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Ram C Menen Divisional Senior Vice President Cargo Emirates. Mumbai. 17 th November 2006. Source: Boeing WACF 2006/07. For India, the time is right and the environment is right!. Current Scenario. India’s strengths are language and highly advanced and skilled pool of labor force.

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Ram C Menen Divisional Senior Vice President Cargo Emirates

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Ram C Menen

Divisional Senior Vice President Cargo

Emirates

Mumbai

17th November 2006


Source: Boeing WACF 2006/07


For India, the time is right and the environment is right!


Current Scenario

India’s strengths are language and highly advanced and skilled pool of labor force

  • India current split in activity:

    • Manufacturing 20% (China : 50%)

    • Services          80% (China : 30%)

Government’s priority is to develop the

manufacturing sector.


Current Scenario

  • Current population split is 30% urban and 70% rural

  • Urban population is ideally suited for the services sector, rural population is perfect for manufacturing.

  • Over 30% of in the population is middle

  • class – India is a retailers dream.


Current Scenario

Value of exports:

1995 : US$ 31 billion

2005 : US$ 57 billion

India’s FDI is only 1% of the total GDP

[about US$5 billion].


Challenges

Cultural: Some of India’s old traditions can slow and impedes growth. However, the good news is that the younger generation is breaking through the barriers led by being on the receiving end of outsource in the services sector.

Unlike China, India has not had the benefit of political continuity which has resulted in greater bureaucracy and slow decision making process.This has led to less confidence and lower FDI than China. India’s FDI is only 1% of the total GDP [about US$5 billion]

The good news is that the new approach of the government is inclusionary and consensual.


Golden Quadrilateral Project

Source: wikipedia.org


Road Network

Inputs on the road project – National highway authority of India ( NHAI ).

NHDP - NATIONAL HIGHWAY DEVELOPMENT PROGRAMME has 7 phases in all.

1 & 2 PHASE : NORTH - SOUTH Corridor and EAST - WEST Corridor will be 100% complete by 2007.

PHASE 3 : 9 Projects of 10,000 kms of 4 lane traffic.

PHASE 4 : 20 Projects of 1,000 kms of 2 lane expressways.

PHASE 5 : of 1,000 kms of expressways.

PHASE 6 : of 5,800 kms of Golden Quadrilateral of 6 lanes.


What’s wrong with this plan??

It will not even meet today’s

needs !!

India needs highways with six

lanes on each direction , i.e. 12

lane roads.


Rail

The new dedicated freight corridor (DFC) for rail freight is a good start. However, this only connects the cosmopolitan points (slide) and not very efficient for transportation of air cargo as it adds on more processes which will add to the overall costs.


Direct (Rail) Freight Corridor


Today, because of the lack of proper distribution capability, Indian imports are better served via hubs in Dubai and Singapore, reaching the internal industrial areas directly from these hub. e.g. it is quite difficult to distribute from the current airports like Bombay to Bangalore or Hyderabad … cumbersome transit procedure as well as time taken to truck between any two points in India.


Mindset must change and bureaucracy must end!!


Trucks are the best regional

freighters.

Flying domestically is expensive

because of higher costs .. viz.

cost of fuel etc.


Freighter

Trucking in India & Europe

Pax & Freighter

EK Online

Trucking

Offline


How efficient is the supply line within your supply chain?


Air cargo is used as a planned tool in today’s supply chain management.

Time is a very critical part of any business decision and the higher cost of airfreight adds economies to the over all supply chain.


Growth in air freight is roughly twice the growth in the GDP of a country. At the current GDP growth of 8-10% air cargo should be growing at 16-20%. If facilities are not provided to cater to this growth, India’s economic growth will be stunted.


J-I-T Assembly Line


Ground infrastructure is critical to developing air logistics activity. Proper investment in air side facilities as well as a proper road infrastructure is very essential to create a seamless distribution network. China is an ideal model to follow where the infrastructure was built before the opening up the market for growth.


Creating an air cargo hub in Nagpur is a great idea. Along side this, there has got to be an industrial development which in itself will create origin/destination traffic. Ideally a major free trade zone is a good catalyst. It will be a greenfield development, hence, can be developed quite quickly.


Multi-modal Int’l Hub Airport at Nagpur [MIHAN]

Manufacturing and assembly plants

Special economic zone

World class health city

IT park

MRO and training facilities

Attractive fiscal and tax incentives

with friendly labour laws


DC3s transported mail and Nagpur was a mail hub!!

  • The house of Tata’s was always closely associated with Nagpur by way of Empress Mills (one of the first business ventures by Tatas, established 1877).

  • The association also goes back to early Air India days (Tata Airlines) when:

    • in 1935, February 25, Tata Sons made a trial flight Bombay / Nagpur / Jamshedpur / Kolkata with Fox Moth VT- ADZ (pilot Mr. Nevill Vincent).

    • scheduled services started only in 1945, April 16th when Tata Airlines began twice weekly Bombay / Nagpur / Kolkata service with DC-3s.


A New Era Is Dawning On Us !!


India has now opened up its skies, however, it has not invested in infrastructure at airports and cargo areas. Unless the task force created by the Civil Aviation Ministry moves in a fast-forward mode, it will always be in a catch up mode. This is less than ideal environment for developing freight.


Interim Solution

Use Dubai & Singapore as a Hub


The air logistics in India will now have to transition from traditional forwarding to that of supply chain management. Multinationals are going to change the scene in the logistics industry.


India has now got the chance to leapfrog technology. It should refrain from recreating the past and focus on creating a new future.


Thank You !


Future

  • BRIC : Brazil, Russia, India and China, in the next 50 years are expected to be the largest economic force.

  • BRIC economy will be larger than the G6 in the next 40 years and will create the largest consumer markets in the world.


India is the world’s largest diamond exporter. Nearly 7 out of 10 diamonds in the world are cut and polished here (Surat).

Other commodities: Chemicals, pharmaceuticals, auto parts, textiles, IT, biotechnology and now also microchips and semiconductors.


MA = Materials Administration

MARKETING

Coordination

Purchase

Production

Distribution

Supplier Manufacture Customer

Warehouse Warehouse


India – Emerging Market

India is becoming an integral part of the

global pharmaceuticals value chain in a

simulated environment.

Clinical trials accelerating – 30-40% lower

cost compared to US/Europe

Indian government stimulating the

development With tax and customs

incentives.

Multinationals cooperating with Indian

companies


“Efficient Inventory Control Is Very Critical To Attaining Cost Efficiency In The Supply-Chain”


Transportation modes can be leveraged to attain cost efficiency at market entry level

Air

Sea-Air

Sea


TIME

In this millennium TIME has integrated with the other three dimensions. Time is now firmly the 4th dimension.

Time as a dimension results in lack of shape or form, i.e. results in fluidity.

The state of fluidity can be seen in inventory and resource management.


SERVICE vs MARKET DEMAND

+

Integrators

Airline

SERVICE

+

DEMAND

0


Emirates Route Network 2006


ECONOMIES OF SCOPE

"Leverage economies

of scope by leveraging available economies

of scale’’


“India is at the right time and at the right place. It must, now, move in a fast-forward mode to take advantage of the opportunities.”


Emirates Route Network 2006


Change in Mind Set!!


Nagpur slide ..


Slides from Alston


SPEED


Paper-free Era & e-Freight


How efficient is your transportation?


Biggest Challenge!!!???

US$100

A barrel?


ORIGIN

DESTINATION

Airline

Airline

Service

Provider

Service

Provider

Door Pick-up

Insurance

Packaging

Custom Clearance Warehousing

Inventory Management

Brokerage

Door Delivery

Insurance

Packaging

Custom Clearance Warehousing

Inventory Management

Brokerage

Customer

Customer

VALUE CHAIN–TOTAL SOLUTION

Providing total solution to the customer through commercial alliances with various service providers


Forecasted Oil Prices


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