Logistics Cities World Forum

Report
Michael Proffitt
Laredo
29th 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
Supply Chains – Visual Representation
Procurement
Supply Management
Demand Planning
Sales Data
Build
Plan
Component
Suppliers
Manufacturers
Distribution
Customers
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
PRICE/
VALUE
PROMOTION/
EDUCATION
6P’s/SAVE
PUBLIC
OPINION
PLACE/
ACCESS
PRODUCT/
SOLUTION
MARKETING
MIX
PROMOTION/
EDUCATION
PRICE/
VALUE
POLITICAL
AUTHORITY
Images of Dubai
Dubai: Sustainable Growth Through
Diversification
Oil & Gas
Tourism
Finance &
Banking
Trade &
Logistics
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
19
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.”
20
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
21
Projected Passenger Growth Dubai International
Airport
90.0
82.3
79.3
76.3
80.0
73.2
70.1
67.0
70.0
64.0
60.9
57.7
60.0
54.4
50.8
46.9
50.0
42.9
38.4
40.0
33.7
28.8
30.0
24.8
21.7
20.0
9.1
9.7
10.8
12.3
13.5
16.0
18.1
10.0
0.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 22
2021
Dubai – An Excellent Location
for Innovative Logistics…
For global supply chains
As a hub for the region
23
Dubai’s Logistics Platform
Jebel Ali Port and Free Zone
Dubai
Logistics
City
Dubai World Central International Airport
24
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
25
Jebel Ali – Terminal Expansion

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
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
Future Possibilities
Terminal 2
26
Dubai: Integrated Logistics and
Freedom for Business
FREE ZONE:
 No customs duties
Integrated
LogisticsPlatform
 No taxes
 Liberal visa policy
 Free capital transfer
 100% ownership
 Logistics know-how
 Quality labor at competitive cost
 Abundant space
27
Linking DLC and JAFZA
Jebel Ali Port and Free Zone
Main road Port – DLC
(bonded, within Free Zone)
Dubai
Logistics
City
Dubai World Central International Airport
28
Dubai Logistics City
Dubai Logistics City Master Plan
30
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
Ahmedabad
Pune
Population > 4 million
 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
STRATEGIC POSITIONING
Mumbai
Singapore
BUT IT’S NOT ALL OPTIMISM
……….
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
Transport Challenges
CAPITALIZING ON INDIA’S LOGISTICS OPPORTUNITY
What does it take?

Free Trade Warehousing Zones (FTWZs)


Domestic Distriparks



To enable EXIM cargo Consolidation, Value Addition and allow
India to become a Regional Trading Hub
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 Terminals at 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


5 Domestic Distriparks - Planned Pan-India,
Complimenting the FTWZ Network


Mumbai (Operational since Nov’10), Delhi
(Go Live Q2FY’12) followed by Nagpur,
Chennai & one in the East
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
MUMBAI FTWZ - JULY 2009
MUMBAI FTWZ - JULY 2009
SAME VIEW – AUGUST 2010
CONTAINER YARD - AUGUST 2009
CONTAINER YARD - SEPTEMBER 2009
CONTAINER YARD - JULY 2010
ARSHIYA’S MUMBAI FTWZ – Warehouse & Main
Access Road
ARSHIYA’S MUMBAI FTWZ – Customs Office
ARSHIYA’S MUMBAI FTWZ – Container Yard & Material
Handling Equipment
ARSHIYA’S MUMBAI FTWZ – Date Center & Electrical Sub Station
ARSHIYA’S MUMBAI FTWZ – Warehouse Interiors & Loading
Dock
ARSHIYA’S UPCOMING INFRASTRUCTURE – KHURJA (DELHI)
• 315 Acre Comprehensive Facility 90 km from Delhi & 53 km from Dadri
- Side-by-Side FTWZ (135 Acres) and Domestic Distripark (130 Acres)
- Arshiya Rail Infrastructure (50 Acres), including on-site Rail Siding
- Operations live as of CY Q2’11 to be joined by similar models in
Chennai & Nagpur
FTWZ : A GAME CHANGER FOR INDIA

India is world’s 2nd largest developing & fastest growing economy just behind China

With a population of 1.1 billion, the domestic consumption comprises 58% of GDP

Strategically located between South East Asia & Middle East there are 7,000 kms of
coastline & unlike China India’s population is evenly spread across hinterland

Unlike Dubai, India has a strong manufacturing base where global companies are
producing products for domestic as well as export opportunities

Logistics infrastructure is the single largest challenge as well as the biggest opportunity
for sustaining India’s fast paced GDP growth

The FTWZ is a game changer for India
Key Learnings
 Logistics Cities are not Products – they are Supply
Chain Enablers
 Successful Planning and Development Requires
Extensive Collaboration
 The Key Infrastructure must be Planned but then
Retain Flexibility
 Clarifying the Value Proposition is Mandatory
 Marketing the City to Potential Sectors/Clients needs a
very Professional Approach
GRACIAS

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