With players in the logistics sector beginning to line up expansion plans, Christoph Remund, CEO, DHL Lemuir Logistics, outlines the strategies of his company and those of the industry in an exclusive interview with Huned Contractor The USD 100 billion logistics business in India is gathering pace. There are several reasons driving this new-found momentum as for example, the phasing out of the current tax regime by March 2010 and the implementation of the goods and service tax (GST) which has been considered as a path-breaking move by the industry. Companies in the logistics space are now looking at improving efficiencies with 3PL (third party logistics) as a solution and this is leading to the setting up of logistics parks across the country. This is therefore the moment for logistics companies to expand their fleet and increase their hubs. With DHL Lemuir Logistics being one of the important players, Christoph Remund, CEO, DHL Lemuir Logistics replies to questions posed by Industrial Products Finder:

Could you elaborate about the India operations of your company?

As a pioneer in air and ocean freight, DHL Global Forwarding (DGF) facilitates trade requirements of leading Indian and global companies. A range of exclusive service offerings such as cargo insurance, security and IT-based customer program management, along with value-added customs brokerage services, rounds off the product and service portfolio in India. DHL Global Forwarding has a domestic presence in more than 32 locations in India, covering every major sea and air port. Our international network links more than 220 countries and territories worldwide. Around 3,00,000 employees are dedicated to providing fast and reliable services that exceed customers' expectations in 1,20,000 destinations in all continents.

In 2009, DGF continued to introduce new ocean freight services and the recent ones include a new connection from the Inland Container Depot (ICD) Ludhiana to Nhava Sheva, connecting North India to our global network, a weekly direct LCL service connecting Chennai to Felixstowe and a new weekly LCL service to Dubai. Additionally, DGF recently launched life science competence centers in Mumbai, Hyderabad and Singapore. This is a vertically segmented organisation within the DHL group of companies focused on the life science and healthcare industry. DHL Global Forwarding has also entered into a partnership with IATA in its global e-freight campaign intended to reduce the number of paper documents for air cargo shipments.

What are the reasons for the logistics sector to expand in India? Is it only due to industrial growth?

India's ocean export and import trade has been growing at a healthy rate of between 15 to 20 per cent over the past few years. This trend looks to continue once we are fully out of the recession period. The India story is certainly strong as other countries look at India both as a potential market for their products as well as a country where they can outsource manufacturing/source input material/components for their industries. We see the positive and healthy trend continuing into 2010, especially for exports.

Given the momentum of growth, what will be the status of DHL Lemuir Logistics in the coming years?

DHL will continue to invest in innovative and cost-effective solutions to cater to the needs of our customers. With offices in 32 locations across the country, manned by over 1,100 qualified employees, the company is strategically poised to enhance servicing capabilities, make significant investments to further consolidate its leadership position and add considerable value to its service offering. We recognise that the several opportunities and challenges in India are resulting in longer, more complex supply chains requiring increased control. DHL emphasizes the need to maximise on economies of scale, re-engineer manufacturing productivity and boost logistics efficiency for the growth of the automotive market.

What has been your investment in India so far?

DHL has invested over USD 2.2 billion across Asia Pacific to provide leading-edge infrastructure for customers. In India DHL has invested over USD 315 million, including USD 163 million for the acquisition of Blue Dart Express, the premium domestic courier and integrated air express package company in India.

What is the strength of your fleet for movement of cargo?

DGF does not have its own fleet but has established excellent relationships with international airlines to offer highly competitive solutions to its customers. How will the introduction of the goods and services tax affect your business? This unified system of taxes will create a seamless pan-India market by allowing both manufacturers and service providers to offset state taxes paid on inputs sourced from another state. Large-scale shared facilities with multiple users will set the platform for consolidation in the post GST scenario. GST will make large regional warehouses economically viable as opposed to the multiple small ones set up to deal with the current tax structure.

What are the innovations that your company has introduced over the years?

Apart from the ones mentioned above, early last year, the company launched the DHL Fashion and Apparel Center of Excellence, based largely in Tirupur, Tamil Nadu to facilitate trade within the region, Europe and North America. The first-of-its-kind center across Asia Pacific comprises a core team of industry experts and is responsible for developing bespoke products and solutions as also provide consultancy services to customers.

What systems has the company incorporated to ensure non-stop movement and reduce warehousing inventory?

DHL being a market leader in express, logistics and supply chain services, focuses on executing strategies and capabilities, and constantly adapting them to changing market needs, seamlessly integrating our global experience and local expertise. However, the lack of infrastructure and complex taxations and regulations act as hurdles in the Indian logistics industry. This hampers efficiency of the supply chain.

What is the market share of the company?

DGF is a market leader in the air and ocean freight business internationally. In India, DGF is a market leader in airfreight and amongst the top three in ocean freight. Additionally, DHL India is a leading customs brokerage house based on active stations and bill of entries filled.

Is the company developing hubs of its own?

No, there is no such plan as yet.

How would you compare the Indian logistics sector to those of other developing countries in Asia region?

Logistics in India is at a nascent stage. In India, the logistics costs are high compared to other countries in Asia because of the inadequacies in infrastructure. Elements of logistics costs include packaging, inventories, losses, transportation, handling and warehousing out of which transportation accounts for almost 25 per cent of the total logistics cost. A lack of infrastructure hampers transport and increases the cost manifold. India lacks logistics parks. The concept of logistics parks is in keeping with international practices, whereby retailers with diversified products can store their goods at one place and save on logistics costs.

India is a key market for DHL, which will drive growth for us globally. The entrepreneurial spirit in India and the opportunities created in the export-import markets give us plenty of opportunities to grow. In the coming decade, there will be a substantial growth in the manufacturing segment, which will mean opportunities for logistics companies. There are two reasons why we see a major opportunity here. First, the size of the domestic market itself is getting larger. Second, India serves as a major sourcing and supply hub. The market potential in India is evident with the growth forecast set to grow by 9 to 11 per cent until 2012.

Does the company have plans to specialise in any one form of cargo transportation? DHL is the only global express and logistics company that can offer end-to-end solutions ranging from air, ocean and land transport to services (clearing, warehousing). We will continue in our endeavor to provide best in class services to our customers to meet their complex logistics requirements.