Techspert

Digitisation to unclog bottlenecks

By Nidhi Raj Singh

FreightCrate Technologies is helping supply chain professionals and business owners understand that supply chain/logistics is no longer a cost-driver, but a value-driver for businesses. In this exclusive interview, Samir Lambay, Co-Founder & CEO, FreightCrate Technologies tells us how technology can help make Indian logistics sector a strong player in the international arena. Excerpts:

What are the highlights and projections, according to you, for the logistics sector for 2019-20?
I believe that logistics in 2020 should be a $230 billion industry. There will be large penetration of tech-enabled transportation, warehouse management systems, improvements in skilled labour and comprehensive tech platforms for supply chain teams to manage both international and domestic logistics procurement and management. Digitisation will play a key role. A National Logistics Portal is being developed by the Ministry of Commerce and Industry to improve ease of trade in the international and domestic markets. The portal will link all the stakeholders of EXIM, domestic trade and movement as well as all trade activities on a single platform.
What are the main challenges and roadblocks that the logistics sector in India faces?
f technology, warehousing and transportation networks. In warehouses, even with recent advancements in technology, there are yet mis-handling issues, pilferage and operational issues caused by lack of skilled labour. Road, port and warehouse infrastructure and skilled labour is not comparable to European cities or even South East Asian ones. Port congestions, delays in vessel arrivals and departures, customs clearance delays and other labour issues, such as transport strikes and road closures cause severe bottlenecks for EXIM industry in India. For exporters, the local transport issues cause delayed delivery to port. Hence, there is an inability to catch appropriate sailings and there is a potential loss of business since they cannot meet delivery commitments of their foreign buyers. For importers, issue of port congestion and back-logs cause delayed vessel arrival. This is sometimes further exacerbated by customs delays that causes delay in delivery to end customers, which affects their production schedules (manufacturers) or inventory levels and sales (retailers).
How can these challenges be overcome?
There are several ways of doing it. More investment in infrastructure, especially roads, ports, logistics parks and better connectivity is good. Investment is becoming easier after logistics got infrastructure status. The changes so far on the infrastructure side are still incremental though. Skill India programs are doing well for other industries such as construction and hospitality. The focus on logistics needs to increase substantially. Firstly, labour needs to be better skilled to construct and deliver port and infrastructure projects on time. Currently, many projects are delayed not because of bad planning but due to lack of quality labour. Secondly, the entire logistics workforce managing port and warehouse operations, customs and transportation needs to be technologically and operationally upskilled to reduce issues of mishandling of materials, delayed deliveries etc. Without a well-skilled logistics workforce, the industry will never achieve its full potential. Co-operation between industry groups, academics and government is required. We need to establish industry think thanks to increase research and development on logistics infra and processes. There is more headway being made here, but a concentrated effort is required too. Initiatives have been made such a single window customs clearance and direct port delivery, which are speeding up the EXIM process, but without a serious commitment to infrastructure development via investment and skilling programs coupled with emerging technologies to optimise logistics processes, the bottlenecks will continue.
So, you think digitisation can help the logistics sector in a big way. How?
Recently, the Confederation of Indian Industry (CII), said indirect shipping costs, such as bureaucratic delays, port handling fees and infrastructure bottlenecks, accounted for 38-47 per cent of total logistics spend. The CII also claimed that industry digitisation could bring this figure down 8-10 per cent. I agree that digitisation will help the entire logistics process. First, online and transparent pricing, data and information about transit times and services allow businesses to make better and faster decisions, which improves cost-effectiveness and delivery times. Start-ups, emerging technologies and enterprise solutions offering better shipment, fleet, warehouse operations and even carrier management will enable the entire industry to digitise, reduce operational costs on the provider side and improve productivity as customers can easily track and manage all their domestic and international orders. Even something as simple as doing away with paper documentation could save the industry billions of dollars globally. Documents are printed and shared via courier for domestic and international transport everyday across the globe. Digitisation of port and terminal processes (already underway) will further assist new emerging start-ups and the rest of the industry to digitise, reducing manpower and wasted resources and improving efficiency along the entire logistics value chain.
Blockchain is new technology and businesses are still wary of it. Can it be used for the betterment of logistics?
Blockchain is an ingenious concept but its applicability to business is actually simple to understand. It offers transparency and security… something all businesses value. Currently, we use central servers to store data. Everyone uses different services, so there is a high chance for fraud while sharing information. One party does not know what information or documents have been falsified on someone else’s servers. Also, if the server is compromised by a hacker for example, all data can be lost or stolen. The blockchain is essentially a ledger or a public record that is decentralised in nature, meaning there is no centralised record, no single point of failure, no one can hack it from one source and also all information, documents and edits are verifiable and publically available (to those approved parties within that blockchain). For example, if blockchain were used in the diamond industry it could eliminate the issue of unethical sourcing (blood diamonds) and counterfeiting. Every event from the time the diamond was mined right upto the final delivery to the consumer is logged in the system. For instance, the certificate of production etc. is all created and maintained on the blockchain. Most importantly, everyone on the blockchain (the public ledger) can view the edits and changes made and also track the diamond, virtually eliminating any chance of fraud. Do you think India can benefit from the technological advancements as much as other countries? I think India can benefit far more than those countries because our logistics cost as percentage of GDP is extremely high, 14 per cent compared to advanced economies (Japan is 10 per cent, USA is 9.5 per cent and Germany is 8 per cent). So, we have greater room for improvement and can aim to reduce by 5 per cent, which will have a significant impact on our competitiveness, as inefficient and high logistics costs increases our export product prices. Secondly, our growth potential especially on exports is much larger than most South East Asian nations. We are the beginning of our journey, our exports are $290 billion. South Korea is $575 billion. We have a 1.4 billion strong population, growing manufacturing and service sectors (which will increase our exports) and our disposable income is increasing, thus our demand for imported and domestic products will increase too. Hence, technological advancements in both logistics infrastructure and processes is not only beneficial but is absolutely crucial for us to service the expected consumer demand for products and also to ensure our companies do not suffer from bottlenecks locally that delay production schedules and increase pricing; making our exports uncompetitive in the international market.
How does your company help businesses become cost-effective and efficient?
FreightCrate offers online tech-enabled quote and shipment management solutions for export and import businesses to and from more than 50,000 global locations. Service Proposition offer door-door service on any transport mode all across the world. We help in all-Inclusive and standardised freight pricing, shipping schedules and delivery times, online shipment management dashboard and automated shipment status updates. Smart algorithms and online freight management ensure that the customer gets a benefit of not just the best price from vetted freight service providers, but also a single platform to effectively manage their entire freight operations. Online freight quotes ensure businesses reduce man hours spent in manual cost computations and negotiations. It makes accurate freight decisions by analysing all factors such as price and delivery schedules, which ensures they do not suffer any consequential losses in terms of inventory stock-outs or penalties for delayed deliveries. Online shipment management and automated shipping status alerts increase resource productivity by reducing man hours spent in coordaining with multiple freight vendors and allowing customers to pro-actively manage their shipments.
Assistant Editor