A typical Indian supply chain has multiple intermediaries in it and managing all of them to derive an optimal output is quite challenging and hence, requires a professional end-to-end service provider to handle it effectively

There is plenty of room for technology to play a greater role in the supply chains in India. Complete visibility of the supply chain is very critical in developed markets as this can reduce costs considerably.

High Time for Logistics Infrastructure
Damco is the new, combined brand of the AP Moller-Maersk Group’s logistics activities. Damco offers a broad range of supply chain management and freight forwarding services to customers all over the world, and has a work force of 10,500 in 272 offices, covering over 93 countries in Africa, Asia, North America, Europe, Middle East, and Latin America. In 2008, the company had a net turn-over of US$ 2.8 billion, shipped more than half a million TEUs ocean freight, air freighted over 60,000 tonnes, and handled over 50 million CBMs (equivalent to 2 million TEU) for supply chain management customers. In India, Damco is present from the last 17 years and has 16 offices with over 300 employees.

Of late, India has witnessed some good logistics infrastructure projects being launched and implemented while some more are in pipeline. But, given the fact that higher logistics costs still rule the roost, there is a pressing need for further investments in creating and maintaining good logistics infrastructure in India, opinesLars Sorensen, Regional Manager, South East Asia, Damco in an interview with Maritime Gateway.

Sorensen is responsible for all the activities of Damco in the South Asia region, which comprises of India, Pakistan, Sri Lanka & Bangladesh. He has been associated with India since 2003, when he joined as the Managing director of Maersk India Pvt Ltd (Logistics Division). Sorensen has worked for more than 17 years in the shipping and logistics industry. Before arriving in Mumbai he worked in Hong Kong as the General Manager, Supply chain management for Damco Hong Kong. Prior to his stint in Asia, Lars has held various responsibilities in Europe in the area of supply chain management.

What challenges do you face in the post-merger scenario at global level?
As an organisation, we have been working with two different brands (“Maersk Logistics” and “Damco”), which have now been integrated into one (The new “Damco”). As a result, we have also realigned our organisation structures under a single brand with a commercial organisation and an operations organisation reporting to the CEO. However, the re-organisation process is already complete and behind us, so the challenges regarding the organisational alignment have already been successfully dealt with.

We see the post-merger scenario as a great new opportunity – an opportunity to present our new and unified organisation to our customers, offering a wide variety of services that can be tailor-made to suit their individual requirements. We see the new organisation to be simpler and easier for our customers to deal with. It also helps us to reduce beauracracy in our organisation and thereby be agile and cost-efficient.

We have set ourselves some ambitious goals to be achieved by 2014. We aim to be a top quartile logistics player in the world by 2014. We will strive to establish Damco as a logistics partner of choice for customers across the globe. This indeed will be challenging but we believe that this is very much possible with our dedication towards developing customer-centric solutions and having the capability to deliver on our promises consistently.

What presence do you have in India currently and what is your India strategy for the short and medium terms?

India is a key market for Damco globally. This can be understood from the fact that we have chosen India to be the headquarters of South Asia region, which is one among the eight regions we have globally. We have a strong management team here in India to focus on this quickly growing market.

Having been in India as a fully owned business for over 17 years now, we have 16 own offices spread across the key markets employing over 300 logistics professionals. We manage the export-related supply chain activities of several globally reputed companies. Several of our global key customers source goods from India and we manage the end-to-end process of these shipments for them.

We handle ocean and air freight forwarding for customers from a variety of industries ranging from electronics, FMCG, industrial goods, pharmaceuticals, retail and other industries. We also offer project cargo services and several land side services like trucking, customs clearance and documentation.

In the short-term, we will focus on strengthening our current product portfolio in India. While in the long-term, we see great opportunities for us to build a strong position in segments like air freight and project cargo in India.

End-to-end solutions are relatively a new concept in India. How ready are the Indian companies in buying these services?

Markets like India are at a very interesting stage of growth and maturity as far as logistics services are concerned. On one hand, we have progressive business houses which are open to the concept of fully outsourcing their logistics operations to a professional end-to-end service provider; while on the other hand, we have several business houses managing their logistics operations fully in house.

A typical Indian supply chain has multiple intermediaries in it and managing all of them to derive an optimal output is quite challenging. In such a scenario, a professional end-to-end service provider can bring in a lot of expertise, knowledge and resources to manage the supply chain quite efficiently.

We believe that it is only a question of time before customers in India start adopting the end-to-end solutions. For this to happen, the various business houses and the end-to-end service providers must develop a good working relationship and develop trust and confidence about each others issues, capabilities and requirements. This will help building professional partnerships which are guided and managed by key deliverables which are monitored, measured and managed jointly by the customer and the end-to-end service provider. Such a scenario is not far away and is definitely the future of the industry in India.

What differences do you observe in terms of operations in India and Europe? How well is Damco equipped to overcome them?

Various logistics markets across the world differ from each other, mainly on the grounds of logistics infrastructure, rules and regulations governing the industry, customer-service provider relationships and adoption of technology in the supply chain, to name a few.

On all the above parameters, markets like India and Europe are very different. Markets like Europe have well-developed logistics infrastructure which consists of roads, railways, sea ports and air ports. India in the recent past has witnessed some good infrastructure projects being launched and implemented and with a few more in pipeline. However, the current logistics costs in India are higher than that of Europe or other developed logistics markets. This reminds us that there is a need for further investments in the area of creating and maintaining good logistics infrastructure in India.

In India, we can also look at putting in place rules and regulations which make transfer of goods within the country easier, quicker and more cost-efficient.

The customer-logistics service provider relationship in India also needs to mature. There needs to be a lot more trust and confidence between the customer and the service provider for the business model to evolve in this fast growing market. However, we definitely do see trends in this direction and fully believe that it is only a matter of time before we see much more collaboration between the customer and the logistics service provider.

Also in India, there is plenty of room for technology to play a greater role in the supply chain. Issues like complete visibility of the supply chain are very critical in developed markets which focus great deal on maintaining a lean and agile supply chain to reduce costs. In India also there is plenty of room to improve visibility of the supply chain, thereby reducing the risks and costs.

We also see that developed markets and customers are becoming very conscious about the environment and the impact of their operations on the environment. As a result we are seeing that the leading companies are now adopting greener logistics solutions and are interested in measuring and lowering their overall carbon foot print. We foresee that the leading businesses in India would also be keen to implement greener logistics solutions. At Damco, we have developed a unique solution, “Supply Chain Carbon Check” to support our customers in measuring and reducing their overall carbon footprint.

At Damco, we have rich experience of working in different supply chain environments and conditions. Instead of a ‘one glove fits all’ theory, we believe in having a strong local organisation which fully understands the local challenges and conditions and work with our customers developing tailor-made solutions for their issues. We try to learn and adopt best practices from our supply chain practices which have proved successful in the developed logistics markets, but we do so after sanitising them for local requirements and challenges.

Our real strength is in our capable and experienced professional staff that has a very good understanding of the local conditions. This helps us to stay strongly focussed on being a global player with strong focus on individual solutions for our customers.

Is there any M&A activity lined up in India?

At present we do not have any M&A activity lined up for India. However, India is a growing market and we will be studying various opportunities available in the market.