Maersk is not only a global conglomerate, owning one of the world’s largest container shipping companies but also a corporate phenomenon that has revolutionised the logistics and forwarding solutions. In an exclusive interaction with Dibyendu RoyChowdhury, Julian Michael Bevis, Senior Director – Group Relations (Asia), A.P. Moller-Maersk Group, shares Maersk legacy and how logistics infrastructure has changed significantly and facilitated the development of the Indian manufacturing segment.
Since 1996, Maersk has been the largest container ship operator and supply vessel operator in the world. What makes Maersk an irresistible name in container services, logistics and forwarding solutions?
Customers are increasingly looking for global solutions to their logistical problems. Our vast global coverage coupled with world-class service levels make us the partner of choice for our clients. Through our various business units, we can provide end-to-end services — from shipping services to a wide range of destinations and origins for the terminal networks. We start with understanding clients’ requirements and then recommend a solution.
Maersk Line (which holds 15.1 per cent of the global TEU), MCC Transport, Safmarine and Damco have made a name of themselves. How important are these brands for Maersk and how have they been changing the dynamic of logistics market?
All these brands are very important for us. Maersk Line as a whole is an integral part of the group. We have five key business areas – Maersk Line, APM Terminals (a global port and logistics infrastructure provider), Maersk Oil (an inside sub stream oil producer), Maersk Drilling and APM Shipping Services which include Maersk Tankers, Damco, Svitzer and Maersk Supply Service. Maersk Line provides marine services to the oil industry, and Maersk Tankers is in the product tanker market place.
Today’s customers are operating in a global market place and hence are always looking for global solutions to their requirements. At Maersk, our container brands have achieved the top position because of our ability to provide world-class service levels through our vast global network.
Could you share your views on Indian logistics infrastructure vis-à-vis that prevailing in Asia and the West? In addition, what are its implications on your business?
I have had the privilege of working in India for over 14 years now. I came to India in 1996, and I can safely say that logistics infrastructure has changed significantly and has facilitated the development of the Indian manufacturing segment. It has given Indian consumers an access to goods and services from across the world at relatively competitive price. Logistics segment in India represents a higher percentage of country’s GDP as against many other countries, hence it is important for the infrastructure to keep evolving and improving.
Since India is an emerging economy, it will keep posing challenges which have to be tackled by the government, regulators and industry bodies together. We, at Maersk, are trying to be part of this change and support the government to arrive at best possible solution whether it is with respect to bring the cost down or increase the competitiveness of Indian products.
“Make in India” initiative by the prime minister of India is a tremendous, far-sighted idea which obviously needs support from logistics infrastructure of similar scale and efficiency. In a large country like India, a lot of work needs to be done on the infrastructure side. But I am sure that the current government is capable of tackling these issues and challenges.
Poor logistics infrastructure costs (theft and damage, higher inventory holding costs, and facilitation and transaction cost) Indian economy an extra $45 billion or 4.3 per cent of GDP each year. How should India approach to combat the challenge to strengthen its poor logistics infrastructure?
I wouldn’t say that India’s infrastructure is poor. There have been significant improvements over the past few years. And this is good news for all because it shows that there is willingness and ability to recognise the importance of logistics in the development of the economy. I am not too sure about the figures that you have quoted above, but every sector that is undergoing an evolution has its pros and cons and an economic cost attached to it. This is something that the industry in conjunction with the government and regulators need to recognize.
The Indian logistics companies are eagerly waiting for GST regime to optimize their operations to reduce cost and increase their margins? What are your expectations from GST regime?
GST will unify and regularise the tax regime across the country, thereby having a positive effect on the economy. Benefits will vary from company to company and will also depend on individual transactions. We also look forward to a constructive debate with tax authorities and other regulators to ensure that such changes are brought in all segments of business to make the system more efficient and transparent. I maintain that the change has been effective and enabled the development of this country. I am sure that this development may have a gestation period, but it will deliver great benefits in the long run.
The warehouse market in India is expected to grow at a CAGR of 10 per cent whereas freight forwarding market is expected to grow at a CAGR of 12 per cent till 2020. What are your proposed investments to support growth in the coming years?
India is a market with huge potential and complexities at the same time. We certainly see the opportunity of increasing our business in the freight forwarding and possibly in the warehousing space as well. But it is difficult to predict how these opportunities will present themselves. We have been contributing to India’s growth for a long time and are open to partner with the government in shaping guidelines and rules that will benefit the entire ecosystem and further contribute to country’s economic growth.