While Goods and Services Tax (GST) continues to remain in a state where several loose ends still need to be tied up, logistics companies -- both domestic and global -- are not just bullish about the sector but are actively making investment plans for the coming fiscal as well.
"For us, I do not see investments getting hampered if GST gets delayed. GST can only add to our current investment plans. As of now, in a growing logistics market like India, higher investments are much a need of the business to improve earnings and streamline operations," said Abhishek Chakraborty, executive director at DTDC Express.
The Bengaluru-based company has 60-65 per cent of its total revenue coming from the express business where it competes with giants like Blue Dart and Fedex. Apart from that, DTDC is into supply chain and e-commerce as well. "We plan to invest about Rs 20-25 crore through internal accruals of which a part will go into technology, hardware and increasing head count. Also, over the next one-two years, we expect to make more serious efforts to raise capital through either our subsidiaries or internally, and may even go to third parties for funds," said Chakraborty without divulging the amount it plans to raise. The company is expected to close the current financial year with a topline of Rs 1,050 crore.
According to Agility's Emerging Markets Logistics index published last month, India, for the second consecutive year was picked as the country with the most potential to grow as a logistics market. The report, which surveyed more than 800 supply chain and logistics professionals, said GST would be the potential game-changer and companies will have to re-gear themselves to adjust to GST. Surveyed entities also indicated that India was the leading emerging market destination for investment by their companies over the next five years.
Last year, France's FM Logistics acquired Pune-based Spear Logistics, making an entry into the promising India logistics market.
"We see a good growth potential for warehousing segment in the domestic market and would have invested even if GST was not round the corner," Stephane Descarpentries, director-strategic projects and director operations Asia, FM Logistics had said.
FM Logistics aims to invest about Rs 300 crore over next three years in order to strengthen its warehousing base across the country. "With e-commerce segment growing in India, we see the need for better warehousing across country and hence this investment (of acquistion)," explained Descarpentries. In the short-term, the company plans to invest about Rs 30 crore over next 6-8 months on ramping up custom-built warehouses of Spear Logistics.
With its strong presence in eastern part of the country, Inland World Logistics, flagship company of Inland Group is also all set to strengthen its investments in value-added services within the country while foraying to neighbouring regions.
"India is the largest of entire SAARC (South Asian Association for Regional Cooperation) countries but a lot of Indian companies have trade with SAARC countries and hence we have plans to invest Rs 20-25 crore in Sri Lanka and Bangladesh next fiscal to increase our volumes," said Praveen Somani, director at Inland World Logistics.
Inland World Logistics already has a subsidiary in Nepal and Bhutan where it sees growing traction for distribution business from India to the latter. Meanwhile, domestically, Inland World Logistics has increased its third party logistics segment, inventory management and warehouse management as services under value-added platform.
The company is expected to close the current financial year with a topline of Rs 920 crore and has aimed to take its consolidated revenues to Rs 3,000 crore. For 2017-18 (Apr-Mar), the Inland World Logistics has set a target of Rs 1,500 crore topline as it expects foraying into new regions would translate into some contribution to the revenue volumes.
After meeting up with the textile manufacturers in Ludhiana and Mumbai, the eight member cotton delegation from Australia came over to Coimbatore in the last leg of their five-day tour.
They left for their home country on Friday after meeting up with the trade community and select mill owners here the previous evening.
During the two-hour presentation, the delegation comprising of cotton shippers, a cotton grower and a research scientist shared the Australian cotton story with special emphasis on zero contamination, quality characteristics of the fibre and their complete package offering.
Later, speaking on the sidelines of the meeting, Matthew Bradd, Chairman of the Australian Cotton Shippers Association told Business Line that they were here to bolster opportunities for exporting high quality Australian cotton to India.
“India has consistently purchased Australian cotton year-on-year, but the last year's monsoon condition and the resultant smaller Indian crop led to an increased demand by the mills here to maintain production.
“In fact, India topped in consumption of Australian cotton at 22 per cent last year,” he said before adding that this was his maiden visit to India.
While conceding that the fibre quality, consistency and strength is superior in many aspects, a member of the Indian cotton trade said that the price is exorbitant and appealed for considering a reduction in the offer price.
Brushing off the comment, Bradd continued about the crop size. “The crop last year peaked to 4.2 million bales from 3.7 million bales during the earlier season. Incidentally, we don't have a domestic market for cotton. The entire volume is exported to global markets. Nearly 80 per cent is exported to countries such as India, China, Indonesia and Bangladesh and the remaining 20 per cent is taken up by Pakistan, Taiwan, Korea, Japan and Turkey.
He admitted that Australia had, until three years ago depended on China for exporting the white fibre. “When China changed its import policy, we were left with a huge inventory. Now, we have strategically decided not to focus on one country for export. When Governments change, policies change as well. So we have to be careful,” he said in response to a query.The cotton industry in Australia invests huge sums in breeding better varieties. Added to this, researchers have developed procedures and tools to assess spinning ability and fibre attributes with a focus on improved spinning and dyeing ability.
“Picking is 100 per cent mechanical, resulting in zero contamination,” he reiterated.
Picking starts in February, offering is made in April and shipped by July – August.
“It has been ideal for Indian spinning mills to source the Australian fibre as at the fag-end of the cotton season here, mills start looking to import quality fibre. And they have understood the relative value of our offering,” Bradd said.
The Australian Bureau of Agricultural and Resource Economics and Sciences (Abares) has released its annual outlook report in conjunction with its annual conference in Canberra. The report finds that 2016-17 is set to be a bumper year for agriculture mostly off the back of exceptional growing conditions. It’s a report that highlights the importance of the right environment for agricultural production and also how susceptible agriculture is to the impact of climate change.
One of the more unusual aspects of last week’s GDP figures was that the leader of the pack over the past year has not been the mining industry.
For the first time since September 2008, and for only the fourth time in the past 20 years, the agricultural industry was the biggest contributor to annual GDP growth:
The reality is it has been a very long time since Australia has ridden on the sheep’s back (or on top of a silo full of wheat).
Over the past 40 years, the agriculture and forestry industry has contributed just 2% of Australia’s GDP growth – the third lowest of any industry.That does not mean the industry is unimportant, but perhaps it does show how we do view the industry through an historical and cultural lens that we don’t, for example, with the accommodation and food services industry, despite the two industries contributing a similar level of value added into the economy.The agricultural industry however remains a good representation of the Australian economy to the extent that it remains captive to world prices, the value of the Australian dollar and the vicissitudes of weather and climate.
According to the Abares report, good weather and rising world prices in the second half of 2016 will see the gross value of Australian farm production increase by 8.3% in 2016–17 to a record $63.8bn.
Abares director, Peter Gooday noted that even though the forecast is for production to fall slightly in 2017-18 to $61.3bn, that would still see it 17.3% higher than the average of the five years to 2015-16.
The figures in the Abares 2017 Outlook highlight the exceptionally strong production of wheat, barley, and industrial crops like cotton and sugar cane in 2016-17:And while forecasting is hard enough without having to throw in the quirks of whether or not rain and sunshine occur at the right time in the right amounts, Abares suggests 2016-17 is to be a bit of a peak, with farm production not to reach these heights again this decade:
The report suggests the main reason for the decline is an assumed return to average seasonal conditions in 2017-18.
The report estimates that while there is a small forecast rise in the volume of livestock production, it would be offset by a fall in the volume of grain and oilseed production from its record high in 2016–17.
Agriculture continues to punch above its weight is on the export front – accounting for around 13% of the value of all our exports.
As the deputy prime minister and minister for agriculture and water resources, Barnaby Joyce told parliament last week, we now have record beef and sheep prices, and wool is at a price not seen since the 1980s. Prices for wheat and barley, however fell:
The impact of the Australian dollar is crucial in agricultural exports.
Abares notes that the depreciation of the Australian dollar relative to the US dollar from 2013 increased the competitiveness of Australian exports – because most rural commodities are bought and sold in US dollars.
The RBA’s index of commodity price shows that while rural prices have fallen since 2011, the falling value of our dollar meant the prices in Australian dollar terms actually held up:In effect farmers were getting more Australian dollars for their produce, even while they were getting less in US dollar terms.
Abares notes that the total real value of Australian agricultural exports increased for seven consecutive years from 2008–09 to 2014–15.
They attribute this growth to the global demand for food, particularly from Asian countries, that has seen an increase in our exports to Asia and also to productivity growth among farm production.
On this score it is worth noting that over the past 20 years, only the wholesale trade industry has seen greater improvements in productivity than the agriculture industry:Farming in 1997 is akin to the dark ages compared to how it is done now with much more efficient equipment and methods.
Abares expects export to overall hold up in 2017-18 – with some falls offset by improvement in other commodities:The Abares Outlook report makes for good reading for the government. While they can take no credit for good weather and high world prices, the outlook does frequently make positive mention of the various free trade agreements that have been recently entered into by Australia.But the forecasts for the next five years highlight that even with increased access to China markets, production is expected to remain flat. The report also notes that it estimates are “subject to significant climate effects” and that “in the two decades to 2014–15, climate conditions deteriorated across many grain-growing regions.”
The report also notes that farmers have begun adapting to the impact of climate change, noting that “anecdotal evidence suggests that farmers have adopted a variety of management practices, including conservation tillage, to exploit summer soil moisture in anticipation of reduced winter rainfall.”
At the annual Abares Outlook conference beginning today in Canberra, one session will discuss “climate change: recent effects on crop yield and productivity.”
It should make for an interesting discussion, because above else, the Abares report shows that even with more open markets, and strong prices, the industry remains hostage to the sun and rain.
The nations of the Gulf Cooperation Council (GCC) and Egypt have impressive trade relationships with Australia. The UAE and Australia shared an $8 billion two-way trade in goods and services in 2015-16, including a $3 billion trade in services that was 8.7 per cent higher over the year. Australia and Saudi Arabia also recorded a $2.8 billion two way trade and in goods and services
Australia’s strong capability in health research and mining will be on display in the Middle East and North Africa region during the Australia Unlimited MENA 2017 (AU MENA) trade mission this month. The Australian Trade and Investment Commission (Austrade) will host its annual Australia Unlimited MENA roadshow from 11-19 March and several leading Australian universities, mining, and healthcare companies will be represented
Australia’s dynamic health research expertise will be profiled during the fifth AU MENA campaign using the theme “collaborate to innovate.” For the first time, Austrade’s mining mission will be a focus of the roadshow, which will promote the bilateral trade, investment and cultural ties that exist between Australia and the MENA region. Major activities will take place in UAE and Saudi Arabia, and there will be associated programmes in Kuwait, Qatar, Oman and Egypt
Australia’s ambassador to the UAE, Arthur Spyrou, said Australia’s mining companies had a lot to offer the MENA region in terms of developing a broad range of projects beyond the energy sector. “Australia is one of the world’s leading mining nations, with a particular expertise in the mining technologies and services that help to keep the world’s mines operational,” Mr Spyrou said. “At a time when many nations in the MENA region are exploring the potential of their mineral deposits this represents a good opportunity to talk about needs and capability.
Through a series of high profile forums, targeted roundtables, and official meetings, AU MENA will provide introductions between Australian companies and key government officials, industry stakeholders, and projects in United Arab Emirates, Saudi Arabia, and Egypt
Gerard Seeber, Senior Trade and Investment Commissioner and Consul General to the UAE, said another focus this year was how Australian healthcare service firms can help MENA countries cope with growing demand. “Australia’s proven expertise in healthcare is well-positioned to assist the MENA region as the public and private sector work to develop a local medical tourism industry and try to prevent the spread of lifestyle illnesses such as diabetes and cardiovascular disease,” Mr Seeber said
By 2020, spending in the GCC alone on healthcare will reach $69 billion. It is estimated that by 2020 there will be a shortage of 15,000 physicians and 1.8 million nurses and midwives. “So the need to enhance skill levels in the healthcare sector also offers clear opportunities for Australian education and training providers,” Mr Seeber said
This year, AU MENA will also encompass a programme for Dairy Australia. The Australian dairy industry has had a healthy relationship with the GCC market, with 11 per cent of total dairy exports making its way into the region. 57 per cent of the GCC’s total dairy consumption was met through imports.
Embraer displayed a Legacy 450 at Avalon, near Melbourne, in the superlight type’s first appearance at the show. The aircraft was accompanied by a Phenom 300, which entered service in Australia in January.
Over the period 2011-2016, the country’s business jet market has been stable, reaching 191 aircraft in 2016, says Claudio Camelier, Embraer Executive Jets’ vice-president sales, Asia-Pacific and Middle East. This comprises 59 large-cabin, 48 midsize and 84 light jets. The large-cabin category has increased and the medium sector fallen in recent years, he says.Embraer has just six business jets flying in Australia today: three Phenom 100s, a Phenom 300, a Legacy 500 and a Legacy 600, with Camelier saying Australian operators typically favour pre-owned aircraft.“In the near future we are not going to see a big shift in this behaviour: it will remain stable, with some new aircraft,” he predicts. To support the country’s fleet, Embraer has established a service centre network with bases in Brisbane, Melbourne, Perth and Sydney.
Gulfstream sent a G280, G550 and G650ER to Avalon. The company’s commitment to the local market is demonstrated by its appointment last year of a permanent field service representative in Sydney, and a parts facility in Melbourne.
The airframer is optimistic of further growth in the Australian market, where it boasts an inventory of 16 aircraft – about one-third of which are ultra-long-range G650s.
“We will continue to see the G650 fleet growing here,” says Roger Sperry, regional senior vice-president, international sales, Asia-Pacific, who adds that the G280 is also gaining interest thanks to its 8h endurance, which puts Singapore in reach from the Australian east coast.
Avalon meanwhile marked the Australian debut of Dassault’s flagship Falcon 8X, which the airframer displayed alongside a large-cabin 2000LXS.
Dassault says it has had a presence in Australia since 1967, when its first aircraft – a midsize Falcon 20 – entered service. Flight Fleets Analyzer shows an inventory of nine Falcon jets in the country: three 2000s, two 900s, two 20s, a 7X and a 50EX.
Manufacturers are also readying for a decision from Canberra on how to replace the two leased Boeing Business Jets and three Bombardier Challenger 604s operated by the Royal Australian Air Force’s 34 Sqn for governmental and VIP transport missions. The tender closed last year, with airframers talking to potential local partners on teaming arrangements.