Is the worst really over for the maritime industry? Ritesh S Ramakrishnan, Joint Managing Director, Transworld Group, talks about the lock down and its impact on coastal shipping, transshipment and digitalisation.
How has been the business in the first half of this year?
There is a whole world of things that have happened from the beginning of the year till now. Things that we were talking about in January is just totally different from what we are focusing on today. The current scenario can be compared to the world wars that have happened in the past wherein an entire generation will be forced to look at things differently and think in new ways.
During the first three months of the year our business performance was reasonably good, freight rates were held up in most sectors, with a few exceptions. The overall volumes and flow of cargo to different geographies also was all positive, so it was like a situation which is too good to be true, wherein we had a lot of things looking upwards. More often than not, in our industry if we have one thing looking up we are thankful and we move on. So we had a lot of plans charted out as we do every year. Then as we got into the COVID-19 issues, to be honest, if anybody tell you that they were prepared for it or found a way to deal with it, then I would take it with a pinch of salt. We had our disaster recovery plans, but when something like COVID-19 hits you it impacts you in many ways.
The direct impact of the pandemic was a huge drop in business and volumes, thanks to the lockdown in other countries. As we have our network in Middle East, India, Southeast Asia and the US, so it was actually one after the other countries going into lockdown. India forms 60% of our business, so when lockdown was declared in India, an immediate impact was felt on all of our businesses. About 50-60% of our volumes were down over night.
We had launched a technology initiative about 2 years ago in June, in collaboration with Oracle. This along with the digital mind set we had as an organisation has helped us. We had zero down-time from the day lock down was declared till now and completely operating in a work from home scenario, seamless movement of digital documents, we have EDOs, EPS, What’s app based information delivery system, multiple portals to take bookings and we are on the verge of integrating them with payment gateways. The pandemic has challenged us to complete our digital initiative.
I believe we have seen the bottom and now we are starting to see positive signs in all our trading lanes.
During the lockdown road transport was disrupted completely and some of the cargo had shifted towards rail. Does this benefit coastal movement as a mode of transport?
If you look at the past half-decade, we have put a lot of effort to create a network and today there is sufficient tonnage and network created by few of us who are in the market. But are the cargo owners and the government today in a position to say that coastal shipping is 50-60% cheaper and offers fixed transit times, lesser pollution, lesser pilferage and has the ability to control your supply chain, while these advantages are not present in road logistics. Of course coastal shipping may not be the answer for every industry. During this lockdown our traditional commodities which is construction and building material had their own challenges, but our volumes have shot up and we have moved a whole bunch of new commodities which earlier never moved by sea.
Coming to transhipment, how was the scenario during the lockdown?
As feeder operators we connect to four hubs – Dubai, India, Colombo and Singapore. Globally there has been a major downsizing in terms of services offered by shipping lines and so the cascading effect was obviously felt by feeder operators. There has been an impact on the transhipment volumes in India and other places as well. But I think we have bottomed out and volumes are beginning to increase from June. As a ship owner in different parts we operate it did hurt as charter hires were down, but as a feeder operator we were very flexibility in our cost and were able to upsize and downsize wherever required, we could offer cost-effective services to our customers, be it NVOCCs, MLOs.
There were volume related challenges as transhipment itself had volume reduction, but overall we were able to manage it.
Crew change has been the biggest challenge the industry has been talking about. As a ship owner what issues did you have and how did you manage?
The single biggest challenge we faced during the initial phase of the lock down was not about business, but the fact that I had on-board a set of my people who due to a variety of reasons were struggling to either sign-on or sign-off. As a ship owner our sea going staff is our backbone and it is commendable to see the commitment they have shown.
Initially there were issues but later the Ministry of Shipping, DG Shipping, INSA and other stakeholders quickly understood the gravity of the situation. The other main issue was that each state ended-up having their own set of rules and regulations for sign-on and sign-off. As seafarers are defined as essential workers and so these issues were also resolved in the past few weeks. We were able to mobilise our seafarers. We also operate a third party shipping agency business which has done a fair amount of seafarer sign-on and sign-off in June.
Ministry of Commerce is coming up with a National Logistics Policy, the draft is ready and the Secretary has been asking some suggestions from the industry. As a large operator across verticals what would you suggest?
This is another great concept which is long overdue and will define several loose things such as what is this industry and who is part of this industry? Now we finally have a document that says this is the policy or framework and the government has been extremely proactive in getting everybody’s feedback. The problem in India is that ideas are great but the implementation gets somewhere muddled. I would suggest that once the policy is ready can we draw a National Logistics Plan, because when the policy is implemented there will be a lot of gaps on the ground which will need to be filled. So please get the industry involved as you have always and get the blanks filled piece by piece.
There has to be a sea change in the way the industry looks at itself it cannot always function in the “jugadu” way which it is used to.
During lockdown every other organisation suddenly realised the need for digitalisation. Going forward how do you think will the scenario unfold?
Even today our industry operates in a very traditional manner and refuses to share data. Why can’t our supply chains operate in a manner which is as simple as we order food online? This is how we started to look at where we stand digitally. We had a traditional system built on Oracle wherein the different parts of the application didn’t speak to each other. So the first thing we did was to bring somebody from out of our industry to head our IT Dept. This helped us understand where we stand and the best possible solution we could build with Oracle and we have gone live in all our businesses except the NVOCC business which will go live by August or September. Our all coastal and NVO regional platforms can all be done through an app. Entire information flow can be through WhatsApp, the application or portal. We are also working with different payment gateways which will come up in due course. We are the largest Oracle implementation in the industry across the world.
In our industry the digital solutions cannot work in isolation as there are a lot of stakeholders involved, so how well is your application integrated with other stakeholders?
From an industry and government perspective we have to trust each other, which is the fundamental bottleneck. If this issue is overcome then we can start looking at ways of connecting with each other. We have built our technology in such a manner that it can seamlessly sync with any system available today. The key for us is how easily it is able to integrate with something else. We are also doing a blockchain trial so that our entire supply chain can be migrated to it.
We are now into “Unlock 1.0” and the manufacturing wheels are slowly moving. What are your expectations with exports? Will they go up? In each of your businesses what do you look forward to?
It is realistic to say that apart from COVID-19 related things the trade will follow its pattern. In India the monsoon season is associated with slackness in cargo and the volumes are generally softer than what they are because of monsoon related challenges within the Indian supply chain. But if we are to discount the monsoon factor, then the volumes across our businesses are up in the month of June, especially the coastal volume has significantly gone up in June. In the first three weeks of June we have done business equivalent to what we could do in 5 weeks of the previous time period. The exim volumes for reefer and dry containers have also gone up. In forwarding business African and US volumes have gone up from outside India, intra-Asia still seems to be a little slow, Middle East to India business is also a little slow.
We are also seeing a trend wherein several trading areas are going for a second lock down. If this happens then there is going to be certain impact on the volumes. But if work from home continues then I still believe that we have seen the worst and things will start moving up from here.