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The impact of the consolidation will be felt in the Logistics segment as well


Mr.S Narasimhan is the Vice-Chairman of Sattva group of Companies who have their Presence In east coast of India spreading from Chennai to Vishakapatnam. His father Mr Santhanam has been a doyen and father figure in the field of Logistics.

Mr S.NARSIMHAN who holds a Masters Degree in Science and Business Administration has done specialization in Marketing, Information System and Operations Research. After spending about eight years in Middle East in reputed IT Companies such as WANG, AT&T, Microsoft, he decided to move to India to take on the Vice Chairmanship of Sattva Group and steer the operations by establishing various units in India.

He was the Past President (2015-16) of CII Pondicherry and present member of Southern Regional Council of CII and also is a member of various Trade Associations. Happily Married to Mrs Usha and blessed with grandchildren, he spends his weekends in philanthropic activities

 Question and answer session with Mr.S. Narasimhan, Vice Chairman Sattva Logistics PVT LTD

Sagar Sandesh: What is the state of the global shipping industry which had to forgo banking finance for nearly ten years because of the economic down turn? What has been the impact of merger of global shipping companies on the freight market for containers and bulk cargo? Your views on the future of the industry after the completion of the consolidation phase.

ANS: The shipping industry is going through the Consolidation phase. The industry has come to this situation because of the price wars unleashed by the shipping companies.

I hope the Logistics industry should not fall a prey to the price war and get into the same shape or status as the Shipping industry.

However, the Consolidation phase has a positive impact on the industry because everyone talks in terms of size of the company. So long as size of the company is big, you have the right and the authority to run the company much better.

A Lot of shipping companies are downsizing their units so that they could cut costs. Multiple offices they were running across the world have folded up. The industry also witnessed certain extent of manpower reduction. There is lot of firing of manpower, resulting in loss of Jobs.

However over a period of time, the industry will certainly settle down. I think the consolidation phase is good for the industry. The impact of the consolidation will be felt in the Logistics segment as well.

For example if we look at Container Freight Station and Inland Container Depot Market, Direct Port Delivery of Imports and Direct Port Entry of Exports will play a major role in the way the Logistics industry would run in the country especially  in  the EXIM side.

We also expect that a lot of consolidation that is taking place in the shipping industry, will have an impact in the transportation sector as well. The transportation segment of the supply chain industry is currently run on a traditional approach and not on a scientific basis as is ought to be.

We also keep talking about Multi Modal Logistics but that again is confined to some selected segment of running train services. Eighty five per cent of the cargo is still moved in the country by the road sector. Even though the government is building new Roads and National Highways, they are not sufficient to meet the growing demands of the industry.

The time has come when the Government and other  Stakeholders of the Logistics industry  to look at converting the cargo moving by road on to trains and coastal shipping segment

The consolidation of the Shipping industry will also help to a certain extent the internal movement of Non EXIM cargo through coastal sector as the government has allowed Foreign Flag vessels to take Indian cargo through changes in the Cabotage laws. Increased coastal movement of cargo will help the growth of East Coast Ports. I see a great future for coastal movement of goods in the East Coast.

Today the West Coast Ports are well developed compared to their Eastern counterparts because of the phenomenal growth of Mundra and JNPT Ports in the last decade. This has become possible because of the excellent rail connectivity, the government had built over the years between North Western States including the National Capital Region with the West Coast ports . In comparison rail connectivity to East Coast ports is inadequate.

SS: What will be impact of the On-going Trade Wars on the International Trade and the Shipping industry? Will the movement of goods in certain shipping routes be affected because of the trade war between United States and China?

ANS: The on-going trade wars will have a severe impact especially on Indian foreign trade because the country is caught between United States and China and both the countries are among the biggest trade partners of India. We are therefore forced to have  a re-look at the duty structure on the goods manufactured in United States and China. However I see a little impact on the movement of goods because of the trade war. I am sure the impact will be more structured and organized especially for the goods coming from China

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