Arguably, the biggest bug in the logistics system is bottlenecks in movement, both literal and metaphoric. The recent Suez Canal crisis━where the Ever Given was stuck from March 23 for nearly a week after she ran aground on the Canal━serves as an opportunity for revisiting how supply chains operate in trade and the related risks that come with it. Sanjay Bhatia is the Co-Founder of Freightwalla, a four-year-old digital freight forwarding company that says it aims to revolutionise logistics and has recently struck deals in blockchain-based supply chain solutions. Here is his interaction with CW.
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What do the post-crisis trends indicate in pricing, and how long do you expect this trend to last? How is it likely to impact domestic logistics?
While the backlog of the ships waiting to transit has been cleared, the ripple effects on the global trade might take next few weeks to be resolved. To avoid excessive traffic many ships did take an alternative much longer route to reach their destination, causing significant delay in their expected time. All this has led to increase in shipment costs across Europe which will sustain for a few months.
Do you envisage a shift in global trading patterns as a result of the immediate [Suez Canal] and the ongoing [pandemic] crises, as both emerge as pain points for container trade? Do you see a possible solution emerging to balance the container shortage issues?
The Suez Canal, one of world’s most heavily used shipping lanes, contributes to approximately 12% of world trade. Responsible for the transit of over 1.5 billion tonnes of cargo or 30% of the world's daily shipping container freight, it has been a significant route and therefore the blockage has had a significant impact on world trade. While the incident put temporary stress on trade, resulting in higher transportation costs, tighter supplies, and delay in delivery of goods, it also highlighted the key challenges that the industry has been plagued with. It is high time the industry preps up so as to address an acute crisis as this.
Currently, there is a tremendous lack of visibility and transparency amongst the players of the ecosystem. Therefore re-inventing processes, digitising shared operations and implementing collaborative technologies is critical. A technologically empowered industry will be in a better position to make informed decisions besides maximising efficiency and reducing trading costs.
Government figures say a record number of e-way bills—a whopping 7.12 crore━were generated in March this year. What does the boost to digitisation mean to efficiency in logistics in the age of Industry 4.0? What needs to be done?
Launched by National Informatics Centre (NIC) as per the directions of the GST Council in April 2018, E-Way Bill needs to be generated for the movement of goods from one place to another, having a value of more than Rs 50,000. One e-way bill has replaced the need of e-way bills for multiple states. Besides reducing the transport time, it has also facilitated removal of the static check posts at the state borders while improving the tax compliance and tax collection processes. The system has thus brought in a lot of transparency besides facilitating the monitoring of the movement of goods.
However, this is just one part of it. Ushering in digitisation for the industry in terms of its operations is critical, too. It will help ensure maximum transparency in this entire process from planning and booking of cargoes to tracking the status of shipment on a real-time basis. It would not only save companies from the tedious process and cost of manual tracking but also provide real time assistance and tracking record of the shipments.
Does water surface logistics in India deserve better? In what specific ways can the government bolster logistics, especially if we assume that depth and dredging will remain perennial issues?
While the face of Indian coastal logistics and shipment industry is changing rapidly, it still requires a lot of policy level intervention to make it competent and self-sufficient. As currently, majority of India’s cargo are transshipped through Colombo, Far East or Middle Eastern ports, increased incentives will go a long way in encouraging cargo owners to increasingly use inland waterways.
Another important limitation which needs to be addressed is the lack of state of the class infrastructure. Due to the lack of end-to-end services for water shipment, multiple handlers are required for the entire process, increasing the shipment cost considerably. Development of competitive infrastructure and efficient taxation policy would certainly lead to significant growth in the usage of water transport.
While the industry deeply appreciates the government's efforts of deepening the channels, the pace is slower than required. There are delays in work completion due to various challenges which require to be addressed urgently.
-Interview by Shashidhar Nanjundaiah
