Allcargo Global Well Poised Geographically
What is Allcargo Global ’s overview of Indian logistics industry, its composition, market size, problems and projected growth in the next three–four years? To achieve this growth, what enabling business milieu is needed to promote logistics business in the country?
We feel that the Indian logistics industry is still in its nascent stages despite the strong growth over the past few years. India still has a very high logistics cost as a percentage of the value of goods. However, with access to improvement in technology and the consolidation of professional logistics players, the industry is now in a position to leverage its capabilities and drive the growth of logistics in the coming years.
Removal of administrative hurdles, simplification of trade procedures and increased adoption of technology are likely to be some of the factors determining the trajectory of this growth.
The biggest problem currently facing the industry is definitely going to be the global economic downturn and the growth will depend on how soon we are able to recognize and adapt to the changes.
Tell us something about Allcargo Global ’s national and international operations, its focused business areas in providing integrated logistics support and solutions.
We have our global presence in Americas, Europe and Asia. The company has turnover greater than INR 2000 cr. It has 120 own offices in 56 countries and supported by an even larger network of franchisee offices. Allcargo Group Businesses relate to Non Vessel Operating Cargo Carrier Container Freight Stations, Equipment Hiring, Project and ODC Cargo Handling, and Other Business Verticals.
The company’s growth over the period has been quite impressive. Which are the important milestones of the company so far? What do you attribute the success to, and where do you see the company in the coming three-four years in terms of its market share?
Company’s success has been driven by a variety of factors.
- The management team in the company is among the best in the industry.
- The strategic direction of the group has been very clear and this clarity of focus has translated to us making the right choices at the right time.
- The employee culture in the organization is very vibrant which leads to each person Contributing his/her maximum towards the growth.
- The acquisition and subsequent integration of ECU Line has enabled us to derive very significant synergies, and to transform into a global player.
In three to four years, we want to further consolidate our leadership position in the businesses where we are the top player and constantly move towards market and thought leadership in the businesses where we aren’t at the top yet.
How the acquisition of Belgium based ECU Hold NV has added new muscles to the company? To expand further in the business, are more acquisitions are on company’s radar as the industry enters its consolidation phase in the domestic and international market place?
The acquisition of ECU Hold NV has definitely expanded our reach, both in geographical and business terms. Since our acquisition, the profitability of ECU has increased consistently giving us great returns on our investment financially. At the same time, it has helped us bring a global quality to all of our businesses at par with the rest of the world. We have leveraged this strategic advantage very well which is evident from the growth we have been able to achieve.
It has also given us a lot of confidence and has brought about a change of mindset in the industry in general that Indian companies in our industry can be competitive at the global level as well.
We are continuously evaluating potential acquisition opportunities, both domestic and international, which make sense for the business and can add synergy to our existing operations.
We understand that the Allcargo Global is also in the business of leasing and renting equipment. What is its present inventory of equipment? How the company would like to address its leasing and renting business afresh in the present environment when buying equipment through upfront payment has become difficult?
Allcargo Global Product mix comprises of a wide range of equipment which are periodically tested and maintained at our state-of-the-art OSHAS 18001 certified Engineering and R&D Centre at Panvel:
In the current market scenario, buying equipment upfront has become difficult, we see a unique opportunity in this with most end users not being inclined to buy their own cranes but instead looking at companies like Allcargo Global to provide a cost effective solution through rental and leasing. Allcargo Global by virtue of its volumes and high utilization can bring economies of scale and pass on the benefit to its customers. Going forward, we would be looking at adding on to our fleet through a mix of equipment acquisition of our own and buying on lease from across the globe to keep our cost per unit down and utilization rates high.
Equipment deficit at logistics providers end has been a problem, due to which to some extend a number of important projects have been delayed. In the wake of this, it is quite heartening that Allcargo Global could successfully arrange to deliver DMRC’s coaches consignment. How the company could script this successful story by providing end-to-end logistics support to such a heavy consignment weighing over 45 tonesfrom IGIA to DMRC site? What are the similar assignments at handfor other organizations in the country?
The assignment included Rolling Off the Metro Rail Cars from AN 124 Aircraft at Delhi Airport, Loading on to Trailers, Transportation through a Specially Designed Hydraulic Trailer from Airport to Khyber Pass Depot, Unloading on to Rail Track of Delhi Metro. The Car was 22 Metres Long and weighed 42 Tons each.
The job was completed safely in a record time which was appreciated by DMRC, Bombardier and the industry.
The project has now commenced by delivering the first 2 Cars out of the 424 Cars using a new technology designed by our projects team. The salient feature of the project has been the deputation of one of our engineers to Germany for Training on Roll On and Roll Off and he also accompanied the metro car in the Aircraft from Germany to Delhi.
The job was done through meticulous planning, practicing all safety norms and through great team work.
Apart from providing a wide range of specialized logistic services, the company has also forayed into warehousing and ICDs. What are the plans to have a Pan India network of warehouses in the country?
The company is setting up warehouses across the country which will be customized to handle multiproducts. The warehouses are being set up at Goa, Hosur, Indore, Nagpur, Pune and Hyderabad. All this would ensure that Allcargo Global is able to offer a wide range of logistics services to its clients. We have initiated the process by acquiring a warehouse at Bhiwandi. All our warehouse would be state of the art facilities, PEB structures with the highest standard of hygiene, safety and security, and providing value added services like repacking, labeling, security tagging etc. as per requirements.
What are future plans to expand across your all verticalsin the next four-five years? With recent relaxations in 100 percent FDI in logistics sector in India, what kind of competition you foreseein the near futurewith global logistics players flexing their muscle to enter in logistics business in India?
We are looking at expanding our CFS ICD business across the country. Besides, with investments in warehousing, we would create a full logistics services portfolio. However, the pace of such development will be driven by a constant review of prevailing economic scenario. We are quality leaders in the business and are ourselves a multinational company with experience of doing business in over 60 countries through our own offices and hence we do not see any threat with 100% FDI."
NBMCW May 2009
