Transcript Emirates Route Network 2006

Ram C Menen
Divisional Senior Vice President Cargo
Emirates
Mumbai
17th November 2006
Source: Boeing WACF 2006/07
For India, the time is right and
the environment is right!
Current Scenario
India’s strengths are language and highly
advanced and skilled pool of labor force
India current split in activity:
Manufacturing 20% (China : 50%)
Services
80% (China : 30%)
Government’s priority is to develop the
manufacturing sector.
Current Scenario
Current population split is 30% urban and
70% rural
Urban population is ideally suited for the
services sector, rural population is perfect
for manufacturing.
Over 30% of in the population is middle
class – India is a retailers dream.
Current Scenario
Value of exports:
1995 : US$ 31 billion
2005 : US$ 57 billion
India’s FDI is only 1% of the total GDP
[about US$5 billion].
Challenges
Cultural: Some of India’s old traditions can slow and
impedes growth. However, the good news is that the
younger generation is breaking through the barriers
led by being on the receiving end of
outsource in the
services sector.
Unlike China, India has not had the benefit of political
continuity which has resulted in greater bureaucracy
and slow decision making process.
This has led to
less confidence and lower FDI than China.
India’s FDI
is only 1% of the total GDP [about US$5 billion]
The good news is that the new approach of the
government is inclusionary and consensual.
Golden Quadrilateral Project
Source: wikipedia.org
Road Network
Inputs on the road project – National highway
authority of India ( NHAI ).
NHDP - NATIONAL HIGHWAY DEVELOPMENT
PROGRAMME has 7 phases in all.
1 & 2 PHASE : NORTH - SOUTH Corridor and EAST WEST Corridor will be 100% complete by 2007.
PHASE 3 : 9 Projects of 10,000 kms of 4 lane traffic.
PHASE 4 : 20 Projects of 1,000 kms of 2 lane
expressways.
PHASE 5 : of 1,000 kms of expressways.
PHASE 6 : of 5,800 kms of Golden Quadrilateral of 6 lanes.
What’s wrong with this plan??
It will not even meet today’s
needs !!
India needs highways with six
lanes on each direction , i.e. 12
lane roads.
Rail
The new dedicated freight corridor
(DFC) for rail freight is a good
start. However, this only connects
the cosmopolitan points (slide) and
not very efficient for transportation
of air cargo as it adds on more
processes which will add to the
overall costs.
Direct (Rail) Freight Corridor
Today, because of the lack of proper
distribution capability, Indian imports are
better served via hubs in Dubai and
Singapore, reaching the internal industrial
areas directly from these hub. e.g. it is
quite difficult to distribute from the current
airports like Bombay to Bangalore or
Hyderabad
…
cumbersome
transit
procedure as well as time taken to truck
between any two points in India.
Mindset must change and bureaucracy must end!!
Trucks are the best regional
freighters.
Flying domestically is expensive
because of higher costs .. viz.
cost of fuel etc.
Trucking in India & Europe
Freighter
Pax & Freighter
Trucking
Offline
EK Online
How efficient is the supply line
within your supply chain?
Air cargo is used as a planned tool in
today’s supply chain management.
Time is a very critical part of any
business decision and the higher cost of
airfreight adds economies to the over all
supply chain.
Growth in air freight is roughly twice
the growth in the GDP of a country. At
the current GDP growth of 8-10% air
cargo should be growing at 16-20%. If
facilities are not provided to cater to
this growth, India’s economic growth
will be stunted.
J-I-T Assembly Line
Ground infrastructure is critical to
developing air logistics activity. Proper
investment in air side facilities as well
as a proper road infrastructure is very
essential
to
create
a
seamless
distribution network. China is an ideal
model to follow where the infrastructure
was built before the opening up the
market for growth.
Creating an air cargo hub in Nagpur is
a great idea. Along side this, there has
got to be an industrial development
which
in
itself
will
create
origin/destination traffic. Ideally a
major free trade zone is a good
catalyst. It will be a greenfield
development, hence, can be developed
quite quickly.
Multi-modal Int’l Hub Airport at Nagpur
[MIHAN]
Manufacturing and assembly plants
Special economic zone
World class health city
IT park
MRO and training facilities
Attractive fiscal and tax incentives
with friendly labour laws
DC3s transported mail and Nagpur
was a mail hub!!
The house of Tata’s was always closely associated with
Nagpur by way of Empress Mills (one of the first
business ventures by Tatas, established 1877).
The association also goes back to early Air India days
(Tata Airlines) when:
in 1935, February 25, Tata Sons made a trial flight
Bombay / Nagpur / Jamshedpur / Kolkata with Fox
Moth VT- ADZ (pilot Mr. Nevill Vincent).
scheduled services started only in 1945, April 16th
when Tata Airlines began twice weekly Bombay /
Nagpur / Kolkata service with DC-3s.
A New Era Is Dawning On Us !!
India has now opened up its skies,
however,
it
infrastructure
has
at
not
airports
invested
and
in
cargo
areas. Unless the task force created by
the Civil Aviation Ministry
moves in a
fast-forward mode, it will always be in a
catch up mode. This is less than ideal
environment for developing freight.
Interim Solution
Use Dubai & Singapore as a Hub
The air logistics in India will now
have to transition from traditional
forwarding to that of supply chain
management. Multinationals are
going to change the scene in the
logistics industry.
India has now got the chance
to leapfrog technology. It
should refrain from recreating
the past and focus on creating
a new future.
Thank You !
Future
BRIC : Brazil, Russia, India and China,
in the next 50 years are expected to
be the largest economic force.
BRIC economy will be larger than the
G6 in the next 40 years and will create
the largest consumer markets in the
world.
India is the world’s largest diamond
exporter.
Nearly 7 out of 10 diamonds
in the world are cut
and polished here
(Surat).
Other commodities: Chemicals,
pharmaceuticals, auto parts, textiles, IT,
biotechnology and now also microchips
and semiconductors.
MA = Materials Administration
Coordination
Purchase
Supplier
Customer
Production
MARKETIN
G
Distribution
Manufacture
Warehouse
Warehouse
India – Emerging Market
India is becoming an integral part of the
global pharmaceuticals value chain in a
simulated environment.
Clinical trials accelerating – 30-40% lower
cost compared to US/Europe
Indian government stimulating the
development With tax and customs
incentives.
Multinationals cooperating with Indian
companies
“Efficient Inventory Control
Is Very Critical To Attaining
Cost Efficiency In The
Supply-Chain”
Transportation modes can be
leveraged to attain cost
efficiency at market entry level
Air
Sea-Air
Sea
TIME
In this millennium TIME has integrated
with the other three dimensions. Time is
now firmly the 4th dimension.
Time as a dimension results in lack of
shape or form, i.e. results in fluidity.
The state of fluidity can be seen in
inventory and resource management.
SERVICE vs MARKET DEMAND
+
Airline
0
SERVICE
Integrators
DEMAND
+
Emirates Route Network 2006
ECONOMIES OF SCOPE
"Leverage economies
of scope by leveraging
available economies
of scale’’
“India is at the right time and
at the right place. It must,
now, move in a fast-forward
mode to take advantage of
the opportunities.”
Emirates Route Network 2006
Change in Mind Set!!
Nagpur slide ..
Slides from Alston
SPEED
Paper-free Era & e-Freight
How efficient is your
transportation?
Biggest Challenge!!!???
US$100
A barrel?
VALUE CHAIN–TOTAL SOLUTION
ORIGIN
Custo
mer
Airline
Service
Provider
Door Pick-up
Insurance
Packaging
Custom Clearance
Warehousing
Inventory Management
Brokerage
DESTINATION
Custo
mer
Airline
Service
Provider
Door Delivery
Insurance
Packaging
Custom Clearance
Warehousing
Inventory Management
Brokerage
Providing total solution to the customer
through commercial alliances with various
service providers
Forecasted Oil Prices
76
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72
65
70
USD/BBL
72
71
65
70
70
55
60
44
50
40
30
74
31
26 26
22
20
10
0
25 yrs
avg
(19762000)
2002
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Sept'05
2006
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