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Logistics Cities World Forum. Michael Proffitt Laredo 29 th May 2013. AGENDA. Introduction Overview Share Personal Experiences: - Dubai Logistics City - India Key Learnings. FIRST OPTION. “Build it and they will come”. SECOND OPTION. UNDERSTAND YOUR MARKET.
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Logistics Cities World Forum Michael Proffitt Laredo 29th May 2013
AGENDA • Introduction • Overview • Share Personal Experiences: - Dubai Logistics City - India • Key Learnings
UNDERSTAND YOUR MARKET
Procurement Supply Management Demand Planning Sales Data BuildPlan Distribution Component Suppliers Manufacturers Customers Supply Chains – Visual Representation
Key Supply Chain Issues - Summary • Forecasting • Extended supply chains • Environmental issues • Collaboration • Visibility through the Supply Chain • Customs • Corruption • Security / Risk • Infrastructure
Complexity of Developments • Logistics Clusters • Logistics Parks • Logistics Villages • Logistic Cities
Why Develop? • Support Ports and Airports • Enable Efficient Transit Movement • Enable Efficient National Distribution • Provide Stockholding Opportunities • Allow Value Added Services to be Performed • Support Reverse Logistics
Key Parties Involved in Developments Users/ Customers Governments Developers Investors
What is Required? • Adequate Road Network – inside the zone and outside • Proximity to Railways • IT Infrastructure • Adequate Power • Container Park and Support Services • Truck Facilities • Commercial Support Facilities • Over-Dimensional Cargo Areas • Warehouses • People
Game Changer Articulate Value Proposition
The 4P’s/SAVE PRODUCT/ SOLUTION PLACE/ ACCESS MARKETING MIX PROMOTION/ EDUCATION PRICE/ VALUE
6P’s/SAVE PUBLIC OPINION PLACE/ ACCESS PRODUCT/ SOLUTION MARKETING MIX PROMOTION/ EDUCATION PRICE/ VALUE POLITICAL AUTHORITY
Finance & Banking Tourism Oil & Gas Trade & Logistics Dubai: Sustainable Growth Through Diversification • 2 bn consumers in greater region, and growing • Healthy growth, liberal business environment • Prominent geographical location Create an integrated logistics platform to establish Dubai as the leading hub for the region
A Unique Opportunity • A visionary approach • Thinking long-term • Strengthen Dubai as hub for the greater region • Create the best trading and distribution environment “Build the world’s first truly integrated logistics platform, with all transport modes, logistics and value added services, including manufacturing and assembly, in a single bonded and Free Zone environment.”
Dubai as a Logistics Hub for the Region • 2 Billion consumers • Solid growth rates • The most liberal business environment in the Region • The most professional location for distribution business • Next step into the future: Integrating logistics into a single platform – a quantum leap for logistics
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Dubai – An Excellent Location for Innovative Logistics… For global supply chains As a hub for the region
Jebel Ali Port and Free Zone Dubai World Central International Airport Dubai’s Logistics Platform Dubai Logistics City
Jebel Ali Port and Free Zone • 14 m. TEU in 2012 • #8 world-wide • Area of 100+ square kilometers • 100,000+ tons sea-air via DXB • 7,000+ companies in JAFZA
Jebel Ali – Terminal Expansion • Demand-led investment, able to cater for Suezmax + vessels (12,000 TEUs) • Adjacent to Terminal 1 and, therefore, the Free Zone also • Maintain leading position in customer service having the most advanced infrastructure and superstructure • Extension of existing Terminal 1, with total additional capacity of 5m TEUs • Phase 1 will consist of 1.6km of quay, 4 berths, 17m depth alongside, 2.0m TEUs capacity • Phase 2 will consist of additional 1km of quay, 3 berths, 17m depth alongside, 3.0m TEUs capacity • Estimated Phase 1 operational commencement: July 2007 Future Possibilities Terminal 2
Dubai: Integrated Logistics and Freedom for Business FREE ZONE: • No customs duties • No taxes • Liberal visa policy • Free capital transfer • 100% ownership • Logistics know-how • Quality labor at competitive cost • Abundant space Integrated Logistics- Platform
Jebel Ali Port and Free Zone Dubai World Central International Airport Linking DLC and JAFZA Main road Port – DLC (bonded, within Free Zone) Dubai Logistics City
OVERVIEW OF THE INDIAN ECONOMY • India has experienced a consistent GDP growth of over 6% in the last decade, • and a 7% growth in 2011 (India’s Central Statistical Organization) • India has been one of the 10 fastest-growing economies in the world in the last • two decades • Domestic consumption is the largest contributor to the GDP (58% in FY’11) • Foreign exchange reserves totals over US$ 250 billion (as of Dec’11) • India ranks 26th in terms of world exporters, contributing over 1.3% of globally • consumed merchandise, with exports growing at a rate of 22% • India ranks 17th in terms of world importers, consuming over 2% of globally • produced merchandise, with a consumption rate growing at 35% (WTO) • India’s urbanization rate is the fastest growing in the world. By 2030, over 40% of • India’s population will be living in urban areas (U.N. Population Fund)
GROWING CONSUMERISM & EVOLVING MIDDLE CLASS • By 2025, India will have a middle class population of 583 million people, becoming the • world’s 5th largest consumer market (McKinsey Global Institute) • Consumption in India will grow in real terms from US$ 378 billion presently to US$ 1.56 • trillion by 2025 – a fourfold increase • By 2020, India is projected to have an additional 47 million working population, almost equal • to the total world shortfall, with an average Indian age of 29 • Comparatively, the average population age of other economies at that time will be 37 in • China, 45 in the U.S. & Western Europe and 48 in Japan • 66% of India's 1.1 billion population is currently under the age of 35 & is expected to outpace • China by 2030 • The estimated size of India’s real estate market in terms of total economic value of • development activity is US$ 40-45 billion, representing 5 - 6 % of GDP, growing at 30% p.a • Residential property constitutes almost 75% of the real estate market in India
INDIA’S EMERGING MIDDLE CLASS • 2 out of the top 5 most populous cities in • the world are in India (Mumbai 13 mil & • Delhi 12.56 mil) • Population in major metro cities in India • which exceed 4 million, including the • above, are Bangalore, Chennai, • Hyderabad, Kolkata, Ahmedabad & Pune • Additionally there are 48 agglomerations • with a population of 1 million or more • By 2030, India will have 68 cities with a • population of over 1 million, 13 cities • of over 4 million & 6 megacities of over • 10 million • In 2030, India's largest cities will be • bigger than many major countries in both • population and economic output Ahmedabad Pune Population > 4 million
STRATEGIC POSITIONING Mumbai Singapore
CHALLENGES OF DOING BUSINESS IN INDIA • As per World Bank’s 2010 survey, India is ranked 134th amongst 183 economies in • terms of ‘Ease of Doing Business’, • - It includes variables such as Starting a Business, Registering Property,Paying • Taxes, Trading Across Borders, Enforcing Contracts & Closing a Business • As per the Transparency International's Corruption Perception Index, 2010, India • ranked 87th out of 178 countries in terms of corruption in public & private sector • Delay in legal proceedings & litigations • Lack of implementation & enforcement of intellectual property laws • Inadequate or lack of infrastructure for supporting the fast pace economic growth, • specially in transportation (Road & Rail) and logistics (Ports, Warehousing, • Distribution, Hinterland Connectivity & Domestic Consolidation Hubs) • Complex Tax structure (Direct & Indirect) • Archaic labour & property ownership laws
INDIA’S LOGISTICS REALITIES: Leading to Strategic & Operational in-efficiencies for doing business in India • Logistics cost in India is high – at around 14% of GDP against 8% - 9% in most • developed nations. • On a GDP of USD 1.6 trillion, this represents an absolute value of in-efficiency • (and therefore logistics market potential) of over USD 65 billion • India's level of containerization is less than 25% as against a global average of 60% - 70% • The average time taken to clear import & export cargo at ports is about 19 days in • India against 3 to 4 in Singapore • India's container throughput in CY10 was just over 7.7 million TEU's as compared to • Dubai (12 million), Singapore (24 million) & China (186 million) • India burns nearly US$2.5 billion worth of fuel on account of trucks standing idle on state check-posts • World Bank’s 2010 Logistics Performance Index (LPI) ranks India 47th in terms of logistics • in-efficiency as compared to 130 countries globally – in terms of • - Customs Clearance, Infrastructure, Timelines, Shipments, Logistics Competences, • Tracking & Tracing
CAPITALIZING ON INDIA’S LOGISTICS OPPORTUNITY What does it take? • Free Trade Warehousing Zones (FTWZs) • To enable EXIM cargo Consolidation, Value Addition and allowIndia to become a Regional Trading Hub • Domestic Distriparks • For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road • Rail Infrastructure Solutions • Comprising of innovative Customized Containers for specific product types, Service Level agreements on timeline and deliver with Key Performance Indicators • State-Of-The-Art Rail Terminalsat strategic locations across India with modern equipment to increase speed of loading/unloading • Integrate Logistics Infrastructure with Global Logistics, Domestic Supply Chain Management, Transport & Handling and IT • Global ocean & air logistics, domestic forward and reverse supply chain management with ownership on reduction of working capital and product visibility & control, through technology
ARSHIYA’S PAN-INDIA INFRASTRUCTURE FOOTPRINT • 5 FTWZs – Rail Connected, Planned Pan-India • Mumbai (Operational since Nov’10), Delhi (Go Live Q2FY’12) followed by Nagpur, Chennai & one in the East • 5 Domestic Distriparks - Planned Pan-India, Complimenting the FTWZ Network • First of the Domestic Distriparks (in Khurja near Delhi) operational by Q2FY’12 • 150 Train Pan-India Rail Operations • Providing unique and customized solutions to marquee customers with long term contracts • Inducted 15 trains since FEB’09 and one of the most profitable Private Container Train Operators (PCTO) • Pan-India Rail Terminal Network complimenting each FTWZ, Domestic Distripark & Rail Operations accelerating cargo distribution through aggregation
INDIA’S FIRST - ARSHIYA’S FTWZ IN MUMBAI • 165 Acre State-of-the-Art facility 24 kms from JNPT Port featuring: • - 24x7 On-Site Custom Clearance House • - State-of-the-Art Infrastructure, Equipment & Facilities • - Connectivity to our Pan-India Rail Network accelerating • distribution through aggregation at strategic locations