Logistics Indiagetting goods to the market

Bicci logistics seminar, May 12 2009

Our worldwide network

• Worldwide• 92 offices

• Neighbouring countries

• Southern Europe

• Northern Europe

• Eastern Europe

• NAFTA

• Central and South America

• China

• South East Asia

• Middle East/Africa

• Pacific

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Personnel

• Staff members– Flanders: 181 FTE– Foreign: 196 FTE– Total: 377 FTE

– Overseas network– FLERs: 72– Trade Commissioners: 15– Number of foreign offices: 75– Interregional co-operation agreement: 17 additional posts

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FIT team in India: 15

Marc Schiltz

Marc Schiltz

Ralph Moreau (tech

attaché)

Tom Vermeulen

Jayant Nadiger

India: The final frontier?

• A continent, not a country• Rapid growth• Large and young population• Consumer hungry

• Challenge: getting the goods to the consumer...

•

Fragmentation of retail

12m retailers (95%<50m2) 21.000.000 jobs

New players: Reliance, Bharti, Pantaloon, ...

Opportunities

• AT Kearney: India 2nd most attractive retail development market (2008 global retail dev. index)

1. Vietnam

2. India

3. Russia

4. China

5. Egypt

• Local retailers are realising the opportunity

• Foreign retailers setting up with innovative schemes: metro, wall mart...

• Result: sourcing by big new retailers ongoing

• Cold chain set up• Professional business models• Privatised airports

locations

•

Malls 2007

•Delhi 30%

•Mumbai 27%

•Hyderabad 7%

•Bangalore 5%

•Pune 5%

•Others 26%

Source: piramyd

Terrain and culture: diverse

• Great distances• 3rd largest mountain range in

the world• 7th largest desert range• Tough climate: extreme cold to

extreme heat, extreme dry to extreme wet.

• 22 different language groups• Multi culture/religious: over

100 regional and national holidays/year

• One market?

Logistics hampered by administrative divisions

• States: 28+7=35• Districts: 603• Municipalities: 5.000• Borders between states due to

different taxations• Result:

– no single market

– financial and administrative burden.

– cues at borders

– costly delays.

Why the fragmentation?

• Historic• Political• Fiscal

Infrastructure

• Roads: – 3.3m km. 70% of all cargo

– Issues: 2% network (NH’s) carries 40% of all cargo: congestion, quality trucks, quality roads

• Rail: – 82.000 km. 30% of all cargo

– Issues: congestion, high freight tarrifs, inconsistent transit times

• Air: – 450 airports of which 11

international. 5% overseas cargo

– Issues: congestion, deficiency in infrastructure

• Sea: – 12 major, 187 minor ports. 95%

overseas cargo

– Issues: capacity, productivity, efficiency

• Key issue: demand first, supply later...

Bottlenecks...

Cost of logistics Source: Reliance

Parameters US China India

Logistics Cost as % of final product 8% 10% 20%

Logistics Contribution as % of GDP 10% 21% 14%

Tips:

• Sell ex works, FOB? Let others worry!

• Work with logistics providers that have local presence

• Take timelags into account• Sturdy packaging• Reefers!• Constant follow-up• Pricing...

Peter.verplancken@fitagency.be