Indians must have thought once, in abroad domestic passenger air tickets are less costly, what would be the reason?

Well Indian aviation policy 2016 also recognized that domestic and international air freight or air cargo and express logistics would be helpful to reduce or subsidize the passenger air fare.

Following are the few facts of Huge Upcoming Air Cargo Scopes :

• Air cargo, particularly domestic has a high employment potential, especially for semi-skilled workers.
• Air cargo ecosystem, Express Delivery Services is becoming pivotal especially in the light of double digit growth in e-commerce.
• E-commerce companies are expected to invest close to $6-8 billion in logistics.
• The e-commerce sector has been witnessing consolidation, which in turn would open up opportunities for the express market.
• Around 10 per cent of the shipments carried by some of the express companies are B to C shipments. There are also companies who works only in carrying B to C shipments.
• Introduction of a product with cost and transit times between current air and surface products.
• Induction of multiple aircraft’s with 100 per cent capacity utilization, streamlining the last mile costs to B2C benchmark levels.
• The consolidation in the e-commerce sector and with internet penetration expected to nearly double in the next four years.

Innovations are very important in this sector, as the demand is always for more reach and faster shipping at lower costs. The companies will need to invest in automation, while utilizing existing resources well.

Some of the new initiatives should be taken by air express operators :

Currently, air cargo volumes in India are very low as compared to other leading countries due to high charges and high turnaround time.

• Parcel lockers
• On-the-Move (OTMs)
• Handheld devices
• Mobile point of sales (MPOS) solution
• Cash on Delivery (COD)
• Reverse logistics with various value-adds such as ‘open’ and ‘cash return’
• Preferred time of delivery
• Provision of track and trace
• Easy surface connectivity to the air-ports
• World-class cargo transit hubs

Presently, there is a very low level of air cargo penetration characterized by only a few airports equipped to handle large volumes of express delivery parcels. As the e-commerce gathers momentum and moves to the several less populated cities like tier 2 and tier 3, there will be increasing demand of expanding air cargo connectivity to smaller towns. The industry would invest in about $8 billion by 2025.

India set a benchmark in providing the lower cost services irrespective of any specific field still India has higher logistics cost due to various issues and challenges faced by the industry. India is involved in complex tax structure, the industry is also affected by poor rate of customs efficiency of clearance processes and procedures thus affecting the international export logistics stratum. however, insignificant comfort provided by the existing Indian infrastructure combined with lack of implementation of efficient IT-enabled tracking and tracing operation has saturated the efficiency of logistics and transportation.

The proposed goods and services tax (GST) will help companies reduce logistics cost by 1.5 to 2.5% as they reconfigure their supply chains and bring in three key structural changes to the logistics industry. First, as India becomes one big market, there will be fewer and larger warehouses. Second, it will lead to a larger number of bigger trucks on road as there is greater adoption of the hub-and-spoke model. Third, these changes will lead to greater economies of scale for transport operators and lead to more companies outsourcing their logistics operations.

Eliminating delays at check posts will yield an additional savings of 0.4-0.8% of sales. These cost savings are, however, more likely to be gradual and back ended, as corporate will have to realign their supply chain while ensuring minimum business disruption, it added. The impact of GST in logistics is going to be dramatic and revolutionary.

Interstate tax burden Currently, each of India’s 29 states taxes goods that move across their borders at different rates apart from that Corporate state tax of 2% is imposed for inter-state goods transfer. Not applicable. Uniform taxation and no varying tax structures would be allowed across states.

Currently, there are around 20-30 warehouses per company, one in every state, in addition to this 20-30 Carry & Forwarding agent per state making the supply chain longer and inefficient. GST tax will be imposed on transportation of goods and full credit will be available on interstate transactions.

Logistic costs are expected to be decreased by 1.5- 2.00% of sales on account of optimization of warehouses leading to lower inventory costs which are set up across states to avoid paying 2% corporate sales tax and phasing out of interstate sales tax. There is immense scope for optimization of costs.

How technology will play its role :

The planned GST system seeks to replace multiple taxes and tariffs for a single tax at the point of sale. GST will unleash a new era of developing logistics infrastructure and take investments to the next level. The regulatory reforms proposed in the GST presents an opportunity to re-engineer logistics and transportation networks. Current inefficient and longer supply chains with warehouses in almost every state will now change based on delivery and cost efficiency. GST, when implemented, will free the decisions on warehousing and distribution from tax considerations and here the technology will play its role in the following cases –

• East tracking of consignments.
• Managing complete Hub and spoke model.
• Centralized accounting.
• Outsource the logistics operations.

This will result in more efficient cross-state transportation with improvement in transit time. Reformation of paperwork for road transporters Cost efficiency to optimum use of assets. This will lead to changes in Logistics Network Redefinition. Logistics service providers to rethink their business operations.

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Omni literally means ‘all’ which would be told other way multiple. Multiple-channel logistics is highly related with the retailing. Its an experience of shopping focusing on customer’s comfort including analysis before purchase.

Traditional distribution process and line-up which were built around consumers of earlier time, people who used to shop almost exclusively at store and shopping malls and for them online delivery in 3-4 days would have been expected but new age shopping experience is being changed. People who will shop more online especially on mobile-phone and expect same day delivery or click and collect within an hour.

Below factors of supply chain, which can full-fill the promise of omni-channel logistics model profitably.

• Online ordering and in-store pickup
• Product availability in stores for online order fulfillment
• Integration of low-cost, last-mile delivery options
• Inventory positioning
• Retail store as a warehouse
• Returns processing
• Short-term inventory re balancing

1. Omni-channel logistics :

The Omni-channel consumer wants to use all channels simultaneously and retailers using an Omni-channel approach must track customer behavior across all these channels. In the Omni-channel retail model, customers demand a seamless shopping experience where they can order-from-anywhere, requiring retailers to adopt a ‘fulfill from-anywhere’ model.

2. Impact on Distribution :

But integrating the various points of purchase is only half the battle. To successfully execute omni-channel marketing, retailers need to integrate their distribution methods as well. With more consumers expecting a seamless experience, retail success today requires one system for offering online order processing and delivering customer orders, online pick-up location as well as tracking buying patterns.

In e-commerce-oriented distribution centers, products are picked from warehouse shelves at the direction of distribution workers. Those workers may also determine the best size of the box for shipping a multiple-item order and which packing materials are needed. If the customer has ordered gift-wrapping, distribution workers handle that, too.

Combining the two types of distribution strategies into one requires a new type of product and not only in terms of size.

The real core—and challenge—of Omni-channel is about the fulfilment. What happens behinds the scenes, the consequences of decisions and precision (or not) in execution become delightfully or painfully aware to the customer.

The end consumer is changing, too. Today, they are more interested in understanding the game of supply chain. They want fulfilment their way. They want to understand the source market—where it was made, the labour and other practices of the manufacturer, and so on.

3. Fulfillment/Logistics :

Shop online, pickup in store (click-and-collect)—  If the customer chooses pickup in store, that might be coming from the retailer’s own stock. But what if that is being shipped by the supplier? What if then the customer decides they don’t want the product? If it is not a standard stock item in the store, who owns that product now—the retailer or the supplier? Is this now a return and shipped back to the supplier? One system logistics technology can resolve everything in one click.

Customize and deliver—Consumers often visit a store to configure or design their personal version of a product. The level of these orders coming through e-commerce channels has significantly increased. Although the retailer may be the sales channel, the question becomes who executes the logistics and services associated with the order. This exposes a fundamental question of the supplier/retailer relationship and their traditional roles. Technology has been shaped in a mobile-device now to build such relationship between supplier and retailer. 

More frequent orders—Suppliers may have to ship from warehouse to the store more frequently and and frequent orders may be small in amount. Thus suppliers may need more stock in ‘sales ready’ inventory. This may change their pick/pack/shipping operations or warehouse design to support consumer-oriented orders. This sort of inventory projection, accounting should be automated and technological help is the best way to figure it out.

Then there’s a huge opportunity for having a much broader selection Omni-channel, speed of delivery, selection, those are the opportunities today. And unfortunately, retailers need to work on several of those. They can’t just do one of those well because there are different perspectives and they need to make sure they really do well on all of those.

CIO-review-magazine-2015-top-promising-company.

CIO- presented-June 2016 – focusing on Logistics & Transportation Technology.

Reference : http://goo.gl/3sI0k3 page no. 19