Amidst the ongoing third wave of COVID-19 pandemic, it seems logistics companies are hurrying up to redesign and revamp their supply chain operations for enhancing efficiency and productivity levels and also to protect their businesses against a wider and more acute range of potential shocks and disruptive events, by taking every detail to its broader context. In the process, companies are adopting various highly innovative and efficient strategies to propel growth and subsist in the competitive environment. Ritika Arora Bhola There’s certainly an urgent need to rebuild supply chain which is far more resilient and flexible, in order to survive and achieve growth. And the pandemic is actually forcing the logistics companies to become flexible, responsiveness, and efficient while guaranteeing costumers’ demands at minimum costs. With lessons learnt from the last two years COVID chaos (2020-2021), supply chain businesses are finally looking at building resilience, chalking out contingency plans and bringing in agility in 2022 and beyond. As the pandemic wreaks economic turmoil around the world with the ongoing third wave, modern supply chains are again experiencing unprecedented stress and are drawing an increased level of scrutiny. Therefore, experts suggest us some important aspects to consider for rebuilding and restructuring supply chains to ensure resiliency, agility and speed of the supply chains of the future. Ramesh Krishnan, Vice President at Stellar Innovative Transportation Solutions jots down several key points which need to be taken care of while rebuilding and restructuring the supply chain. Time to marketCost to reach marketStatutory compliances and adherence of regulatory enforcementGlobalisationUse Alternative resources for green initiativesFinancially sustainable design “Supply chains were built typically for improving the efficiency in the pre-COVID-19 era and the focus has been on minimising the cost of operation. But, the pandemic taught us the value of redundancies in the supply chains, be it alternative factories, warehouses in multiple locations, dual sourcing or even higher safety stocks. Though these principles go against the idea of ‘lean’ business,” says Dr Debmallya Chatterjee, Professor and Head- Operations and Supply Chain at SP Jain Institute of Management and Research (SPJIMR).“Today’s businesses need to consider these redundancies as a part of their business model.” Many experts lately talked about rebuilding the supply chains through strategies such as multi-sourcing and near-shoring which, Chatterjee says is not going to be easy and may not be a solution in the short-term. “If we look at near-shoring as a strategy, it would require a lot of time to set up an alternative and that too would require a lot of clearances including a nod from the local government. For example, when it comes to producing medicine, replacing India or China for a country like USA would not be easy. Though there were a lot of discussions around moving out of China, today the companies are happy continuing with China as their manufacturing hub. This is mostly because of the infrastructure they had developed over a long period of time that is difficult to replicate elsewhere. When it comes to multi-sourcing, the focus for the companies should be to evaluate their suppliers on ‘time to bounce back from any disruption’ rather than focusing on how long the stocks survive. This can be considered as a KPI for the suppliers so that an ecosystem is developed that can handle future disruptions,” says Chatterjee. “We are at the cusp of a new supply chain era. Supply chain 4.0 will see technology and digital operations come to the forefront,” explains Abhishek Chakraborty, Executive Director, DTDC Express.“The use of data and technology to serve our customers is what is rewriting the rules of the logistics business. So, any restructuring will have to consider the role of data and technology. Data analytics fed into an AI or ML system can uncover underlying fundamental problems and provide solutions to them as well.” “Digital transformation is imperative for the labour intensive supply chain industry. The use of new technology enhances the efficiency and transparency in the sector. Yet, we must not forget that human capital is the backbone of the logistics industry. Technology can assist it and not replace it. The onset of COVID-19 has also shown the need to account for the toll of pandemics and natural disasters on the industry. The supply chains of many sectors grounded to a halt and some even had to move to new locations, take new routes. Supply chain models need to have an inbuilt agility to function in the times of extreme change such as those brought about by the current pandemic,” Chakraborty adds. A futuristic ecosystem-building approach In the last few years, logistics companies globally have adopted various innovative and efficient strategies to build-up highly resilient supply chains with futuristic approach and world-class standards. Focus has also been majorly on improving the supply chain and logistics infrastructure. The industry had long back realized the importance of 100 per cent digitalisation of business operations, but the adoption was relatively slow, but it is COVID that acted as a catalyst and forced the industry to push towards ‘digital operations.’ Chatterjee partially agrees. “The race to make their supply chain digital has created a unique problem for many Indian organisations. A good number of them have misunderstood the idea and are running behind upgrading the existing technologies in bits and pieces instead of looking at it holistically. It requires a complete change in the approach. The future supply chains would not work in isolation. The supply chain partners need to be integrated to reap the benefit of the technologies in the form of greater flexibility, improved responsiveness and greater agility.” According to Krishnan, “India is ready for software technology of any level but not yet ready for hardware technology in most sectors. The reasons are: High cost of hardware technology and dependence on import instead of locally available technology.Huge peaks and lows due to big days and festivals. The skew is so high that if we deploy technology, we will have fixed cost. Whereas, during lows, we will not be able to meet the capacity, and then during peaks, technology will become insufficient and we will have to deploy manpower. Moreover, manpower unfortunately is easily deployable and dispensable and hence is a variable cost. Only in case of high precision items it would make sense to upgrade technology that too to meet global standards. “In this age of supply chain 4.0, it is imperative for the Indian logistics industry to integrate technologies such as IoT, cloud computing, AI and ML to scale up distribution operations. This has already begun with DTDC,” Chakraborty says. For instance, development of temperature-controlled logistics vertical that utilises IoT sensors to monitor ambient temperature inside transport vehicles and containers. “At this time, whether or not India is ready for such technologies is a moot point. Integrating such technologies in operations is no longer a luxury but a necessity. There are challenges, such as the requisite technical knowhow on how to adapt and use these technologies. Acquiring such knowledge requires investments and businesses find it difficult to make a case for the investment in some of the emerging technologies. But, as more and more clients demand higher resilience, visibility and agility, logistics players will be forced to adopt these technologies.” New practices and emerging solutions for the next decade Undoubtedly, the impact of COVID-19 pandemic on global supply chains had certainly been huge. According to a report published by Accenture, more than 90 per cent of the global supply chains got impacted by the pandemic with more than 75 per cent of them reporting heavy financial loss. However, despite the plethora of challenges like labour shortage, capacity crunch, high space costs, etc. logistics service providers ensured business continuity by adopting ‘Operational Smartness’ and ‘Innovation’ as a survival kit and successfully transported time- and temp-critical cargo, especially pharmaceuticals. “Recent technological advancements have changed the face of the supply chain and logistics industry,” agrees Alexandre Amine Soufiani, Managing Director at FM Logistic India. “With convenience and customer experience at the forefront of logistics trends, warehouses and distribution centres need to further adapt to the evolving consumer landscape. During the COVID-19 pandemic, the rise of e-commerce has played a huge role in shaping the way warehouses operate, as have consumer expectations for speed of delivery, customisation, product availability, and much more. With the growing complexities of customer demands and the globalisation of many retailers due to e-commerce, warehousing trends are starting to shift to keep up with the ever evolving and increasing demand of customers.” Amine cites few efficient solutions: Omni-channel Logistics—The next generation of business requires logistics networks tailored to the needs of each and every channel. Omni-channel services are the need of the hour and companies are realigning supply chains to cater to multiple channels from the same warehouse.Warehouse Management Systems—Secured, real-time access to the consumer’s ecosystem of connected devices enables a variety of innovative pick-up and delivery services, as well as improved customer service support and valuable insight generation for logistics providers.Augmented Reality—Blurring the lines between the digital and physical worlds, augmented reality (AR) is providing new perspectives in logistics planning, process execution, and transportation. By adding virtual layers of contextual information onto a heads-up display or other digital device, AR empowers workers by providing the right information at the right time and in the right place.Internet of Things—IoT has the potential to connect virtually anything to the internet and accelerate data-driven logistics. Everyday objects can now send, receive, process, and store information, and thus, actively participate in self-steering, event-driven logistics processes.Robotics and Automation—The first wave of automation using collaborative robotics has arrived in the logistics industry. Driven by rapid technological advancements and greater affordability, robotics solutions are entering the logistics workforce, supporting zero-defect processes and boosting productivity.Space Optimisation—Warehouses are constantly faced with the challenge of efficiently optimizing space. It is critical for warehouses to run as efficiently as possible and work on warehouse space optimisation which calls for the deployment of innovative logistics solutions. The goal is to increase the quantity of stock that can be stored in the available space and to ensure it can be located and moved safely but efficiently.Sustainable Developments—An increasing shift towards renewable or ‘green’ energy sources (solar, wind, etc.) is propelling the development of electric mobility and facility solutions for logistics. Taking the above into account, Krishnan says, in the current situation sustenance by profitability is replaced by funding and higher valuation. But in the long run ‘profitability’ will be the key mantra. Apart from this, a lot of government backed initiatives like development of infrastructure, subsidy and promotion of technology, duty waiver for import equipment, and Make in India, etc. to make technology cheaper is on tracks. “Complete focus on health and well-being of workforce has to take a driving seat,” Chatterjee feels looking at the current situation. “A continuous cycle of mobilise (plan and resources), sense (priorities/risks), analyse (scenarios), and configure (network designs) would help mitigate the risks to a greater extent. Besides, the supply chain practitioners also need to sense weak signals of disruptions that were generally ignored in the pre-pandemic era. The disruption caused by the COVID-19 pandemic will have a lasting impact on businesses and companies need to build resilience in their supply chains for the future. They need to bring in redundancy that can help in a greater flexibility for their supply chains. They also need to bring in transparency in the end-to-end supply chain to maximise visibility and respond better to future disruptions. This capability can be achieved only through technology—by harnessing data analytics and automating processes.” According to Chakraborty, the ability to shift or reroute the entire supply chain to service high demand areas or procure goods from still functioning areas was the most critical skill during the pandemic. E-commerce and digital sales have grown by leaps and bounds in this period, and logistics players must cater to this growing segment. Additionally, urbanisation necessitates the designing of a new supply chain model to cater to the e-commerce sector and reach the growing population.” “As other industries move into recovery and growth mode, so do the logistics companies. We are seeing an increase in investment in facilities, fleets, manpower and technologies. These investments can be termed as smart investments as they will be augmented by smart analytics, data and emerging technologies. For example, data analytics will inform our decisions on where to open new warehouses or retail outlets, how many vehicles to onboard, etc.” “Fleet expansion will be mainly geared towards electric vehicles, both to save costs in the long run and to reduce our carbon footprint. All of the above changes will be encouraged by an expected reduction in investment required for new technologies, as both startups and larger companies start offering a more affordable SaaS or PaaS model to logistics players,” Chakraborty continues. Productivity growth at the sectoral level and the Road to Recovery According to Amine, Indian warehousing segment also had its unwanted share of COVID impact. However, he feels, driven by a robust growth in the e-commerce and manufacturing sectors as well as rising demand in emerging tier II and III cities, logistics and warehousing space absorption will be fastest to recover from the COVID-19 aftermath. “Growing demand for temperature-controlled warehouses to cater to the cold chain, pharmaceutical, food and FMCG sectors, as well as growth in organised retail, are the likely drivers of this growth,” highlights Amine. Warehousing demand is increasing and particularly driven by e-commerce and pharma sectors, says Amine. “The centre's focus in making India a global manufacturing hub has caused warehousing clusters to expand rapidly beyond metros into tier II and III cities. Also, as most of these are aligned with industrial hubs, the demand for Grade A warehouses there has increased substantially. “ “Subsequently, the increasing internet penetration in rural areas in addition to rising household income and the government’s push on digital in rural areas has increased the pressure on manufacturing organisations to move closer to their customer base in these areas.” “In this endeavour to cater to the hugely untapped rural customer base, many organisations have realised the importance of developing quality and world-class warehousing facilities as these not only offer operational excellence but also facilitate cost optimisation.” “To further strengthen our omnichannel fulfilment capacity, we will be expanding our network of large MCFs, supported by investments in automation connected to a full network of urban logistic hubs. Globally, RPA is a prime focus area for us. We deploy AGVs and robots for various activities like loading, unloading, picking, palletising, etc. In India, we have implemented drones for inventory control at one of our warehouse and are in the process of getting this implemented across all warehouses. We have also implemented a fully automated packing line for various clients.” “Continuing…these in-city hubs are designed to offer a full range of sustainable omni-channel services that include order fulfilment, last stage packaging customisations, digital marketplace, last stage readiness, and cross docking. Green last-mile delivery, too, is part of the offer, thanks to our EV charging point enabled infrastructure,” tells Amine. “The year 2022, as I see, will witness the rise of organised logistic offerings to small and medium businesses (SMBs),” says Chakraborty. “SMBs form the largest industrial group in India but are not served as well by most logistics companies. DTDC is leading the charge on providing an organised bouquet of offerings to this section. We also have an increased focus on improving last-mile logistics, especially for e-commerce. This means that last-mile delivery will become more organised, tech-enabled and sophisticated to serve both e-commerce platforms and the end consumers better.” For Krishnan, the biggest learning is reality check on what only a façade was and what necessity was. “Supply chain industry worked seamlessly even during the pandemic without much physical supervision. Work from home and technology intervention became an integral part of the supply chain business. Time to market is gaining more importance, however one must strike a balance between the cost and profitability but keeping in view the future potential. With China becoming eyesore for many western countries, India has immense opportunity to become a global manufacturing hub, which will offer the biggest advantage of scaling up volumes. This will have a cascading effect on GDP, cost of production, automation and technology, and growth of consumerism. This will have a very positive impact on logistics and distribution aspects, be it long haul, first-mile, last-mile, or warehousing operations,” Krishnan adds.  “If you look at e-commerce, pharma or FMCG, the supply chains have performed amazingly well post the first quarter of 2020,” Chatterjee points. “The organisations have pulled it well after the initial hiccups and no one can ignore the support from 3PL service providers. It is true that the businesses have changed drastically for logistics service providers and forwarders during the pandemic. Logistics companies who hadn’t undertaken digitisation of their end-to-end processes were severely impacted, especially during the lockdown.” “Now, as we sail through the New Year, logistic companies are yet to get back to normalcy, as ports and airways are still not fully functional. The movement of containers ships is yet to be normal which had a rippling effect on the global supply chains leading to piling up of inventories and demand-supply mismatch across geographies. As we are facing another wave of the pandemic worldwide, few things need to be taken care of by the logistics and supply chain companies going ahead.” The pandemic had taught us the value of preparedness and supply chain’s ability to bounce back. Planning is good but what matters most is the ability to re-plan and be adaptive to changes. The pandemic has taught us the importance of developing a change-agile mindset in the leaders.One important lesson companies also learned the hard way is not to depend on a single supplier or single logistics partner for their entire operations.The concept of redundancy in the form of more than one logistics partner or supplier needs to be inculcated in the minds of supply chain managers and slowly they will be able to strike the fine balance between the efficiency and resilience. This will not come overnight.Also, companies need to be empathetic and transparent to their workforce amidst difficult times. It is important to recognise employee and workforce contribution in keeping the supply chain uninterrupted.Importantly, employee well-being will be the mantra for success. Keeping the remote workforce motivated is going to be one of the biggest challenges for supply chain leaders in the near future.

Industry findings throw light on the fact that almost 200 airlines operated well over 2,500 of the so-called “preighter” flights in 2020. Interestingly, some companies have gone even further by converting their parked passenger aircraft into freighters. Global aviation data firm Cirium found that between March and December 2020, 155 aircraft had all or most of their passenger seats removed in order to transport more cargo in their cabins. With online shopping booming and an urgent global demand for vaccinations and medical supplies, it’s hardly surprising that airlines would want to make up some lost revenue by carrying cargo rather than passengers. Upamanyu Borah The strong demand for converted freighters has been driven by a robust cargo market, one of the few bright spots for the airline industry over the past 12 months. Since the start of the global health pandemic, freighter aircraft usage has grown strongly, mainly due to the global disappearance of belly hold capacity as passenger aircraft were grounded. The number of freighter aircraft flights peaked at more than 145,000 in December 2020 during the holiday period. While the global freighter fleet is growing, as is the number of passenger to freighter (P2F) conversions, there has been a corresponding increase in aircraft available for conversion driven by the accelerated retirement of passenger aircraft fleets. According to data from IBA’s InsightIQ, the number of parked or stored aircraft has increased by a factor of 2.5 between December 2019 and June 2021. This accounted for 60 different aircraft types operating in the narrow body and wide body market. The grounding of the passenger fleet caused an expected drop in the amount of cargo space available in the hold of those passenger aircraft, and attention inevitably turned to passenger to freighter converted aircraft to cater for the increased demand for transportation of freight. With COVID having prompted capacity alterations across the industry and as newer types are entering the passenger market, aircraft being converted are coming from a wider age range and apparently sourcing adequate feedstock should not be a significant problem for most types considering readily available supplies. Overall, since May 2020, almost 200 narrow body and wide body aircraft have joined the worldwide freighter fleet, with the active fleet of narrow body freighters growing from 61 to 625 aircraft with newly-converted B737-800s accounting for half that growth. The B757-200 remains the pre-eminent freighter aircraft with a fleet of 298 units – converted and factory delivered – followed by the B737-400, with 148. Meanwhile, the active mid-size widebody freighter fleet has grown steeply in the same period by 80 to 624 aircraft. The B767-300ER is the dominant aircraft in this segment, accounting for more than half the growth as many ex-passenger aircraft are converted, and in total fleet size this type now stands at 315 aircraft when one adds converted and factory delivered aircraft. The A330 freighter fleet is also growing strongly, but from a much lower base, with six aircraft converted during this period, but with an additional pool of aircraft taking its fleet size to 74, the data reveals. The large widebody freighter fleet has mushroomed from 55 to 601 aircraft since May 2020. The re-entry into service from storage of 29 B747-400s and seven MD-11Fs accounted for around half of the growth, with the remainder made up of factory deliveries of 22 B777Fs and three B747-8Fs. In the News! Singaporean firms ST Engineering and Singapore’s government-run investment company Temasek are joining forces to create a new 50-50 leasing venture for converted freighters, amid a series of ongoing announcements focussed on the booming market for P2F modifications. The venture targets to build a portfolio valued at about US$600 million within five years, investing in passenger aircraft – primarily single-aisle types – for conversion to freighters. Prior to the news of this partnership emerging, there had been a flurry of activity in the sector. For instance, Boeing revealed it will in 2022 set up a P2F conversion facility for 737-800s in Costa Rica – the first such operation in South America in association with Cooperativa Autogestionaria de Servicios Aeroindustriales (COOPESA), a Costa Rica-based maintenance, repair, and overhaul (MRO) provider, while Israel Aerospace Industries (IAI) will in 2024 establish a modification line in Seoul, South Korea for 777-200LRs and -300ERs. That facility will augment IAI’s initial line in Tel Aviv, where the first aircraft under the 777-300ERSF ‘Big Twin’ conversion programme it launched in 2019 with lessor GE Capital Aviation Services (GECAS) will shortly be inducted. Most recently, Etihad Engineering, the largest commercial aircraft maintenance, repair and overhaul (MRO) services provider in the Middle East signed a strategic partnership with IAI to provide P2F conversions on Boeing 777-300ERs. The B777-300ERSF is based on the passenger variant of the type and is expected to offer a 25% capacity increase to the smaller 777-200LRF. With the installed GE90 engines, the Big Twin will achieve up to 21% lower fuel-burn per tonne than 747-400 freighters, and big-cargo capability that sees 25% more volume than the 777-200F production freighter. According to IAI, with the flexibility to be more profitable than the competition at high or low utilisation models, the aircraft has “the range capability to seamlessly replace aging 747-400 and MD11 freighters. The engines were specifically designed for long-haul operations and the Boeing 777 series, providing up to 115,000 lbs of thrust. In addition to providing the engines of the aircraft, GECAS will also provide MRO engine and power-by-the-hour services throughout the lifecycle of the freighters. “We view the 777-300ERSF as the next generation of long-haul, large-capacity widebody freighters,” said Rich Greener, Senior Vice President and Manager of GECAS Cargo had said in a statement. “GECAS Cargo has developed a new standard for aviation lessors, leveraging our fleet of passenger aircraft to provide freighter conversion feedstock — for this 777-300ERSF program as well as converting 737-800NGs. This approach extends the useful life of our aircraft and GE/CFM engines while meeting the need for replacements of retiring freighters and increased demand for dedicated cargo capacity.” Reportedly, US-based cargo airline Kalitta Air is set to be the launch operator of the largest-ever twin-engine Boeing 777-300ERSF freighter. Originally a 747 operator, Kalitta Air’s fleet has grown to a total of four 777F, 24 B747-400F and nine B767-300BDSF aircraft. GECAS has also recently announced a deal to lease out six of its B737-800BCFs — two to Russian carrier ATRAN and four to an unidentified customer. ATRAN recently took delivery of two of the aircraft from GECAS and will add two more of the P2F narrow bodies to its operations in September. GECAS will also lease two 737-800BCFs to Malaysia-based carrier Kargo Xpress, subsidiary of M Jets International. The first aircraft is set to be delivered to the Malaysia-based carrier in October this year, followed by the second one in December. Between 737-800BCFs and 777-300ERSFs, GECAS currently holds orders and options exceeding 100 P2F conversions. Meanwhile, July Boeing market data reflected that the 737-800BCF has won more than 200 orders and commitments from 16 customers, with that number having gone up by 33% (up from 150) alone since January. Since entering into service in 2018, the B737-800 converted freighter has consistently delivered the reliability and efficiency our customers need. “As we reach this milestone less than three years after the first 737-800 Boeing Converted Freighter took to the skies, we at Boeing thank our customers for making the 737-800BCF the narrow body freighter of choice for meeting cargo needs around the globe,” Jens Steinhagen, Director of Boeing Freighter Conversions said in a statement. “The success and market leadership of the 737-800BCF is a testament to superior design, as well as to the hard work and dedication of Boeing’s global team that includes our parts and MRO suppliers. As demand for Boeing Converted Freighters soars, we continue to increase our capacity to meet our customers’ needs,” he noted. Steinhagen had previously noted that Boeing is focussed on working with its MRO partners to ensure we meet the growing market demand, which is why it added additional lines to support future capacity for both the 737-800BCF and 767-300BCF. “Any future conversion line decisions, whether with existing or potentially new partners, will be driven by a variety of factors, including the business environment and market demand.” Whilst reports say 90 per cent of freighters around the globe are Boeing jets, Airbus thinks its conversion programme for the widebody A330 and narrow body jets like the A321 and A320 is set to take a piece of the former’s share in freighter operations worldwide. In particular, the company is looking at the prospects of the A321P2F conversion programme which could easily rival its nearest freighter platforms. Compared to similar class freighter models, the A321 freighter is regarded as a better option for the environment and lowering CO2 emissions, with a 20% reduction in fuel burn and its enhanced performance in range, payload, and volume capacity. The aircraft type is also acknowledged as being one of the most technologically advanced narrow body fleet types in its class. It was reported that in May Oregon-based 321 Precision Conversions, a joint venture of Air Transport Services Group (ATSG) and Precision Aircraft Solutions was close to delivering its first Airbus A321 converted freighter. The imminent handover followed the US Federal Aviation Administration (FAA)’s issuing of a supplemental type certificate for the A321-200P2F variant in late April, paving the way for delivery to launch operator SmartLynx Airlines Malta and the ramp-up of conversions. A similar programme is also being developed by Sine Draco Aviation Development. On the other side of the Atlantic, Dublin-based lessor GTLK Europe is set to acquire four A321 converted freighters, induction for which will commence this year with the last conversion to be carried out in 2022. The aircraft will undergo modification by the Elbe Flugzeugwerke (EFW) joint venture which is run by ST Engineering and Airbus. In October of 2020, EFW re-delivered the first converted freighter to aircraft lessor Vallair, its launch operator for the A321P2F programme. The aircraft has since then entered service with Qantas who will be flying the aircraft for Australia Post. Since then, the group has delivered a second aircraft to lessor BBAM and secured orders for GTLK Europe. In the latest of developments, BBAM is said to have placed the largest order to date for the A321 converted freighter, which is attracting growing attention from express delivery companies and airlines supporting parcel networks that are experiencing rapid growth in e-commerce business. The deal essentially locks up a full production line for BBAM through 2025 and comes with the option to add new conversion slots every year starting in 2026. BBAM, which manages leases for investors that own aircraft, has already converted and redelivered two A321 converted freighters to Titan Airways, a U.K. charter airline, for a total of 20 orders so far. EFW CEO Andreas Sperl expressed, “Interest in our A321P2F conversion solution has been on a significant rise over the past year or so, and we are committed to satisfying the growing market demand with on-time redeliveries by ramping up conversion lines with our parent company, ST Engineering.” To meet the rising global demand for dedicated freighter aircraft, ST Engineering and EFW introduced a conversion site in Guangzhou, China in the end of 2020, and will be setting up another in the US in 2021, which will ramp up world-wide conversion capacity for the type to 25 slots per year by 2023. Expansion plans are also in the works to support the rising demand for the widebody A330P2F programme, which is currently carried out at EFW’s facility in Dresden, Germany. For instance, Mexico-based MasAir Cargo Airline has reached an agreement with Irish leasing services company CDB Aviation for the lease of two Airbus A330-300P2Fs. The aircraft are scheduled to be delivered to MasAir during the first half of 2022. “The A330 P2F is considered as very popular especially for the express cargo market, as it is a wide body program with great capacity offering more cargo volume and lower cost-per-ton than other available freighter aircraft types with a similar range,” Sperl said. Airbus predicts that around 1,000 small freighter conversions will be required over the next 20 years to replace ageing fleets and cater for growth, which will make a solid market potential for the A321P2F programme. Several airline companies including new ones are already in the process of launching A321 converted freighters, which will compete with B757s and B737s. Miami-based Global Crossing or GlobalX Airlines, the new entrant airline currently undergoing FAA certification using the Airbus A320 series, announced it has signed a LoI with ST Engineering and the latter’s in-house leasing arm Aviation Asset Management to lease five incremental converted A321-200P2F aircraft. ST Engineering said it would acquire the A321-200s for conversion either on its own or through its joint venture firms. The first of the quintet is set to enter conversion in April 2022 and deliver to GlobalX in the fourth quarter of the year. The other four units will be converted and delivered progressively. In October 2020, GlobalX signed a LoI with Vallair for ten A321-200 P2Fs of which five were confirmed for conversion by ST Engineering. GlobalX confirmed that the five newly ordered aircraft are on top of the ten previously signed, increasing the start-up’s freighter fleet to fifteen A321-200P2Fs. Future tense but unlikely The P2F market is expected to remain strong in the short-term but most industry experts think it will naturally level off at some point. The risk for operators who invest in P2F conversions is that if passenger traffic quickly bounces back to pre-crisis levels, the return of belly-hold capacity could be enough to accommodate much of the air cargo demand, which analysts predict will remain stifled as a result of the recession. In fact, when viewed in relation to the bigger picture, passenger to freighter conversions will likely have a minimal impact on capacity and Available Freight Tonne Kilometres (AFTKs). Practically, the issue of lack of capacity has been compounded by the increased volume of global e-commerce trade and demand for PPE supplies brought about by the coronavirus pandemic. IATA data for March 2021 shows a record for air cargo, with cargo tonne kilometres (CTKs) up 4.4% above the same month in 2019 – well before COVID-19 appeared. CTKs have climbed consistently over the last 12 months, save for the annual post-Christmas slump. In the long-term, global air cargo traffic is forecast to grow by four per cent a year over the next two decades. In Boeing’s World Air Cargo Report from last October, the airframe manufacturer predicted that the world’s dedicated freighter fleet will grow by more than 60 per cent over that time, and that nearly two-thirds of the deliveries will be conversions from passenger aircraft.

With limited physical infrastructure, new digital infrastructure and processes are needed to increase throughput, reduce friction, and improve transparency and coordination. The evident three pillars to the emerging movement of goods ecosystem: connected community, holistic decision-making and intelligent automation. Forward thinkers are beginning to see the opportunities to differentiate across all three of these dimensions. End-to-end transparency through connected community Addressing fragmentation through connected communities is among the greatest challenges and opportunities facing transportation and logistics. But the horizontal partnerships forming around ports serve as a strong example of what’s possible. Integrated data platforms, such as those found in Hamburg and Rotterdam, exchange critical port information—including ship arrival and departure times—to participating ports, shipping lines, and marine terminals coordinating drayage. Powered by cloud, integrated platforms handle large transaction volume between disparate applications, and enable ports to orchestrate the network with real-time data exchange, optimising ship course and speed, vessel berthing, ship offloading, and response to schedule changes. The collaboration has already led to a 20 per cent reduction in dwell times for ships that can cost up to US$80,000 per hour to operate. The significance of this platform is a mindset shift as well as a technological one. Ecosystem participants, some direct competitors, are collaborating to digitise and connect. And in the case of new smart ports, all stakeholders have been given an active seat at the table during planning and development, helping to create open platforms with mutual benefit. Accompanying integrated platforms created by the physical movers, pure technology players—from startups to projects backed by industry incumbents—are investing billions to mature the world of digital freight. While digital platforms that match cargo to available capacity in real time are certainly not new, they are proliferating in number and, more importantly, expanding beyond their historical concentration in spot-trucking to different points of the value chain, from air and ocean to rail and B2B freight. Some platforms are even taking digital freight end-to-end. Cainiao, China’s leading digital logistics business connecting e-retailers with end-to-end logistics, is achieving enormous scale. The brand has already amassed more than 90 trucking and air carriers, six digital fulfilment hubs, 266 IoT-connected warehouses, and a variety of last-mile networks, including self-pickup locations, smart lockers, and express couriers. Their ability to see across the growing network, and marry it all with AI applications to match shippers to the lowest-cost and fastest routes is driving a significant competitive advantage. Cainiao is already processing an average of 42 million packages per day, with ambitions to deliver an online order anywhere in the world in under three days. In theory, digital freight seems like a quick fix for a fragmented industry. But it’s not so simple (see sidebar, “The interoperability hurdle”). The proliferation of new platforms will not lead to freight markets that follow the laws of perfect competition overnight, if ever. Platforms of Cainiao’s size are rare. Most struggle to grow the partnerships needed to achieve scale—and, in a way, create fragmentation themselves as vertical stacks of integrated products. But similar stories have played out in other industries. History suggests that waves of consolidation and evolution in digital freight might be inevitable. In the early days of online travel, for example, hundreds of online travel agencies—most regional, with limited inventory—connected travelers to the world’s hotels and airlines. After decades of consolidation, only a handful of global players command significant market share, and their content is further aggregated by a handful of leading travel metasearch platforms. But what are the implications? And where are the opportunities? For regional parcel carriers and logistics providers, the improved, real-time visibility into available cargo and tech-enabled coordination could be what’s needed to materially improve utilisation. The ability to leverage the assets of other carriers through shared models could help expand coverage and monetize or acquire additional capacity, enabling fleets that flex with demand or create new revenue streams. A single 26-foot truck traveling 100 miles per day can generate up to US$3,300 per month. For retailers, the additional freight services and crowdsourced assets offer new opportunities to meet growing last-mile and peak season demand. As comfort with sharing models and crowdsourcing rises, retailers will have fresh options for moving goods between stores or middle mile. Agility through holistic, data-driven decision-making Many of today’s global movers are already data-driven. For example, the quantitative rigor that a logistics provider might use to design a custom supply chain for a global retailer is quite sophisticated—as are the range of increasingly integrated transactional systems, enterprise resource planning systems (ERPs), transportation management systems (TMS), warehouse management solutions (WMS), and software tools used to manage those operations. But where today’s global movers need to focus is compressing the time between data collection and meaningful action. Global supply chains can be planned with immense precision, but dealing with unpredictable environments and rising consumer demands requires the agility to react to changing network conditions with dynamic decisions and, perhaps in the not-too-distant future, to tailor microsupply chains for each product and customer. Early adopters are not only finding success from a mix of new data sources from connected assets, cargo, and warehouses—in some cases, they are harmonising these new data streams with transportation management, inventory management, and other supply chain functions. These capabilities serve as early signals that traditional, linear supply chains are just beginning to collapse into more dynamic digital supply networks, where once-isolated data sources—such as operations data, connected assets and cargo, and historic data—begin centering on a digital core that provides real-time decision support. The transition is starting. Ocean shipping giant Maersk already commands a fleet of 270,000 IoT-enabled cold containers, transmitting data on temperature, location, and refrigeration power supply to the cloud, helping automate oversight, exception alerts, and quality control processes at ports. In transportation, DHL recently announced its goal to have 10,000 IoT-connected trucks operating in India by 2028, estimated to provide over 95 per cent reliability for inventory and temperature tracking for perishable goods in the region. In retail, sensor data is being aimed at significant pain points, such as supply chain visibility and inventory management. Keeping hundreds of distribution and retail locations stocked with the right levels of inventory while simultaneously creating a virtually endless aisle to online customers is the complexity behind an estimated US$2.1 trillion in overstocks and out-of-stocks across the US retail industry. As companies become more involved in digital transformation and build their capabilities, they are likelier to realize its benefits—and keep investing to further grow their expertise. This snowball effect of investment and success is exemplified by the long-term rollout of UPS’s dynamic routing system Orion. Orion’s first generation was far from real-time, but its yield of US$100 million in annual savings spurred investment for second-generation upgrades, bringing the system into real-time through delivery information acquisition devices that communicate optimized routes to drivers while on the road. Planned upgrades may incorporate a driver’s remaining pickup and delivery requests, as well as external data sources such as traffic and weather. Instrumentation only looks to accelerate. According to a recent Deloitte executive study, supply chain was rated among the biggest opportunities for IoT technology. The growing interest, combined with improving interoperability, latency, and protocols for 5G-to-5G device communication, and falling sensor costs, will continue to make piloting and scaling new solutions cheaper and faster. With time, data-driven decision-making will likely get more sophisticated, expanding connectivity with smart city sensors, predictive traffic flow models, and other data sources. Automating the network While visions of self-driving robo-taxis in cities grab much of the limelight, autonomy and robotics bring similar implications for the future of the movement of goods. Evidence of maturing automation can now be found at every step in the chain, and while still some ways away, the foundations of a global, touchless supply chain are actively forming. Autonomous cargo ships are in development, while some ports already feature an entirely robotic ship offloading process. Nearly 50 companies are progressing on AV technology, and many, such as Embark, Waymo, and Tesla, are focussing efforts on trucking. Warehouse robotics that lift, move, and sort are widely in use and gaining dexterity. Ocado, an online-only UK supermarket, can process 3.5 million items per week in highly automated warehouses working around the clock. And last-mile automation, from drones to droids, is transitioning from concept to pilots. Flytrex, an on-demand drone delivery startup, delivers packages in Iceland, while some grocers deliver fresh produce in Arizona with autonomous delivery vehicles. These concepts could be the early foundations of a touchless supply chain. But capturing the concept’s full potential will likely require rethinking entire logistics systems to take full advantage of a constant flow, including an evolution away from the fixed “collect in the evening and deliver during the morning” approach toward a fluid system of continuous movement and supply—as well as key transactions configured entirely around human labor. Some processes, such as truck-loading at warehouses, for example, can be reimagined in their entirety. By combining emerging autonomous warehouse technology with autonomous self-driving systems for long-haul transport, new types of vehicles can begin hauling trips as soon as they receive cargo. These new freight transport vehicles could range in size—and seamlessly pass through automated warehouses and distribution centres. There will likely be a blurring of lines between the movement of goods and people. The digital management infrastructure that powers new mobility ecosystems designed for urban transport may be vital to, for instance, logistics providers and retailers in the last-mile. Companies such as AEV Robotics are already designing modular vehicle systems for cities that allow businesses, city planners, and fleet managers to configure autonomous solutions for a multitude of applications. A variety of functional pods can be placed over autonomous, electric chassis, from on-demand ride-hailing to medical services, industrial applications, same-day delivery, and fresh food retail.

Indian logistics industry is witnessing a revolution with several Grade A warehouses and Free Trade Warehousing Zones (FTWZs) gearing up to offer world-class services to the customers. However, in this post COVID-19 scenario, rapidly growing Indian economy will need an efficient and fairly vast network of warehouses and logistics facilities. The government’s recent initiatives like Make in India, Vocal for Local, Ease of Doing Business, Manufacturing in India, and various other ambitious schemes and policies launched have definitely triggered growth opportunities in the right direction for the Indian logistics industry. FTWZs are considered as direct contributors towards overall economic development. FTWZs are established to easily facilitate the foreign trades without involving manufacturing processes and allow hassle-free handling of EXIM cargo to achieve efficiency and cost effectiveness. In the long run, FTWZs are believed to help in attracting foreign investors for servicing India’s manufacturing and consumption demand more efficiently. Apart from the domestic demand, these suppliers will have the opportunity to consider India as a potential transshipment destination for servicing the neighboring countries. Location wise also, India offers excellent position on the Global Maritime Trade Route, which carries almost 60 per cent global transport, thus offering excellent transship opportunities for FTWZs in India. According to World Bank Data, International trade accounts for 58 per cent in 2019 of Global GDP and for India, trade comprises 39 per cent of India’s GDP for the same year. This comparison indicates an ample opportunity to increase trading activity in India. However, for carrying out efficient trading activities, improvement of infrastructure at warehouses across the country needs special attention of the developers. Also, the WDB states that GDP share of India’s Export and Import of goods and services is recorded at 18 per cent and 21 per cent respectively. Focused programmes under Make in India and other fiscal initiatives to promote India’s manufacturing activities are expected to increase the share of EXIM cargo for Indian economy in the coming years. This dynamic of Indian economy increases the potential and opportunity of FTWZs in India. According to the Ministry of Commerce and Industry, there are eight approved FTWZs in India. Out of eight FTWZs, four have been notified. Out of 4 notified FTWZs, only three are operational at present.  According to the reports, there is no investment made by the Central Government in these FTWZs yet.  Total amount of Rs 3,315.81 crores have been invested mainly by the private Developers/Co-developers in these FTWZs during the last five years.  Further, revenue of Rs 13,051.19 crores has been generated by these FTEZs during the last five years. Setting up of new FTWZs and/or SEZs is primarily private investment driven in India. Below is a statement showing details of the FTWZs in India: Details Free Trade and Warehousing Zones (FTWZs) SEZs in India Sl. No.Name of the developerLocationArea HectaresSEZ status1Arshiya International  LimitedTaluka Panvel, District Raigad, Maharashtra57.898Notified/Operational2J Matadee  Free Trade Zone Private LimitedSriperumbudur Taluk, Kancheepuram District, Tamil Nadu40Notified/Operational3Arshiya Northern FTWZ LimitedMoujpur, Bulandshar,  Uttar Pradesh51.4394Notified/Operational 4Arshiya International LtdTaluka & District Nagpur, Maharashtra43.26Notified5Lepakshi Knowledge Hub Private LtdChillamaturu Mandal, Ananthapur District, Andhra Pradesh40Formal Approval6ISPRL FTWZ Padur (Indian Strategic Petroleum Reserves Ltd)Padur, Karnataka41.20Formal Approval7Cochin Port TrustThoppumpadyRamesaram Village, Cochin, Kerala40.85Formal Approval8Venkatesh Coke & Power LtdPonneri Taluk, Thiruvalur District, Tamil Nadu46.71Formal Approval Future Growth Prospects A recent report by the research firm, JLL states that India has not yet achieved its optimum stage in FTWZ development. There are very few operational FTWZs facilities currently in India. These are Arshiya; Khurja, MMTC & ILFS; Kandla, Adani; Mundra, Arshiya; Panvel, J Matadee; Chennai, NDR, Ennore. Rs 3,315 crores have been invested by the private developers/co-developers in these FTWZs during 2015-2019 and revenue of Rs 13,051 crores have been generated by these FTWZs during 2015-2019. As per new reports, new investments from DPW (Chennai and JNPT), NDR (Raigad), Karanja (Mumbai) are expected. Also, the recent policy intervention through notification in October 2020 (G.S.R. 678 {E}), also allows domestic supplies from domestic tariff area to foreign suppliers in FTWZ with admissible drawback or any other benefits. This notification in turn allows international buyers to consolidate, pack, and prepare more efficient supply chain plan for their cargo from India. “From a user’s perceptive, there shall be a driver for marketability of the FTWZ facility,” says, Chandranath Dey, Head- Operations & Business Development, Industrial Services, JLL India. “In the Indian context, Computer Hardware, Computer Peripherals, Consumer Electronics, Electronics Components, Electronics Instruments, Telecom Instruments, Defence Equipment along with various components related to planned manufacturing units all come under Make in India programme,” Dey further adds and jots down the benefits: Very high supply reliability (including spares) to domestic customersQuality control on imported spares, parts and component prior to duty-paymentValue Added Services after SKU level break bulking + CKD assemblyBring down lead time of equipment and spare parts for end customer deliveryDeferment of import duty till the date of supply to domestic customersWarehouse/storage hub in India comparable to origin countries FTWZs operating in India at present are highly competitive and offer state-of-the-art warehousing and trading facilities. This includes expedited customs clearance, cutting-edge technology and infrastructure, inland container depots and yards, commercial complexes, etc. Companies can operate via FTWZs in two efficient ways: As a Trading Unit: For the purpose of carrying out authorised operations such as trading, warehousing, labelling, consolidation, etc.As a Service Unit: Availing the services of an authorised trading unit. According to government’s policies in this regard, companies that are registered as Trading Units must be an Indian entity with a nature of the business that includes import-export, trading, shipping, etc. Authorised operations are listed in the Letter of Approval (LOA) which is granted by the Unit Approval Committee. LOAs are valid for five years with the option to extend for another five years. Several specific activities are allowed to be conducted in FTWZs like: Trading which is inclusive or exclusive of labellingPackaging and repackingRe-export, resale, re-invoicing of goodsWarehouse storage of goods for domestic or international clientsValue add or optimising activities on goodsAssembly of complete or semi-knockdown of goods FTWZs offer unparallel advantages to international trade. Aside from the reduction in formalities for customs and excise, other incentives include income tax and demurrage costs exemptions. Increased logistics efficiency, supply chain management and operations add to faster turnaround times. Comparison: FTWZ or Grade A warehouses For establishing robust and efficient supply chain for cargo movement, demand for Grade A warehouse space is becoming more attractive propositions for 3PL, e-commerce, and other occupiers. Grade A specification and it’s development model helps to achieve efficient use of built space, adequate use of modern material handling equipment and other technology for in-box cargo tracing, monitoring and movement. FTWZ space is typically used for the same specification. Enlisted are few key pointers which make FTWZ and warehouses different from each other. FTWZsDomestic WarehousesOnly for EXIM cargoOnly domestic cargo can be handledManage EXIM cargo with diversified value added services (packing, grading, labeling etc.)Diversified value added services (packing, grading, labeling etc.) but only for domestic cargoRe-export to other foreign countries more efficient wayRe-exports not allowedCargo consolidation and re-distribution in the supply chain of global trading activitiesCargo consolidation and re-distribution in domestic supply chain However, the near real comparison of FTWZ would be custom bonded warehouses, as both handles EXIM cargo. Inclusive Development FTWZs are truly being supported by the government's ambitious plans. Schemes like Make in India, PLI and other investment promotion benefits have a major impact on potential FTWZ demand. It is unlikely to establish independent production process without intervention of any foreign cargo for any manufacturing unit planning to come under these schemes. It is obvious that some spares, components, and/or semi-finished material are to be imported from different foreign suppliers. To establish a new supply chain model for manufacturing unit in India requires space with efficient and hassle free EXIM cargo handling area. FTWZs are believed to be the only solution for providing this infrastructure and services in India. The government’s infrastructure initiatives such as Bharatmala under which the government is planning logistics parks at 35 locations and Sagarmala which aims to develop and modernise Indian ports are also expected to boost the expansion of the logistics sector. At the same time, latest technological advancements are being introduced, such as automation and robotics to improve efficiency across the supply chain. The industry is also also witnessing a gradual shift from unorganised to organised players in the warehousing sector. Experts expect all these factors will contribute towards achieving growth and a seamless supply chain in the coming years. Leading Indian airline SpiceJet has also launched India’s first-ever FTWZ at an airport—at GMR Aerospace & Industrial Park in Hyderabad's Rajiv Gandhi International Airport (RGIA—which is expected to transform the India's pharma capital into an air transshipment hub like Singapore, Malaysia or Dubai. The Indian airline had signed an agreement to lease with GMR Hyderabad Aviation SEZ (GHASL), a 100 per cent subsidiary of GMR Hyderabad International Airport (GHIAL), in March 2020 by which the airport constructed a 33,000 sq ft facility for the airline to carry out the warehousing, distribution and trading activity. The FTWZ is similar to the facilities and boast infrastructural capabalities like Singapore Changi Airport and Al Maktoum International Airport in Jebel Ali, Dubai. Any foreign customers who have not registered in India can easily come in and keep their cargo in this space without getting into the taxes of India and without paying any duties. With the e-commerce and cross border boom, there is a lot of cargo moving through the air. And the facility is expected to help industry stakeholders. SpiceJet is in negotiations with  different metro airports in the country to set up similar FTWZs.

With the unveiling of the visionary ‘Make in India’ programme in 2014, which is aimed at transforming India into a global hub for manufacturing, setting forth of a well-defined aspiration to become a US$5 trillion economy, the need for reforms in the logistics sector was further amplified. More recently, the clarion call by Prime Minister Narendra Modi for an ‘Aatmanirbhar Bharat’—a self-reliant India requires an eminently robust logistics sector. It is therefore that the centre formulated a vision “To develop an integrated cost-effective, reliable, sustainable and digitally enabled logistics ecosystem in the country for accelerated and inclusive economic growth”. Approach: Initiatives and Announcements The logistics industry is one of the key sectors of the Indian economy that has seen immense growth in the last couple of years. With improved logistics infrastructure, there is a significant growth potential of trade in general. Most importantly, during the pandemic induced lockdowns, the sector has stood the test of time by supporting the movement of essentials and non-essentials. Now it is expecting the government shower much-needed attention to it. With whole of the government’s effort planned to ensure that problems facing the logistics ecosystem are viewed in their entirety and solved with an end-to-end perspective, the key aim is to capitalise on the massive infrastructure investments already made and further planned. Formulation of Logistics Division: The Logistics division in the Department of Commerce under the Ministry of Commerce and Industry was created on July 07, 2017 to allocate the task of “Integrated development of Logistics sector” to the Department of Commerce. It is consequent to the amendment to the second schedule of the Government of India (Allocation of Business) Rules, 1961. The division is headed by a Special Secretary to the centre and has been given the mandate to develop an Action Plan for the integrated development of the logistics sector in the country. The Logistics Division adopted a consultative approach for identification and resolution of gaps based on interaction with more than 100 with stakeholders in the public and private sector by way of policy changes, improvement in existing procedures, identification of bottlenecks and gaps and introduction of technology in this sector. The following initiatives have been planned and are underway as part of the consultation: The National Logistics Policy is in its final stages of being issued. The policy has been developed after wide consultations with all central ministries on the supply and demand side and takes a comprehensive view of the sector defining specific action points.A National Logistics Law that would provide an agile regulatory environment through a unified legal framework for “One Nation-One Contract” paradigm (single bill of lading across modes) supporting “One Nation-One Market” agenda has been framed and is under consultation with stake holders. The provisions of the law will enable the assignment of a unique Logistics Account Number replacing unwieldy registration systems and encourage excellence certification in the currently fragmented market of logistics service providers. It will also promote common terminology, transparency in charges and better mechanisms for industry lead conciliation and dispute settlement. National Logistics Master Plan: To deal with fixed infrastructure development in an integrated and holistic manner, the National Logistics Master Plan that is under development adopts a geo-spatial approach rather than a sectoral approach to identify gaps and blind spots. The plan aims to augment intermodal and/or multimodal transport mix through convergence of various ongoing projects/programmes. Conjoined development of related infrastructure (optical fibre cable networks, gas and utility pipelines) is planned so as to ensure no disruptions at a later stage. It is planned to monitor the Master plan implementation through an Inter-Ministerial Committee (IMC). State and City Logistics plans are proposed to be developed in alignment and synergy with the National plans. National Grid of Logistic Parks and Terminals: Additionally, a National Grid of Logistic Parks and Terminals is planned with a unified approach for coordinated development of Intermodal facilities, promote intermodal and Multimodal Logistic Parks (MMLPs) as a separate class of infrastructure with a national registry of multimodal facilities to enable price discovery, optimal utilisation, and to facilitate planned development. Adoption of National Packaging Initiative: A National Packaging Initiative is planned to reduce logistics costs, ensure product safety and promote sustainability. It is proposed to issue guidelines and standards for packaging material and design, promote domestic industry for manufacturing specialised packaging materials and machines and provide certification of bulk packaging of dangerous goods for all modes. Industry-best Warehousing Fulfilment: For development of modern warehousing, recommendatory guidelines and standards for warehousing and related physical assets are being developed to drive interoperability and compatibility. It is also planned to streamline processes for securing approvals/ clearances for setting up warehouses and their grading and certifications for excellence. For development of a modern and agile fleet of rolling and floating stock, the steps planned include local manufacturing of containers, promoting containerisation in less than train load and palletisation in less than wagon/truckload, innovative wagon/truck design—for quick release at terminals, and high capacity and light-bodied rolling stock to meet needs specific sectors, low daft vessels suited for Inland waterways and coastal shipping, use of slurry pipelines and containerisation in railways for bulk commodities, designated well-equipped logistics facilities for movement Over Dimensional Cargo (ODC), reefer container and trucks to facilitate temperature-controlled logistics, promotion and proliferation of innovative delivery models like Double Stack Dwarf Containers (DSDC), Roll-on Roll-off (RO/RO), and road railers, etc. Accelerating Digitalisation: The Logistics Division has also planned ‘digitisation initiatives’ to create an integrated IT backbone to bring efficiencies, reduce empty trips and enable a seamless interface. The specifications of a National Logistics Platform (iLOG) are under finalisation in consultation with Ministry of Electronics and Information Technology (MEiTY). The iLOG will serve to bring together a single platform for the different IT solutions created over time by the various stakeholders viz logistics service providers, buyers as well as central and state government agencies such as customs, DGFT, railways, ports, airports, inland waterways, coastal shipping, etc. In addition to the iLOG, specific initiatives to fill the gap areas are also planned which shall, inter alia, enable digital document exchange, truck visibility, electronic logging in and out of truck drivers, directory of all warehouses in the country, and so on. Ensuring an adequate supply of Competent Workforce: A National Logistics Workforce Strategy is being put in place for integrated skill development of logistic sector professionals. Building on the existing framework of skill development centres which are currently transportation mode based (for Road, Railways, Ports, Civil aviation, etc.) it is planned to enable exchange of ideas and best practices across sectors and build a workforce of professionals who will be the key drivers to development of logistics in the country. The measures include: A coordinated approach to assess and meet current and future skill needs, bringing to mainstream the education and training in logistics sector in the regular formal education from school up to post-graduate level.Introduction of a Certified Logistics Professional (CLP) scheme and to incentivise the engagement of such professionals.Driver Employment and Empowerment Programme with the objective of reducing logistics costs due to high shortages of truck drivers by making truck driving a preferred vocation. Improving Cold Chain Systems: The Logistics Division aims to meet the sector-specific needs of the Agriculture and MSME sector to ensure they are able to discover new and far reaching markets, of bulk sector by using operations research for optimisation of their logistics, pharmaceutical, fruits, vegetables, etc. by developing an efficient National Cold chain for and the special requirements in transportation of Dangerous Goods and ODC shipments by streamlining the processing and compliances involved. Specific steps are also envisaged with focus on international trade to integrate our supply chains with the world. With above, it is hoped that in the next 5 years the targets set by the National Logistics policy to improve India’s ranking in Logistics Performance Index to 25 and to reduce cost of logistics in India by 40 per cent from 13 per cent to 8 per cent of GDP will be met.

Though there are similar warehousing clusters in Gurgaon, Bengaluru and Hyderabad, it is Bhiwandi, northeast of Mumbai that is becoming the flag-bearer of India’s booming logistics and warehousing business. There are numerous factors that have contributed to the rise of Bhiwandi as a logistics and warehousing hub—from ancestral land parcels to government initiatives. Traditionally, known for its century-old power looms industry which still exists in the interiors of the city—people in the region have owned huge land parcels for generations, with farming being the primary as well as family occupation. With rapid urbanisation and rising land costs, most landowners gave up farming and leased out lands to build warehouses in a bid to achieve better ROI. The industrial status granted to logistics and warehousing sector also played a pivotal role as it made it easier to avail long term loans for building warehouses and logistics centres. The manufacturing units in Bhiwandi also cashed in on the availability of warehousing facilities in the proximity, further propelling its rise. Online retailers and 3PLs take warehouses like these on lease to avoid large investments required to establish one. The cluster of warehouses and logistics centres in Bhiwandi is quite strategically placed in the north-west corridor of Mumbai. The region benefits from superior road network to Thane and Mumbai, enabling faster and easy delivery of goods to a large consumer base in the city. It is well connected to the international and domestic airports in Mumbai, and with other regions through the National Highway number 3. However, the demand and prices are estimated to rise with the improvement in connectivity through the upcoming Metro Line 5, the Thane – Bhiwandi – Kalyan route, scheduled to be completed by 2022. Only in the last seven years or so, modern newfangled warehouses have come up in Bhiwandi. Here, online retail companies such as Amazon, Flipkart, Nykaa, Pepperfry, Grofers, Bigbasket, among others, store their goods in what the industry calls fulfilment centres (FCs). When a customer places an order on one of these online platforms, the item ordered is packed in these FCs, sorted according to the delivery location and dispatched in a delivery vehicle for its final destination. Leading global 3PLs—DHL, FM Logistics, DB Schenker, Rhenus Logistics as well as homegrown specialists Safexpress, Varuna, Om Logistics, Delhivery, KD Logistics, V-Trans India, Ecom Express, TCI, and many more—that deliver the goods to customers doorsteps—also have their own FCs and multi-client facilities (MCFs) here in Bhiwandi. Like a local train on a busy Mumbai station, a delivery truck enters and exits these centres every 30 seconds. At the start of the 21st century, retailers like Big Bazaar and DMart set up warehouses in Bhiwandi. It was only natural for e-commerce companies to follow suit a decade later. Soon, new and international-standard warehouses began to emerge on the other side of the city’s old-fashioned godowns. In 2012, companies like Pepperfry started setting up bigger FCs in the city. Since 2014, e-commerce major Amazon has set up seven such centres in Bhiwandi—the highest number across its major warehousing hubs in India. Although location is a prime factor as Bhiwandi is near to Mumbai and is well connected to the thoroughfares in the region, the most important factor—perhaps the clincher—is availability is labour. Reportedly, from logistics haven—Bhiwandi, e-commerce companies manage deliveries for the entire western region—roughly 35-40% of all online retail sales across players and categories. Another significant reason is also that, most e-commerce companies tend to lease all logistics services to keep the cost low while delivering efficiently across the country. ‘Indian E-commerce Logistics Industry Outlook to 2025’ by Ken Research suggested that the e-commerce logistics industry of India is expected to grow to US$492.8 billion by 2025 with a positive five-year CAGR of 23.6 per cent in terms of revenue during the forecast period FY'2020-FY'2025 due to increased demand from tier 2 and below cities owing to increased internet penetration in these areas. Currently, most of the demand comes from metro and tier I cities. However, by 2025 this trend is expected to change, as tier II and lesser cities are emerging as new demand centres owing to higher internet penetration. Hence, it is estimated that in the next five years, a high proportion of demand is expected to come from tier II and below cities. With the increasing potential of local and zonal shipments, large e-commerce logistic companies are focusing on establishing new FCs near the end consumers to increase delivery speed and cater to larger parcel sizes. Moreover, with tier II and beyond cities driving the growth, several e-retailers are looking at expanding their network via strategic alliances and logistics partnerships in these areas. With nearly 25 million sq ft of legal warehousing space, Bhiwandi is neck-and-neck with Delhi-NCR that offers not one but two large warehousing clusters around Ghaziabad and National Highway-48. Here, a broker is readily available to facilitate an e-commerce player’s logistics needs at every step—from their warehouse to the customer’s house. These include land-leasing services; management of warehouses; manpower supply for packing, sorting, loading and unloading of goods, trucks and truck drivers to ferry those goods; security and catering staff, among other things. Hundreds of them help e-commerce companies serve customers in states such as Maharashtra, Gujarat and Goa. To put it succinctly, Bhiwandi is like a supermarket for e-commerce players. The e-commerce space in the city also gives a means of livelihood to close to 3.5 lakh people from the area and nearby towns. As per Colliers’ Indian Industrial and Warehousing Market Report 2019, occupiers seeking large facilities should consider leasing warehouse space in Bhiwandi. Developers should also consider building Grade-A quality warehouses in the nearby areas of Sape and Padgha. They can also leverage technology solutions to optimise costs and offer cost-effective solutions to occupiers, making Bhiwandi a more lucrative proposition than it already is. It is believed, the accelerated adoption of ecommerce, same-day or next-day delivery commitments fulfilled by third-party logistics companies, and the need to diversify supply chains are pushing demand for warehousing and logistics. According to industry estimates, almost one-fourth of the total warehousing space in India has been leased by ecommerce firms such as Flipkart and Amazon in the past two years. This is further expected to accelerate, due to larger behavioural change of consumer buying following the outbreak of COVID-19. A favourable regulatory backdrop along with the government’s support through policy and reforms are further expected to boost the infrastructure spend and in turn the overall demand for modern warehousing. Property consultant Knight Frank projects that annual warehousing transaction for the top eight Indian cities as primary markets will grow at a compound annual growth rate (CAGR) of 19% to 76.2 million sq ft by FY’2026 from 31.7 million sq ft in FY21. Recently, an affiliate of Amazon India has entered into an agreement with logistics development platform ESR to lease 606,000-square-feet warehousing space at India’s biggest logistics cluster—Bhiwandi. The deal for the space at Warburg Pincus-backed ESR’s upcoming logistics park is for a long-term tenure of 20 years, indicating the e-commerce player’s commitment to grow the business further.

Since the last many years, India’s air cargo industry has established its worth internationally and also witnessed a great transformation in terms of infrastructure and throughput capacity—from world-class airports with state-of-the-art cargo hubs and handling capabilities, storage and transportation facilities, excellent turnaround time and performance made possible with the best of automation and technologies in place—the sector is now considered capable of acting as a force multiplier in making India’s vision of a US$5 trillion economy further possible. Even during the pandemic which wrought massive devastation across the nation both from a humanitarian and economic standpoint, the domestic air cargo sector emerged as a success story as it facilitated the uninterrupted supply of goods and essential commodities countrywide and across continents. Ritika Arora Bhola Predictions: 2022 and beyond It seems the Indian air cargo industry is taking great strides at the moment, mostly benefitted by the efficient and ambitious initiatives and schemes launched by the government in the last few years. While other industries were on standstill during the pandemic, Indian air cargo gained momentum and the cargo business proved to be a great contributor towards revenue generation for the domestic aviation sector. According to the WorldACD air cargo rankings, the number of freighters being operated by Indian carriers has increased from 5 as of March 2020 to 25 as of today, and the share of cargo carried into and out of India by sovereign flag carriers has increased from 2 per cent to 19 per cent. And for the first time, an Indian flag carrier has broken into the top ten carriers of cargo from India. Also, Indian government’s recent initiative of withdrawing the unrestricted ‘Open Skies Policy’ to promote Indian carriers has commendably assisted the industry’s growth. Another initiative, Krishi Udan has connected Indian farmers from regions with sporadic and problematic road and rail connectivity, thereby lengthening transit times, to the main consumption centres of India through air cargo. The Ministry of Civil Aviation’s Incentive Scheme has also benefited the shippers, farmers, and the regional airports. This has utmost helped the domestic air cargo industry grow and establish itself as a feasible mode of transport of perishable commodities. Further propelling the growth, the National Air Cargo Policy 2019 (NACP) also rightly proposes to capitalise on the advantage of India, from a geographic point of view, of being positioned between the manufacturing hubs to the east and south east of Asia, and with the consumption centres in Europe and the Americas, by highlighting the creation of transportation hubs at all major Indian airports in the run up to 2025. Observing the above, it would be apt to say that Indian air cargo industry is moving in the right direction and is ready to achieve the pre-COVID-19 growth levels in the coming years. “Undoubtedly, the cargo business has been a great contributor towards revenue generation for the Indian aviation industry during the pandemic,” says William Boulter, Chief Commercial Officer at IndiGo. Talking about IndiGo’s operations, Boulter states, “We also had to adapt ourselves to the fast evolving business environment during the pandemic. By using the aircraft cabin (with minor changes) as well as belly space, we have been able to carry significant payloads on our passenger aircraft as ‘CarGo charters’. For the fiscal year 2021, our cargo revenue increased by 9.6 per cent compared to the previous year, even though our normal belly space from passenger operations was absent for a couple of months, and at a much reduced level for the remainder of the year.  This has really supported us during this pandemic period when our operations have been severely impacted. We have flown over 6500 ‘cargo-in-cabin’ charters since April 2020 and these have made a positive contribution to our cashflow when passenger services were at a thin level.” Further, highlighting their growth, the global air cargo expert added that IndiGo has initiated a freighter programme and is in the process of sourcing four A321CEO aircraft. “The A321P2F—Passenger-to-Freighter conversion is the most efficient narrow-bodied freighter available, offering 24 container positions and supporting a payload of up to 27 tonnes. The delivery of our first freighter is expected in first half of CY2022. Our investment in the Freighter Programme will help strengthen our product and services in the segment, and not only accelerate our own business recovery but will also be a strong engine of economic growth for the country.” “Looking at the current pace and scenario, we do see potential in the cargo business, which will remain one of the key revenue generators for all the airlines and continue to contribute to economic growth in India,” suggests Boulter. “Domestic cargo has certainly proven itself to be a key revenue generator for Indian airlines in the chaos and duress of a global pandemic,” veteran freight forwarder Cyrus Katgara, Partner, Jeena & Company also feels. However, Katgara says that growth is still relatively low as compared to pre-COVID-19 times. “At present, we are doing 15-17 per cent lesser volumes compared to the pre-COVID 19 levels, however now the stage is set for domestic air cargo to grow.” Keku Bomi Gazder, CEO of AAI Cargo Logistics and Allied Services Company (AAICLAS)—a fully owned subsidiary of Airports Authority of India (AAI) says, “We are seeing green shoots across the air cargo industry. The domestic cargo throughput has reached close to pre-pandemic levels but we need measures to sustain these levels.” Gazder informs that he is working with the industry to work out ways to remove bottlenecks and hurdles to make the industry attractive and shift more cargo from other modes of transport to air. “We work alongside the larger industry to ensure needs and wants of the industry is listened to, addressed and resolved. Most of domestic cargo moves through the large metro airports at present. However, we are now seeing a shift to that phenomenon, which is being driven by the pandemic. Tier II and III cities now account for a large chunk of the business, thanks to e-commerce and door-to-door supply.” “At AAICLAS, we are fortunate to have the responsibility to manage and operate these cargo terminals. What we did during the vaccine movement was an eye opener. A lot of bottlenecks got removed and funds allocated to be deployed for building cool chain assets got deployed in creating better basic infrastructure. We feel these numbers are sustainable and will move only northwards. Furthermore, the government at centre is coming up with various schemes to stimulate growth and facilitate freight.” Triumph over hurdles Despite various uncertainties and challenges of what lies ahead—like capacity crunch, high fuel costs, and multimodal connectivity issues, the air cargo sector recorded modest yet impressive growth. The industry saw growth opportunities in innovation and digitalisation and readily moved towards it. The domestic air cargo stakeholders worked 24x7 to ensure the continuity of supply chains and logistics operations, proving that even disastrous crises are never meant to stop them to achieve their goals. At present, the domestic industry is poised for fast growth, influenced by the current demand and supply scenario but challenges like inadequacies in gateway and hinterland connectivity through rail, road for air freight; skyrocketing jet fuel prices; higher GST slabs makes it uncompetitive if compared to road and other modes of transport; inadequate infrastructure in tier II airports still looms large, as Katgara points out. Suraj Agarwal, Director at Monopoly Carriers agrees. “The biggest challenge is the lack of required infrastructure to meet the growth. Higher prices of terminal and freight are also a matter of concern and 18 per cent GST is adding to the woes,” he adds. Boulter emphasises it is vital that facilities at cargo terminals need to be further improved in relation to space available, also terminal charges need to be reduced to boost domestic cargo. “We also believe that while many of us are adopting digitisation to greater levels, an increased utilisation of other evolving technologies will further help in reducing dwell times, while lowering the overall costs, thereby increasing efficiency,” he mentions. “Domestic transportation of cargo is extremely cost-driven. Another challenge for air cargo is from the road and rail operators. We at the air cargo industry are working with the government to attract cargo from other modes to air. This will help to ensure producers and consumers of goods do not lose value during transportation,” Gazder reveals. Taking a favourable perspective on initiatives, Gazder says, “As an example, the Government of India’s Krishi Udan Scheme saw success amongst farm producers transporting their goods to buyers who were willing to pay a premium. We did routes like Guwahati – Delhi – London. Imagine the yields that a farmer who sold his produce at a 250 kms radius now selling halfway around the word. It is therefore of paramount importance to bring key stakeholders together and address their needs whilst working on a lean cost structure.” According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), India’s air cargo industry is expected to witness Rs 35,000 crore (US$4.99 billion) investment in the next four years. The Indian Government is planning to invest US$1.83 billion for development of airport infrastructure along with aviation navigation services by 2026. Interesting developments in India’s recent aviation and air cargo industry On December 21, 2020, IndiGo announced that it has collaborated with Urban Drive car rental company to offer self-driven and chauffeur driver services across 60 Indian cities.In October 2020, Zurich Airport International signed the concession agreement for the development of Jewar Airport on the outskirts of Delhi. The agreement has granted Zurich Airport International the licence to design, build and operate Noida International Airport (NIAL) for the next 40 years.In October 2020, the Airports Authority of India (AAI) announced plan to upgrade runways at seven airports across the country by March 2022.In January 2020, IndiGo became first Indian carrier to have an aircraft fleet size of 250 planes and became the first airline to operate 1,500 flights per day.On January 19, 2021, the Airport Authority of India (AAI) signed a concession agreement with Adani Group for three airports—Jaipur, Guwahati and Thiruvananthapuram. The concession period is 50 years from the date of commercial operations.On February 25, 2021, the Airports Authority of India (AAI) issued tenders for construction of the first phase of an international airport at Dholera in Gujarat, entailing an investment of Rs. 987 crore (US$135.07 million). The new facility is being set up in Greenfield city under the Delhi–Mumbai Industrial Corridor (DMIC) project at Dholera.On March 25, 2021, Union Minister of Civil Aviation Hardeep Singh Puri inaugurated the Kurnool Airport, Orvakal, Andhra Pradesh, in a virtual ceremony. The flight operations at Kurnool airport will commence on March 28, 2021 under the Regional Connectivity Scheme – Ude Desh Ka Aam Nagrik (RCS-UDAN).In March 2021, the government submitted a proposal to develop a water aerodrome project at the Ujjani Dam, under the Ministry of Civil Aviation’s UDAN-RCS (regional connectivity scheme).In March 2021, the government announced plan to set up two water aerodromes in Assam and four water aerodromes in Andaman & Nicobar Islands this year to boost tourism and connectivity.In March 2021, the Indira Gandhi International (IGI) Airport in Delhi announced a key expansion project to increase its passenger handling capacity. The expansion project includes a new terminal, advanced facilities, an additional runway and improved capacity to handle more passengers.In April 2021, Boeing, an aircraft manufacturer, announced that it has partnered with the Indian Aviation Academy (IAA) and the University of Southern California (USC) to conduct safety management system training sessions for all stakeholders in the domestic aviation industry.In June 2021, SpiceJet announced its ambitious target to fly 100 million domestic passengers on Sustainable Aviation Fuel (SAF) blend by 2030 under the aegis of World Economic Forum (WEF).AAI plans to invest Rs 25,000 crore (US$3.58 billion) in next the five years to augment facilities and infrastructure at airports.An UK business group is set to invest Rs 950 crore (US$135.9 million) in Hyderabad-based Turbo Aviation's new airline TruStar. Major initiatives undertaken by the government In February 2019, the Government of India sanctioned the development of a new greenfield airport in Hirasar, Gujarat, with an estimated investment of Rs. 1,405 crore (US$ 194.73 million).Under Union Budget 2021-22, the Indian government expanded the scope for ‘KrishiUdaan’ in convergence with Operation Green Scheme, wherein air freight subsidy of 50% for agri-perishables would be provided to North East states and 4 Himalayan states/UTs. The expansion of product-coverage will boost the ‘Krishi Udan’ scheme and improve air cargo transportation from these states.Under Union Budget 2021-22, the government lowered the custom duty from 2.5% to 0% on components or parts, including engines, for manufacturing of aircraft by public sector units of the Ministry of Defence.In September 2020, the Government of India sanctioned Rs. 108 crore (US $ 14.73 million) for Jagdalpur, Ambikapur, and Bilaspur airports in Chhattisgarh under the UDAN scheme for upgrade and development.The government is planning to start 14 more water aerodromes across the country, after the successful launch of seaplane service by Prime Minister Narendra Modi, between the Statue of Unity near Kevadiya in Gujarat's Narmada district and Sabarmati Riverfront in Ahmedabad in October 2020.The Airport Authority of India plans to abolish royalty and offer steep discounts in lease rent to encourage MRO units to set up facilities at its airports.In March 2021, on the launch of the ‘Azadi Ka Amrit Mahotsav (India@75)’ by the Government of India, the Ministry of Civil Aviation (MoCA) has proposed 392 routes under the UDAN 4.1 bidding process.On May 08, 2021, AAI commenced commercial operations at Rupsi airport—Northeast India’s 15th airport and Assam’s 7th airport.The MoCA increased capacity of domestic flights to 65%, from 50%, effective from July 05, 2021. Reports say the government has also asked Inland Waterways Authority of India (IWAI) to develop ‘freight villages’. The IWAI will also provide inland waterways connectivity to these freight villages. The first of such freight villages was built at Varanasi in Uttar Pradesh. The village provides connectivity through all three modes of transportation—road and rail connectivity through Eastern Dedicated Freight Corridor (EDFC), and water connectivity through the country’s longest waterway—National Waterway 1. A similar freight village is proposed on 335 acres of land in contiguity with the terminal at Sahibganj. Indeed, these are great moves. Taking cue of the same, Gazder says, “India has moved significantly up in the Logistics Performance Index. We are working with other ministries to accurately ascertain the bottlenecks. We have reached a long way in terms of thinking outside-in with the end user in mind. E-freight is everyone’s agenda and is enabling a lot of frictionless and efficient movement of information and goods. AFS, CFS, and SEZ are some of the areas that we are working with other departments to ensure logistic providers are facilitated.” On a positive note, Katgara highlights that the logistics infrastructure for multimodal logistics in India is growing at a brisk pace. “The government is working towards setting up 35 MMLPs in India and out of the 35 identified locations, 24 are situated on the national corridors planned to be taken up for development in the Bharatmala Pariyojana Phase-I. The work has already begun on the detailed project reports (DPRs) for seven locations—Nagpur, Mumbai, Bengaluru, Chennai, Surat, Sangrur, and Jogighopa. These locations would be developed from the point of view of external connectivity infrastructure, which means they would have rail and road connectivity, and where applicable, inland waterway connectivity to ports,” informs Katgara. “We feel the government is taking efforts in the right direction and only such concerted effort will yield positive results,” Boulter stresses. “The government launched a bold vision and initiatives to augment the logistics infrastructure and efficiency for India to compete with international markets. The government is planning to set up logistics parks, bolstering highways infrastructure, making 100 tier II and III airports operational, amongst many other activities.” Further shedding light on the positives, Agarwal adds, “In the last few years, road transportation has also improved, all thanks to the Road Ministry on ramping up projects and towards timely completion, and GST which has reduced the barriers in transit resulting in less turnaround time.” “But, still a lot needs to be done. The government under its Ministry of Commerce is working but things still have a long way to go.” Embracing digital Technology to remain Competitive Despite the major investments and infrastructural developments India has always been far behind the developed nations when it comes to adopting newest technologies for robust and efficient operations. But, the pandemic accelerated the need for more advanced, automated, and digitally resilient operations. The air cargo stakeholders are now readily embracing highly-advanced technology platforms and harnessing the benefits. Now is a crucial point where a fast-track approach to digitalisation is required to keep pace with competitive modes of transport. The sector is certainly undergoing a technology transformation, expanding from heavy use of legacy mainframe systems to more customised interfaces used for networking planning, flight operations, revenue accounting and other processes. Commenting on the same, Katgara says, “We are surely moving in the right direction as digitalisation will certainly help it improve the way it runs. Technologies like predictive analytics are providing better visibility over movement of goods and robotic technology is helping distribution centers to keep pace with the demand throughput. All these advanced technologies have started to play a major role in digital air cargo supply chain management.” “There are certainly no two thoughts about it. Digital India as envisioned by the Prime Minister of India and e-freight led by IATA is the way forward. The industry and its end users have started seeing the gains out of adopting technology to improve efficiency and attaining effective resource deployment,” Gazder supports. Agarwal do not take account of the same. He says that the domestic air cargo industry is still poor in terms of technology. “We have been asking MoCA regularly to integrate all data in one platform but due to the involvement of multiple agencies, it is not happening.” IndiGo is one of the leading Indian carriers which has hundred per cent digitalised its processes and operations. Two years ago, IndiGo implemented a new CarGo system ‘SmartKargo’ which takes care of the acceptance, shipment tracking and other functions of cargo network. “While moving vaccines, we incorporated real-time tracking of all the COVID 19 vaccine boxes which have moved across the length and breadth of India. Considering the sensitivity of the commodities we have been carrying, such as oxygen concentrators, medical equipment and other critical hospital supplies, the speed of movement coupled with the use of technology has been a winning combination for our success in CarGo logistics,” remarks Boulter. He further informs that the launch of IndiGo’s very own CarGo application for shippers on both Android and IOS platforms has been a grand success, with over 48 per cent usage across the network. “Our goal is ease of business with the use of technology and we have a number of digital implementations planned towards the end of this year, to improve ease of payments among other aspects of the business.” *************************************************************************************

There is already a surge for on-demand and instant delivery services across the Indian urban space. With logistics service providers and delivery companies brimming with orders, the strong need for technology-based instant last-mile delivery models has not only improved delivery speed but also optimised utilisation of resources, thereby improving unit economics. In fact, efficient last-mile delivery has become a key determining point as far as customer satisfaction is concerned and all kinds of businesses are evidently looking to provide a seamless and service competitive experience. Upamanyu Borah E-commerce in India has truly transformed the way people shop—and providing a fillip to other sectors as well, namely fintech and the logistics industry. While deep-pocketed bigger players have access to logistics in a way that smaller players don’t, last-mile logistics is posing a great problem to solve. And this is where logistics technology start-ups are making a difference. A big problem plaguing the trucking industry is gross under-utilisation of assets. This coupled with inconsistent earnings and delayed payments render the space ripe for tech intervention. The on-demand delivery industry is already disrupting traditional markets by adopting a full cycle approach to three essential components of a delivery experience: ordering, pick-up, and delivery. This is receiving a significant boost as businesses today fully adapt to COVID induced changes. More importantly, these companies are having a set plan to invest locally in electric trucks/vehicles for urban distribution as a sustainable and environment-friendly solution to support urban intra-city logistics strategy and taking steps towards minimising the current high air and sound pollution from which Indian cities are suffering. According to a KPMG research, 80% of customers today look for same-day shipping. In fact, 50% of shoppers are actually willing to pay extra money for faster delivery. As consumers become accustomed to extremely quick delivery experience, offering shipping options will increasingly become a ‘need rather than a choice’ for retailers. “To enable last-mile connectivity, digital tools and data analytics also came to the forefront. These tech deployments enable complete and constant visibility of the consignment through GPS installation. Leading-edge technologies like AI enabling predictive analysis of supply chain data, Industrial Intelligence of Things (IIoT) enabling predictive repairs and maintenance, and smart factories are expected to drive the future of e-commerce logistics in India,” said Jasmine Singh, Senior Executive Director and National Head- Industrial, Land & Logistics Services atreal-estate consulting firm CBRE India. “With online shopping and e-tailing garnering popularity among the masses, end-to-end delivery has become central to an efficient supply chain flow. Identifying the enormous growth potential of e-commerce, many online retail platforms began investing in warehouses to ensure a smooth supply chain,” explained Singh. Making the Difference Often, while inter-city transportation has been efficient, the final stage delivery remains a challenge. This is where efficient intra-city logistics and last-mile delivery services are gaining prominence. Intra-city logistics for enterprises is not just about delivering parcels in 30 minutes. It is about solving the actual business challenges. Innovative technology is the bedrock of a system that efficiently matches the needs of demand and supply to ensure a seamless function together with optimisation of resources and positive unit economics. “Customer’s expectations are increasing greatly and both individuals and businesses are expected to get goods faster, more flexibly, and in the case of consumers—at low or no delivery cost. As a result, the logistics sector is undergoing immense pressure to deliver a better service at an ever-lower cost,” said Sushil Rathi, COO at Mahindra Logistics. “In the future, we will witness many breakthroughs in last-mile delivery models and technology integrations, offering greater comfort for the end consumers. The consumers are expecting same day delivery, especially for the groceries and essential items, and hence the concept of hyperlocal delivery business model has emerged. Meanwhile, an increase in omnichannel distribution models especially in e-commerce segment can be observed. A higher level of service integration and a greater adoption of technology would help logistics players in creating the customer value proposition.” Rathi says they are constantly looking and working towards expanding growth significantly around consumer durables, e-commerce, and pharma. “We consider them as consumption driven industries. We have deepened our focus by launching new solutions, like return processing, pop-up sort centres and integrated distribution services. These are evident in our continued growth in value-added services and in the e-commerce and consumer segments.  The new facilities are developed to sustainable standards and allow us to provide flexible and scalable fulfilment and integrated distribution solutions for the e-commerce industry,” says Rathi. “Companies should develop ways to interact and deliver directly to consumers,” stated Aniruddha Banerjee, Senior VP- SCM, Spencer's Retail & Nature’s Basket. “FMCG companies need to focus on omni-channel and flexible online delivery models with a dark store fulfilment setup. Also, the focus should be towards investing more on infrastructure development for a strong last-mile delivery setup. Focus should also be on personalisation of shipments.” “Companies need to build infrastructure that allows customisation of orders within the supply chain, without adding any cost. Smart supply chain control towers are the need of hour, which can anticipate potential problems in an automated and optimised fashion at a regional and global level,” Banerjee added. “During the pandemic, we had successfully implemented concepts like Residential Welfare Association (RWA) list for delivery of essential items, such as Fresh F&M delivery in 3 hours, alongside some of the first-in-industry practices like immunity and health advisor programme in collaboration with Dr Lal PathLabs across all the hyper supermarkets,” Banerjee shared. “Leading players of consumer products have a strong distribution network in rural India. They also stand to gain from the contribution of technological advances like internet and e-commerce to better logistics performance,” he put across. “Introduction of products with focus on quality and efficacy will be on surge as Indian consumers are highly adaptable to new and innovative results. With the rise in disposable income, mid- and high-income consumers in urban areas have shifted their purchase trend from essential to premium products. Premium brands are manufacturing smaller packs of premium products. All in all, online portals are expected to play a key role for companies. Internet has contributed in a big way, facilitating a cheaper and more convenient mode to increase a company’s reach.” Bengaluru-based startup LetsTransport provides intra-city logistics solutions using tech, thus enabling truck vendors on one side and solving for businesses looking to have their cargo moved on the other. Founded in 2015, it is one of the largest urban logistics service providers in India. With the aim to improve the livelihood and work environment of the urban trucking community along with improving the efficiency of the sector, the firm has on-boarded 100k+ trucks across India. Currently, the firm is catering to urban logistics operations of 17 cities in India by working across industry sectors such as organised retail, FMCG, e-commerce, distribution, and 3PL companies. In a bid to drive sustainable growth of intra-city and last mile logistics, LetsTransport recently announced it will augment its electric vehicle (EV) fleet on its platform to 1,000 by June 2022. Having already commenced EV-led operations in Delhi-NCR, Hyderabad, Bangalore and Mumbai, the tech-driven logistics firm will introduce EVs to its fleet in Chennai, Pune, and Kolkata. LetsTransport has already tied up with 8 OEMs towards strengthening its 100-vehicle strong EV fleet across cities. The primary deployment of these EVs is in intra-city, last-mile logistics for e-commerce, retail, FMCG, and 3PL distribution sectors. “Local intra-city logistics providers cannot provide a service that outstand the rest. We at LetsTransport have always worked towards adding features that make it simpler for truckers to transact through our application directly, without any hassles. Logistics industry, despite being one of the largest in our country, is very unorganised and with evolving consumer behaviour, last-mile logistics has become a bigger challenge and we at LetsTransport are trying to solve it through our platform,” said Pushkar Singh, Co-founder & CEO of LetsTransport in a media interaction. “Modernisation and Automation are now getting into almost every industry, and logistics is also not untouched. In fact, logistics per se has been the most difficult industry to implement technological changes, but companies like LetsTransport have transformed the whole domain of logistics.” “The next big trend in logistics will be the adoption of electric trucks. EV evolution has already started and that will be one of the biggest turnaround for the logistics industry in our country,” Pushkar anticipates. “With low operational and maintenance costs, we expect EV to play a pivotal role in intra-city and last-mile logistics, and we are well prepared for it. In augmenting our fleet, we are also contributing to strengthening the EV ecosystem by enabling financing of EVs, setting up charging infrastructure as well as enabling a marketplace for resale of EVs in the near future. This in turn will encourage more driver-entrepreneurs to move to EVs as it becomes a more profitable asset.” LetsTransport is already showing its commitment towards strengthening the EV ecosystem in the country by enabling finance for vehicle owner-operators, educating potential entrepreneurs on the commercial benefits of electric vehicles, and contributing to the charging infrastructure. It is an established fact that the cost of operating a commercial 3-wheeler EV is around 20% of equivalent traditional internal combustion engine (ICE) vehicles. While the EV ecosystem is still at a nascent stage, the sustainability impact and operational costs of EVs are key drivers for early adoption in logistics. Another Bengaluru-based tech-logistics firm Blowhorn decided to differentiate itself by offering micro fulfilment services. It says to have pioneered the spot and fixed-contract transportation market and is now turning its attention and accelerating initiatives towards speed across logistics offerings. It provides fixed contract-based as well as variable engagement models for large enterprises, SMEs, and individuals. Consequently, Blowhorn remains as India’s first and only ‘full-stack’ logistics company, operating across Bengaluru, Chennai, Delhi, Hyderabad, and Mumbai markets. Full-stack refers to its capabilities in all three elements of the logistics value chain—warehouses, transportation, and tech-enabled systems. Statistics has it that while most logistics startups have been focussed on shaping inter-city logistics, around 40% of the total supply chain cost is intra-city. Also, there seems to be a clear industry-agnostic trend towards higher fulfilment rates at faster delivery times within cities. Customers are no longer willing to wait for the goods they have ordered. This represents a huge challenge for intra-city supply chains, and a huge growth opportunity for nimble logistics start-ups optimised for speed such as Blowhorn. “The benefits of technologies reach far, effecting the most basic operations in the supply chain. They provide a simple, yet impressive and impact-heavy approach to delivering optimisation and efficiency. More importantly, leveraging adaptive technologies has proven to increase productivity and profits. Done right, the companies in question have their growth strategy served on a silver platter,” said Santosh Desai, CTO, Blowhorn in a statement to the media. “In Bengaluru itself, we have several small warehouses, not more than 1000 sq ft, spread across various localities. For consignments that needs some storage or transit, we keep them in these warehouses. None of these consignments stay for more than 24 hours.” Blowhorn not only uses technology to connect drivers and manage trips but also to manage this inventory. While it aggregates transport partners and drivers, it does not charge them. “If a driver says he wants to earn Rs 1,000 a day, then our platform will connect him with trips that is relevant, based on the vehicle he drives. Our agreement is with the enterprise or whoever requires the logistics service and we charge them accordingly,” noted Desai. “We want to provide end-to-end services which include fulfillment services and analytics.” “With the increasing demands of transaction volumes by end-customers, it is important for firms operating in the logistics and supply chain sector to have reliable, fast and flexible business operations. They have to be ready to create new, innovative delivery solutions to ensure the sales-readiness of their retail network.” “The COVID-19 lockdown affected the logistics sector and Blowhorn too was hit by it. Our business faced a drastic dip. Driver partners were affected. But it gradually improved. In this time period, we partnered with some FMCG brands which benifitted driver partners as well brought continuous business,” he added. Assessing the relative importance Today, it is about building capabilities to seamlessly execute movement of goods irrespective of scale and size. Major e-commerce players as well as small businesses are today looking to improve delivery time and experience as a critical tool to gain new customers and satisfy existing ones. Hyperlocal players are increasingly witnessing a rise in express delivery, next day delivery or two day delivery. Instant on-demand delivery is another relatively new focus area gaining increasing prominence in recent times. However, executing express deliveries and on-demand requires highly sophisticated logistics and last-mile delivery capability. The relatively nascent logistics sector in India therefore needs to grow at a rapid pace to meet the rising needs of a digital economy. Clearly, an infinite space for last-mile delivery services is emerging in India. With above, the process of digital transformation in logistics is more than just installing a brand new system or software. It is a collaborative endeavour that needs strategic repositioning of the corporate. Businesses are striving to become more adaptive and customer-centric with the aim being to achieve optimisation in distribution networks. Speed and timing are your best friends in order to gain a competitive advantage, offering reduced time-to-market. This calls for increased agility in supply chain automation solutions—the only way to make a mark in today’s cutthroat and fast-paced market. *************************************************************************************

The automotive industry has reached a fork in the road: one path leads to reinvention and success, while the other maintains the current status quo. Business leaders will only have a brief window of opportunity to reimagine their core operations. To ensure their survival and success now and in the future, it’s time for automotive industry players to act. While the speed and route to a future automotive value chain will vary, we believe the ultimate destination is common. To prepare for any radical change, an organisation will need to take decisive actions around what the future strategy and operational configuration has to look like. As part of these considerations, companies (including dealers, OEMs, suppliers and service providers) will likely need to identify within their organisation a technology, product line and/or division that needs to be reviewed and potentially given a new direction. This is because continuing with the same strategy that benefitted from the strong automotive market of the past is unlikely to optimise returns in this evolving market. Particular attention needs to be paid towards areas that will not be part of core strategy over the next decade and beyond. Assets identified as ‘non-core’ will differ in scale. For some companies such assets are a small part of the overall business. For others, a desire to leverage previous investments will mean they constitute a larger portion. Some companies (particularly suppliers and dealers) may face stark decisions – their whole business may fall into the non-core category and require strategic review. In dealing with distressed assets, cost optimisation projects are often more useful than narrow-focused cost-out programmes. But delivering a cost optimisation project in the current climate is a challenge. COVID-19 has already driven businesses to cut costs with examples in the automotive industry including, but not limited to, reduction of inventory levels, renegotiation of key contracts, review or delay of capex investments, stopping or reducing performance rewards and a temporary freeze on new hires. However, cost optimisation will be needed to provide businesses with the flexibility and agility they need to capitalise on any potential market recovery. While short-term cost-reduction initiatives have been necessary, a more structured and strategic reflection on the cost base will be required to boost recovery and prepare businesses to thrive during uncertain times. At a minimum, this will include assessing the financial impact of cost reduction and optimisation measures from both a functional and end-to-end process perspective (that is, order to cash, procure to pay, etc.) to understand the cost and the potential value created. Linked to this is an increasing trend towards executing non-core asset disposals by joint venture (JV) formation or separate listing/ring-fencing. While this does not deal fully (or at all) with the vendors’ exposure to the current and future performance of the asset, it does have benefits. The upfront carve-out required to get the business on a stand-alone basis makes future disposal easier and enables the remaining business to focus on core strategy execution. If structured correctly, it can also isolate financial liabilities. Meanwhile, it is also anticipated that the sector could also see a new consolidation dynamic: vertical consolidation. This would be a reversal of well-developed procurement strategies at OEMs and large tier-1 suppliers. For more than a decade, the trend has been for OEMs to outsource complex and invaluable modules (from instrument panels and powertrain modules to HVAC systems and door modules) to tier-1 suppliers. The OEM manufacturing process has increasingly become an assembly operation, with the manufacture of modules and parts handled by suppliers. Accordingly, tier-1 suppliers have outsourced detailed parts manufacturing to sub-tier suppliers located across a complex, integrated global supply chain. Two emerging pressures have led to this changing dynamic: First, COVID-19 was a shock to the hyper-efficient ‘just in time’ supply chains refined to be as close to real time as possible. As the pandemic impacted automotive factories, production halted as parts could not be manufactured or delivered in sufficient time or quantity. This has brought in to question the resiliency of automotive supply chains and whether the pursuit of ever-increasing efficiency has gone too far. OEMs and tier-1 suppliers are considering bringing production of critical parts/components back in-house to secure supply and avoid significant disruption in the future. Vertical consolidation around specific geographies is also a solution being considered to enable increased resilience. This means creating larger supply bases with enhanced capabilities through mergers and that reduce logistics risks by being closer to the OEM factory gates. Second, vertical consolidation is being viewed as a tool to help stabilise profit levels in the face of lower volumes. Companies are trying to make more income from each vehicle to make up for the gap left by lower volumes. The focus has been on complementing product sales with service sales, particularly around digitally enabled mobility solutions. However, capturing additional margin from each vehicle by expanding the level of value-add content ‘owned’ on each one, whether at the OEM or supplier level, is a feature of vertical consolidation being explored by industry executives. The current market environment presents a unique opportunity to change the direction of a business, and sell-side M&A can be an effective tool for companies looking to reinvent themselves. However, creating maximum value through divestiture can be challenging. During the industry consolidation expected to emerge – whether by acquisition of non-core divisions, or consolidation of whole businesses horizontally or vertically – it will likely be a buyer’s market in the near future. The cost of executing a value-creation strategy through buying, combining and rationalising automotive companies is currently low due to the disruption impacting the market, which is depressing deal prices and creating opportunities around stressed and distressed assets. Simultaneously, the potential for profitability improvement is high, due to these same issues. This means that the potential for creating value is there for buyers up for a challenge. Private equity investors (PEIs) are well-placed to capitalise on this opportunity. According to cross-industry research by Deloitte, changes in the market environment and corporate strategy aside, the largest hurdles to divestitures anticipated this year include changes in operating performance (36%), inability to negotiate acceptable deal terms (35%) and inability to obtain acceptable value for assets (33%). In the automotive sector, there are additional factors, such as uncertainty around market volumes, the transition to EVs and a rapidly changing regulatory environment, that all make the creation of an investment hypothesis that stands up to scrutiny increasingly difficult, but completely necessary. Sellers must now expend significantly more effort helping potential buyers build the hypothesis, making it easy for them to see the value that can be created and to have confidence that uncertainty can be mitigated (or even leveraged). *************************************************************************************