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‘Logistics industry better equipped to weather macroeconomic headwinds’

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Switzerland-based Kuehne+Nagel, one of the leading logistics providers in the world with more than 80,000 employees at over 1,300 sites in over 100 countries, is celebrating 25 years of its presence in India.

In an e-mail interaction with businessline, the company’s Managing Director for India, Sri Lanka & Maldives, Coen Van Der Maarel, shared his views and insights on the forces shaping the industry and Kuehne+Nagel’s India plans. Excerpts:

The logistics sector has been making a steady recovery over the past year or so. But with a possible global recession, is that recovery under threat?

The pandemic had shaken supply chains and, on a broader scale, the growth of the economy and employment opportunities. However, immediately after the lockdown was eased and ports started to operate, it became evident that having sophisticated technology is both a survival tool and a competitive advantage.

The logistics industry as a whole is now better equipped at sustaining the macroeconomic changes of various geographies, despite the slowing of global economic activity.

Businesses are taking advantage of market fluctuation to reduce the risk of unanticipated supply chain disruptions and to remain competitive. In such a situation, organisations can thrive if they take measures such as encouraging AI skills to save expensive hands-on staff time for daily operations and investing in infrastructure automation.

Apart from the recession, what are the opportunities and challenges that the supply chain and logistics industry is faced with?

There are many opportunities and challenges. For one, the logistics and shipping industries are no longer dominated by men. Many organisations prioritise diversity and inclusion when hiring.

Two, businesses have felt a strong need for incorporating technology to increase their operational efficiency. Technology such as blockchain, IoT, Big Data and Cloud are helping companies to bring real-time integrated service for a seamless customer experience. Also, other time-intensive tasks, including payments, document transfers, and processes, have become instantaneous, bringing down the overall logistics costs.

Three, the  logistics sector will play a key role in achieving SDG 2030. Logistical processes can generate various wastes, in addition to using transport emitting CO2 in large quantities. Sustainable logistics seeks ways to reduce these impacts, adding new ways of working that take this objective into account. This includes the adoption of electric vehicles and reuse packaging, and investing in waste recycling for reducing carbon emission through sustainable aviation fuel for air fleets and biofuels for sea freight.

As for challenges, the majority of businesses lag in implementing technology at the operational level. Furthermore, due to the high cost of logistics technology, only large organisations are able to afford it. Also, customers expect their logistics partners to assist them in resolving issues and advancing in a competitive market throughout the shipping and delivery process.

They would like to have the option of expedited freight, such as two-day or same-day delivery. To respond to changing customer needs and deliver top-notch services, logistics companies need to have systems and procedures in place.

You are also a big player in the healthcare logistics sector. How was it being in the thick of things as the world grappled with Covid, shortage of medical supplies and challenges in moving vaccines?

Kuehne+Nagel Healthcare is the leading 3PL for the Healthcare industry (pharma, bio pharma/ vaccines, med device/tech, diagnostics & testing, animal health and consumer healthcare).

Prior to the pandemic, we developed a growth plan that had us expanding from 123 to over 230+ GxP (good practice)-compliant operations and expanding our vertical-focussed employees. This growth plan helped us to react quickly to the requests and needs of our customers during the pandemic.

While the world was disrupted, we were able to maintain service for all of our existing healthcare customers leveraging our network. We moved over 3 billion-plus doses to all parts of the world. We were able to leverage our network and we delivered to many developing markets that others could not.

During times of disruption in a regulated industry, customers tend to look to reduce risk and look for services that can deliver on their quality requirements. Most importantly, we were as transparent as possible on the logistics disruptions. We communicated and worked on alternatives and solutions to ensure delivery…not always easy, but it was our role to do our part.

Will we see a situation where technology will lead to the commoditisation of the services?

Technology is a significant force that is altering the dynamics of the industry. We’ve seen businesses making significant investments in supply chain information systems such as point-of-sale software (to gather consumer demand data) and applications such as AI/ML/Data Analysis (to gain visibility into upstream product movement) to satisfy customer demands.
In a Supply Chain 4.0 world, smart factories are predicted, which will use technology like real-time analytics, automation and other similar concepts to make the process easier and the outcomes more cost-efficient. Companies will be able to complete tasks quickly and maximise business potential by integrating AI and machine learning. Excellent data accuracy and value-added services are being provided by the technological integration of business processes, which is translating into rich customer experiences. We continue to invest in technology such as Big Data and predictive analytics. The commoditisation of services is not something we foresee shortly. The adoption of technologies by market participants is becoming more important as they strive to provide the best possible customer service while boosting operational effectiveness and cutting costs

How has been your India journey so far? Any learnings and insights that stand out?

We operate in sea logistics, air logistics, road logistics and contract logistics, with a clear focus on integrated logistics solutions. The company has grown from a traditional forwarder with air freight and sea freight operations to an end-to-end logistics provider, where we aim at having solutions for specific industries.

We started operations in India in 1997, and were awarded the best sea logistics provider in 2004. In 2012, we became GxP-compliant, which is extremely important to perform pharma operations. The certification enabled us to start operations for our international customers.

In 2018 and 2019, we inaugurated our two new logistics centres in Mumbai and Delhi for warehouse and distribution services. The year 2022 marks some extremely important milestones, as we were awarded the Best Freight Forwarder in India by the Government.

In the future, we will expand our footprint to second and third tier cities where we want to make sure that we ensure customer proximity to not only large companies but also many SMEs and start-ups.

In India, we have started to do our bit to ensure we are well aligned with the global initiatives. Launching of electric vehicles for our short-haul transfers across major cities has been one such achievement. Sustainable Aviation Fuel (SAF) plays a vital role in achieving a transition to net-zero flying and achieving emission reduction goals across the aviation industry.

Apart from securing 21 million litres of SAF, Kuehne+Nagel recently became the first air logistics provider to offer customers the option to purchase SAF for all air freight logistics services, across all its platforms and channels — online or offline.

The maritime industry is also pushing towards using alternative cleaner fuels to reduce carbon emissions as much as possible. Kuehne+Nagel’s biofuel concept enables customers to immediately ship their goods carbon neutral.

Following the same principle as in air freight where we offer SAF as an alternative fuel, Kuehne+Nagel offers the Mass-Balance-Concept allowing allocation of fully traceable biofuel contingents to cargo shipped on a regular fuel vessel.

Published on October 28, 2022





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