Digitalisation and smart transportation solutions might be the answer to several issues this pandemic has unveiled. Given the circumstances, logistics professionals and respective industries faced the need to change and adjust to a new status. Huned Gandhi, Managing Director, Air & Sea Logistics- Indian subcontinent, Dachser speaks to Upamanyu Borah, more about how they set in place a secure and connected ecosystem, finding new balance in methods and paradigms without shifting focus from people and goods.
At Dachser, what fundamentals go the extra mile to define supply chain management during times of a crisis?
Dachser has always been a customer-centric organisation. Our approach as well as processes is designed based on customer expectations and maintaining high quality services. Besides, we are constantly guided by our Dachser values for enhancing customer and partner relationships.
During the crisis, it becomes even more important that our teams areclose to our customers, even if it is practically not possible to meet them in person. As such, we haven’t seen any challenge to connect to our customers and understand their requirements, considering we have robust IT solutions and systems in place to serve our customers digitally. Last year, we implemented our in-house air and ocean freight management system- Othello in India, which is backed by SAP as a financial system. This has helped us to support our customers seamlessly, even while working from the safety of our homes.
Initially, there were some snags pertaining to slow internet connectivity that a few staff had to face due to lack of bandwidth in their homes, but these issues were well tackled by our efficient IT teams. After the concerns were addressed, our staff enjoyed a better bandwidth to be able to connect to the systems and keep processing shipments for our customers from their remote locations.
We are continuously trying to alleviate the potential impacts of the pandemic by supporting the global supply chain with the efficacy of our extensive network, and constantly finding solutions for our valued customers to carry on their operations.
Our teams are our biggest strength, and amid this unprecedented juncture, they have once again done a remarkable job. Even during the first phase of the lockdown, they were continually engaged with our customers for organising their urgent and critical shipments, especially LSH customers who were shipping out critical medicines and relying on us to manage their shipments.
We have received several testimonials from our top customers in India and overseas for the critical support extended by us.
I can recall there was an urgent requirement of raw materials from Europe for Ahmedabad Textile Industry’s Research Association (ATIRA) to manufacture masks. Our team of experts worked round the clock on all days including the weekend and made sure that the shipment arrived on time. There are many such instances where our teams ensured that timely solutions were found albeit the arduous circumstances.
How do you manage to keep your people aligned to service your customers more abruptly than ever? Any challenges you had to deal with in internal and external communications?
Ensuring the safety of our teams has always been the topmost priority during the pandemic. As soon as the outbreak took over India, the first thing we did was to start framing guidelines with regard to working from home, maintaining health and safety, and communicating the same with all our people across India.
It’s only because of the collective teamwork that we were able to internally communicate faster and effectively with all our colleagues.
Our 500+ people are on the job even today moving both regular and time-critical shipments for our customers from all the major airports and seaports across India.
Currently, how are air freight volumes distributed between India and the rest of the world?
There was a huge surge for personal protective equipment (PPE) and other medical essentials from China into Europe as well as the US, during the period from March to June.
Since the start of the crisis, Dachser Air & Sea Logistics has handled more than 40 charter flights worldwide from the APAC region and transported a total of over 60 million respiratory masks as well as other medical items such as PPE and protective gloves, and made sure the requirements of the US, European governments were met and distribution to hospitals across these regions was carried out smoothly.
Talking about India, the movement was largely for pharma goods, both by air and sea modes. The regular volumes were missing, because across sectors manufacturing was almost at a standstill during the lockdown. Other than the pharma shipments and a few time-bound automotive shipments, there wasn’t much demand for air freight.
Now, we are seeing some project imports for the automotive sector and other industries. With production reviving gradually, we hope to get back to our normal business soon.
Where are the freight rates headed? Why?
As of now, we are starting to see some stability; the rates are not as high as they were during the March to June period.
The airlines have not yet started operating with full capacity, which is still a challenge. The rates are still inflated, but considerably lower than what we had experienced in the beginning of the outbreak. If we talk about imports, initially, for Europe, it was 3-4 Euros a kilo, while China went up to 40-50 CNY a kilo. Now, the levels have come down to 20-25 CNY a kilo out of China, and Europe is at 1.5-2 Euros a kilo.
Export rates are still high; we are at 250-300 Rs per kilo at present. This is expected to continue in the short-term. Once passenger airlines return to the skies, we expect to see better stability in rates.
What about the more mature markets?
There is no denying that the pandemic has exposed the market vulnerabilities. Even the mature markets were not spared from the wrath. It’s definitely shaping up to be an enormous stress test for globalisation.
Currently, we are seeing high demand to USA. Exports to Europe are also improving as the markets in the region are slowly starting to recover.
Today, what are the major risks for logistics managers embracing an E-commerce strategy?
E-commerce in my opinion has its own usage and logistic managers will opt for it whenever it’s feasible. I don’t see this as any threat to our Industry which will continue to grow steadily as the world comes to terms with the ongoing pandemic.
Which trade lanes currently exist at Dachser Air & Ocean India? What are additional ones planned for 2020 and beyond?
Being a German company, the largest trade lane for Dachser India has always been Europe, followed by intra-Asia and USA. In recent times, we have seen an exponential growth in the intra-Asian markets and currently the US trade is also booming with all vessels running in full capacity.
For the future, in addition to Europe and intra-Asia, we see USA as one of the major trade lanes for our growth. The markets of Thailand, Singapore, Vietnam, and Indonesia also hold the potential and we look into exploring and enhancing our business in these markets, considering that we already have well-established Dachser offices in these countries.
What are the most sought after developments in India’s aviation sector that has helped address growing freight transportation demands?
One of the sector’s biggest developments has been the expedited practice of rapid-process-digitalisation, the focus—investments and innovation—by the stakeholders and industry towards the adoption and enhancement of IT capabilities have been phenomenal.
Also, airport infrastructure has seen overwhelming developments over the years and contributed directly to the country’s international competitiveness.
What are the short to medium-term prospects for the air cargo market?
Initially, as the crisis starts to subside, we will see a peak in demand for air freight, because of the depleted inventories across manufacturing companies. Once those are replenished by the arrival of a batch of new units, the demand for air freight will stabilise, and ocean freight demand will kick in.
Towards the end of the year, once the vaccine production stage matures, there will be a huge demand for moving those shipments. Then the factors of speed and timely delivery will be crucial.
May we expect to see more shippers moving freight from water carriage to air this year? What kinds of commodities are most likely to shift?
Quite frankly this question arises every now and then, and we have always seen the consistent growth of air cargo as a clear answer to these questions. Air cargo has come a long way, and with new age aircrafts and technology, it has proven itself as a time and cost-effective solution for many products.
Can you help us understand Dachser’s role in future logistics, and services evolving around this concept? Are similar developments in Europe also planned for India?
We firmly believe that our air and sea business in India will continue to grow steadily in the years to come. Contract logistics— warehousing and distribution has also been a mature business for us in Europe as well as Asia. In the next five years, we expect similar developments to happen in India. Our focus has always been to provide high quality services and this has been our USP for growth over several decades.
Even during the crisis, the recognition and recommendation from our customers bear testimony to our solutions and tech-driven efficiency in logistics.