transreporter

A Monthly Diet For Global Logistics Industry

VOL IV ISSUE X AUGUST 2010 ` 30, US$ 2, EUR 1.40, GBP 1.20, CAD 2.2

COVER STORY

FOCUS

INSIGHT

PAGE 24

PAGE 16

CONTENTAccenture has selected 12 newdisruptive energy alternatives thathave the potential to replace majorportions of today's hydrocarbon fuelswhile simultaneously reducing GHGemissions

A Parliamentary Standing Committeefor transport points out many faultyprovisions of the proposed NationalRoad Safety and Traffic ManagementBoard Bill, 2010 and recommendswithdrawal of the Bill

Of all the internal executivecandidates, the Chief Operating Officer(COO) is most often considered to bethe CEO-in-training

PAGE 32

Road safety to remain in limbo

Do you have CEO succession plan?

Evolutionary, revolutionary, and game changer

EDITOR’S NOTE

India registers the highest number of road deaths across theglobe. Nearly 1.05 lakh people die in road accidents inIndia. It is the highest in the world. Even India has overtaken

China's killing fields. The World Health Organization revealed, in its first ever

Global Status Report on Road Safety, that more people die inroad accidents in India than anywhere else in the world,including the more populous China. Globally over 1.2 millionpeople die in road accidents every year and 20-25 millionpeople suffer non-fatal injuries.

The report said that "the 'epidemic' will become the world'sfifth biggest killer by 2030. While rich nations have been ableto lower their death rates, these are sharply on the rise in thethird world. Ninety percent of deaths on the world's roadsoccur in low and middle-income countries (21.5 and 19.5per lakh of population, respectively) though they have just48% of all registered vehicles".

The statistics for India are chilling. At least 13 people dieevery hour in road accidents in the country, the latest report ofthe National Crime Records Bureau reveals. Road deaths inIndia registered a sharp 6.1% rise between 2006 and 2007.However, road safety experts say the real numbers could behigher since many of these accident cases are not evenreported.

In fact, fatalities in road accidents in India are moving upat a compounded annual growth rate of four per cent. But, itseems that India is not in a hurry to curb this menace. Centraland State governments are pushing for construction of morehighways and roads, and are doing precious little to makethem safe. India doesn't have scientific traffic engineeringwhich forms the basis of road safety improvement practised inUS and UK since 1930s. This still remains a matter ofconsultancy in India as it is yet to have own traffic engineeringwings.

India constituted Sundar Committee for suggesting roadsafety measures in 2005. It submitted its report in 2007 andnow a Parliamentary Standing Committee for transport hasfound many loopholes in the proposed National Road Safetyand Traffic Management Bill. With the alarming figure of roadfatalities, India doesn't need another 'White Elephant' in theform of National Road Safety and Traffic Management Boardproposed by the Sundar Committee. Need of the hour is toset up a Central agency which will govern and will beresponsible for the state of affairs in the road safety sector.With the concerned Parliamentary Standing Committeesubmitting its report, the ball is now in the court of the CentralGovernment.

White elephant

D.K. Agarwal, Chairman

EDITORIALEditor :: NNitin AAgarwal

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NEWS

06 TransREporter August 2010

DHL, the world's leading logistics company,announced today the launch of its new direct

Less than Container Load [2] (LCL) service fromNhava Sheva, India to Los Angeles, USA.Operated by Danmar Lines, DHL's in-housecarrier, the new service will facilitate tradebetween India and the USA and offers customersreliable and cost-effective services with a reducedtransit time of 26 days between the two ports.

Container traffic at major ports in India surged21.5 percent inApril comparedwith a yearearlier, drivenby a strongturnaround inthe country'sforeign trade.Nhava Sheva isthe largest portin India andhandles closeto 60% of thet o t a lcontainerized cargo in India. Ranked among thetop 30 ports in the world, Nhava Sheva alonehandled over 4 million TEUs in 2007-2008[3].

"The US is India's 2nd largest export partnerand 3rd largest import partner[4]. The launch ofthis direct LCL route connecting Nhava Sheva toLos Angeles will further facilitate foreign tradebetween the two countries and support thegrowing needs of small and medium enterprises.This service will enhance the strong globalconnectivity offered by DHL's extensive LCLnetwork and will help customers expand andstrengthen their supply chain in the India-USAtrade lane," said Amadou Diallo, Chief ExecutiveOfficer, South Asia Pacific, DHL Global

Forwarding." Christoph Remund, Chief ExecutiveOfficer, DHL Lemuir Logistics Pvt. Ltd., added,"The launch of DHL's new LCL service fromNhava Sheva to Los Angeles is strategicallyplanned in time to meet the growth of foreigntrade amidst the global economic recovery. DHLdedicates substantial resources to continuedeveloping and maintaining highly effectiveservices that include traditional LCL services andmulti-vendor buyers' consolidations for shipments

sourced fromsingle andm u l t i p l ecountries," headded.

"DHL recentlylaunched anL C Lconsol ida t ionweekly servicefrom Cochin toColombo, andwith theintroduction of

this new service, we have further strengthenedour network and ocean freight service offeringsto support the needs of our customers. To offercost-effective and innovative solutions tocustomers, we are constantly looking foropportunities to extend our LCL service offeringswhile contributing to the thriving Indianeconomy," said Sanjay Tejwani, Director -Oceanfreight, DHL Global Forwarding India.

As one of the largest Ocean Freight serviceproviders for Full Container Load (FCL) and Less-than-Container Load (LCL) shipments, DHLcurrently operates the world's largest LCL networkwith close to 2,000,000 cubic meters of LCLfreight handled annually via 45,000 point-pairs.

DHL launches new direct LCL servicefrom Nhava Sheva to Los Angeles

NEWS

August 2010 TransREporter 07

Four Soft (4S) (NSE: "FOURSOFT", BSE:532521), a global leader offering software

solutions for Logistics and Transportation industrytoday released its financial results for the firstquarter of FY 2010-11.

Rajshekhar Roy, Chief Executive Officer,commenting on the results, said: "There are manypositives for us this quarter. As compared toprevious year, where the company's bottom line wasaffected due to adverse market conditions, this hasbeen an encouraging quarter for Four Soft. Theglobal logistics industry, Market dynamics and theenvironment in which our business operates hasimproved significantly, thus contributing to ouroverall growth." He furtheradded, "We attribute thesuccess of this robustpipeline, to our game -changing focus ofimproving processefficiencies, enabling real time delivery capabilities,re-engineering applications, enhancing productivityand improved customer management. Our nearteam goal is to harness sales growth through ourproducts which represent the intellectual capital thatwe have built up over the years. The company isalso targeting to create employment opportunitiesspanning to the entire year."

Biju S.Nair, Chief Financial Officer, said, "Thisquarter embarks us on a journey of growth. Signingnewer accounts is also always a good sign. The realcontributor to the operating profits this quarter canbe attributed to the focused approach the companyhas followed over the 6 quarters, over the past fewmonths the company has progressed into achievingfrequent customer deals and has been able to signsome good contracts. With this new corporatestrategy our near term goal is to maximize ourshareholder value and provide an improved qualityservice to our customers"

PPeerrffoorrmmaannccee IInnddiiccaattoorrssAs the market leader in Freight Forwarding, Four

Soft is supporting 17 of the world's largest 25

Freight Forwarders. Customers are now using FourSoft systems to move more than 20% of GlobalFreight volumes.

The company had lately transformed itself into anew outfit, where it offers IT products and servicesto its customers. Alongside, this transformation, thecompany is expanding its geographical spread andincreasing the product line by offering multiple ITsolutions to meet the customized needs of itsGlobal customers.

As long term growth strategy the company plansto grow to USD 100 Mn by FY 2013. The companywill opt for a unique combination of organic andinorganic growth. At present, the company is on an

organic growth and isinvesting to improve andinclude newer services invarious verticals and salesforce. The expansion focusduring this spree would be

Latin America and Europe. Four Soft is a publiclisted and CMMI level 3 certified company whichprovides innovative software solutions, ITconsultancy and BPO services exclusively for thelogistics and supply-chain management marketplace. It is the market leader in the transportationand logistics segment with a large internationalclient base including the majority of the top logistics& transportation companies in the world. Withregional offices strategically located worldwide, itsupports customers including DHL, Schenker, Agility,UTI and Geodis Wilson. Additional informationabout Four Soft is available at www.four-soft.com.Four Soft offers a full suite of web-native productsacross the logistics supply chain. This includes 4SeTrans® for freight forwarding and logistics, 4SeLog® for extended warehouse management, 4SVisilog® & 4S VisiLog plus® for track & trace,visibility and supply-chain management, 4SeCustoms® for customs brokerage, 4S iShipping®for shipping line execution, 4S eConnect® forbusiness-to-business connectivity and 4S Infotips forinformed decision making.

Four Soft announces Q1 results, net profit jumps 460 pc

Internet solutions for Logistics

NEWS


Transport Corporation ofIndia Ltd., India's leading

integrated supply chain andlogistics solutions provider,today announced itsfinancial results for the Firstquarter ended on June 30th

2010. The Profit After Tax recorded an increaseof 54.30% rising to Rs 12.19 crores from Rs7.90 crores in the same period last year. Thecompany reported a Net Sales of Rs 394.19crore against that of Rs 313.68 crore in thecorresponding quarter last year registering agrowth of 25.67%.

Commenting on the company's performance,D.P Agarwal, Vice Chairman & ManagingDirector, TCI said, "The first quarterly resultshave resulted in a convincing growth driven by astrong domestic demand upturn acrossmanufacturing sector especially Automobile,Engineering and Capital Goods segments. Theholistic growth across divisions can also beattributed to the various operational initiationtaken in the recent past.

He further added, "The first quarter has beenan eventful one for the logistics industry as awhole. The industry saw an increase in freightrates and truck rentals owing to the diesel pricehike. However, there was not much impact onTCI as most of our customers operate on acontractual basis and eventually it gets passedon to them."

TCI's PAT up by54% in Q1

The ShippingMinistry is

planning to set upa port freightcorridor, includinga deeper-draughtport in WestBengal, reportedIANS. Minister of

State for Shipping Mukul Roy announced that theshipping ministry had decided to set up a containerterminal facility at Diamond Harbour in South 24Parganas district for Kolkata Dock System (KDS) andfour berths at Salukhali near Haldia Dock Complex(HDC) for handling bulk cargo. "For making theproposed port corridor a fruitful one railwayconnectivity is required. We have already spoken tothe Railway Minister Mamata Banerjee and she hasagreed to the proposal," IANS quoted Roy as saying.

"The railway minister has requested the chairmanof railway board, Vivek Sahai to discuss the matterwith KoPT chairman and finalise the project. KoPTchairman M.L. Meena will meet with Sahai Thursdayto prepare the project report," he said.

According to KoPT officials, the railways have tolay a two km-long track from Diamond harbourstation to proposed container terminal site andanother 8 km long track from Haldia-Panskurasection to Salukhali near HDC.

"The rail connectivity is very essential to make theproposed port facilities viable. The KoPT hasdecided to set up the port facilities on the newlocations to overcome the ongoing draught problemwhich is affecting the business badly," said Roy. Healso said that KoPT chairman and the railway boardwill discuss on constructing about a five km longrailway bridge over Muriganga river in South 24Parganas and laying of around 40 km long tracksfrom Namkhana to proposed port site, about 32 kmdown the stream from Kachuberia over the river.

Port freight corridor tocome up in West Bengal

Highlights of Q1 Results (FY 2010-11)(Rs. In Crores)

Particulars 30.06.10 30.06.09 (% Change)Net Sales 394.19 313.68 25.67EDIBTA 29.14 24.90 17.03

PAT 12.19 7.90 54.30

NEWS


Apollo LogiSolutions (ALL), a fully-ownedsubsidiary of Apollo International, plans

to invest up to Rs 1,300 crore in the logisticsbusiness over the next five years, a topcompany official said. "Our aim is to be asignificant player in the logistics space, newsagency PTI reported.

"We plan to invest around Rs 1,200-1,300 crore in this business by 2015,"Apollo International Vice-Chairman andManaging Director Raaja Kanwar told PTI.The promoters will contribute towards a partof the investment, while the remaining fundswill be raised through debt, said the report.

The company plans to set up at least 9-10 Container Freight Stations (CFS) andInland Container Depots (ICDs) in five yearsin India. "Our biggest USP is the Apollobrand. In the next five years, we will have apan-India presence," news report quotedKanwar as saying. "We want to play apivotal role in the growth of infrastructure inthe country through a combination of assetand service-based logistics solutions," hesaid.

The company set up its first ContainerFreight Station at Panvel, in Navi Mumbai,last year. "We have already invested Rs 120crore in our first Container Freight Station atPanvel. We are getting good returns fromthis facility," he said, adding, "We expectaround Rs 50 crore of revenue this fiscal.""This is the facility where we have our CFS.

Depending on the opportunities, we canscale this up," Kanwar said, adding that twomore CFSes are planned over the next 12-18 months."

Apollo LogiSolutions to investRs 1,300 cr in logistics biz

Ashoka BuildconLimited, an

i n f r a s t r u c t u r ecompany thats u c c e s s f u l l yc o m p l e t e dMaharashtra's first

BOT ("Build Operate and Transfer") road projectand currently operates one of the highest numbersof toll-based BOT projects in India, has bagged twodifferent orders from National Highways Authorityof India (NHAI), collectively worth Rs. 1389 croresfor construction of roads on Design, Build, Finance,Operate and Transfer (DBOFT) in the state ofKarnataka and on Orissa-Chhattisgarh borderrespectively.

The company has bagged an order worth Rs.909 crores for the construction of four lane roadfrom 0.00 kms to 88.00 kms on NH 6 betweenSambalpur-Baragarh on the Orissa-Chattisgarhborder in the state of Orissa to be executed as BOT(Toll) project on DBFO pattern under NHDP PhaseIII project.

The other contract comprise an order worth Rs.480 crores for a stretch of 79.36 kilometers for sixlane road on Belgaum-Dharwad section of NH-4from 433.000 kms to 515.000 kms on DBFOTbasis.

FFoorrtthhccoommiinngg PPuubblliicc IIssssuuee:: The Company hasfiled its Draft Red Herring Prospectus ("DRHP") withthe Securities and Exchange Board of India ("SEBI")for an Initial Public Offering ("IPO") of equity sharesof Rs 10 each ("Equity Shares") for cash at a price tobe decided through a 100% Book-Building Process(the "Issue"). The Issue comprises a Net Issue of Rs.225 Crores to the Public and a reservation of Rs.4.50 Cr. Equity Shares for Eligible Employees. TheEquity Shares are proposed to be listed on theNational Stock Exchange of India Limited ("NSE")and the Bombay Stock Exchange Limited ("BSE").

Ashoka Buildcon bags Rs 1389crore contract from NHAI

NEWS


Kochi port Q1 cargo handling rises 23%The Cochin Port Trust has registered a growth rate

of 23.1 per cent in cargo handling during April-June 2010 compared to the corresponding periodlast year, according to a report.

The statistics released by the Indian PortsAssociation (IPA), which assessed the performanceof various Indian ports, pointed out that Kochi hasmade an increase of 8,26,282 tonnes in its cargohandling compared to the same period last year,reported Business Line.

In April-June 2009, the port had handled36,55,974 tonnes of cargo which increased to44,82,256 tonnes during the same period in 2010.According to IPA data, the general growth rate ofvarious ports at the national level is 1.92 per cent.

There is also a considerable increase in thenumber of containers handled at the port, said thepaper. "The number has increased from 72,122

TEUs last year to 84,545 TEUs this year, a growthof 17 per cent."

The port also registered a considerable increasein the handling of liquid cargo, including crude,petrol and lubricants. The cargo handling increasedfrom 24,43,028 tonnes last year to 31,65,504tonnes this year, an increase of 30 per cent, it said.

The paper also reported that the import throughthe port also increased in the same period. Thecement import, which was 7,590 tonnes last yearrose to 61,663 tonnes this year.

The timber import went up from 8,476 tonnes inApril-June 2009 to 12,958 in the same period thisyear. However, the traditional import of sulphur,urea for the public sector FACT has shown adeclining trend in the quarter whereas constructionmaterials such as timber and cement registered agrowth.

The Airbus has selected QuEST Global formanufacturing aerostruncture parts making

the latter 1st 1st Indian private sector player towork directly with Airbus.

QuEST Global's selection as Airbus preferredsupplier for manufacturing capabilities, ability tooffer offset fulfillment and Risk SharingPartnerships, positions QuEST Global uniquelyamongst Indian aerospace players. The globalaerospace engineering & manufacturing major,QuEST Global announced that it has become thefirst Indian private sector player to manufactureparts directly to Airbus under the long termagreement. QuEST Global supports itsaerospace customers on global programs relatedto aero structures, engines, accessories, actuationsystems, aircraft interiors and ground supportequipment. This distinction comes after astringent selection process by distinguished Airbusand EADS sourcing and manufacturing

organizations. During this process, manysuppliers were evaluated on various parametersranging from capability to infrastructure. This is afirst step into manufacturing relationship withAirbus on existing programme with a view toexpand engagement to many other sourcingopportunities to leverage QuEST Global'scapabilities. QuEST Global has set up anintegrated manufacturing facility ranging fromMachining, sheet metal processing, assembly andspecial processing (thro joint venture withMagellan Aerospace). The facility is approved byAirbus apart from other certifications likeNADCAP. QuEST Global becomes the onlyprivate sector company in India to signEngineering Services and Manufacturingagreements. Under these agreements, QuESTGlobal will support various current programs inManufacturing as well as current and upcomingprograms in Design.

QuEST Global wins Airbus' confidence

BEYOND INDIA


DB Schenker invests inport terminals and cranesDB Schenker Rail Polska is continuing to invest in

expanding its facilities at the Szczecin andSwinoujscie Baltic Sea ports. Approximately EUR22.5 million in all will be invested in the new wharfsand cranes by 2018 in cooperation with the portauthority. According to Hans-Georg Werner, CEOof DB Schenker Rail Polska, "Through thisinvestment, we are aiming to greatly increase thetransshipment capacity over the medium term andparticipate in the growth in the exchange of goodsvia the ports." DB Schenker Rail Polska transshipscontainers, less-than carload freight, paper andcellulose, granite, steel and other goods at the portsand carries out project business for heavy cargo.

Two new gantry cranes have been installed inSzczecin. Weighing 630 metric tons, the cranes caneach move 35 containers an hour and stack up tofive containers. DB Schenker Rail Polska isscheduled to begin operating the new containerterminal in fall 2010. For this purpose, roads andnew IT systems have been the target of investmentas well. The terminal will have an annual capacityof up to 220,000 TEU (20-foot equivalent units),more than doubling the transshipment capacity ofDB Port Szczecin. By 2018, a total of approximatelyEUR 16.5 million will have been invested in theexpansion. As a result, space and equipment will beable to be restructured for conventionaltransshipment.

A modern Liebherr crane is being installed at theport of Swinoujscie. A contract with Polish TradeServices of the agricultural production and foodproducer Bunge International Group will securetransshipment for the long term. The crane canmove 10,000 metric tons a day. The terminalexpansion will create capacity for an additional fewhundred thousand metric tons each year. The firstship carrying imported products is scheduled topass through the port in mid-2011.

While thefts rates vary between commoditygroups and industries, cargo theft volume

overall is up slightly in the first half of 2010 ascompared to the same time period in 2009.FreightWatch International, the leading globallogistics security provider, released its Bi-AnnualCargo Theft Report today.

As cargo theft rates climb, incident reportingdemonstrates that cargo theft gangs areseeking larger payoffs per theft, with anincrease in multi-trailer theft incidents. Theseincidents often occur at locations serving asingle industry or sector, such as electronics orpharmaceuticals.

"After a significant spike in cargo theft activityin 2009, we expected theft rates to level outsomewhat in 2010," according to Ron Greene,General Manager of FreightWatchInternational, USA. "What we are witnessing,however, is a more targeted approach by cargothieves, seeking multi-trailer thefts and largescale warehouse burglaries, including thelargest loss on record."

Food and beverages emerged as the mostcommonly stolen by cargo thieves, accountingfor 22% of all theft incidents, with electronicstrailing close behind at 19%. Meat products,canned beverages (sports drinks, energy drinksand juices), and raw products (such as sugarand coffee) were the most commonly stolenproducts in the food and beverage commoditycategory. The industries analyzed in the 2010Bi-Annual Cargo Theft Report include alcohol,auto parts, building and industrial materials,clothing and shoes, consumer care products,electronics, food and drinks, home and gardenproducts, miscellaneous, pharmaceuticals, andtobacco. The report also highlights the mostcommon locations for thefts, regions with thehighest risk, and more.

Cargo theft losseson the rise in 2010

BEYOND INDIA


LeanLogistics, a global leader in innovative SaaStransportation technology and supply chain

services, announced today the release of On-Demand TMS® version 10.2.0, a series ofenhancements to the company's flagshiptransportation management system used byleading shippers, carriers, 3PLs, suppliers andtransportation trading partners.

The new release builds upon the industry leadingSaaS (Software-as-a-Service) TransportationManagement Solution (TMS), first launched in2000 and now the transportation managementsystem of choice by more than 51,000transportation professionals. Because of the single-instance, multi-tenant nature of SaaS technology,the new version is immediately and simultaneouslyavailable to all users in the LeanLogistics'Transportation Network (cloud)'.

The latest release is part of the long-termstrategy of providing clients with the web-basedtools to leverage the On-Demand TMS® data andglobal connectivity, while improving performanceand reducing transportation costs.

Key features of the new release include greaterflexibility in reporting, language translation andglobalization, updated LTL load rate uploads, aswell as allowing shippers to create and print aStraight Bill of Lading and a Master Bill of Lading.

Additionally, the release includes an enhanceddistance calculation engine for improved ease ofuse across a wider community and can be assignedand parameters selected by division. LeanLogisticsis a global leader in SaaS transportationtechnology and supply chain services.LeanLogistics' On-Demand TMS® deliverscomplete transportation planning, execution,settlement, and procurement functions, as well aspowerful visibility and business intelligencefeatures, that improve business processes, increaseoperating efficiency, and reduce costs. On-Demand TMS® currently processes millions ofshipments per year representing over $5 billion inannual freight spend across the largesttransportation network -- more than 51,000shippers, suppliers and trading partners interactingwith nearly 7,000 carriers.

LeanLogistics Releases On-Demand TMS® v.10.2.0

Rotterdam invests 25 million in tank terminalThe Port of Rotterdam Authority (PoRA) will

invest approximately € 25 million in thecreation of a site of almost 5 hectares toaccommodate the future expansion of BotlekTank Terminal (BTT). The land will be gained byfilling in the south western corner of the Botlekdock with some 600,000 m3 of sand. Therewill also be a quay wall of over 400 metersconstructed and in addition, some jetties andsmall firms are replaced. If the environmentalassessment procedure (MER) develops asscheduled, the filling in can start mid 2011 andthe project will be finished mid 2013.

Procedure: The filling in and the constructionof the quay wall are contracted out 'design &construct'. Therefore the contractor decides

where the sand comes from. However, in orderto minimize environmental impact the PoRA willpoint at the possibility of using sand fromprojects elsewhere in the port. The quality ofthe sand and timing of availability areimportant factors in this respect. The additionalprojects are included in the total investment,but are contracted separately and according aso called RAW form. The prequalification forboth contract will start soon and the allotmentwill take place in 2011.

BBTTTT:: BTT will realize approximately 350,000m3 tank storage capacity on the new site. Inthe first phase, 200,000 m3 is being built atexisting land adjacent to the water to be filledin.

BEYOND INDIA


William Grant selects Kewillfor EMCS complianceGuildford, UK, Kewill (LSE: KWL), a leading

provider of solutions that simplify global tradeand logistics, has signed a three year contract withWilliam Grant & Sons, the luxury spirits company, todeliver a global export documentation solution tomeet its electronic customs reporting requirements,including the Excise Movement Control System(EMCS), which becomes mandatory across Europeon 1 January 2011.

Under the terms of the contract, Kewill willimplement its export documentation software, KewillSPEX, along with its Kewill eBiz-Manager integrationsoftware, across William Grant's UK operations andparts of its global network. Kewill will also deliverintegration with William Grant's operating systemson an ongoing basis, providing direct links to theHMRC CHIEF and EMCS systems to enableseamless, efficient processing of electronic customsdeclarations. The fully integrated solution will driveimprovements to accuracy and quality for thecomplete export declaration function, utilising aweb based service to facilitate the requiredmessages to HMRC and support the production ofexport documentation, allowing William Grant'sstaff worldwide to print a uniform set of exportdocuments with a minimum of manual intervention.The direct integration with William Grant'soperating systems will enable straight-throughprocessing of data, reducing time spent ondocument creation and local customs/governmentreporting and allowing the company to support allof its international compliance activities through asingle provider.

Brian Robertson, Solution Manager at WilliamGrant & Sons commented "The Kewill solution willprovide us with the ongoing assurance that we arefully compliant with all regulatory and statutorycustoms requirements, as well as delivering aconsistent approach to customs documentation andreporting across our global operations.”

Agility, a leading global logistics provider, hasannounced its appointment as the official

logistics provider for the New Zealand OlympicCommittee (NZOC).

The partnership agreement means that Agilitywill be responsible for handling the logisticsrequirements for New Zealand teamscompeting in events such as theCommonwealth Games in Delhi later this yearthrough the London Olympic Games in 2012.

"I am proud Agility will be able to contributeto the success of New Zealand teamscompeting in the Commonwealth and OlympicGames," said Anthony Browne, CEO of AgilityNew Zealand. "As sports fans we love followingthe achievements of our New Zealand athletescompeting on the world stage and we will playour part in ensuring that the teams are wellprepared."

"It is exciting to partner with Agility, knownglobally as a market leader in specializedlogistics," said Terry Daly, commercial directorof the NZOC.

"Our teams and campaigns create somefairly unique demands on our logistics provider-we transport everything from ice machines,medical supplies and racing bikes to bean bagsand coffee. Agility handles some of the mostchallenging logistics jobs in the world so weknow our equipment is in good hands."

Daly added, "It was important that we wereable to work with a company that had a stronglocal presence here in New Zealand, but also aglobal network, taking Delhi for example,Agility has traded there since 1982 and theyemploy over 1,500 people across India.

"At Agility, corporate social responsibility isintegrated into our corporate culture," saidBrowne.

Agility is official logisticsprovider for NZOC

BEYOND INDIA


Inbound Logistics Magazine has named Aspen inits 2010 list of Top 100 third party logistics (3PL)

companies. This is the sixth year in a row thatAspen has been recognized by the magazine.With their facilities expanding across the UnitedStates, a new strategic partnership with NetworkDistribution Solutions (NDS), and the addition ofnew robust services, this announcement hasadded to an already exciting year. The companysees the selection as an important benchmark intheir drive to have the Aspen brand recognized asdedicated to industry leading services as well as astrong culture, values, and relationships.

Aspen has always driven their brand ofsolutions as industry leading, but two years agothey defined their niche differentiators within thesupply chain industry: beating key performanceindicators (KPI) and creating trustful relationships.Both these attributes are essential to buildingrobust solutions in today's unstable economicenvironment. K.P.I.'s are essential performancemeasurements within specific services. Aspen is

consistently surpassing these measurements,giving their customers flexibility at a time whenprofit margins are already razor thin. Toacclimate to today's business needs, which arechanging at light speed, Aspen feels thatrelationships are paramount. When youunderstand your customer inside-and-out, andeven their customer inside-and-out, only then willyou be able to adapt at a pace that's equal to theneed.

The first 6 months of 2010 have been excitingfor Aspen . While most in the industry areexperiencing some stagnation or a decline inservice, Aspen has seen growth. The secondgeneration family-owned business has grown toincorporate 12 locations, including a campusstyle environment in Salt Lake City , and a fleet ofvehicles. Also a big win this year was theirselection to NDS as the western regions carrier forthe network. This is a great opportunity for thecompany and their customers. The network willexpand Aspen's footprint nationally.

Aspen figures in Logistics Top 100 3PL list

Kerry Logistics has strengthened its fashionlogistics network in Mainland China with three

more facilities scheduled to be built in Shanghai,Chongqing and Kunshan by 2011.

According to Global Insight, a US provider ofeconomic and financial intelligence, the marketshare of foreign retail brands in China, whichaccount for 20% of the retail market currently, willincrease to 40% in 2014.

Currently, Kerry Logistics is managing over 40fashion and retail companies, most of which areinternational brand leaders.

Kerry Logistics' customized supply chain solutionsinclude buyers' consolidation, building andrecycling, Garment-On-Hanger container system,freight and Purchase Order management, sea/airand inter-modal services, and combined U-turn

model.Shanghai, the gateway for foreign fashionbrands to expand into the Mainland China market,is well served by our five state-of-the-art logisticscentres and a nationwide distribution network withproven ability to provide Cash-On-Delivery servicesto all cities. The logistics centres are situated inWaigaoqiao Free Trade Zone, Baoshan, Qingpu,Pujiang and Nanhui.

"We also offer a wide range of value-addedservices to our clients to meet the specificrequirement of the Mainland China market, fromGarment-On-Hanger (GOH), Chinese informationtagging and Chinese care labelling to pre-retailpreparation, quality control and store stock taking,"said Kevin Lam, Director of Key Account, andAssistant Regional Director of Sales - MainlandChina of Kerry Logistics.

Kerry Logistics strengthens its mainland China fashion network

BEYOND INDIA


DHL and CDI to developlogistics solutions for China DHL has signed a Partnership Agreement with the

China Development Institute (CDI), a leadingthink tank in China, to research and developinnovative logistics solutions nationwide. As aGlobal Research Partner of the DHL InnovationInitiative, CDI will provide in-depth strategicknowledge and resources for the two parties tojointly deliver solutions in the areas of UrbanLogistics, Sustainable Supply Chain, Auto IDApplication, Supply Chain Optimization toadministrative and business organizations.

This research initiative is driven by the DHLSolutions & Innovations (DSI), which is responsiblefor all research projects and innovations in theglobal Deutsche Post DHL network, together withCDI Center for Logistics and SCM.

The partnership with CDI is a boost to DHL'sresearch efforts in Asia, particularly in China. Initialprojects, such as piloting of new delivery vehicleswith innovative route optimization, feasibility studiesand solutions for urban logistics in China'smetropolitan areas or carbon neutral facilities willcontribute to strengthen DHL's service offerings ofefficient and sustainable supply chains throughoutChina and the Asia Pacific Area.

DHL aims to turn the development projects basedon cutting edge technologies such as RadioFrequency Identification-enabled solutions andservice offerings, intelligent routing and schedulingor cold chain logistics into new business solutions.These solutions will improve operational processesfor DHL and its customers, increase efficiency andenhance their competitiveness.

As a Research Partner of DSI, the CDI joins otherrenowned Institutes such as the MIT (MassachusettsInstitute of Technology), Fraunhofer Institute, theGlobal Supply Chain Management at TongjiUniversity and the DLR (Deutsches Zentrum für Luft-und Raumfahrt).

ProLogis reported second quarter 2010 fundsfrom operations as defined by ProLogis

(FFO), excluding significant non-cash items, of$0.15 per diluted share. Of this amount,approximately $0.02 related to gains oncontributions and $0.13 per diluted share wasfrom core operations. FFO, includingsignificant non-cash items of $0.01, was $0.14per diluted share.

For the six months ended June 30, 2010,FFO, excluding significant non-cash items andfirst quarter non-recurring charges, was $0.28per diluted share, relative to the company's full-year 2010 guidance of $0.70 - $0.78 perdiluted share. Core FFO for the first half was$0.24 relative to the company's full-yearguidance of $0.55 - $0.60 per diluted share.

The company reported a net loss of $0.05per diluted share for the second quarter of2010 and a net loss of $0.24 per diluted sharefor the six months ended June 30, 2010.

For the quarter, the company's total industrialoperating portfolio (including completeddevelopment) was 89.7 percent leased, up from89.2 percent in the first quarter of 2010,principally driven by a 480 basis point increasein completed development leasing. Totalleasing activity was 28.3 million square feet inthe second quarter of 2010, in line withaverage leasing over the past year of 29.4million square feet per quarter.

Customer retention during the quarterremained strong at 78.1 percent in thecompany's direct owned portfolio and 81.8percent within its property funds. In addition,more than 76 percent of the company's newdevelopment portfolio leases were signed withrepeat customers, including Emerson Electric inNorth America, SONY in Europe and HitachiTransport System in Asia.

ProLogis reports secondquarter results

FOCUS


Road safety in India seems to remain in limbo asa Parliamentary Standing Committee for

transport has recommended the withdrawal of theNational Road Safety and Traffic ManagementBoard Bill, 2010 introduced in the Lok Sabha onMay 4, 2010. The Sundar Committee hadrecommended to set up the Board in 2007.

The committee has pointed out many faultyprovisions of the Bill which shows that the Indianplanners still lack a comprehensive futuristic

approach as far as the road safety is concerned. The committee has recommended that the

present Bill be withdrawn and Government shouldcome out with a comprehensive legislation with thataddresses the entire gamut of road safety. Thestanding committee faulted the government for notframing a National Road Safety Policy and felt it"should take precedence over any other measures,legal or executive".

The report, submitted by Chairman of the

Road safety to remain in limboA Parliamentary Standing Committee for transport points out many faultyprovisions of the proposed National Road Safety and Traffic Management BoardBill, 2010 and recommends withdrawal of the Bill

By Hardeep Singh Bedi

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Standing Committee on Transport, Tourism andCulture Sitaram Yechury said, "Road safety is acommon problem to the national as well as stateand other roads; therefore, there has to be acommon solution for the common problem."

The committee has pulled up the Road TransportMinistry for delaying the implementation of theMotor Vehicle Amendment Bill, 2007, which hadmany recommendations regarding road safety.

"The committee is of the view that had theGovernment taken action on the recommendationof the committee, it would have certainly improvedroad safety scenario in the country."

The panel expressed its surprise over the fact thatthe process of amending the Motor Vehicle Act,which was taken up in 2001, was still pending.Worse still, while an amendment to the MV Act wasunder the consideration of the government, anotherBill relating to road safety was brought toParliament. The committee said it was against theidea of bringing legislative proposals piecemeal.

"While the amendment to Motor Vehicle Act isstill under consideration, another Bill relating toroad safety has been brought to Parliament," theParliamentary Standing Committee on Transport,Tourism and Culture said.

The Committee also said that the proposedBoard has nothing new to offer. "Almost all aspectsof road safety that have been proposed to be vestedin the Board are being taken care in the existingframework." The committee said since the proposed

Board's role would be mainly advisory, it would belargely ineffective. Besides, it would not have thepower to ensure coordination among differentagencies, thereby leading to unnecessaryduplication for laying specifications regardingnational and state highways.

The committee also opposed the Board's powers. "The Board shall have power to make

recommendations pertaining to road safety andtraffic management, only in relation to nationalhighways. This will limit the mandate of the Boardas more than 70 per cent of the accidents in thecountry take place on roads other than NationalHighways."

The committee has also pointed out that whileMembers of the proposed Board are required tohave requisite experience in the technical fields, forthe post of Chairman, the Ministry has proposed"adequate knowledge and professional experiencein administration and road transport". This is adilution from what was originally recommended bythe Sunder Committee.

The committee also points out deviations in whatthe Ministry has done against what was suggestedby the Committee of Infrastructure (CoI) headed bythe Prime Minister. The CoI had asked the Ministry"to present a note for creation of Directorate ofRoad Safety and Traffic Management."

But, the Ministry instead appointed a SunderCommittee that recommended creation of thisBoard, the committee said. The committee forecast

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that in the absence of new initiatives, the totalnumber of road traffic injuries and deaths wouldrise by 65 per cent between 2000-2020 across theworld. In India, the number of deaths had increasedto 1,14,444 in 2007 from 84,674 in 2002.Sundar Committee

On 13th January 2005, the Cabinet Committeeon Infrastructure headed by the Prime Ministerdirected the Ministry of Road Transport andHighways to present a note to the EmpoweredCommittee of Secretaries for the creation of aDirectorate of Road Safety and Traffic Managementand the amendment of traffic laws as required.Later, an Expert Committee under the Chairmanshipof S. Sundar, Distinguished Fellow, The Energy andResources Institute (TERI) and former Secretary ofthe Ministry of Surface Transport, was constituted torecommend a structure for the organization andadvise on its role and functions.

The Sundar Committee submitted its report onFebruary 22, 2007. Its main recommendationswere creation of National Road Safety and TrafficManagement Board (NRSTMB) and also creation ofa dedicated fund namely 'National Road SafetyFund'. While recommending to constitute Board,the committee observed that "drawing from theInternational Review and bearing in mind the legaland institutional framework of India, the Committeedeliberated at length on the nature, structure andmandate of the agency that should be set up inIndia. The Committee felt that while a Directorate inthe Ministry could help in focusing attention onroad safety it would not provide for continuity or forharnessing the expertise that is required to promoteroad safety effectively; it would fail to bring underone roof the various disciplines/specialisationswhich have a major influence on road safety.Besides, a Directorate would not also enjoy thenecessary authority and status to coordinate

effectively with other central ministries and stategovernments; nor will it have the independence toset standards for safety and issue directionsregarding compliance. The Committee also notedthat of the various arrangements in place in othercountries, NHTSA established through law andadequately funded in the U.S. has been mostsuccessful in promoting and ensuring road safetyand in bringing about the uniform implementationof road safety measures in all the states in America.The Committee came to the considered conclusionthat a nodal national body for road safety in Indiashould not be just a Directorate in the Ministry buta dedicated agency, established through law, inorder to provide for continuity, expertise andcredibility". Recommending to set up the directorateimmediately, the committee wished that "should thisrecommendation (setting up of NRSTMB) to beaccepted, India would be the first country in theworld to set up a single, integrated and dedicatednodal Agency to promote, coordinate and overseeall activities relating to road safety. Moreimportantly, India needs such an integrated anddedicated agency to combat the rising menace ofaccidents and fatalities on Indian roads".

The committee said that the Agency's role shouldbe to aid and advise the Ministry on all mattersrelating to road safety. "It should address roadsafety issues in respect of the National Highwaysand Mechanically Propelled Vehicles and makerecommendations and set guidelines on road safetyon other roads. It should contain enablingprovisions to set up Road Safety and TrafficManagement Boards in the States. It should alsoencompass the provisions related to road safetycontained in the other relevant Acts like the MotorVehicles Act." The Agency should have the freedomto set safety standards with regard to the design,construction and maintenance of national highways

The Sundar Committee; constituted on 13th January, 2005; submitted its report onFebruary 22, 2007. Its main recommendations were creation of National Road Safety and

Traffic Management Board (NRSTMB) and also creation of a dedicated fund namely'National Road Safety Fund'

FOCUS


and in respect of Mechanically Propelled Vehicles.In addition, the Agency should have the necessarypowers to monitor compliance, issue directionsregarding compliance and levy, where necessary,penalties. As for the finances of the proposedBoard, the Sundar Committee said that "the budgetof the Board should be approved by Parliament andshould be funded by grants from the Road SafetyFund. The Board should also be free to receivecontributions, with the approval of government,from national and international organizationssupporting road safety.

Exhorting to amend traffic laws,the mandated to review the existingtraffic laws and suggestappropriate amendments to theMotor Vehicles Act and otherrelevant acts to improve roadsafety in the country.Decriminalization of RoadAccidents was one of the importantsuggestions of the SundarCommittee. Accidents areregistered as medico legal casesand as a result medical aid to roadaccident victims is often delayed.The problem further exacerbatesas the attending doctors have tospend considerable time inappearing in the courts/tribunalwhen these cases come up forhearing.

It recommended that "changes to law orprocedures be introduced wherever necessary inorder to de-link the provision of medical care fromthe legal/criminal aspects of the case". Thecommittee was also of the view that if the attendingdoctor in the first instance prepares detailed caserecords of the relevant treatment of accident victimsin a standardized format, the presence of thatdoctor in the courts/tribunal's could be avoided.Who is responsible for road safety?

India has the dubious distinction of registeringthe highest number of road deaths across theglobe. Road accidents kill 33 people every hour in

southeast Asia - and the highest number of thesedeaths are reported in India, said a World HealthOrganisation (WHO) report released on November13, 2009.

The WHO report released on the eve of theWorld Day of Remembrance for Road Traffic Victims(Nov 14) said that the number of road trafficinjuries also has been rising rapidly in the region.The survey was based on figures provided by 11Southeast Asian countries.

"As many as 288,768 people were killed on theroads in the region and almost 73 percent of this

burden belongs to India." Roadaccident deaths in India increasedfrom 1.14 lakh in 2007 to 1.18lakh in 2008. The Centre has saidthat it would take steps to bringdown fatalities by 50% by 2012.But, at present there is noresponsibility within the Centralgovernment so far as road safety isconcerned even though deaths duein road accidents are shooting upevery year. The present NationalRoad Safety Council is non-statutory, meets only once a yearand there is no responsibility.

The committee headed by SSundar had in its report said thatthe responsibility for road safety is'diffused' and there is no singleagency to deal with a range of

problems associated with road safety. There is also no effective mechanism for

coordinating the activities of different agenciesdealing with road safety. The role of key ministriesand public sector agencies in improving road safetyis peripheral. It is not a priority area in their agendafor development. With the concerned ParliamentaryStanding Committee submitting its just objections,the ball is now in the court of the CentralGovernment. The government must correct theloopholes and ensure that a Central agency isconstituted at the earliest which would be solelyresponsible for the road safety across India.

There is also noeffective mechanism for

coordinating theactivities of differentagencies dealing with

road safety. The role ofkey ministries and

public sector agencies inimproving road safety isperipheral. The need of

the hour is that aCentral agency isconstituted at the

earliest which would besolely responsible forthe road safety across

India

CENTRE STAGE


VRL Logistics wins two awards at CeatIndia Road Transport Awards 2010

VRL Logistics Ltd., the leading player of theLogistics Industry has pulled off a double

whammy by winning two awards at the recentlyheld Ceat India Road Transport Awards 2010.

The two awards bagged by VRL Logistics Ltd are:Ceat India Road Transport National Award forEnvironment Conservation and Ceat India RoadTransport Regional Award for OperationalExcellence.

This is an achievement which brings immensepride not only to the people of Karnataka but it isalso an inspiration for other companies to takecare of the environment that we are all sodependent on. This should go a long way in raisingawareness among the corporate houses that eventhey can do something for the society.

On this occasion, Vijay Sankeshwar, Chairman,VRL Logistics Ltd., said that "the journey so far hasnot been easy and it has been made worthwhilewith all the rewards and recognitions that arecoming our way which testifies that our pursuit ofexcellence is being noticed, not only nationally butabroad as well. The prestigious Ceat India RoadTransport awards, advised and tabulated by Ernst &Young Pvt. Ltd. motivate us all over again to deliverexcellence consistently".

VRL Logistics Ltd., has the largest fleet backedwith 3 decades of trust. The driving force behind

the success of VRL Logistics has been itscommitment to live up to the consistent trust shownby patrons & associates over these years. VRLprovides its customers with an entire bouquet ofvalue-added services that comprises of RoadTransportation, Express Cargo Movement Re-distribution, Courier services, PassengerTransportation & Warehousing.

On this momentous occasion, AnandSankeshwar, Managing Director, VRL Logistics Ltd.,said, "This organization has come a long waywhich had a modest beginning with a single lorry.VRL Logistics Ltd., over the last 3 decades hasgrown into a nationally acclaimed & internationallydecorated logistics and transport solutionsprovider. VRL Logistics holds the unique distinctionwith Limca Book of Records as the largest fleetowner in private sector in India with a fleet of 2691commercial vehicles and hi-tech buses."

With a pan India services in 18 States VRLLogistics has established a strong network of 1000plus branches to cater to the ever-growingcustomer demands and needs. Talking on thisoccasion, Anand Sankeshwar, MD, VRL LogisticsLtd., said, "Over the last three decades, VRLLogistics has established itself as a front-runner inthe Logistics Space. This evolution would not havebeen possible without the vision, a willingness to

CENTRE STAGE


embrace change, a strong capacity for innovationand acute awareness for customers growingrequirements." At VRL Logistics Ltd., exhaustive dataand records can be accessed over a period of time,which is a boon for corporate houses. It can beaccessed and used for varied reasons and it hasbeen made possible by the high-techbreakthroughs made in technology by the team atVRL Logistics. At the core of the groups transportbusiness is its gigantic 43-acre transport-cum-warehouse complex in Varur, Hubli. This uniquefacility has all the essential back up services underone roof. The total built up area of complex is5,00,000 sq. ft. with an additional 1,00,000 sq. ft.of land utilized for sheds etc.

VRL Logistics has a strong and dedicatedoperations team monitoring an impeccableefficiency in handling your precious cargo andensuring on time deliveries. With dedicated

containerized route vehicles supported by an onlinetrack and trace facility that ensures Delivery ontime. Zero excuses. The Operational efficiency iswell supported by 12 regional offices & 40 HUBS.The full-fledged IT Team of VRL Logistics hasdeveloped in-house online track and trace softwareenabling customers to get updated information ontheir shipments. This adds to the customer delightas well as self-assurance, which is our core pursuitas well. In our flagship business we rank at the topof the industry. As we continue to grow, inresponsible ways and within the contest of our corevalues: respect for people, valuable partnershipsand good corporate citizenship, VRL provides theingredients and materials that form the buildingblock of a number of businesses whose productsand services impact millions of people everyday.Sankeshwar signs off saying that VRL is the nameyou can trust!

DHL has announced trials of world's first in hybridtechnology for HCVs in distribution. During theinitial testing phase, the truck will used with in andaround London with DHL customers interested inreducing their carbon footprint.

In partnership with manufacturer Volvo Trucks,DHL Supply Chain will trial the world's first 18-tonnehybrid distribution truck that could achieve up to 15per cent in fuel savings. Powered by an electricmotor and a diesel engine, which can be usedseparately or together, the hybrid vehicle will allowfor reduced fuel consumption, lower emissions andlower noise levels.

DHL and Volvo are partnering on a number ofinitiatives aiming at reshaping the logistics of thefuture by making it cleaner, safer and more efficient.

DHL and Volvo agreed to partner for trialling thevehicle for a two-year period. The partnership arosefrom a mutual interest in the development of newenergy-efficient technologies and has seen DHLwork closely with Volvo on the specifications of thevehicle. It will also benefit from a dry freight

'Teardrop' body fitted by body builder DON-BUR. The vehicle was just unveiled in Hatfield and will

initially be operated in and around London.Overall, the truck will be used with several DHLcustomers, also interested in reducing their CO2emissions, like NHS Supply Chain.

New ways of reducing the carbon footprint oftransport

Ian MacAulay, Innovation Manager, UK FleetEngineering Services, DHL Supply Chain, said:"Reducing carbon emissions is an important issuefacing businesses and we always endeavour tomake sure we drive positive environmental change.DHL has made a firm commitment to improve itscarbon efficiency by 30 per cent by 2020, and newdevelopments in vehicle technology and fuels willbe vital in achieving the target.

"This hybrid solution is a world first for 18-tonnedistribution vehicles. Energy efficient vehicles alsohave the benefit of reducing costs and in a timewhen businesses are keen to drive out inefficienciesthis is an important cost saver to recognise."

DHL trials world's first in hybrid technology for HCVs

COVER STORY


Evolutionary, revolutionary, and game changer

COVER STORY


Accenture has selected 12 new disruptiveenergy alternatives that have thepotential to replace major portions oftoday's hydrocarbon fuels whilesimultaneously reducing GHG emissions

Hardeep Singh Bedi

Transport fuels are second only to powergeneration in their contribution to the planet's

energy and environmental challenge. They areresponsible for as much as 30 percent of allgreenhouse gas (GHG) emissions globally.Greenhouse gases are gases in an atmosphere thatabsorb and emit radiation within the thermalinfrared range. This process is the fundamentalcause of the greenhouse effect. The maingreenhouse gases in the Earth's atmosphere arewater vapour, carbon dioxide, methane, nitrousoxide, and ozone. In our solar system, theatmospheres of Venus, Mars and Titan also containgases that cause greenhouse effects. Greenhousegases greatly affect the temperature of the Earth;without them, Earth's surface would be on averageabout 33 °C (59 °F) colder than at present.

Scientific research suggests that the earth'saverage temperature is rising slowly but steadily.Increased global emissions of greenhouse gases(carbon dioxide, methane, chlorofluorocarbons andnitrous oxide) have contributed to this phenomenon.The Intergovernmental Panel on Climate Change(IPCC) has predicted a rise in global temperatures ofbetween 1 and 2° Celsius by 2020 and between 2and 5° Celsius by 2070. Increased internationalawareness of this global temperature increase hasled to considerable international effort, such as theUnited Nations Framework Convention on ClimateChange (UNFCCC) and the Kyoto Protocol, toprevent climate change by attempting to reduceCO2 emissions.

Apart from environmental concerns, volatile oilprices and the potential to create green jobs haveignited interest in renewable transport fuels.

The transport fuel industry is about to enter aninnovative and exciting era, as newly

commercialized alternative fuels and advancedtechnologies combine to lower GHG emissions,open new industries and compete to reducedependence on the petroleum barrel. These fueltechnologies are emerging now, and affectedindustries need to begin planning today to take fulladvantage of the new transport fueling optionscoming tomorrow.

Tomorrow's transport fuelmarket will include multitudesof new and old participants,including players in theenergy, chemicals,a g r i c u l t u r e ,pharmaceuticals andconsumer electronicsindustries, as well asg o v e r n m e n t s ,utilities andb a t t e r ymanufacturers.As a result, thewave ofdisruptive newtransport fuelsheading thisway will likelyc a u s egovernments andindustry managersto reassess theirstrategies for creatingpublic and business value,respectively, in this dynamicnew sector.

Accenture has selected 12 new disruptive energyalternatives that have the potential to replace majorportions of today's hydrocarbon fuels whilesimultaneously reducing GHG emissions.

It describes four of the 12 technologies asevolutionary, meaning they would derive more fromassets and resources already available. It says fivetechnologies are revolutionary because they wouldenable biofuels to use the existing petroleumdistribution infrastructure. The remaining three

technologies, focused on electrification, are trulygame changers: They overturn the liquid fuelparadigm altogether.

Melissa Stark, the Clean Energy lead for theAccenture Energy industry group, writes that "for afuel to be considered disruptive, it needed to meetat least two of the following criteria: It could bescalable-that is, capable of meeting more than 20percent of the world's transport fuel demand by

2030; it could produce at least 30 percent fewerGHG emissions than the hydrocarbon fuel it

replaces; it would be cost competitive withgasoline at an oil price of between $45

and $90 a barrel; or it could becommercialized in five years or

less".E v o l u t i o n a r y

technologies Stark says that the

four evolutionarytechnologies wouldwork by stretchingtoday's assets andresources; and whilecommerc ia l i za t ionchallenges remain,

these technologiesrepresent "no-regret"

solutions that can have asignificant impact on CO2

emissions and boost energyindependence today. She writes

that the advanced internalcombustion engine, Next-generation

agriculture, Waste-to-fuel, and Marine scrubbersare the four evolutionary technologies.

The advanced internal combustion engine:Although the internal combustion engine (or ICE)was a 19th century invention, it still holds significantperformance improvement potential. Given thecorrelation between GHG emissions and fueleconomy, investing in advanced "ICE age"technologies that boost efficiency, such as next-generation direct gasoline fuel injection, can havea profound impact on GHG emissions.

COVER STORY


COVER STORY


Next-generation agriculture, which also has all four disruptive technology attributes,promises to provide the enhanced crop yields biofuel makers need to compete

effectively with hydrocarbon. Clearly scalable, with significant GHG reductions andpotentially cost competitive with oil, next-generation agriculture technologies are

already beginning to be commercialized

Better yet, squeezing more miles per gallon outof conventional vehicles reduces carbon emissionsand boosts energy security in the same wayproponents hope electric vehicles will-but soonerand at significantly less cost. Advanced ICEs meetall four criteria for a disruptive fuel technology:They are readily scalable, capable of deliveringsignificant GHG reductions, cost effective and willlikely be introduced in the next five years.

NNeexxtt-ggeenneerraattiioonn aaggrriiccuullttuurree:: Next-generationagriculture, which also has all four disruptivetechnology attributes, promises to provide theenhanced crop yields biofuel makers need tocompete effectively with hydrocarbon. Clearlyscalable, with significant GHG reductions andpotentially cost competitive with oil, next-generationagriculture technologies are already beginning tobe commercialized. Furthermore, with US cornyields already at nearly twice the world average,applying even basic agronomy practices in marketswith low yields has the potential to improve returnsdramatically.

Still in its infancy, "new agriculture" promisessubstantial future growth based on the potential ofgenetically modified crops to achieve desiredcharacteristics, increase yields, and reduceharvesting and processing costs. Coupled withprocess innovations, new agriculture can achievethis growth while reducing water and energyconsumption.

For cellulosic feedstocks, a major challengeinvolves the high cost of the crop deconstructionprocess. Improvements will likely come in this areafrom optimizing the whole system, from feedstock toproduction. The first cellulosic processing plants togo on stream will probably focus on feedstocks likecorn fiber and corn cobs, which can work with first-generation infrastructure.

Take POET, the largest ethanol producer in theworld. The Sioux Falls, South Dakota-basedcompany is planning to launch Project LIBERTY, itsfirst commercial-scale, cellulosic ethanol plant, in2011. By adding cellulosic production to anexisting ethanol plant, POET estimates it will beable to produce 11 percent more ethanol perbushel of corn and 27 percent more per acre ofcorn, while using biomass to power the plant itself.

WWaassttee-ttoo-ffuueell:: Turning trash into cash-producingtransport biofuels from waste-involves technologiesfound primarily in the laboratory and in pilot stagesof commercialization. A wide range of suitablesources of waste exist, including municipal solidwaste; agricultural and forestry waste; used fats, oiland greases; and industrial flue waste gases. Inparts of Northern Europe with limited landfillcapacity, waste-to-fuel processes could ultimatelybecome an important energy source.

But legislation and financial incentives areneeded to expand this industry. If waste feedstockprocessing is ultimately brought to scale, it couldsolve two problems simultaneously: It wouldprovide a source of low-cost, low-carbonrenewable fuel and at least a partial solution tolandfill shortages.

However, the scalability of waste-to-fueltechnology remains uncertain, because of theobjectives to reduce or recycle waste, coupled withits characteristics of smaller, distributed volumesthat need to be aggregated to be processed.Otherwise, waste-to-fuel technologies meet three ofthe four disruptive technology standards: Theywould have a positive GHG impact and exhibitfavorable economics; there are companiesplanning to be commercial in less than five years.

MMaarriinnee ssccrruubbbbeerrss:: The International MaritimeOrganization has agreed to limit marine vessel

sulfur oxide emissions to 0.5 percent by 2020 fromthe current 4.5 percent level. Marine scrubbers-shipboard exhaust gas sulfur removal systems-would enable industries to forgo the large capitalinvestments needed to upgrade refineries toproduce more low-sulfur fuel oil.

While marine scrubbing is technically feasible-several companies have successfully tested thetechnology in demonstration projects-investors sofar have remained on the sidelines. Marinescrubbers are scalable; will have a positive impacton GHG emissions by making it possible to avoidupgrading high-sulfur fuel oil to meet the new limit;and will be commercialized by 2011. Cost,however, remains an issue. Revolutionary technologies

"Fungible fuels" offer the same or better energycontent as today's hydrocarbons and-here's therevolutionary part-can be "dropped" into the existingfuel distribution infrastructure. To be fungible, a fuelshould offer the same or better energy content astoday's hydrocarbons, and should use the samedistribution pipelines, tankers and other assets.Once perfected, these renewable fuels eliminatethe distribution constraints on bio-fuels, enablingproducers to rapidly scale up operations. Theyinclude sugarcane-to-diesel, butanol, bio-crude,algae and airline "drop-ins." These fuelsdramatically reduce GHG emissions.

Synthetic biology- Sugarcane-to-diesel: Findinga plentiful and lower-cost biofuel with enoughenergy content to serve as a viable substitute fordiesel has become a holy grail of sorts, due to theoutsized role that fuel plays in a multitude of keyindustries, including trucking, construction,maritime and agriculture. Synthetic biology-thedesign of novel biological systems and livingorganisms using engineering principles-has recentlyopened a feasible sugarcane-to-diesel pathway.

Today, companies using these techniques havedeveloped microbes that can convert sugarcaneinto ultra-clean diesel fuel. If the fuel's economicscan approach those of sugarcane-to-ethanol,sugarcane-to-diesel could have significantpotential, given the cost and availability ofsugarcane compared with traditional biodieselfeedstocks like palm, soy and rapeseed.

Converting sugars to diesel fuel using syntheticbiology is close to commercial viability, andsugarcane-to-diesel meets all four disruptivetechnology criteria, with scalability, GHG impact(an 88 percent reduction), cost (the first commercialplant expects costs in the $45- to $75-per-barrelrange) and time to market (commercializationexpected in 2011).

BBuuttaannooll:: A "four-carbon" alcohol, biobutanolprovides improved energy content compared withtwo-carbon fuels like ethanol. As a result, it offersenergy content more similar to gasoline but withhigher octane levels, and is less sensitive to waterthan ethanol. This last point makes it possible totransport biobutanol through existing petroleumpipelines and infrastructure and to blend it withgasoline at ratios much higher than those possiblewith ethanol.

In the past, several issues, including toxicity in thefermentation process and resulting low yields,hampered butanol production. But today,companies have developed microbes orbiocatalysts and associated processes able toovercome these challenges. Biobutanol meets allfour requirements for a disruptive technology:scalability, potential GHG reductions of 80 percent,target cost per barrel of $50 to $60 andcommercialization by 2014.

BBiiooccrruuddee:: Biocrude is an intermediate productthat renewable energy players can further processinto any type of transport fuel, just like petroleum

COVER STORY


"Fungible fuels" offer the same or better energy content as today's hydrocarbons and-here'sthe revolutionary part-can be "dropped" into the existing fuel distribution infrastructure. Tobe fungible, a fuel should offer the same or better energy content as today's hydrocarbons,

and should use the same distribution pipelines, tankers and other assets

COVER STORY


crude. Made by converting the cellulose and ligninin biomass such as trees and grasses into a greenhydrocarbon, biocrude has enormous potentialbecause it is a renewable alternative to diesel, jetfuel and gasoline that is capable of using existingpetroleum infrastructure. But many challengesremain.

Several technologies can currently turn biomassinto biocrude, including one that involvesthermochemical decomposition and a subsequentupgrading process. With relatively little extrainvestment, these technologies can take advantageof existing refining and distribution infrastructure,and could lead to a breakthrough in the adoptionof renewable fuels worldwide. Biocrude meets allfour disruptive technology criteria. It is scalable,although as with all biomass conversion processes,feedstock availability could be a bottleneck; it could

have a GHG reduction impact greater than 30percent; it is expected to be cost competitive; and itwill likely be commercialized within five years.

AAllggaaee:: Although offering yields 25 times greaterthan soybeans, algae-based fuels can cost anuncompetitive $8 to $30 per gallon to produce,and algae could require genetic modification tomeet its full potential as a fuel.

Instead of using algae as a feedstock(photosynthetic algae), some companies areexperimenting with different applications wherealgae is fed sugars and subsequently produces oilsthat can be converted to an intermediate or diesel(heterotrophic algae). Algae-based fuels arescalable and will have a major impact on GHGemissions, but as mentioned above, they arecurrently too expensive, and they will take up to 10years to commercialize.

AAiirrlliinnee ddrroopp-iinnss:: Market and regulatory forcesare increasing pressure on the aviation industry toboost energy efficiency and reduce carbonemissions. Biofuels represent a viable way for theindustry to cut greenhouse gases, since many of thetechnology challenges have already beenovercome.

Test flights have proven the technical feasibility ofaviation biofuels, which can be dropped withoutmodification into the current aviation fuelinginfrastructure. In addition, aviation biofuels havesignificant potential to reduce emissions, although

feedstock availability remains an issue. And giventhe current cost of drop-ins, feedstock supplylimitations and competition from road transport forthese fuels, being competitive with current jet fueland meeting scale requirements could be majorissues. While airline drop-ins satisfy the scale andGHG impact criteria, they currently do not meetdisruptive technology cost and time-to-marketcriteria.Game changer technologies

What about electricity, something of agranddaddy of alternative energy? The cost andperformance of advanced batteries are the biggestchallenges to the electrification of transport. Plug-inhybrid-electric vehicles, or PHEVs, could becomethe most disruptive technology of all, but withoutregulatory incentives, the upfront cost of batterieswill limit broad uptake.

Charging infrastructure will play a key enablingrole in achieving mass PHEV use, while vehicle-to-grid technology, which remains more than adecade away from commercialization, willultimately enable two way communication andoptimization between the electric car and the grid.

Plug-in hybrid-electric vehicles: Plug-in electricvehicles (PEVs), which include both PHEVs and non-hybrid "pure" electric vehicles, have receivedincreasing amounts of attention and support fromgovernments and industry alike, and they willprobably become part of the vehicle landscapewithin the next five years. PHEVs provide greaterenvironmental benefits and lower operating coststhan either ICEs or hybrid-electric vehicles, and theyoffer an extended driving range, compared withpure electric vehicles.

But the industry must still overcome the highcapital costs associated with PHEV batteries for theeconomics to work favorably without regulatoryincentives. Moreover, while PHEVs could potentiallyoperate emission-free, GHG emissions reductionsdepend largely on the electricity source (forexample, coal, natural gas or nuclear power) andwill therefore vary by market. PHEVs meet the GHGimpact and time-to-market criteria for disruptivetechnologies. But battery constraints could limittheir scalability, and they currently cost $4,500 to$6,000 more than comparable ICE vehicles.

CChhaarrggiinngg tteecchhnnoollooggyy:: Large-scale PEV chargingwill require grid optimization. For example,maximizing the charging that occurs during off-peak electricity demand hours would enable electricutilities to manage energy demand more effectivelyand consumers to benefit from lower off-peak rates.As a result, charging technology will play a key rolein expanding the penetration of plug-in electric

COVER STORY


vehicles, and municipalities worldwide have alreadyannounced ambitious PEV charging infrastructurelaunches.

The scalability of the controlled charging marketwill depend largely on demand for PEVs, which itselfrequires support and incentives from policymakersand industry. Otherwise, controlled charging fits ourdefinition of disruptive in that it will have asignificant GHG impact, it supports a fuel costcompetitive with $40-per barrel oil and it iscurrently being rolled out in pilotprojects across the globe.

VVeehhiiccllee-ttoo-ggrriidd ((VV22GG)) tteecchhnnoollooggyy::Technically feasible, full-scalevehicle-to-grid commercializationwill require high PEV penetrationlevels. (V2G seeks to establish atwo-way power flow between thegrid and plugged-in PEVs.) Keyareas being tested are V2Ginformation flow, expanded vehicleenergy storage and the creation ofan integrated smart grid. V2G couldsignificantly disrupt conventionalelectricity supply and demandrelationships-with electricity endusers potentially becoming anessential grid storage resource. As aresult, V2G could change both theelectric power and transport fuellandscapes. The technology currently meets onlythe GHG impact criteria, where it can potentiallyachieve GHG reductions of up to 99 percent.

The Delaware-based Mid-Atlantic GridInteractive Cars Consortium (aka, MAGICC),which includes members from across the UnitedStates, helps to develop V2G technology thatenables a bidirectional power flow to and from thegrid, making it possible to transfer high power tothe grid at a very low cost.How to get success?

The move from the oil patch to the grid or thefarm will likely happen faster than many companiesimagine-which will significantly disrupt thetransport fuel business. As a result, governments

and industry players alike need to anticipate andprepare for the more complex game this dynamicnew multi-fuel world promises.

Local agendas and local resources will likelydrive investments in new transport fuels. To boosttheir chances of market success, companies shouldlearn from and take advantage of what has alreadybeen done around the world.

Companies will have to ensure that thetechnologists must lead the revolution. Scientists

and engineers need to be inleadership positions, because theinvestment and policy debaterequires participants to know thescience and understand thechallenges in deploying it.

Companies will have to createflexible partnership and businessmodels. Cooperation across manyindustries will drive success. Withnew technologies being developedalmost daily, companies andgovernments need to understandhow fresh information affects theirtechnologies, go-to-marketstrategies and regulatory positions.

Risk exists in both biofuels andelectrification. In biofuels, whilegovernment mandates canguarantee a level of demand, their

correlation with feedstock availability tends to bevery weak, because of a lack of transparency intoa fuel's potential supply and cost. New feedstockswill be even more challenging, because no marketexists to set prices. In the electricity markets,demand itself represents the uncertainty. In all threecases, players need to find ways to share andmanage risk with other stakeholders.

Even for technologies that will be commercial infive years, actual business scale-up could takelonger than anticipated. For technologies that takemore than five years to commercialize, companiesshould recognize they may be in pilot ordemonstration stages for many years and thus planaccordingly.

COVER STORY


The move from theoil patch to the grid

or the farm willlikely happen faster

than many companiesimagine-which will

significantly disruptthe transport fuel

business. As a result,governments and

industry players alikeneed to anticipateand prepare for themore complex gamethis dynamic newmulti-fuel world

promises

INSIGHT


Acompany derives inspiration from the topleader. In a professionally run company, the

top leader is called Chief Executive Officer (CEO).But, unfortunately most companies don't have aCEO succession plan. Even the situation is worsein the US. According to a recent survey, 61 percentUS companies won't be able to replace the CEOin the case of emergency.

Succession planning concerns are furtheraccentuated as the issue of separating the CEOand chairman roles receives greater attention.Today, the topic of CEO succession planning hasnever been hotter-or debated so urgently.

Questions about the rigor of successionplanning are being driven out into the open not

only by the soaring complexity of business but bynew regulatory developments.

The good news is that the lack of a properlyprepared successor-which is the outcome of manyflawed plans-is something that can be addressed.Develop strong candidates internally

The best way for an organization to mitigate thatrisk is to develop strong candidates internally andthen carefully manage the succession event, incase of an emergency. These candidates areknown as "relay successors", and researchindicates that companies that appoint suchsuccessors outperform those that hire from theoutside.

But which insiders to short-list? Of all the

Do yyou hhave CCEEOO succession pplan?Of all the internal executive candidates, the Chief Operating Officer (COO) is mostoften considered to be the CEO-in-training

By Subhash Raturi

INSIGHT


internal executive candidates, the Chief OperatingOfficer (COO) is most often considered to be theCEO-in-training. Even when not formallydesignated as the heir, the chief operating officer-where that role exists-is usually given considerationby the board for the top job. After all, the COOposition offers a portfolio view of the company asa whole; when properly designed, it includesregular access to the CEO's in-box.

In many cases, COOs are being groomed forthe top spot, or even beingtested as the organization'sCEO-elect. And there is asteady migration fromCOO into the topposition. In a recentsample of formerCOOs, Accenturefound that one innine stepped intothe CEO's shoeswithin a year of herdeparture.

Research alsoindicates that a little overhalf of all chief operatingofficers see themselves as the"heir apparent". Almost allthink of themselves as "theother half"-offeringcompetencies, experiences,expertise and amanagement style that complement those ofthe CEO. Nearly all of the COOs surveyed believethat top operations executives are responsible forthe long-term performance of their organizations.And more than 85 percent say they are able toaffect their organizations' long-term performance.Few guarantees

Yet the COO's readiness for the highestexecutive office is by no means a given. A centralelement of the challenge is that there are aspectsof the CEO position that simply can't beexperienced as an understudy-even when theCOO has been formally designated as the heir.

Virtually every CEO agrees that there areimportant elements of the position that cannot befully understood until you are wearing CEO shoes.Time in the COO job is no guarantee of successin the top spot, because the one role simply isn'tthe other.

But the more pressing-and soluble-part of thechallenge lies in boards' understanding of what isneeded to prudently manage the transition risksinvolved with any CEO succession. Even at

companies that recognize the need toprepare the successor,

boards mayunderestimate just

what thatp r e p a r a t i o nrequires. Afterall, replacing aCEO is notsomething that

most boardshave a great deal

of practice doing.Further reducing the

risks involved in anysuccession requires that

everyone-board members, CEOsand heirs-fully appreciates the time

and effort it takes to get the relaysuccessor ready. So what does ittake to get the COO as

prepared as possible for making itto that top rung on the ladder? In a general sense,the key is to develop and then continually refine anuanced understanding of the gaps between thecapabilities and credentials of an heir and what,looking forward, the CEO position is likely todemand.

The gaps will be very different for the COO thanthey will be for rivals for the top job, such as theCFO. One part of assessing the capabilities of anheir is to understand where he is now.

The COO role is highly contextual, and thecharacteristics of the current CEO and thechallenges the company is facing are just two of

INSIGHT


many situational elements that determine thenature of the role. Other elements can include theskills the COO has demonstrated and thereputation she has earned. As a result, wecontend, the degree to which the role isinstrumental in the preparation of the heir dependslargely on situational factors like these.

For that reason, it is important to be realisticabout specific challenges the COO faces whenbeing considered for the corner office.How fast is too fast to move?

It is easy to underestimate the difficultiesassociated with the move from COO to CEO,because it is assumed that the COO, as an insider,understands the company, and vice versa.Performance expectations may be inflated to thepoint where they are quite unrealistic, possiblysetting the new CEO up to fail.

The desire to get things moving isunderstandable. New CEOs want to establishthemselves in the role. Board members andcoworkers are anxious to learn what the newleader will be like. However, when the subtleties ofbringing the new chief on board are ignored, it isnot uncommon to see new CEOs taking on toomuch in their efforts to make their mark quickly.

In many cases where the new CEO's personalityis very different from that of his predecessor, andwhen the changeover happens too quickly, theorganization experiences a sort of paralysis.People who are used to interacting with the CEOin a certain way often don't know how to respondto a different style.

Although there is enormous pressure toperform, new CEOs have confessed that onechallenge is actually applying the brakes a bit.One executive noted that as COO, his job hadbeen to make things move forward as quickly aspossible, but that as CEO, his job is often to slow

things down-to make sure the final decision is theright one for the company.

The key is for the board to ensure that the samethoroughness and patience that would be affordeda successor from the outside during heracclimation period be given the former COO aswell. That way, the new boss has time to actuallylearn the role, to evaluate the executive team fromher new vantage point, to understand how torelate to each team member from the new positionand to deepen her relationships with boardmembers.

Even when the executive jobs and the peopleholding them don't change-or at least not much-many of the interpersonal dynamics will changebecause, in effect, the top team is a new team.

Often, COOs are not used to devoting so muchenergy to something that doesn't directly concernrunning the company. But when preparing for theCEO role, they have to recognize that running theboard is part of their job as well. When they domove into the corner office, they will have to investheavily in building relationships with boardmembers, understanding what is important to eachone and discussing how they will operate together,how they prefer to communicate and so on. Thatis especially critical when they inherit the previousCEO's board.

Further complications may arise when theformer CEO joins the board. In this situation, thechallenge is all about how comfortable he can bewith his successor. The new boss may be slow toact on her agenda, worrying that doing too muchtoo fast may appear disloyal to her former boss.

But failing to move quickly to establish thatagenda can reinforce the perception that theformer COO is skilled only at execution. So it isvital to get early agreement on how quickly thenew agenda should be rolled out.

Often, COOs are not used to devoting so much energy to something that doesn't directlyconcern running the company. But when preparing for the CEO role, they have to recognize

that running the board is part of their job as well. When they do move into the corneroffice, they will have to invest heavily in building relationships with board members

INSIGHT


CEOs have to be ruthless Since CEOs never have enough time, they have

to be ruthless about how they prioritize theirresponsibilities and disciplined in sticking to thesepriorities. Some COOs who have made the moveto CEO have noted that the way they allocate theirtime now sometimes seems unnatural.

Several former COOs concede howuncomfortable it can feel to be the final decisionmaker. "Sometimes I feel a bit naked," confidedone, "in that there isn't someonenext door to bounce ideas off. Myboard is a help-and my team is ahelp-but it still feels different thanwhen I was COO."

A second source of discomfortfor the CEOs is being in thespotlight all the time.

Easily the single biggestchallenge that COOs face as heirsis the way they are perceived byothers, both inside and outside thecompany. Because the COO roleis chiefly about good execution, itis easy for others-including boardmembers-to see the COO aslacking in strategic capabilities.Those looking to champion theCOO as the next CEO must findways to demonstrate his strategicpotential to the board.

COOs who make it to the topoften have to recalibrate theirimage, particularly within theorganization. Used to drivingoperations, they have had deepwebs of relationships across the company. But wefind that we often have to coach new CEOs not touse those networks in the ways they have beenused to.

Those who do use their old networks-howeverinnocently-soon discover that even a whisper fromthe CEO becomes a shout across the company.They also realize that they are no longer in aposition to act on every snippet of anecdotal

information they receive through the networks. Notonly do they lack the time to do so, but much ofthe information is about day-to-day operations,and is therefore no longer their primary remit.

Nor can they be seen to be as accessible as theyprobably were in the COO role; they must masterthe art of keeping some "professional distance"-without becoming overly distant, of course.

Boards are often anxious to have the CEO tapa new COO right away. However, that may not

always be the right thing to do.Research has found that the

COO role is most effective whenit fully supports the CEO. To getthe best person for the job, thenew CEO must first have a senseof how she wants to play her roleand where the potential gaps inthe leadership team could be.

Naming their successors tooquickly can have a significantdownside for relay successors.Not only does immediatelyhaving a new COO make itmore difficult for the CEO toestablish himself as thecompany's new leader, thesituation adds a layer oforganizational and reportingcomplexity.

Research shows clearly thatthe right preparation matters agreat deal. COOs who wereexplicitly named as the departingchief executive's heir found thetransition to CEO to be relatively

smooth. When there is one clear heir, the CEO,the board and other stakeholders can invest in theevolving relationship without appearing to playfavorites.

The transition is smoother still when the CEO isready to move on.

Besides the COO herself, the directors and theexiting CEO have important roles to play in gettingthe new chief off to a good start.

Boards are often anxiousto have the CEO tap anew COO right away.

However, that may notalways be the right thing

to do. Research hasfound that the COO roleis most effective when it

fully supports the CEO

SPECIAL STORY


Last few months have not been good for theIndian subcontinent port sector. Congestion at

some of the busiest container ports causeddifficulties to shippers and ocean carriers in thetrades to and from the Indian subcontinent.

Port of Nhava Sheva (Jawaharlal Nehru) hasbeen confronted with serious yard congestion andrail delays in recent months, is gradually returningto normal traffic levels, but severe terminalcongestion at Sri Lanka's Port of Colombo andBangladesh's Chittagong has been wreaking havocon normal cargo flow and vessel sailing schedules.

Jawahar Lal Nehru is India's largest containergateway, handling almost 60 percent of thecountry's total containerized traffic. Volume for fiscal

2009-10 totaled a record 4.06 million TEUs, and1.09 million TEUs for the April-June quarter.

Current expansion plans for the port include a 4-million-TEU fourth terminal and a 330-meter berthextension project, doubling annual capacity to over8 million TEUs from 4.17 million TEUs now.

Three major ocean carriers covering the trade toand from India imposed an emergency congestionsurcharge on all import containers handled at thePort of Nhava Sheva (Jawaharlal Nehru), thecountry's largest container gateway. Effective July15, the surcharge will be $150 per 20-footequivalent unit and $300 per 40-foot equivalentunit.

Orient Overseas Container Line, NYK Line and

Congestion cripples portsAs situation at Nhava Sheva improves, severe terminal congestion at Sri Lanka'sPort of Colombo and Bangladesh's Chittagong wreaks havoc on normal cargo flowand vessel sailing schedules

By K Mahendra Kumar

SPECIAL STORY


Hyundai Merchant Marine, in separate notices tothe trade, said the surcharge is necessary to offsetadditional costs incurred as a result of increasedcongestion and rail delays at the west coast hub.

"Due to serious port congestion in Nhava Sheva,we will implement a port congestion surcharge forall inbound cargo including inland shipments,"OOCL said.

Persistent operational delays earlier promptedsome shipping lines, including Maersk Line andCMA CGM, to divert northernhinterland cargo to the neighboringports of Mundra and Pipavav.

According to the lines, the currentsurge in overall traffic volume coupledwith the onset of heavy monsoonrains, which typically complicateintermodal operations, is likely toaggravate the situation. In a bid toclear a jam of northbound containers,state-owned rail operator ContainerCorp. of India recently made specialarrangements to shift accumulatedboxes en masse to its nearbyDronagiri Rail Terminal at no extracost to lines, and deployed additionaltrains to facilitate speedy evacuation.

Nehru, with a port-run terminaland two private facilities, saw itsthroughput grow 17 percent duringthe April-May period from a yearearlier to 751,000 TEUs. In fiscal2009-10 ended March 31, it handled a record4.06 million TEUs compared with 3.95 millionTEUs the previous year.

However, Nhava Sheva Port denied reportedcongestion. In a statement, the port said thatoperations at its three terminals improvedconsiderably over the last two months. The portrequested shipping lines call off their plans to levycongestion surcharges on inbound containers.

"There will be congestion in any logisticsbusiness, but it is not abnormal or unprecedentedcongestion for the lines to levy a congestionsurcharge," said N.N. Kumar, acting port chairman.

He said the terminals are making all efforts toensure speedy conveyance of containers to vesselsfor exports, and to rail and highway for importdeliveries. Cargo deliveries to container freightstations around the port and inland depots are "atnormal levels," averaging 1.72 days to containerfreight stations and 6.42 days to the Tughlakabaddepot near Delhi, port officials said.

The port authority also denied reports that theshortage of harbor pilots was affecting vessel

turnaround schedules. "The port hasadequate number of pilots for servingvessels of varied tonnage and there isno berthing delay," it said.

The port's statement comes aftersome leading carriers, including APL,NYK Line and Orient OverseasContainer Line, issued trade noticeswith congestion surcharges of $150per TEU and $300 per FEU, citingincreased operational costs.

CMA CGM is diverting containersfrom India's busiest container portNhava Sheva as terminal operationscontinue to be hampered bycongestion.

The French carrier said it believedthe situation was starting to improve,but meanwhile is diverting containers,with client approval, to the Indian portof Mundra, located north of NhavaSheva on the west coast.

CMA CGM's Line Manager for Europe andIndian Subcontinent, Christophe de La Ferrière,said the congestion was caused by the high numberof imports stuck in Nhava Sheva's terminals: JNPCT,NSICT and GTI.

"This is due to poor evacuation of the importscontainers towards the various inland containerdepots," he said.

"Productivity at the terminals is also impacted bydelays in docking/sailing the vessels due toshortage of pilots in Nhava Sheva.

"Transit times to final destination for importcontainers are affected. It is also sometimes causing

Persistent operationaldelays earlier

prompted someshipping lines,

including Maersk Lineand CMA CGM, todivert northern

hinterland cargo tothe neighboring ports

of Mundra andPipavav. According tothe lines, the currentsurge in overall trafficvolume coupled withthe onset of heavymonsoon rains is

likely to aggravatethe situation

SPECIAL STORY


delays, mainly for containers coming by rail frominland origins."

To combat the delays to containers moved byrail, CMA CGM was using trucks as often aspossible.

De La Ferrière said that if containers missed theship they were booked on, they would be delayedfor seven days.

However, he was optimistic the congestion wouldease as the rail operator was increasing thefrequency of its services.

Maersk Line also complained that containerswere being "severely" delayed at the port, followinga double-digit increase in container volumes duringApril and May.

The Danish carrier was concerned that, with themonsoon and peak seasons approaching, it wouldbe some time before operations returned to normal.

To try and mitigate the delays, Maersk had

diverted all its traffic to and from northern Indianinland container depots via Pipavav, India, to helpease the congestion and provide better transittimes.

The 6,000 km long Indian coastline has 12major ports and 181 minor/ intermediate ports outof which 139 are operable. Indian Ports are thegateways to India's international trade by sea andare handling over 90% of foreign trade.

The major ports are located at Calcutta/ Haldia,Chennai, Cochin, Ennore, Jawaharlal Nehru Port atNhava Sheva, Kandla, Mormugao, Mumbai, NewMangalore, Paradip, Tuticorin andVishakhapatnam.

The 12 major Indian ports, which are managedby the Port Trust of India under Central Governmentjurisdiction, handle 90 percent of the all-India portthroughput, and thus bear the brunt of sea bornetrade. Though the bulk of Indian trade is carried by

SPECIAL STORY


sea routes, the existing port infrastructure isinsufficient to handle trade flows effectively. Thecurrent capacity at major ports is overstretched.Sri Lanka, Bangladesh story

Severe terminal congestion at Sri Lanka's Port ofColombo and Bangladesh's Chittagong is wreakinghavoc on normal cargo flow and vessel sailingschedules.

"All mainline and feeder vesselscalling at Colombo areexperiencing delays due toincreased berthing times. Thecongestion is particularly affectingtransshipment cargo from India,Bangladesh and Pakistan as it islargely routed through Colombo," ashipping line agent reported fromColombo. Persistent delays recentlyforced Zim Integrated ShippingServices to suspend callingColombo on its independently-operated Asia-Mediterranean-Europe Service until further notice,in a bid to maintain its fixed-dayberthing window at Nehru.

"Colombo Port has bitten offmore than it can chew. Moreservices at the port are creating amess. We have written to the SriLankan Port Authority to clear thebacklog. They are creating morespace for idling containers," a senior ShippingCorp. of India official said. According to localshipping circles, the situation is aggravated by achronic shortage of handling equipment, andrecent problems in "inter-terminal trucking" after theauthority appointed a new private contractor forsuch operations, leading to legal disputes andwork-to-rule slowdowns.

"In a nutshell, feeder vessels are being delayed inberthing, and containers are then getting delayed intransfer between feeders and connecting mothervessels," a leading feeder operator said.

Colombo's box traffic for the January-May periodrose 27 percent to 1.68 million 20-foot equivalent

units from 1.32 million TEUs on a year-on-yearbasis. To alleviate congestion problems, SLPA isdeveloping a 22-acre logistics park around the portarea and expanding terminal capacity with theproposed South Harbor and Hambantota portprojects.

The congestion at Chittagong, Bangladesh'smain gateway port, is mounting so rapidly that

shippers are in a quandary overcontractual commitments.

"The congestion is so severe thatnot a single vessel has been able tomaintain its originally plannedschedule in recent weeks. Oceancarriers are also experiencingsevere space and equipmentshortages adding to the alreadyextreme situation," said freightforwarder Milgram & Company.

A representative of theBangladesh GarmentManufacturers and ExportersAssociation said cargo handling atthe port is being delayed by anaverage of 10-11 days comparedwith 2-3 days a couple of monthsago. The operational disruptionsand delays, which have beenattributed to increased labourunion activities and an acuteshortage of containers, prompted

carriers to impose congestion surcharges on allexport and import cargo handled at Chittagong.Hapag-Lloyd said it plans to raise Chittagongsurcharges from the current $100 per TEU to $200per TEU, effective Aug. 16, citing increased feedercosts.

Slowly but steadily, containers are piling up atsmaller Indian ports too, such as Tuticorin, Chennaiand Kolkata, amid surging cargo volume andinadequate infrastructure. Container volume atmajor Indian ports for the April-June quarterincreased 17 percent in the April-June quarter to1.9 million TEUs from 1.6 million TEUs in the year-ago period.

The operationaldisruptions and delays,

which have beenattributed to increasedlabour union activitiesand an acute shortage

of containers, promptedcarriers to impose

congestion surchargeson all export and

import cargo handled atChittagong. Hapag-

Lloyd said it plans toraise Chittagong

surcharges from thecurrent $100 per TEU to$200 per TEU, effective

Aug. 16, citingincreased feeder costs

transreporter

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