increasing number of Indian project cargo importers including power plant buyers from China are learning the hard way the inefficiency of the logistics and supply chain management prevalent out there. Scenes at leading destination ports of project cargo like Mumbai, Vizag, Haldia, Chennai, Tuticorin and Kandla tell the story in graphical details.
Substandard packaging of the cargo (despite being sensitive engineering cargo for large industries), poor stacking within the ships, poor documentation/information flow/tracking of the cargo being loaded onto the ships, inferior shipping marks on the cargo making identification and tallying of cargo at the destination ports etc are nightmares for surveyours who are supposed to tally the goods and clear them.
Most often packing bills are totally haphazard and are debatable with shipping lines having a different version from that of the exporters. Given the adamancy of the shipping lines and insistence of port authorities to clear the cargo, surveyours invariably have to 'compromise', hiding many things behind poor packing, poor identification marks.
According to a Mumbai-based logistics operator, the increasing imports are only helping to make the problems worse and more complex than improving the systems and procedures.
China is emerging as a major player in power plants of up to 600MW in size plus industrial and transport infrastructure with one power station being built per week on an average. According to industry circles here, besides other project cargo, India is going to import 12 power plants of 1000 mega watt each from China in 3 years.
Despite their contribution to the growth of exports, the Chinese logistics and supply chain industry are still dogged by inefficiency, even more than their Indian counterparts. There are now more than 700,000 logistics enterprises registered in China, mostly small and medium-sized operators.
When a very large business house recently did a commercial analysis of their cost of importing a power plant from China, they found that 40% project cost saving (when compared to Indian manufacturers) coming down to 25% due to damages and slippages. However, if the project delays and time overruns were also taken into consideration, the margins would have gone down by another 10%. The company source said, on condition of anonymity, for their forthcoming project for 1000 mega watt power plant, they are seriously looking at sourcing locally.
"The solution is not to stop imports of such critical equipments from China," Kutbuddin Ujjainwala of Mumbai-based Insight Consultants said, adding, "But to have will and determination on the part of the importer, who should stick to packing methodology and logistics mechanism for delivery while clinching the deal with a Chinese exporter."
Another important factor is the Indian preference to import on C&F basis instead of on ex-work basis. For critical projects, which have gestation of over 2-3 years, it is advisable to have an inspection team at the sourcing point, he said.
Source : The Economic Times