Automotive Logistics

Nitin Kulshrestha Head, Operations GATX India

Inbound Auto Logistics

Optimise supplies for Manufacturing plants Provide effective logistics engineering - analyse and optimise supply flows between supplier sites and assembly plants: by implementing multimodal transport solutions, customs procedures, flow simplification and grouping Forward stock management, monitoring stock rotation, defining alternative transport plans, setting up solutions for urgent transport 24/7 Recovering packaging (lost/reusable) and managing flows between the manufacturer s sites and those of their suppliers

Outbound
Multimodal transport from the factory: logistics engineering, transport plans, scheduling, supervision, tracking, reporting Vehicle customisation (Post-Production Operations): Carry out added-value operations for car manufacturers Vehicle preparation before distribution to the sales network(PreDelivery Inspection): dynamic testing, removing protective covers, washing, cleaning, interior preparation, mechanical and electrical tests, final quality control. Secondary distribution: Distribution of vehicles from Storage areas to marketing areas and dealers

The stake holders

Suppliers

Manufacturing Plant

Storage Locations/Hubs

Dealers

Customers

Indian Automotive Industry

World's second-fastest growing auto market India's passenger car and commercial vehicle manufacturing industry is the 7th largest in the world Asia s 4th largest exporter of passenger cars, behind Japan, South Korea & Thailand India is home to 40 million passenger vehicles Car penetration 13~15 per 1000 people

Indian Automotive Market - an opportunity

Other contributing drivers

Segmentation of Automotive Market

Segment Total Passenger Vehicles (%) Total Medium & Heavy Commercial Vehicles (%) Total Light Commercial Vehicles (%) Total Commercial Vehicles (%) Passenger Carriers (%) Goods Carriers (%) Total Three Wheelers(%) Scooters (%) Motorcycles (%) Mopeds (%) Total Two Wheelers (%) Grand Total (%) Percentage 15.79 2.53 2.10 4.63 2.51 1.51 4.01 11.57 59.35 4.66 75.57 100.00

Finished Passenger Vehicle (Cars) growth story

Challenge for Supply Chain - Keep up with growth

Issues faced in Indian Automotive Logistics

Poor infrastructure Road, Rail, Ports Excess reliability on Road poor Rail and Coastal services Lack of properly designed Rolling Stock both on Road and Rail Lack of professional LSPs Lack of trained manpower Poor IT penetration Regulatory issues

Poor infrastructure Road, Rail, Ports

Infrastructure - Roads

Infrastructure - Rail

Infrastructure -Ports
Poor connectivity with Rail and Road Few Ro- Ro berths available No impetus on Coastal shipping Inadequate space for storage of cars

Infrastructure Auto hubs

For bulk movement storage hubs would be required Aggregation and distribution to be carried out from these centers Could be used for value addition taking the value chain closer to the end customer Reducing the service to Market time

Excess reliability on Road poor Rail and Coastal services

Problems faced in Road transportation

About 97% of Automotive Logistics happening through Roads in India In developed markets the Rail co-efficient varies from 35% to 60% Roads overburdened with traffic leading to longer transit and lead time. Movement through cities is a major problem Road safety vulnerable with frequent accidents Low fleet productivity due to multiple factors ( Just 300 Kms. /day) Barriers- Toll Plazas and Octroi collection booths High damage rates compared to other modes. Too many transporters, too unorganized. Fragmented industry.

Lack of properly designed Rolling Stock both on Road and Rail

Rolling Stock - Rail wagons

Poor Availability of Railway Rakes (Wagons)-Very Few, Ageing & Dwindling Stock Outdated Rolling Stock. Specialized Auto Wagons is very limited in relation to demand. Currently Fully Owned & Operated by Indian Railways. Wagon design limitations( especially in the critical Height parameter) in Electrified and Diesel operated routes

Rolling Stock - Road carriers

Dimensions of vehicle Overall length, width and height flouted regularly. No of Axles, Load per axle and turning radius also flouted No professional and accredited body builder available in the market Proper tracking mechanisms not installed on these Road carriers

CMVR Central Motor Vehicle Rules

Lack of professional LSPs Lack of trained manpower

Poor IT penetration

What should an ideal Logistic Service Provider (LSP) do?

Create a door-to-door solution, not a partial solution Bring in know-how and technical capabilities Invest in necessary assets and infrastructure to fill the supply chain gap Bring in global best practices to complement local capabilities

LSPs alone cant do much need support from OEMs

OEMs to provide commitment to allow LSP s investment to be justifiable
Time Resources Volume

Work collaboratively with LSP to overcome all the hurdles OEMs to look at total supply chain, not just transactional cost

OEM and LSP relationship

Transactional Planning OEM plans all , 2 PL does as instructed Partnership OEM provides direction LSP prepares a plan, shares with OEM and executes LSP is measured on pre defined parameters Partnership and collaboration Long term

Operations Coordination Terms/Timeframe

Micromanaged by the OEM Instruction mode top down Short term relationship No commitment

Regulatory Issues
Rolling out of GST regime - Seamless state borders Faster and smoother Custom clearance at ports Auto Freight train operators policy to be made operator friendly

Regulatory Issues
The introduction of goods and services tax (GST)will create an effect for abolition of taxes such as octroi, Central sales tax, State level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, and get rid of the cascading effects of multiple layers of taxation.

Way forward
Poor infrastructure Road, Rail, Ports
Improve Road infrastructure, Private participation Open up the Rail Sector .. Create Auto Hubs near to railway yards, Ports need to be well served by Road and Rail

Excess reliability on Road poor Rail and Coastal services

Reduce reliance on Road Make Auto Freight Operator policy more lucrative. Rationalize tariff structure on Indian Railways

Way forward
Lack of properly designed Rolling Stock both on Road and Rail
Clearly define and strictly implement all CMVR guidelines regarding the Road Car Carriers Create strict quality guidelines for building car carriers Allow Wagon leasing and promote induction of new designs of Wagons

Way forward
Lack of professional LSPs Lack of trained manpower Poor IT penetration
OEMs to have long term commitment for LSPs More professional courses for Logistics Professionally Managed companies offering opportunities to trained managers and workers GST roll out

Regulatory issues
GST roll out to help LSPs Declaration of Operator friendly policies Privatization of Ports Impetus on Ro-Ro and Coastal shipping

Thanks