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Although the concept of project logistics hasn’t really taken off, some industry players feel that the growth in the infrastructure sector will boost the development of this market in India. Anil Mathew investigates.

Until a few years back, the project logistics market hardly saw any action but the picture is rapidly changing now. With the growing number of infrastructure projects, increasing role of tertiary sector, commercialisation, globalisation and opening of the economy, this market has now started to grow slowly but steadily in India.

In the last five years alone, the demand for project logistics service providers in India has grown by nearly 40%. This is mainly due to global companies shifting their manufacturing base to India. Also, availability of skilled and quality resources, including engineers for designing and fabrications, has assisted the growth of this sector.

Even though in the present scenario it is not easy to assess the growth rate of project logistics market in India, there are educated guesses that the market could be growing at 7%.

Going by the increasing number of infrastructure projects happening in India the project logistics industry is set to grow by leaps and bounds in the days to come.

“Project logistics in India has a very crucial role to play and it is on the upward growth path. This is very evident in the number of projects that are currently in the pipeline.

As the GDP is back in upward mode together with a huge demand in infrastructure development to keep pace with our economical and industrial growth, I believe there is an immense growth opportunity for professional project logistics companies.

Also, project logistics players may have a responsible role to play in the project implementations,” says, Pavithran M Kallada, MD, Unique Global Logistics Pvt Ltd. “India offers a huge market for project logistics.

The main factors driving this is our global competitiveness, high-end technology, availability of skilled labours, adherence to quality specifications and most importantly, the stable Indian geo-political system,” he adds.

Expressing a similar point of view, Lars Sorensen, regional manager of Maersk Logistics/Damco South Asia, says: “In India, the government’s focus on large infrastructural projects and industrial growth has resulted in increased demand for project logistics in the recent years.

We are also witnessing key Indian companies winning and implementing large turnkey projects abroad. Due to these trends, India is quickly emerging as a key growth market for project logistics solutions.”

One of the main reasons why project logistics hasn’t really taken off in India is the lack of awareness about the role of project logistics players in the successful execution of an infrastructure project.

As M Murali, director general, National Highways Builders Federation (NHBF), rightly says: “Compared with the more high-profile and consumer driven express freight business, the project logistics segment, a part of the logistics industry, is not often seen or understood.”

The general feeling with the infrastructure project players is project logistics is something that deals with the transportation of massive pipes, reactors and other structures to often inaccessible parts of a region.

However, project logistics is something more than the transportation of sensitive materials or critical equipment from one place to another.

Kallada explains: “Project logistics players have a very sensitive role to play and this definitely is not limited to transportation alone. Cargo transportation is just one variable in the whole logistics value chain.

Project logistics involves a range of diverse activities that needs to be coordinated simultaneously.

The whole gamut includes project execution planning, pre-survey on transport routes, identifying the right transport equipment, which include vessels, aircraft and the vehicles, documentations scrutiny, load and discharge supervision, route escort arrangements, journey management planning, port handling, vessel loading, and cargo lashing and insurance.”

Marcel Hungerbuehler, CEO, Bengaluru International Airport Ltd (BIAL) agrees. He says: “Project logistics involves planning and transportation of materials that are usually oversized or huge dimension cargo for setting up mega infrastructure like power plants, steel mills, airports, automobile industry, etc.”

Project logistics includes co-ordination of all logistical support for sourcing of large size machineries/components from different parts of the world, its ocean/air/land movements, document clearances etc and is a critical factor to the successful implementation of projects.

Purchase order management and logistics expedition play a key role in timely delivery of project equipment, when there are multiple location procurements.

Usually a project logistics player offers services such as logistics feasibility studies, heavy lift shipping and charting by sea and air on door-to-door basis, port handling, transport management, packing and crating, and project site thorough management, including inventory control and procurement monitoring. However, the services offered vary from player to player.

MA Abid Ruhi, project manager, Maharashtra Airport Development Co Ltd (MADC), says: “Project logistics is the most effective method of value addition to the projects. With the help of project logistics, surplus products from one area can be taken to a deficit area, which is advantageous to both the producer and the consumer.

Many companies are having project logistics in rail and road sector and also for air cargo. With the sales tax being replaced by value added tax (VAT), project logistics is witnessing a boom in India.” MADC is currently developing the existing Nagpur airport as the ‘Multi-modal International Passenger and Cargo Hub Airport at Nagpur’ (MIHAN) Project.

Even if sometimes when the role of projects logistics is limited to transporting of sensitive equipment required for infrastructure projects, it is an important role as timely delivery of equipment in safe manner is very vital for the project completion.

It requires a professional handling with safe practises, failing in which the project may delay. Besides, the phase wise completion of schedules of any dynamic project can only be achieved by timely cargo deliveries, which can otherwise jeopardise all the planning and timelines slated for it.

Pointing to the importance of project logistics players’ role, Kallada says: “Project logistics is the key to any successful project execution, as untimely deliveries upset the project schedule leaving all the pre-arranged manpower and equipment on ground idle. This in turn delays the overall project completion resulting in higher manpower cost and rentals.”

Sorensen underlines the importance of logistical support for infrastructure projects. He says: “Project logistics involves co-ordination of all logistical support for sourcing of large size machineries/components from different parts of the world, its ocean/air/land movements, document clearances etc and is a critical factor to the successful implementation of projects.”

Sorensen also emphasises that project logistics is a specialised service that that requires meeting time-bound and unique demands.

He explains: “The products and services for project logistics are generally non-standardised and complicated in nature, with each project having its own challenges and requirements.

This means the solutions that are offered in project logistics are unique and tailor made for a specific project. This requires specialised skills and also experience and knowledge of handling the various procedures and operational challenges of the project.

For example, to handle out of gauge cargo one needs large trucks and special cranes and other similar tools. It may require break bulk ships and other carriers, which can transport the cargo across ocean, air etc.

Also, such projects involve a lot of specific documentation and other procedural formalities, which are different from other shipments. All such complexities make project logistics a skill and knowledge based service which needs careful planning and specialised capabilities.” he explains.

When Construction Week (India) contacted the National Highways Authority of India (NHAI) to understand the role of project logistics in the Golden Quadrilateral project and vice versa, we couldn’t get a formal statement.

However, a source within the NHAI pointed out that unlike in the Western countries, where project logistics play a vital role in the execution of projects, in India the concept of project logistics hasn’t yet gathered enough storm.

“We usually invite tenders from engineering and construction companies and it is they who carry out the projects. Hence, we are not that clear about the role of project logistics in India in the timely and successful execution of projects,” he said.

The high cost factor related to project logistics is also a huge deterrent. Referring to this, Hungerbuehler of BIAL says: “In India, the project logistics market is relatively small, as the cost of air cargo is very high and projects that have a demand for air cargo (mainly due to the paucity of time) are few and far between.

Due to the relatively small demand for project logistics in the country, there are very few project logistics operators in the country like NMT Projects, Associated Container Terminal Ltd (ACTL) and Kaushik Logistics.”

Nevertheless, Narendra Goswami, MD, Aqua Specialised Transport Pvt Ltd, is quite optimistic. He says: “Indeed, there is a vital role that project logistics has to play in India looking at the development of infrastructure throughout the country including the several projects across the power, energy, petrochemicals, and oil & gas sectors, which are in the offing.”

Moreover, logistics hubs like Multi-model International Hub Airport at Nagpur (MIHAN), which has road, rail and air components, and call for logistics parks are expected to turn the corner in favour of project logistics in the country in the future.

M Murali of NHBF too is quite confident as he draws attention to the reforms in government policy and pro-infrastructure initiatives like flexible policies on private participation in road, rail, air and port and other infrastructure areas are driving force for the growth in logistics.

“Besides, the government plans to invest US$44 billion in improving infrastructure across roads, ports railways and air transport by the financial year 2012. The increase in government spending on infrastructure will lead to an increase in efficiency and catalyse the growth of project logistics in the country,” he says signing off on a positive note.

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