially in the shipments of heavy articles like
machinery and vehicles. This is also a chosen method in case of household packers and
movers.
Railways This is also an age old method of shipments and transport.
Though most used in case of domestic services this is very effective in the availability
of cost effective logistics support in India.
Waterways An essential part of this industry this is also one of
the oldest methods. Shipments and transportation of goods is done on an international
basis through this way. It is apt in case of shipments of oil, highly sensitive or
volatile articles like Uranium.
Future outlook:
The countrys logistics industry which is worth around USD 160 billion
is likely to touch USD 215 billion in the next two years with the implementation of GST,
Economic Survey today said. "With the implementation of GST, the Indian logistics
market is expected to reach about USD 215 billion in 2021, growing at a CAGR of 10.5 per
cent," Economic Survey 2017-18 tabled in Parliament said. The Indian logistics
industry which provides employment to more than 22 million people has grown at a compound
annual growth rate (CAGR) of 7.8 per cent during the last five years, it said. The Global
Ranking of the World Banks 2016 Logistics Performance Index shows that India jumped to 35thrank
in 2016 from 54th rank in 2014 in terms of overall logistics performance.
India has improved its rank in all the six components of logistics
performance index, it added. Realizing the importance of the sector and to address the
inefficiencies, the government has included the sector in the Harmonized Master List of
Infrastructure Subsector. "Inclusion of logistics sector in the Harmonized Master
List of Infrastructure Subsector will benefit the sector in many ways," it said. It
will be helpful in facilitating the credit flow into the sector with longer tenures and
reasonable interest rates, it said adding the infrastructure status will simplify the
process of approval for construction of multi modal logistics (parks) facilities that
includes both storage and transport infrastructure. "It will encourage market
accountability through regulatory authority and will attract investments from debt and
pension funds into recognized projects," it added. To a large extent, the logistics
sector in India remains unorganized, it said adding the industry is facing challenges such
as high cost of logistics impacting competitiveness in domestic and global market,
underdeveloped material handling infrastructure, fragmented warehousing and lack of
seamless movement of goods across modes, among others. "In order to develop this
sector in an integrated way, it is important to focus on new technology, improved
investment, skilling, removing bottlenecks, improving inter modal transportation,
automation, single window system for giving clearances, and simplifying processes,"
it added. By recognizing the importance of the sector, a new logistics division has been
created in the Department of Commerce to develop and coordinate integrated development of
the industry, improvement in existing procedures, identification of bottlenecks and gaps,
and introduction of technology-based interventions in this sector, the survey said.
Improving logistics sector has huge implication on exports and it is estimated that a 10
per cent decrease in indirect logistics cost can increase 5-8 per cent of exports.
Apart from increasing trade, better performance in logistics will
augment programmes like Make in India, and also enable India to become an important part
of the global supply chain. Technological changes have led to the convergence of
industries and the transformation of the business processes related to supply chain
management. The need to improve logistics efficiency is being driven by the modernization
of transportation infrastructure, changing consumer purchase patterns, and the emergence
of new business models. With the declining cost of technologies related to Automatic
Identification Data Capture, Autonomous Vehicles, Augmented Reality, Big Data, and Cloud
Computing, the global logistics industry is being transformed in terms of the
transportation, warehousing, customs brokerage, and e-logistics services offered by
service providers. This study provides a detailed assessment of the impact of these
technologies on the logistics industry.
Opportunities:
Increased demand of 3PL. The improving infrastructure and rising focus
on core business operations will lead the future growth of the Indian 3PL.
Infrastructural Development Investment Policies of Central & State
government shall result in higher growth opportunity for transportation business.
Expected increase in freight during 2021-2022.
Successful completion of National Highways Projects shall open up new
avenues and improved service quality.
The increased fleets shall ease the operations.
Online system will increase the efficiency and effectiveness towards
decision making and accountability toward the clients which develops healthy relations
with clients.
Threat:
Insufficient integration of transport networks information technology
and warehousing & distribution facilities.
Insufficient specialist equipment, i.e. proper refrigerated storage and
containers.
Competition from local and multinational players.
Regulations exist at a number of different tiers.
Paucity of Trained Manpower.
Damages, accidents and theft are concern during voyage.
Natural disturbances in form of floods, cyclones, landslides in major
parts of India.
Due to above two conditions, the claims from clients increases and
inflow of revenue decreases and finally resulted into long legal litigation.
Segment Wise Performance:
The Company operates in single segment. For the financial and
operational performance, please refer the Directors Report.
Outlook
The recent Indian logistics sector comprises of inbound and outbound
segments of the manufacturing and service supply chains. Of late, the logistics
infrastructure has gained a lot of attention both from business industry as well as policy
makers. The role of managing this infrastructure, to effectively compete has been slightly
under-emphasized. Inadequate logistics infrastructure has an effect of creating
bottlenecks in the growth of an economy. The logistics management regimen has the
capability of overcoming the disadvantages of the infrastructure in the short run while
providing cutting edge competitiveness in the long term. There exist several challenges
and opportunities for logistics sector in the Indian economy.
Challenges faced by the recent logistics industry in India
The most essential challenge faced by the industry today is
insufficient integration of transport networks, information technology and warehousing
& distribution facilities. Regulations exist at a number of different tiers, is
imposed by national, regional and local authorities. However, the regulations differ from
city to city, hindering the creation of national networks.
Trained Manpower is essential both for the third party logistics sector
as well as the manufacturing and retailing sectors, which is very weak at a practical
level, i.e., IT, driving and warehouse as well as at a higher strategic level. The
disorganized nature of the logistics sector in India, its perception as a manpower-heavy
industry and lack of adequate training institutions has led to a shortfall in skilled
management and client service personnel. There is a lack of IT standard, equipment and
poor systems integration.
Solutions to some of the challenges
Infrastructure is the backbone of every countrys growth and
prosperity and for the logistics industry to flourish special emphasis has to be on
building world-class road networks, integrated rail corridors, modern cargo facilities at
airports and creation of logistics parks which need to be given a status equivalent to
Special Economic Zones. It is necessary to realize that the benefits which can bestly be
practiced in logistics industry can be brought about by the companies by establishing
training intuitions, so that there is improvement in the overall service quality of the
sector. Good storage and Warehousing facilities are important for the growth of the
logistics industry. With the increase in the transportation of perishable products, the
logistics agencies needs to give a lot of importance to enhancing the Warehousing
facilities. Warehousing is required to go to the next level taking into account the
changing dynamics of JIT manufacturing, global procurement and new models of sales and
distribution. Emphasis on research and development is potent mainly because it encourages
the use of indigenous technology which can make the industry cost competitive and can also
bring about improvement in services thereby using better, effective and efficient
services. Particular focus has to be on research in process excellence which can help to
eliminate inefficiencies and bring Indian logistics on par with global practices.
Future prospects
The logistics firms are moving from a traditional setup to the
integration of IT and technology to their operations to reduce the costs incurred as well
as to meet the service demands. The growth of the Indian logistics sector depends upon its
soft infrastructure like education, training and policy framework as much as the hard
infrastructure. To support Indias fast paced economy growth of logistics industry is
very essential. It is estimated that the Indian logistics industry will continue to show
robust growth of 10-15% annually, leading the pace of growth of the economy at large. The
global economic outlook, indeed that of India is expected to significantly improve as
India Inc begins to tackle the economic downturn. With a new government many policies are
expected to be implemented which will give a fresh impetus to Indias growth engine
particularly in the corporate and
SME sector which in turn will expand demand for the logistics sector.
With the implementation of GST, the logistics companies, which are currently forced to set
up many small warehouses across multiple cities can set up just a few, big warehouses
region wise and can follow the hub-and-spoke model for freight movement from the
warehouses to the different manufacturing plants, wholesale outlets, retail outlets and
the various POS. This growth is backed by the boom in the e-commerce sector and
expansionary policies of the FMCG firms. This has increased the service geography of the
logistics firms but they also have to meet the demands of quick delivery and tight service
level agreements. The industry has moved from being just a service provider to the
position which provides growth of Logistics and Warehousing industry in the coming years.
Risk and concerns
The Indian Transport industry is a growing avenue and widely opens for
new entrepreneurs. The Company takes the extensive view of business risk. The Company
always keep itself changing with the changed environment of operation, technology and
innovative ideas. The Company however faces the following risk:
Competition Risk: This risk from more players wanting a
share in the same pie. Like in most industries, opportunities bring itself with more
competition. We face different levels of competition in each segment, from domestic as
well as multi-national players.
Regulatory Risk: If we are unable to obtain required
approvals and licenses in a timely manner, our business operations may be adversely
affected.
Internal Control System:
The Company has in place adequate internal control system commensurate
with size and nature of its business. These systems provide reasonable assurance in
respect of providing financial and operational information, compliance with applicable
statutes and safeguarding the assets of the Company.
|
|
By order of the Board of Directors |
|
For Containerway International Limited |
|
Sd/- |
Sd/- |
|
Salem Laxman Ganpathi |
Jayashree Ganpathi |
| Date: 03-09-2022 |
Director |
Director |
| Place: New Delhi |
DIN: 01151727 |
DIN: 01158489 |
+91-9892691696
