Schenker India Pvt. Ltd, part of DB Schenker; the transport and logistics division of 39.1 billion euro Deutsche Bahn Group, is quite upbeat on its contract logistics business division comprising warehousing facilities and road transportation management. The German logistics giant, which offers integrated logistics services including international air and ocean freight and contract logistics, has chalked out robust strategies to beef up its operations in the booming inland logistics industry. Out of its total turnover, the air freight division accounts for 50pc, 30pc is generated from from ocean freight division and the balance 20pc from contract logistics arm. Going forward, the warehousing and road transportation division will contributed roughly 35pc to its total business.
Mr. Reiner Allgeier, MD, Schenker India Pvt Ltd, in an exclusive interaction with Motorindia magazine, shared, “We are here to make it big in the booming Indian logistics market. We do not want to be perceived as just a freight forwarding company only interested in exports and imports of goods via ocean or air. Apart from establishing our presence in the export-import segment through ocean freight and air cargo services, we will further enhance our operations in the contract logistics segment which is quite underexplored at his juncture. This segment is growing at 10-15 per cent as a lot of multinational firms are increasingly outsourcing their logistics and warehousing functions. As specialists with expertise to manage complex logistics requirement, we are well positioned to leverage the market potential. We want to act as a total supply chain solution provider which can bring goods from anywhere in the world here and facilitate customs clearance, help in storage by way of our warehousing network and offer solutions for domestic distribution.”
It is to be mentioned that DB Schenker in India offers a complete range of international air & ocean freight services as well as integrated logistics services and global supply chain solutions from a single source supported by its strong worldwide network comprising 2,000 locations. The Frankfurt-headquartered firm made its official entry into the country in 1996 through a joint venture with a local agent. Six years later, it bought out its partner’s stake and became a wholly-owned subsidiary of Schenker AG, part of Deutsche Bahn Group. It has now become one of the leading providers of integrated logistics services in the country to various industries. With 37 office locations and a warehouse footprint of 2 million square feet, DB Schenker in India operates 53 warehouses in 31 locations and runs 50 dedicated trucks (branded as DB Schenker) and 300-350 trucks on a daily trip basis on an average. In the export-import segment, DB Schenker handles about 80,000 tonnes of air cargo and 80,000 Twenty foot Equivalent Units (TEU) of ocean containers a year.
Elucidating about its expansion plans, Mr. Allgier said, “As part of the growth strategy to enhance our presence (in the domestic logistics market), we will be expanding the warehousing footprint of the company by 50 per cent to 3 million sq ft from an existing of 2 million sq ft and growing revenues by 20 per cent annually. By that time, we will be easily having 40+ offices pan-India. We have already increased the ‘Schenker Logistics Centres’ locations to 12 this year as part of the expansion plans and also be expanding our dedicated fleet size. Although, we don’t own our own trucks, we have a network of sub-contractors who provide us with the required fleet.”
DB Schenker in India is focussing on five key verticals viz. Automotive, Industrial, Electronics, Healthcare and Retail. While it is witnessing robust growth from automotive, industrial and healthcare industries, the electronics industry will remain a major contributor in the future. “We are anticipating a 15-20 percent growth next year on the back of unprecedented demand from automotive, retail, electronics, healthcare, and manufacturing sectors.”
When asked to shed some light on some of the key growth levers, he reckoned, “The new government at the helm of affairs is likely to give a massive thrust to the infrastructure sectors like road, power, highways, etc. Furthermore, the government is also giving a huge push to Dedicated Freight Corridor projects that will improve the supply chain efficiency and enable 24X7 logistics in the country. This will help us to integrate the production and delivery dynamics for our customers that includes reduction in handling and logistics costs, inventory cost, transit time and holding time, as well as elevate the quality of service to the next level and improve connectivity with ports and road networks, to form an inclusive intermodal strategy for first and last-mile delivery.”
When asked to spell out the vision for the company, Mr. Allgeier concluded, “We will be the leading global logistics provider offering end-to-end solutions to both domestic and overseas clients. We have the expertise and the passion to help our clients streamline their supply chain. With support of its worldwide network of branches DB Schenker in India connects all important global economic regions and offers logistics solutions tailor-made to the customers’ requirements. We will be expanding our footprint in the tier-II and tier-III cities as our clients are increasingly accepting our services.”
Tête-à-tête with Shrichand Chimnani, Director – Logistics, Schenker IndiaHow different is DB Schenker India from other logistics players in India?
First and foremost, the team that we have is exposed to a great extent to its customer base. So we have a fair understanding of what it takes our customer to appreciate our logistical services. Secondly, rather than offering standardised products and services we work on a solution-oriented approach with all our customers. Thirdly, we focus on more value-added services than the conventional storage-based logistical services. How instrumental is the automotive sector in driving the business of DB Schenker in India? What strategies are you chalking out to enhance your business in this space? If you look at our global operations, we are a well established player in the automotive sector. This is our strength in Europe and other developed countries. We would like to capitalise on that strength in the Asia-Pacific countries, especially India. If you look at the Asia-Pacific market, India, China and Thailand are the three strategic markets for DB Schenker in the automotive space. Therefore, we are committed to serve the OEMs (both PV and CV players) and tier-I suppliers in this industry. Going forward, we will be looking beyond OEMs and will be eyeing strategic alliances with leading domestic and overseas auto component manufacturers (in India). In our contract logistics space, nearly 20-25 per cent of our business is generated from the automotive space. This will be enhanced further to 30-35 per cent of the total business (in contract logistics) as we have hired some specialists in this domain. We expect a similar growth trajectory in our overall business. Within the automotive segment, we have also done some sub-segmentation and identified a few leading tyre makers in the country. We will also identify some key growth areas like assembly activities for both OEMs and Tier-1 suppliers. Would you like to share the names of some of the leading OEMs that you cater to? Are there any new players that you are allying with within the CV space? Though I cannot reveal the names, what I can confirm is that we cater to all the leading OEMs in the country. To answer your second question, yes, we are planning to forge an alliance with some additional players in the CV space. This is because we are expecting revival of the domestic CV industry soon future. Moreover, this segment is equally important for us as passenger vehicle segment. With the new government assuming power at the Centre, do you expect a massive thrust on some of the key sectors like infrastructure linked with your industry? I think there will definitely be a change in the (business) sentiment as far as the infrastructure sector is concerned. The question is whether it happens within the next six months or one year. I think there will be some sort of a boost to sentiment in the next 10-12 months post the 2014 Budget. If you go back to the previous NDA Government you will notice there was a big thrust on the road infrastructure in the country. We believe that this government will inherit some policies of the previous regime and take some substantive steps in the same direction. Those (policies) involve improving the road connectivity and speeding up the infrastructure projects, especially some of the big-ticket ones like freight corridor projects and ensure their timely implementation. Besides infrastructure bottlenecks, what are the other challenges that you are currently facing? One of the biggest challenges plaguing some key sectors in the country is the complex tax structure. We are really hoping for simplification of the taxation laws. We are also looking for the earliest introduction of GST and rationalisation of the system of inter-State permits prevalent in the country. So improvement of the documentation process plays a complementary role in the economic development of the country. How is your road freight business progressing? Do you see a fair growth in that space? Yes, this vertical is witnessing a phenomenal growth and we are very committed to its further growth. We are focussing on three segments under this business, i.e., First Mile, Last Mile and Long Haul routes. We see this vertical very indispensable as it enables us to be an end-to-end solutions player in the logistics space. So it’s more of a necessity for us than a customer’s requirement. To further our growth, we have invested in people, technology and transport management solutions this year. We are also working to improve our network capabilities to further our aim. We have done all the groundwork (for road freight business), and we hope some acceleration in such activities. Lastly, can you spell out the vision of your company? We intend to become one of the top two logistics service providers in the country. We also want to cater to various services, especially focussing on end-to-end solutions for our customers. With that objective, we will work on various services like road freight development supported by our value-added services. |
