Container Logistics Sector - Tarragon Capital Advisors

INDIA LOGISTICS INDUSTRY
CONTAINER LOGISTICS (CONTAINER FREIGHT STATION &

INLAND CONTAINER DEPOT) SECTOR
MARCH 2013
Prepared by Tarragon Capital Advisors (India) Pvt Ltd
INDIAN CONTAINER LOGISTICS (CONTAINER FREIGHT

STATION & INLAND CONTAINER DEPOT) SECTOR
I.INTRODUCTION (PAGES 3-5) VI.MARKET
INFLUENCES
(PAGE 37)
II.MARKET OVERVIEW (PAGES VII.KEY CHALLENGES (PAGES

7-10),
INTRODUCTION
CFS/ICD (PAGES 11-17)
TO 39-42)
III.PRE-REQUISITES &
VIII. COMPETITION (PAGE 44)
REGULATIONS (PAGES 19-24)
IV.GOVERNMENT
INITIATIVES (PAGES 26-32)
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
RECOMMENDATIONS (PAGE 46)
INVESTMENT X.EXECUTIVE
(PAGES 48-53)
SUMMARY
I.INTRODUCTION : EVOLUTION OF GLOBAL CONTAINERIZATION
I.INTRODUCTION : EVOLUTION OF CONTAINERIZATION IN INDIA
*TEU - twenty-foot equivalent unit is based on the volume

of an inter-modal container, a standard-sized metal box,
which is designated as twenty foot long and 8 feet wide
I.INTRODUCTION : EXPORT IMPORT FLOW CHART
The logistics industry is extremely fragmented in terms of services

offered and each player specializes in a particular sector/s. Each
such activity, therefore, represents a unique sub-vertical opportunity
in and of itself

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
II.MARKET OVERVIEW
INDUSTRY OVERVIEW
INDUSTRY STRUCTURE
POTENTIAL FOR GROWTH IN EXIM TRADE
II. MARKET OVERVIEW : INDIA LOGISTICS INDUSTRY

OVERVIEW
Industry encompasses 5 freight segments Ocean, Rail, Air, Trucking &
Third-Party Services (3PL)
Current size is approx. US$100 bln and is expected to grow at 15 -20%
annually to touch approx. US$350 bln by 2015 (source : Fitch Rating
Agency); sub-sectors are growing between 30 - 40% per annum
61% and 30% of total domestic product is transported via road and via
rail respectively (source : Deloitte, Logistics Sector report, Jan. 12)
The industry employs over forty-five million people (source : Deloitte,
Logistics Sector report, Jan. 12)
Organized sector represents only 6% of the total size of the industry.
This is projected to grow at a CAGR of 25% over the next 3 years (source
: Nirmal Bang Group report, Nov. 11)
The strength of the logistics industry is, undoubtedly, going to be a key
determinant of Indias future growth
II. MARKET OVERVIEW : INDIA LOGISTICS INDUSTRY

STRUCTURE
LOGISTICS INDUSTRY STRUCTURE
INDIAN
LOGISTICS
MARKET
ROAD
FREIGHT
CONTAINER
HAULAGE
EXPRESS
LOGISTICS
3PL*
CONTAINER
LOGISTICS
CONTAINER FREIGHT
STATION (CFS) AND
INLAND CONTAINER
DEPOT (ICD)
LIQUID
LOGISTICS
MULTIMODAL
TRANSPORT
OPERATOR
*3PL - Third Party Logistics Services provider provides services such as

transportation, warehousing, crossdocking, inventory management,
packing & freight forwarding, etc.
II. MARKET OVERVIEW : POTENTIAL FOR GROWTH IN EXIM

TRADE
Containerized logistics account for only 15% of Indias EXIM trade

compared to a global average of around 70% (source : Motilal Oswal, On
high Ground, Oct. 12). Containerized volumes are expected to touch 15
million TEUs by 2015 for export and import (source : Subhashish Ghosh,
Managing Director, APM Terminals)
Logistics costs in India are 13% of GDP much higher when compared to
other economies (source : World Bank Report 10) arising mainly from
poor infrastructure facilities (leading to a higher turnaround time) and
high costs of administration
Emergence of organized retail in India, increase in foreign trade, and rise

in status of India as a global manufacturing hub will lead to upgradation/further development of infrastructure. Emerging Market
Survey 11 (Transport Intelligence) re-confirms the view of India as one of
the potentially strongest growth markets globally for the logistics
industry
10
II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

The Indian logistics sector was valued at around $100 billion in 2012, of
which EXIM containerized logistics accounted for about 15 per cent
CFSs accounted for 40% and ICDs for 60% of the container loads
CFS/ICD facilities have been rising (as seen on the next slide)
due to increase in port traffic, increase in containerization levels, more
custom clearance activities in CFSs/ICDs, higher margins in comparison to
other logistical activities and construction of Dedicated Freight Corridor
11
MARKET SIZE
II. MARKET OVERVIEW : CFS/ICD SUBSECTOR GROWTH

TREND
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FISCAL YEAR
12
II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD DIFFERENCE BETWEEN CFS & ICD

ICD
CFS
LOCATION
In the interiors, away It is an off dock facility

from the servicing ports located
near
the
servicing ports
FUNCTION
Largely deals with full
container load which is
aggregated for onward
movement to or from
the ports
Deals with break-bulk

cargo
origination/terminating
in
the
immediate
hinterland of a port;
also
serves
as
a
destination for customs
related activities
13

SERVICES OFFERED BY CFS & ICD (1/3)
INTERMEDIATE
STORAGE FACILITIES
RECEIPT/DELIVERY
OF CONTAINERS
Provide storage between various transportation modes as well as storage of

EXIM
Provision for storage of Reefer Containers (which require refrigeration
services) and hazardous cargo
Weighing and inspection of cargo/packages and damages, etc.

Transportation and receipt of import containers from the port, and
movement of export containers to the port
CONSOLIDATION
AND
DISTRIBUTION OF
CARGO
In the case of LCL* cargo wherein cargo/containers cannot be received or

delivered directly to the consignee, then, in that event, cargo stuffing or
destuffing for LCL
DEPOT FUNCTIONS
Storage of empty containers and temporary storage of loaded containers yet

to be dispatched from the facilities
*Less than Container Load (LCL) is a service offered by freight forwarding

companies, allowing shippers to book only part of a container. This is useful
when a shipment cannot fill up a container, but you would still like to get
the benefits of container shipping
14

PORT
DECONGESTION
Provide backup facilities for the port

Containers, therefore, do not congest the port (prior to customs inspection and
loading on to the ship for onward delivery to the customer)
REDUCING
REDUNDANCIES
Reduce the cost of container logistics by providing

consolidating/stuffing cargo of exporters
Cargo transportation by road /rail to and from gateway port
CONTAINER
HANDLING
PHYSICAL
DISTRIBUTION
the
function
of
Transportation by road, rail and barges to a CFS/ICD container yard

To and from transportation of containers under bond between ICDs/CFSs and
ports as welldeveloped multi-modal transport systems
Distribution of finished products

Value added services such as packing/repacking/tagging, etc.
15

ONE STOP LOGISTICS &

CUSTOMS SOLUTION
ICD/CFS aid in the containerization function

Facilitate
stuffing/de-stuffing,
transportation,
customs
warehousing, handling, storage and repairs of containers
clearance,
CUSTOMS CLEARANCE
Custom's clearance activities at CFS/ICD help decrease the dwelltime of

containers saving cost
Customs examination and stuffing of export cargo
De-stuffing of import cargo
Storage of container (import loaded)
Checking container seals
Assessment and valuation of cargo
OTHER FACILITIES
Pretrip trials of Reefer Containers to check if refrigeration equipment is

functional
Cleaning services, maintenance and repair services for containers,
container handling equipment, refrigeration equipment, road chassis
16

GROWTH DRIVERS
Streaming of
Indirect Tax
Structure
Investment in
Transportation
Infrastructure
Growth
Drivers
Increased Demand
of 3 PL Services
Recognition of
logistics
management as a
strategic tool
Infusion of
Qualified Work
Force
Globalization of
Manufacturing
Sectors
17

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
18
III.PRE-REQUISITES & REGULATIONS
The
proposal
for
setting
up
such
facilities
include
a feasibility report, land consideration, design and layout as well as
equipment consideration which is examined by the InterMinisterial
Committee (IMC), Ministry of Commerce, on the basis of certain guidelines
which are highlighted in subsequent slides
19
III.PRE-REQUISITES & REGULATIONS : GUIDELINES (1/2)

InterMinisterial Committee (IMC), Ministry of Commerce, is the
regulatory authority which monitors the growth of CFSs/ICDs
IMC comprises representatives from the Department of Revenue,
Ministry of Surface Transport, Ministry of Railways and the Ministry of
Commerce
The Committee considers the proposals submitted by public and
private sector entrepreneurs for setting up of new ICDs/CFSs at different
centers in the country and monitors their progress
The facility must be economically viable for : users, railways for full train
FEASIBILITY REPORT
LAND REQUIREMENT
movements in case of ICD, other transport operators and shipping lines

Tariff rates levied by operators for ground rent, cargo storage, loading and
unloading, and transportation of containers to ports are also considered
Minimum level of traffic volume (twoway) is:
ICD 6,000 TEUs/yr
CFS 1,000 TEUs/yr
Outside limits of major cities: minimum of 3 acres

Inside city limits /port area: minimum area of 1 acre
20
III.PRE-REQUISITES & REGULATIONS : GUIDELINES (2/2)
Design and layout should be stateof theart, equipped with

DESIGN AND LAYOUT
mechanical/electrical facilities of international standards

The layout should allow smooth flow of containers, cargo and vehicles
through the ICD/CFS and it should take into account initial volume of
business, estimated volume in 10 years and the type of facilities
exporters would require
The ICD/CFS should plan for the most modern handling equipment
EQUIPPING CFD/ICD
for loading, unloading of containers from rail flats, chassis, their

stacking, movement, cargo handling, stuffing/destuffing
Players interested to set up a rail based ICD must have
infrastructure facilities including land, track, handling equipment for
containers, maintenance of assets including track, rolling stock, etc.
An uptodate inventory control and tracking system to locate
containers/cargo
21
III.PRE-REQUISITES & REGULATIONS : APPROVAL

PROCEDURE OF CFS/ICD & ITS IMPLEMENTATION (1/3)
PROPOSALS
The Inter-Ministerial Committee considers and clears on merits the proposals for setting up ICD/CFS
State Governments /Customs /Ports view will also be taken as and when needed
APPLICATION
Application accompanied by 10 copies of feasibility reports should be submitted in enclosed form to the
Infrastructure Division in the Ministry of Commerce, Udyog Bhavan, New Delhi
SECOND COPY OF
APPLICATION
A separate copy of the application is needed to be sent to the jurisdictional Commissioner of Customs
Commissioner of Customs will send his comments to the Ministry of Commerce and the Central Board of
Excise & Customs (CBEC) within 30 days
If the project is planned in a port town, a copy of the proposal should also be sent to the concerned Port
Authority who would give their comments within 30 days to the Ministry of Surface Transport and the
Ministry of Commerce
BEFORE
APPLICATION
FILING
Applicants need to become familiar with the statutory Customs requirements regarding Bonding, Transit
Bond, Security Insurance and other necessary procedural requirements and cost recovery charges to be
paid before filing the application
22

ON RECEIPT OF
PROPOSALS
ON ACCEPTANCE
OF
PROPOSALS
Ministry of Commerce takes action on receipt of the proposal to get comments from jurisdictional Commissioner
of Customs and other concerned agencies within 30 days
A copy of the proposal should also be sent to Zonal Railway Manager, under intimation to the Ministry of
Railways when needed
Another copy of the proposal is to be submitted to the IMC Members for advance action
IMC expanded to take decision within six weeks of the receipt of the proposal under normal circumstances
A Letter of Intent (LOI) will be issued to the applicant on acceptance of a proposal

On acceptance of LOI, the applicant may initiate steps to create infrastructure
EXTENSION
REQUIREMENTS
The applicant is required to set up the infrastructure within 1 year from the date of approval
Ministry of Commerce may grant an extension of 6 months keeping in view the justification given by applicant
Afterward, a report would be submitted to IMC to consider extension for a further 6 months
IMC may consider extension or it may withdraw the approval granted
AFTER RECEIPT
OF
APPROVAL
The applicant need to send quarterly progress report to Ministry of Commerce after receipt of approval
Three formats for sending the quarterly/ annual report needed to be submitted to Department of Commerce
through electronic mode as well as through hard copy
23

FINAL CLEARANCE
VIOLATION OF
CONDITIONS
REVIEW
Final clearance and Customs notification will be issued ONLY after the applicant
has put up the required infrastructure
met the security standards of the jurisdictional Commissioner of Customs
provided a bond backed by bank guarantee to the Customs
posted Customs Staff after some time from CBEC
The approval, which is given initially for 5 years, is subject to extension, or, subject to cancellation in case of
violation of the conditions of approval
Inter-Ministerial Committee may review working of the ICD/CFS
24

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
25
IV.GOVERNMENT INITIATIVES : INVESTMENT IN

LOGISTICS INFRASTRUCTURE
26
IV.GOVERNMENT INITIATIVES : CONTAINER TERMINAL

PRIVATIZATION
SR.
PORT NAME
YEAR
SUCCESSFUL
BIDDER
REVENUE SHARE
JN PORT TERMINAL 2
1997
P & O Ports (DP

World)
33.00%
CHENNAI PORT (TERMINAL

1)
2001
P & O Ports (DP

World)
37.10%
COCHIN PORT
2004
P & O Ports (DP

World)
33.30%
JN PORT TERMINAL 3
2004
APM Terminals
Concor
35.50%
KANDLA PORT
2006
PSA ABG
48.99%
CHENNAI PORT (TERMINAL

2)
2007
PSA
45.80%
MUMBAI PORT
2007
Gammon
Infrastructure
35.00%
ENNORE PORT
2010
Group Maritim
TCB
39.99%
JN PORT TERMINAL 4
2011
PSA ABG
50.82%
(Residing and
to be
Retendered)
27
IV.GOVERNMENT INITIATIVES : LOGISTICS SUPPORT AT

JNPT PORT INDIAS LARGEST CONTAINER PORT
CFS FACILITIES
ICD FACILITIES
9
railway sidings are provided in JN Port for

handling container train
About 51 ICDs offers the JN Port with gateway
connectivity
About 80% of total ICD traffic is handled at the
major ICDs located in New Delhi, Ludhiana,
Sabarmati, Dadri, Nagpur & Hyderabad
In Apr 1999, Nhava Sheva International Container
Terminal (NSICT), the first PPP Port Project in India,
had been commissioned
25 CFSs having capacity of 2.48 mn TEUs per year

supports the JN Port
Around 10 more CFS projects having capacity of 2
mn TEUs per year are also coming up
In Sep 2002, JNPT had commissioned Shallow

Draught Berths to handle feeder container
vessels and dry bulk cargo vessels
In Aug 2004, JN Port had signed an agreement
with MaerskCONCOR consortium (Gateway
Terminals India Pvt. Ltd.) to convert a Bulk
Terminal into a 3rd. Container Terminal on a
BOT basis which became fully operational in
Oct, 2006
In Oct 2002, a consortium of Bharat Petroleum

Corp. Ltd.
& Indian Oil Corp. Ltd had commissioned a Liquid
Cargo Terminal on Build Own Transfer (BOT)
basis
28
IV.GOVERNMENT INITIATIVES : PLANNED INVESTMENTS

ON PROJECTS JN PORT (2010-2020)
PROJECTS TILL 2020
DEEPENING
OF
CHANNEL /
BERTHS
ETC.
CONSTRUC
TION/
RECONSTRU
CTION OF
BERTHS /
JETTIES
ETC.
PROCUREM
ENT
OF
EQUIPMENT
S
ETC.
RAIL /
ROAD
CONNECTIV
ITY
WORKS
OTHER
WORKS
TOTAL
Ongoing
Projects
No. of Project
11.0
Estimated
Cost.
(INR bn)
1.5
4.0
1.9
7.4
Phase I
(20102012)
11th 5 yr.
Plan
No. of Project
12.0
Estimated
Cost.
(INR bn)
8.0
47.0
1.1
2.8
35.8
94.7
Phase I
(20122017)
12th 5 yr.
Plan
No. of Project
10.0
Estimated
Cost.
(INR bn)
26.0
1.9
0.5
90.2
118.5
Phase I
(20172020)
13th 5 yr.
Plan
No. of Project
1.0
Estimated
Cost.
(INR bn)
0.2
0.2
Total
Projects
(Ongoing
+ New)
No. of Project
10
16
34.0
Estimated
Cost.
(INR bn)
8.0
73.0
4.7
7.3
127.8
220.8
JNPT shall be raising bonds aggregating to Rs. 2,000 crores in FY13

29
IV.GOVERNMENT INITIATIVES : EXPANSION PROJECTS

JN PORT (1/2)
CONTAINER
TERMINAL
4th Container Terminal
will be developed on
Design, Build, Finance,
Operate, Transfer
(DBFOT) basis
Phase I:
Length 1,000 Mtrs
Capacity 2.4 mn TEUs
Cost: INR 40.6 bn
Phase II:
Length 1,000 Mtrs
Capacity 2.4 mn TEUs
Cost: INR 26.4 bn
5th Mega Container
Terminal at Nhava
Island with capacity of 10
mn TEUs at planning stage
(source : The Economic
Times 13/2/2013)
BERTH EXTENSION
Project of extension
berth by 330 mtrs
towards North by
DBFOT basis with
estimated cost of INR 6
bn to increase capacity
by 0.8 mn TEUs p.a.
Already awarded
of
DEEPENING AND
WIDENING
DEDICATED
FREIGHT CORRIDOR
Deepening and
widening of Mumbai
Harbour and JN Port
channel is in the
Process
PhaseI
Vessels upto 14 m
draught (ie.6000TEUs)
using tidal window can
be handled
Estimated cost: INR
13.47 bn
Assured Depth basis
dredging
Expected completion
201314
With an estimated cost

of INR 281.81 bn, the
government has
approved the dedicated
multimodal high axle
load freight corridor in
the Eastern and
Western corridors
Study being undertaken
for
4
more
freight
Corridors in high freight
density area of Golden
Quadrilateral (6,000 kms)
by
30
IV.GOVERNMENT INITIATIVES : EXPANSION PROJECTS

JN PORT (2/2)
CONTAINER HANDLING
EQUIPMENT
Additional
container
handling equipment will
be acquired
New 3 Rail Mounted

Quay Cranes (RMQCs) as
replacement of old 3
RMQCs of 1989 was
commissioned in Aug
2011
3 Super Post Panamax
RMQCs for MCB and
shifting of old RMQCs
from MCB to SDB is to be
commissioned
ROAD CONNECTIVITY
PORTBASED SEZ
Special Purpose Vehicle

(SPV)
is
formed
with
National Highways
Authority of India (NHAI)
and City and Industrial
Development
Corporation
of
Maharashtra (CIDCO) to
improve the road
Connectivity
Port Based Multi Product

SEZ will be developed which
has received its approval
from Ministry of Commerce
and Ministry of Shipping in
Mar, 2010
Estimated cost: INR 35.7

bn
Phase1:
Area:277 ha on Ports land
Investment: about INR 55
bn on PPP basis
Consultants : IL&FS IDC
Work Completion: about

95%
31
IV.GOVERNMENT INITIATIVES : PROJECT IN PROGRESS

JN PORT
Deepening and Widening of
Mumbai Harbour Channel
and
JN Port Channel in PhaseII
Tenders
from
consultants
across
the
world have been invited
for
preparation
of
feasibility report, detailed
project
report
and
providing PMC services
Improvement of services at
Nhava Island area including
a mega 5th Container
Terminal
Joint
Venture
Hindustan
Organic
Chemicals
(HOCL)
with
Tenders from across the
700 acres of M/s. HOCL
world have been invited by

the port for appointment
of
consultants
for
studying
feasibility,
preparation of master plan
and DPR for the 5th
Container Terminal
land to be developed as
SEZ, FTWZ, ICD etc.
Ltd.
HOCLs land is 30 kms

from port and is connected
by road and rail with JNPT
Duration
of
the
assignment: 2 yrs and 3
months
32

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES)
SUMMARY
33
V. FOREIGN INVESTMENT (1/2)

AUTOMATIC ROUTE (AR)
Foreign investors do not need any approval from
Reserve bank of India or Government of India
ROUTES OF FOREIGN
INVESTMENT IN INDIA
GOVERNMENT ROUTE (GR)

Foreign investors need to take prior approval from
Government of India through Foreign investment
promotion Board (FIPB) for all activities not
included in AR
ROUTES PERMITTED AND EXTENT OF FDI ALLOWED IN PORTS & HARBOURS SEGMENT (EFFECTIVE
FROM APR 1, 2010)
TYPES OF
INDUSTRIES
Ports and Harbours
APPROVAL ROUTE
RESTRICTIONS
Automatic Route with 100 FDI

allowance
Allowed under the AR for :

Leasing of existing assets of ports
Construction and maintenance of assets such as container terminals, bulk /
breakbulk / multipurpose and specialized cargo berths, warehousing, CFS,
storage facilities and tank farms, carnage / handling equipment, setting up of
captive power plants, dry docking, and ship repair facilities
Leasing of equipment for port handling and leasing of floating crafts
Captive facilities for port based industries
34
V. FOREIGN INVESTMENT (2/2)

Investing in Greenfield core infrastructure projects,
such as ports
Setting up wholly owned subsidiaries, representative

offices, project office, branch office or joint ventures
FOREIGN INVESTORS CHANNEL

FOR ENTRY IN INDIA
Mergers & Acquisitions in India
WITH 60 DEALS IN 200611, PE, M&A (BOTH INBOUND AND OUTBOUND) IN CONTAINER BUSINESS HAS SHOWN
A CONSISTENT GROWTH
SOME RECENT INBOUND M&A TRANSACTIONS IN INDIA
ACQUIRER
TARGET
YEAR
SEGMENT
DP World
Chennai Container Terminal
2008
Ports
Eredene Capital
Ennore Container Freight Station
2008
Ports
Blackstone Group Lp
Gateway Rail Freight Ltd
2009
Rail
PSA International
Chennai Container Terminal
2010
Ports
RECENT DEVELOPMENTS
Infrastructures Kerala Ltd (INKEL), Bahrainbased VKL
Group and resort chain Mfar Hotels & Resorts Ltd
MIV Logistics Private Limited
2012
New CFS will be set

up with INR 650 mn
investment
35

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
36
VI. MARKET INFLUENCES

Strong growth
Higher margins in comparison with other logistics activities

ROAD
FREIGHT
EXPRES
S
COAST-TOCOAST
CONTAINER
HAULAGE (RAIL)
CFS/IC
D
Mature
Growth
Growth
Growth capital
intensive
Growt
h
Mature
ENTRY
BARRIER
Low
High
High
High
Mediu
m
Low
GROWTH
510%
2022%
15%
20%
35%
1015%
EBIDTA
MARGINS
35%
810%
25%
30%
40%
46%
SCENARIO
MTO
Firms are keen on capitalizing on the growing demand for ICD/CFS segment and are
investing towards the same
Between 20152018, 50 more facilities are expected at an investment of INR 75 bn

COMPANY
LOCATION
Gateway
Faridabad, Ludhiana
Allcargo
Goa, Bangalore, Nagpur, Hyderabad, Hazira
Concor
Rourkela, Durgapur, Kuder, (Gujarat), Madhosingh (Rajasthan), Baddi (HP),

Khemli (Rajasthan)
Inlogistics
Sahnewal (Ludhiana, Punjab)
RMaritime
Hazira, Rewari, Modinagar

37

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
38
VII. KEY CHALLENGES (1/4)

Transport related challenges - In India nearly 61% of the cargo is moved
by road, 30% by rail and 9% by airways, pipelines and inland waterways.
This is as compared to a 37% share of road in the USA and 22% in China
Important rail networks are oversaturated
Rail freight tariffs are high
Transit times are long and uncertain
Rail terminal quality is poor
Lack of flexibility in carrying different types of products
Railway carriage not easy for industries which cannot provide full trains
loads and while road movement preferred to rail, road movement has its
own fair share of issues
39

Inadequate road network coverage
Poor road quality - motorable roads less than 10% of total road network
Expressway network will take time to develop Expandable to 15,000
kms at the end of 13th plan
High level of fragmentation of the trucking industry
Multiple check points
Lack
of
sustained
warehouse,
investment
in
planned
infrastructure
such
as
transport centers, ICDs
State of ICDs/CFSs is poor - Many logistics companies with an interest in
setting up ICDs/CFSs eventually fail to do so, mostly on account of lack of

land available at an appropriate place and at a reasonable price
Existing facilities themselves are plagued with several issues older
facilities are located within city boundaries restricting day movement of

trucks
40

The approach roads to the facilities are poor making evacuation of cargo
difficult
Most facilities have issues of inadequate parking and lack of available land
for expansion, paving, etc.
State of cold storage is poor Estimates on cold chain facilities in India
puts the number of cold storage at around 5,400 with a capacity of 24
million metric tons. However, nearly 60% of these facilities are meant for
storage of potatoes
Poor electrical conditions increase cost of operation
Multimodal Logistics parks are yet to take off with emerging
requirements of integrated logistics provision of transportation hub,
value addition etc., large logistics parks were sought to be developed.
Consolidation of large land parcels is a significant issue hampering their
development
State of warehousing is poor warehousing costs are 20-25 % of the total

logistics cost. Most warehouses are not leak proof, not equipped with
adequate security systems, racking and other facilities
41

The only really large warehousing owners are government agencies
including Central Warehousing Corporation and State Warehousing
Corporation
Focus of a significant majority of the government warehouses is food
grain storage
Land availability for warehousing at an appropriate place and at an
appropriate price is a concern e.g. Delhi alone has a deficit of 9,000
acres of land for development of warehousing facilities
The Ports sector in India also suffers from several issues:
High turnaround times @JN Port is twice that of Colombo &
Singapore due to congestion and slow evacuation
Inadequate depth
Costal shipping has not taken off
42

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
43
VIII. COMPETITION : MAJOR PUBLIC COMPANIES (SUMMARY)
44

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
45
IX. STRATEGIC RECOMMENDATIONS : ADVICE FOR INVESTORS
GREENFIELD ICDs
Investors should invest

in greenfield ICDs and
expand
existing
facilities
as
their
demand is increasing
due to rapid growth of
export
and
import
coupled with capacity
constraints
in
movement
and
evacuation of cargo
CFSs/ ICDs
Investors should grab

the
opportunity
to
invest in CFSs / ICDs in
India
as
projected
traffic
indicates
the
need for at least 40 to
50
new
rail/road
ICDs/CFS across the
country in next 510
years
SUPPLY CHAIN
MANAGEMENT
Investors should invest

to include Supply Chain
Management
(SCM)
functions
such
as
warehousing, C&F and
other
value
added
services in the business
plan of ICD with a view
to build Mega Logistics
Park
MODERN LOGISTIC
CUM
TRANSPORT CENTERS
Using the Public Private

Partnership
model,
investors should take
initiatives
for
development
of
integrated and modern
logistic cum transport
centers across major
locations in India
Further
improved
logistics operations will
subsist
with
the
integrated development
of
warehousing,
transportation
and
traffic
planning
46

INFLUENCES
(PAGE 37)

7-10),
INTRODUCTION
TO 39-42)
IV.GOVERNMENT
V.FOREIGN
(PAGES 34-35)
IX.STRATEGIC
(PAGES 48-53)
SUMMARY
47
X. EXECUTIVE SUMMARY
MARKET
DRIVERS &
CHALLENGES
GOVERNMENT
INITIATIVES
FUTURE
SCENARIO
48
X. EXECUTIVE SUMMARY (1/5)

Container cargo traffic is estimated to reach 15 mln TEUs by FY16
ICDs handle 60% of containerized cargo vs. CFSs which handle 40% of
containerized cargo
Both ICDs and CFSs provide various services such as cargo consolidation,
distribution as well as custom clearance activities
There is likely to be a significant rise in the demand for third party

logistic providers driven by industries like automobile, retail, pharma,
etc.
Shift in customer activities outside the Port area, higher margins in
comparison with other logistics activities, the construction of a dedicated
freight corridor are all responsible for driving growth in the
containerized cargo sector
Logistics sector is evolving rapidly and its growth is dominated by the
interplay of infrastructure, technology and new types of
service
providers
49

The challenges in the sector remain (a) the costs entailed for the
development of a facility, (b) archaic procedures for the movement of
containerized cargo, (c) competition from the unorganized sector and, (d)
changing government policies on taxation
The Government of India has undertaken various initiatives which
include investment in logistics infrastructure (Maritimes States & ports
in India, container traffic at Indian ports, logistics support at Indias
largest port, planned investment and future expansion in projects at JN
Port until 2019-20). The Government is also involved in formulating and
changing government policies on taxation related to the sector
50

The development of CFSs/ICDs has benefited players in the
industry, importers, exporters as well as port authorities
Port authority receives readyto
load
containers thereby raising
ports
productivity and profitability
Allows exporters and

importers to lower inventory
costs
Linkage to the port by rail

resulting in quick transit and
low transportation costs
Exporter/Importer,
Custom House
Agent, shipping
companies use
ICD/CFS facilities
Ownership/operation by a
public
or private company provides
services at competitive rates
Consolidation of cargo has

allowed for the making of a
logistics hub for LCL cargo
51
X. EXECUTIVE SUMMARY (4/5) : ESTIMATED INVESTMENT

FUTURE SCENARIO
TYPE OF
INFRASTRUCTURE
ESTIMATED NOS./
DEMAND IN NEXT 510
YEARS
ICD/FTWZ
50 nos.
AIR CARGO CENTRES
150,000 sq. m.
AGRO WAREHOUSES
35 mln M.T.
INTEGRATED
TRANSPORT CENTRES
15 nos.
52
X. EXECUTIVE SUMMARY (5/5) : ESTIMATED INVESTMENT

FUTURE SCENARIO
53
CONTAINER LOGISTICS (CONTAINER FREIGHT STATION &

INLAND CONTAINER DEPOT) SECTOR
THANK YOU
54

Container Logistics Sector - Tarragon Capital Advisors

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Container Logistics Sector - Tarragon Capital Advisors

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INDIA LOGISTICS INDUSTRY

CONTAINER LOGISTICS (CONTAINER FREIGHT STATION &

INDIAN CONTAINER LOGISTICS (CONTAINER FREIGHT

II.MARKET OVERVIEW (PAGES VII.KEY CHALLENGES (PAGES

VIII. COMPETITION (PAGE 44)

REGULATIONS (PAGES 19-24)

I.INTRODUCTION : EVOLUTION OF GLOBAL CONTAINERIZATION

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

I.INTRODUCTION : EVOLUTION OF CONTAINERIZATION IN INDIA

*TEU - twenty-foot equivalent unit is based on the volume

I.INTRODUCTION : EXPORT IMPORT FLOW CHART

The logistics industry is extremely fragmented in terms of services

INDIAN CONTAINER LOGISTICS (CONTAINER FREIGHT

II.MARKET OVERVIEW (PAGES VII.KEY CHALLENGES (PAGES

VIII. COMPETITION (PAGE 44)

REGULATIONS (PAGES 19-24)

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

II. MARKET OVERVIEW : INDIA LOGISTICS INDUSTRY

II. MARKET OVERVIEW : INDIA LOGISTICS INDUSTRY

*3PL - Third Party Logistics Services provider provides services such as

II. MARKET OVERVIEW : POTENTIAL FOR GROWTH IN EXIM

Containerized logistics account for only 15% of Indias EXIM trade

Emergence of organized retail in India, increase in foreign trade, and rise

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

II. MARKET OVERVIEW : CFS/ICD SUBSECTOR GROWTH

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD DIFFERENCE BETWEEN CFS & ICD

In the interiors, away It is an off dock facility

Deals with break-bulk

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

Provide storage between various transportation modes as well as storage of

Weighing and inspection of cargo/packages and damages, etc.

In the case of LCL* cargo wherein cargo/containers cannot be received or

Storage of empty containers and temporary storage of loaded containers yet

*Less than Container Load (LCL) is a service offered by freight forwarding

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

Provide backup facilities for the port

Reduce the cost of container logistics by providing

Transportation by road, rail and barges to a CFS/ICD container yard

Distribution of finished products

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

ONE STOP LOGISTICS &

ICD/CFS aid in the containerization function

Custom's clearance activities at CFS/ICD help decrease the dwelltime of

Pretrip trials of Reefer Containers to check if refrigeration equipment is

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

II.MARKET OVERVIEW : INTRODUCTION TO CFS/ICD

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

INDIAN CONTAINER LOGISTICS (CONTAINER FREIGHT

II.MARKET OVERVIEW (PAGES VII.KEY CHALLENGES (PAGES

VIII. COMPETITION (PAGE 44)

REGULATIONS (PAGES 19-24)

III.PRE-REQUISITES & REGULATIONS

III.PRE-REQUISITES & REGULATIONS : GUIDELINES (1/2)

movements in case of ICD, other transport operators and shipping lines

Outside limits of major cities: minimum of 3 acres

Prepared by Tarragon Capital Advisors (India) Pvt Ltd

III.PRE-REQUISITES & REGULATIONS : GUIDELINES (2/2)

Design and layout should be stateof theart, equipped with

mechanical/electrical facilities of international standards

for loading, unloading of containers from rail flats, chassis, their