Last week’s Automotive Logistics India conference was marked by a sense of urgency amongst attendees eager to solve the problem of moving vehicles across a country that has seen a huge escalation in domestic and export demand for small cars.
GM’s director of logistics and supply chain for Asia Pacific, Robert Strain, kicked off the conference by emphasising the company’s interest and commitment to becoming a major player in the region and said, “Outbound [logistics] in India is a huge opportunity to grow and change”. But, along with other delegates, he recognised that the issue was complex and the challenges were pressing.
Up to 98% of finished vehicles are moved by road and the problems this presents are hampering growth. The infrastructure is inadequate, road tolls and state taxes are prolific, and carriers face harassment at state border crossings.
Moving to rail was seen by many as a priority, and as reported in last week’s Automotive Logistics News, moves are being made to increase rail freight to 15% (from 2% currently) by 2016 with the opening in West Bengal of the first of 15 automobile logistics hubs across the country served by the rail network (read more here).
But there was a mixed view at the conference about whether any real progress was being made.
Maruti Suzuki's general manager of logistics, Deepak Sharma, described the efforts that SIAM (the OEMs’ trade association) has been making to develop a strong business case to present to the new Minister for Railways, Mamata Banjeree. “The share of rail use is indicative of the maturity of the market. When we become volume driven, we simply cannot produce bulk volumes without developing rail,” he said.
And he expressed real optimism. “Within one month you will see some progress on rail, and within three months trains will run with cars,” he predicted.
A number of transport companies present at the conference used the opportunity of having SIAM on hand to form an LSP forum aimed at raising awareness of their needs in this and other areas.
Other speakers, however, were dismissive of rail as a viable option in the near- to medium-term. RS Kalsi, chief general manager of sales at Maruti Suzuki, revealed that during the peak season he had virtually no ability to use rail. “And the vehicles I did get did not arrive in the right shape,” he cautioned.
The export of vehicles from India, which outstripped China for the first this year, also faces challenges, with investment still needed in developing ro-ro ports that are up to international standard.
Bryan McCausland, regional head of logistics for Wallenius Wilhelmsen Logistics, emphasised the urgent need for action, given the long lead times and high investment needed to develop infrastructure projects like this.
But timescales for such projects are still hard to predict in India. The long-awaited standardisation of multiple local taxes, the national Goods & Service Tax (GST), is due to come into force in April 2010. As well as simplifying tax collection, it is also hoped that it will remove much of the high-delay bureaucracy at each state border. But many conference participants were sceptical, and thought 2011 a more realistic date for it to start.