Emerging Market:
The Road Ahead
Ram C. Menen
Divisional Senior Vice President Cargo
skycargo.com
Mumbai, India
24th January 2008
Emerging Markets : Where Are They
Asia
Middle East
Eastern Europe
Africa
Latin America
Will They Walk the Walk……..
Emerging Markets
Fastest Growing Economies Of The World:
BRIC Countries
World Markets
Emerging Market: Asia
Highest growth is likely to be within the
Asia Pacific region where its share will
go from 24% to 26% by 2011.
India and China will be major players in
this growth.
India needs to be prepared to be able to
deal/handle this growth.
Welcome to ‘Incredible !ndia!’
Indian Economy
The economy of India is the 12th largest in the
world
3rd largest in terms of Purchasing Power
Parity (PPP)
2nd fastest growing major economy in the
world
GDP worth US $1.25 trillion (2008).
GDP growth rate of 9.4% (fiscal year 20062007)
Source: Wikipedia
India’s buoyant growth outlook
Higher GDP growth as industrial
expansion accelerates
Inflation risks building up
Smaller current account deficit as
industrial exports strengthen
Further monetary tightening may be at
hand
Deteriorating fiscal position could limit
infrastructure investments
Latest Trends & Developments - FDI
India has displaced the US to become
the second-most favored destination for
foreign direct investment after China
FDI equity flows were US$ 5.5 billion in
2005-06, it increased almost three times
to US$ 15.7 billion in 2006-07,
representing a growth rate of 184%
India Issues
Politics & Government
Bureaucracy, slowness due to
fragmentation
Infrastructure
– Facilities
– Need to simplify the business through
effective use of technology
– Power
Sustaining the growth spurt
Air Cargo Outlook
With India's GDP growing at over 9% per
year and the manufacturing sector enjoying
double digit growth rates, the Indian logistics
industry is at an inflection point.
Overall, the growth rate of the aviation sector
(including domestic) in the next 10 years is
expected to be not less than 25 percent.
India: Infrastructure.
Highest landed costs due to inefficiencies
throughout domestic logistics chain
New highway system is key to future growth
Four Metro Airports: Delhi, Mumbai, Kolkata,
Chennai
Non-Metro Airports: Bangalore, Hyderabad,
Kochi, Thiruvananthapuram etc
Emerging Airports: Nagpur, Guwahati,
Lucknow, Coimbatore,
Cost of Logistics
Logistics cost in India is over 13% of GDP
(circa US$ 70 billion), compared to less
than 10% of GDP in Western Europe and
North America.
The main reasons are: inefficiency of the
system, lower average trucking speeds,
lower turnaround speeds at ports and cost
of administration delays
Efficient supply chain management is the
only way to bring the costs down
For this to happen, logistics infrastructure
must consider developments in science of
supply chain management.
Infrastructure
The country needs US$330bn in infrastructure
investment over the next five years to sustain its
economy's growth at 8% annually
India needs to increase its spending on
infrastructure projects to 8% of the country's GDP
from 4.6% at present.
Despite these obstacles, India will reach average
annual freight traffic growth of 11.1%
(international) in the 2007-2011 period
The Way Forward…
Science of vendor managed inventory (VMI)
will evolve and will play a critical role in
achieving efficiency of future supply chains
Collective & Collaborative efforts in the supply
chain is a must
The ability to communicate in real time will be
critical to efficient stock keeping for
manufacturers and retailers equally, to
maintain the integrity of efficient VMI process.
Infrastructure must support and facilitate
continuous replenishment process.
The Way Forward…
Development of good sales to inventory ratio
data will be key to the efficiency of VMI
operation
Development of common language for
transmitting data electronically from one
business to the other will be key to success
and India is best placed to be able to deal
with this because of its supremacy in the IT
field.
Air Freight has got to be factored in and
should be a planned tool for gaining efficiency
in VMI.
Value Chain
India’s … Future…
Up until now, the highest growth has
been in the services industry.
However, during the next phase,
highest growth will be in the
manufacturing and retail business
A good logistics infrastructure will be
key to emerging India market
Opportunity
As an emerging and developing nation,
India has the advantage of leapfrogging
technology. India is in a position to
benefit from latest technologies and
take the science of supply chain to the
next level, giving it a leadership
position in the world market
Thank You
skycargo.com