• HOME
  • ABOUT US
  • SUBSCRIBE
  • ADVERTISE
  • E-NEWSLETTER
  • CONTACT US
91-22-24193000
Subscriber@ASAPPinfoGLOBAL.com
Automotive Products Finder
Advertise Here [728 W x 90 H pixels]
  • BEST STORIES
  • INTERVIEWS
  • NEWS UPDATES
  • PRODUCTS
  • EVENTS
  • ARCHIVES
Automotive Product Finder Magazine | The changing landscape of automotive logistics

The changing landscape of automotive logistics

Eberspaecher buys 20% stake in start-up PACE Telematics
ABB CEO discusses AI, robotics with Maharashtra CM Devendra Fadnavis

Cover Story  /   August

Growing sales of automotives, emergence of new markets, shift in the mode used to transport vehicles & auto components, implementation of GST, new regulations and rise in usage of technologies are leading to revolutionary changes in the automotive logistics, says Rakesh Rao.

In the recent years, the Indian logistics sector has received major boost due to various factors such as GST implementation, infrastructure status by the Government and technological advancements among others. The domestic logistics sector is projected to grow from Rs 6.4 trillion in FY17 to Rs 9.2 trillion by FY20 - at CAGR 13 per cent. At the same time, the third-party logistics space is expected grow at a 19-20 per cent CAGR to reach Rs 580 billion by 2019-20 from Rs 325-335 billion in FY17.

Auto logistics: Evolving fast
In 2017-18, around 29 million vehicles were produced in India registering a growth of 14.78 per cent over the last year. Given the current low car penetration, rising prosperity and the increasing affordability of private vehicles, the Indian automotive industry is poised to grow even faster in the future. These vehicles need to be transported to the far flung areas of the country, thus offering humungous opportunity for logistics & warehouse service providers. The automotive logistics industry has evolved much faster in India compared to logistics in other sectors. “A decade earlier, challenges in our logistics sector were related to infrastructure, underdeveloped highways, lack of rail transport options for freight, a fragmented logistics market and a highly bureaucratic customs regime. However, we have to recognise that there has been undeniable progress after the implementation of ‘once in a generation’ reforms like GST, increased focus on infrastructure, construction of highways and ports in the last two years. All these have helped create more opportunities and investment for logistics companies in India,” says Rajeev Singh, Partner, Deloitte India.

The new Central Motor Vehicles Rules (CMVR) regulation on car transporters calling for a standard 18.75-m trailer length for car carriers came into force in April last year. As a result of the new dimension and safety requirements for car carriers, carmakers and logistics providers have been scrambling to make their truck fleets compliant and secure new capacity.

“The standard size of 18.75-m across India addresses quality and safety concerns that have been a burden on logistics companies for years. Reduction in size will reduce the number of cars a trailer can carry that will push many logistics companies to invest in additional capacity. With many logistics companies being small or medium sized, this investment in adding new fleet may pose a challenge,” opines Rajeev Singh.

However, he feels that this can be addressed effectively if there is good OEM-to-OEM level collaboration. He explains, “Trucks bringing new cars from North for a car company can return with set of new cars of another OEM on the return journey. The new load carrying norms announced very recently will cut freight costs and fasten movement of goods on highways. Logistics and transport sectors will gain from the new norms through quicker supply chains that will have an overall positive impact on the economy.”

With the introduction of GST in July 2017 that simplified taxation processes, many auto makers and logistics companies have consolidated their warehouses by moving from the earlier tax-efficient model to obtain maximum operational efficiency.

Rajeev Singh elaborates, “The impact of GST has been positive overall. In the initial few months, there was confusion on the six different tax slabs and number of changes for different vehicle categories. A major boost for logistics industry was the improved journey times for goods/freight across Indian highways. Recently introduced e-way bill system for transport of goods between different states has also reduced lot of paper work and delays at state borders. Post GST, OEMs are also reducing the number of warehouse locations wherever it make business sense.”

Expansion on the cards
Increasing sales of automotives is resulting in logistics service providers (LSPs) expanding their capabilities to meet the rising requirements of auto OEMs and auto component suppliers. For example, in February 2018, Mahindra Logistics, a 3PL logistics firm that caters to automotive industry along with other sectors, opened its largest multi-user facility in Chakan (Pune) – one of India’s leading automotive manufacturing hubs. The new facility will not only serve auto OEMs but also the automotive component manufacturers in Chakan belt. The company, which follows an asset-light business model and designs logistical solutions for several industries, has an established track record in the automotive segment and expects to benefit from the uptick in the segment.

Speaking on the occasion, Sushil Rathi, COO, Mahindra Logistics Ltd, said, “At Mahindra Logistics, we are committed to provide effective and efficient services to our clients. The new warehouse at Chakan is part of our post GST strategy of offering strategically located facilities, to cover a larger area. The interesting part about this warehouse is that it is a multi-product, multi-user one, and can come with flexible capacities and tenure.”

Serving the new markets
Growing demand for automobiles from tier 2 and tier 3 cities is one of the major reasons for the Indian automotive industry to experience robust growth. In line with this trend, car production and spare part suppliers are moving closer to the new customers. Places like North-East region are emerging as important markets for many Indian businesses thereby presenting a huge growth potential for the automobile industry. This is opening up new opportunities in the automotive logistics segment.

Eyeing such potential business, Avvashya CCI Logistics Private Ltd (ACCI), a subsidiary company of Allcargo Logistics Ltd, is investing close to Rs 60 crore in the next two years to build an auto engineering part warehouse in Guwahati. The warehouse will provide end-to-end management for aftermarket spare parts to service the North-East sector, which includes last mile delivery. ACCI covers the entire spectrum of logistics services for preparing, transporting and importing vehicles in completely knocked down units (CKD) or semi knocked down components (SKD).

"As companies from different sectors and brands tap this market, the need for warehousing will grow manifold in this region. Distance from the mainland was one of the key reason for North East not getting it’s due recognition and this is precisely the reason why this region will need more than its fair share of warehousing. The topography also inhibits development of a robust rail network thus necessitating use of road transport – yet another reason for a booming auto trade," says Arindam Chakrabarti, Head - Automotive and Engineering Solutions, Avvashya CCI Logistics Pvt Ltd.

Rail over road
Automotive logistics in India has remained overwhelmingly reliant on road transport. “The current model mix for general freight transport in India is skewed towards road which carries nearly 60 per cent of the total freight volume, followed by rail at 31 per cent, water and air transport taking the remaining. A single freight train can take around 40-50 trucks off the road. While this helps in reducing carbon footprint greatly, there is need for more investments in building logistics parks across the country with easy access to rail network,” says Rajeev Singh.

Indian Railways (IR) does not use specialised wagons for transporting cars and they use modified rakes that are used for goods transport. To address this issue, IR is investing in special rakes to transport cars.

Many automotive manufacturers are also stepping up efforts to shift more finished vehicles from road to rail and coastal shipping. For example, a major OEM in North transports its vehicles between North (Delhi) and South (hub near Bangalore) using special rail wagons. Few other auto companies are trying coastal routes.

Even Indian Railways has been taking number of initiatives in recent time to capture automobile traffic and emerge as the most preferred carrier of automobiles in the country. Immediately after becoming the Minister of Railways in September 2017, Piyush Goyal liberalised Automobile Freight Train Operator (AFTO) policy to encourage more private investment in special wagons, procurement of IR's own BCACBM (high-capacity railway wagons) and NMG wagons. As a result, the loading from automobiles traffic increased by 16 per cent during 2017-18 and earning from automobile traffic increased by 18 per cent as compared to 2016-17.

In April 2018, IR took two more game changing decisions to allow handling of automobile from all container terminals and to allow loading automobile and auto spares in privately owned wagons in different directions for optimal utilisation of stock.

With Government of India’s focus on promoting alternative means of transportation to reduce carbon footprint, the demand of transporting vehicles through rail mode is increasing. To tap this potential market, Adani Logistics Ltd (ALL) and NYK Auto Logistics India Pvt Ltd (NALI) last month agreed to form a joint venture which will specialise in transportation of finished vehicles using automobile freight trains.

It is expected that finished vehicles distribution through rail mode will grow faster than the industry’s growth rate and the ALL-NALI JV aims to ride on this growth wave. Accordingly, the JV plans to commence operation with 6 automobile freight trains and aims to increase it to 25 trains in three years.

"ALL’s strength lies in rail operations and having a network of multi-modal Logistics Parks, while working closely with APSEZ having a pan India port footprint. This formidable association combines the strengths of individual parent companies, putting the JV in a very unique position, utilising these readily available assets and expertise, to deliver an end-to-end value driven, asset and service based, supply chain solutions, to the automobile industry in India. This new JV marks yet another milestone in our strategic efforts to explore opportunities in rail transportation by auto wagons in designated territory in India," said Karan Adani, CEO, Adani Ports & SEZ Ltd - the parent company of ALL, in a press release.

With rising global oil prices putting pressure on the road transport sector, industry experts believe movement of finished vehicles via railways to rise in the coming years.

Automating logistics
As various industries, such as retail with close links to logistics, are being redefined by digital technology, it is inevitable for such disruption to also revolutionise the logistics sector. Many start ups have already emerged trying to leverage digital technology to simplify end to end logistics business in India. “Countries like Germany, Singapore, Hong Kong and USA, all of which possess more sophisticated logistics ecosystems have gone on to showcase how digital transformation has benefited their entire logistics value chain, including warehousing operations, freight transportation, and last-mile delivery. As a result, these countries have consistently ranked higher than India in the World Bank’s Logistics Performance Index,” says Rajeev Singh. In-bound logistics in auto industry is highly complex due to thousands of parts coming from hundreds of suppliers both local & global. All parts need to be stored in multiple warehouses and supplied to assembly in the right sequence at the right time to avoid any loss of time on a fast moving assembly line. Automation and digital interventions can help reduce these stoppages of assembly line and associated production losses. Rajeev Singh says, “IoT (Internet of Things), which includes Global Positioning System (GPS) and Radio-frequency Identification (RFID) systems, is being used to provide logistics carriers with real-time information on key location stats. Artificial intelligence (AI) can help automate business processes to reduce/eliminate manual interventions for freight handling, to improve quality, speed up processes and subsequently bring down logistics costs.”

Warehouse automation
Warehousing plays a critical part of spare parts distribution in the automotive industry. Warehouse, constituting about 60 per cent of the supply chain function, is the base for procurement, manufacturing and distribution services.

A few years back, warehouses were mostly managed by unorganised players. However, in recent times, warehousing sector has witnessed almost a revolution with go-downs upgrading into large-scale distribution centres and deploying advanced technologies and modern automation. “Many progressive warehouses at the moment are installing AI-driven autonomous robots which reduce their order fulfilment and inventory replenishment time. These unique solutions cater to various in-house operations such as inventory storage (put away), replenishment, picking and combining orders. Hence, they play a major role in enhancing business agility and growth as well as eliminating complexity,” says Vivekanand, Country Manager, India and SAARC, GreyOrange, which manufactures advanced robotics systems for automation in warehouses.

To tap the thriving automotive industry, GreyOrange plans to supply robots for manning warehouses of auto component manufacturers. “The Butler goods-to-person robotics system is well suited for automotive components as there are numerous SKUs for automotive use and these components have very diverse product attributes; some are lower value and are fast moving components, and some are very high value and may be slower moving. The way the Butler system fulfills and consolidates each order results in higher efficiency and accuracy. Among the sites we are currently deploying, one of them will be used for distribution of automotive components,” informs Vivekanand.

Through smart integration of technology and right strategy, auto OEMs and auto component makers can increase their efficiency and make their logistics processes more effective.

Collaborate to succeed
While automotive logistics sector offer huge potential, there are couple of challenges in skill development and new technology adoption. India has a demographic advantage but the availability of appropriately skilled manpower remains a challenge. “This is particularly so in the logistics sector as it is seen more as a support industry than a mainline one. The sector needs to specifically build a pool of personnel comprising truck drivers, seafarers, warehousing managers, quality inspection supervisors, among others. There are limited institutes for soft skills, and operational and technical training,” says Rajeev Singh.

Slow adoption of new technologies has been another big constraint. Awareness about the economic benefits of using digital technology is low and collaboration among stakeholders far from satisfactory. As a result, the logistics ecosystem is fraught with operational inefficiencies and poor asset utilisation.

Rajeev Singh opines, “An expanding digital consumer base, coupled with inadequate and ill-planned infrastructure facilities, has left India trapped between growing demand for logistics services on the one end and a fragmented logistics services market on the other. Already some experiments are being made for adopting digital technologies in the country. But given the potential for significantly higher value to be created for the Indian economy, the sector cannot benefit much until a concentrated and collaborative effort is made by each stakeholder, including infrastructure providers, terminal operators, logistics service providers and technology companies.”

The new load carrying norms announced very recently will cut freight costs and fasten movement of goods on highways. Logistics and transport sectors will gain from the new norms through quicker supply chains.The changing landscape of automotive logistics

- Rajeev Singh,
Partner, Deloitte India

Many progressive warehouses at the moment are installing AI-driven autonomous robots which reduce their order fulfilment and inventory replenishment time. These robots play a major role in enhancing business agility and growth as well as eliminating complexity.

- Vivekanand,
Country Manager, India and SAARC, GreyOrange

The topography (of North East region) inhibits development of a robust rail network thus necessitating use of road transport – yet another reason for a booming auto trade.

- Arindam Chakrabarti,
Head - Automotive and Engineering Solutions, Avvashya CCI Logistics Pvt Ltd

Tags Cloud
  • Rajeev Singh
  • Vivekanand
  • Arindam Chakrabarti
  • Deloitte India
  • SAARC
  • Greyorange
  • Avvashya CCI Logistics Pvt Ltd
Advertise Here [600 W x 90 H pixels]

Comments

Loading ...
Social
Become a fan
Like
Follow us
Follow
RSS
Subscribers
Popular posts
Valeo to unveil technological innovations in mobility at CES 2019
Valeo to unveil technological innovations in mobility at CES 2019
News,
Jan 2019
YES BANK inks MoU with Kia Motors in India
YES BANK inks MoU with Kia Motors in India
News,
Jan 2019
VDMA Working Group on Hybrid Lightweight Technologies elects new executive board
VDMA Working Group on Hybrid Lightweight Technologies elects new executive board
News,
Jan 2019
Most commented
0
0 Automation firm OMRON offers 2D dimension and visual inspection machine
0 Yamaha launches 3rd generation FZ-FI & FZS-FI
Latest Comments
1
None says:
None
2
None says:
None

Posts Categories

  • BEST STORIES
  • INTERVIEWS
  • NEWS UPDATES
  • PRODUCTS
  • EVENTS
  • ARCHIVES

Twitter Feeds

Contact Us

ASAPP Info Global Services Pvt Ltd.

A-303, Navbharat Estates,
Zakaria Bunder Road,
Sewri (West),
Mumbai - 400 015,
Maharashtra, India


Tel : 91-22-24193000, Fax : 91-22-24175734
Email : Subscriber@ASAPPinfoGLOBAL.com
Website: www.ASAPPinfoGLOBAL.com
  • HOME
  • ABOUT US
  • SUBSCRIBE
  • ADVERTISE
  • E-NEWSLETTER
  • PARTNERS
  • CONTACT US

© COPYRIGHT 2017 ASAPP Info Global Services Pvt Ltd. All Right Reserved.