Transportation, Logistics, Warehousing and Packaging Sector

Transportation, Logistics, Warehousing and Packaging Sector (2022)

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Study on mapping of human resource skill gaps in   India till 2022 

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table of Contents
1.  Environment Scanning and Competitiveness of the Transportation, Logistics, Warehousing and Packaging Sector ........................................................................................................................... 5  1.1.  1.2.  Overview of the Transportation, Logistics, Warehousing and Packaging Sector ................... 5  Industry Size and Growth of the Transportation, Logistics, Warehousing and Packaging

Sector 7  1.3.  1.4.  Demand Drivers of the Transportation, Logistics, Warehousing and Packaging Sector ...... 20  Key Success Factors and Risk Factors for the Transportation, Logistics, Warehousing and

Packaging Sector ............................................................................................................................... 21  1.5.  Drivers of competitiveness of the Transportation, Logistics, Warehousing and Packaging

Sector 23  2.  Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing

and Packaging Sector ......................................................................................................................... 24  2.1.  2.2.  2.3.  2.4.  2.5.  2.6.  2.7.  2.8.  2.9.  Current employment pattern ................................................................................................. 26  Skill Requirements and Skill Gaps in the Transportation Segment: Road Transport ........... 28  Skill Requirements and Skill Gaps in the Transportation Segment: Ship Transport ............ 32  Skill Requirements and Skill Gaps in the Transportation Segment: Railway Transport ...... 37  Skill Requirements and Skill Gaps in the Third Party Logistics Segment............................ 42  Skill Requirements and Skill Gaps in the Warehousing Segment ........................................ 49  Emerging trends .................................................................................................................... 54  Projected Industry Size and Human Resource Requirements ............................................... 59  Focus areas for skill building ................................................................................................ 64 

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

List of Figures
Figure 1: A Typical Supply Chain .......................................................................................................... 6  Figure 2: Value chain: Logistics ............................................................................................................. 6  Figure 3: Evolution of logistics services ................................................................................................. 8  Figure 4: Segments of the Transportation, Logistics, Warehousing and Packaging Sector ................... 9  Figure 5: Share of the Transport Segment in GDP ............................................................................... 10  Figure 6: Sub-Segment wise share in Transportation ........................................................................... 11  Figure 7: Growth in India’s Shipping Fleet .......................................................................................... 15  Figure 8: Major players in the Ship Transportation Segment (based on Turnover, 2008).................... 15  Figure 9: Logistics Service Providers ................................................................................................... 18  Figure 10: Types of packaging.............................................................................................................. 19  Figure 11: Demand drivers for the Transportation, Logistics, Warehousing and Packaging Sector .... 20  Figure 12: Broad overview of the Indian logistics space ...................................................................... 25  Figure 13: Value chain of the Road Transport Sub-segment ................................................................ 28  Figure 14: Value chain of the Ship Transport Sub-segment ................................................................. 32  Figure 15: Profile of people employed in the Ship Transport Sub-segment ......................................... 33  Figure 16: Profile of people employed in the Railway Transport Sub-segment ................................... 37  Figure 17: Popular services of 3PL providers ....................................................................................... 42  Figure 18: Value chain in 3PL (for import/export management, custom clearing and forwarding) ..... 43  Figure 19: Value chain in Multimodal Transport Operations ............................................................... 44  Figure 20: Profile of people employed in the Third Party Logistics Segment ...................................... 45  Figure 21: Value chain of the Warehousing Segment .......................................................................... 49  Figure 22: ICD and CFS: Import Cycle ................................................................................................ 50  Figure 23: ICD and CFS: Export Cycle ................................................................................................ 51  Figure 24: Profile of people employed in the Warehousing Segment .................................................. 52  Figure 25: Projected GDP growth in Transportation sector – 2008 to 2022 (Rs. billion, constant prices 1999-00) ................................................................................................................................................ 59 

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

List of Tables
Table 1: Growth rates of various segments of Transportation, Logistics, Warehousing and Packaging Sector ...................................................................................................................................................... 9  Table 2: Trends in Rail-Road Modes in Passenger and Goods Traffic................................................. 13  Table 3: Warehouse capacity plans of major 3PL Companies ............................................................. 17  Table 4: Level-wise Distribution of Human Resources in the Road Transport Segment ..................... 26  Table 5: Functional Distribution of Human Resources in the Railway Transport Segment ................. 27  Table 6: Functional Distribution of Human Resources in the Ship Transport Segment / at Logistic providers dealing in export-import, freight forwarding ........................................................................ 27  Table 7: Level-wise Distribution of Human Resources in the Warehousing Segment ......................... 27  Table 8: Distribution of human resources by education level............................................................... 28  Table 9: Skill requirements and skill gaps in the Road Transport Sub-segment ................................. 29  Table 10: Typical configurations of small, medium and large players in Ship-based Transport.......... 33  Table 11: Skill requirements and skill gaps in the Ship Transport Sub-segment ................................. 34  Table 12: Cadre-wise Staff Strength in Indian Railways ...................................................................... 38  Table 13: Strength and Profile of employees in Groups A, B, C and D ............................................... 38  Table 14: Skill requirements and skill gaps in the Rail Transport Sub-segment .................................. 39  Table 15: Skill requirements and skill gaps in the Third Party Logistics Segment (Specific to Warehousing) ........................................................................................................................................ 45  Table 16: Skill requirements and skill gaps in the Third Party Logistics Segment (Specific to Export and Import Transactions, Custom clearances and Freight forwarding) ................................................ 48  Table 17: Skill requirements and skill gaps in the Warehousing Segment ........................................... 52  Table 18: Projected on-road M&HCVs and human resource requirement in M&HCVs for drivers and cleaners (in ‘000s) ................................................................................................................................. 60  Table 19: Incremental human resource requirement in the Road Sector till 2022 (in ‘000s) ............... 60  Table 20: Projected growth in the Airline Industry in India ................................................................. 61  Table 21: Projected Industry Size and Human Resource Requirement in the Airline Industry ............ 62  Table 22: Incremental human resource requirement till 2022 in Warehousing (organised sector) and 3PL (in ‘000s) ....................................................................................................................................... 63  Table 23: Incremental human resource requirement till 2022 in the Transportation, Logistics, and Warehousing sector (in ‘000s) .............................................................................................................. 63  Table 24: Focus areas for skill building ................................................................................................ 64 

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

1. Environment

Scanning

and

Competitiveness

of

the

Transportation, Logistics, Warehousing and Packaging Sector
1.1. Overview of the Transportation, Logistics, Warehousing and Packaging Sector
Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment. It is also defined as the procurement, maintenance, distribution, and replacement of personnel and material. A typical logistics framework consists of physical supply, internal operations and physical distribution of goods and services. The global annual logistics spend is valued at about USD 3.5 trillion. The annual logistics cost for the USA is about 9% of GDP and internationally it varies between 9% and 20% of the GDP. The US logistics market is the largest in the world and accounts for one-third of the world logistics market1.The global logistics industry has registered significant growth in the last decade wherein the big driver has been the emergence on Third Party Logistics (3PL) and Fourth Party Logistics (4PL) players in industry who are expected to play a much more important role in the years to come. The global logistics industry is characterised by high costs of operations, low margins, shortage of talent, infrastructural bottlenecks alongside increasing demand from clients for providing one-stop solutions to all their needs and for investing in progressive technology . All these factors will further decrease the margins involved in this industry and fasten the process of consolidation in industry through acquisitions, mergers and alliances. The entities in a typical supply chain are the supplier, the manufacturer, the distributor, the retailer and the customer. Goods, information and finance move unidirectionally or bi-directionally between these entities. A typical supply chain is as shown below:

1

Report on Logistics industry overview by Armstrong and associates Page 5 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 1: A Typical Supply Chain

The terms Logistics and Supply Chain Management (SCM) are typically used interchangeably in common parlance, though there is a subtle difference between the two. While SCM is more strategic in nature, logistics is more operations-oriented. Logistics can be considered as a part of SCM which encompasses planning activities, implementation, control of the efficient forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer and legal requirements. The activities involved in a typical supply chain are typically inbound activities or outbound activities; inbound logistics refers to activities relating to bringing goods into the organization, while outbound logistics deals with activities relating to taking the goods out of the organization. The value chain for logistics is as shown below Figure 2: Value chain: Logistics

Goods that are received from the manufacturer are loaded and stuffed into containers of the right size. The goods are then transported by any of the modes of transportation (rail, road, air, etc). The
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

transported goods are brought to a warehouse and stored. The goods are then re-packed in the format to be sent to the customer, and then finally delivered to the customer. Logistics is a critical component relevant across agriculture, manufacturing and service sectors and has to be optimally managed for smooth functioning of production and distribution operations. Additionally, logistics cost accounts for a major component of the input costs in all sectors, more so in the case of sectors such as cement, steel, automobiles, FMCG, retail, pharmaceuticals etc. With rising competition in the sectors that use logistics services, it has become even more important to enhance the efficiency of the system and use the cost-benefit in increasing the company’s competitiveness. Besides, with increasing globalisation a larger number of multi-national companies (MNCs) are sourcing, manufacturing and distributing goods on a global scale, and thus need more complex supply chains to be managed. Given such developments, the Transportation, Logistics, Warehousing and Packaging Sector is expected to become a more specialised and niche expertise area where high premium will be charged for increased quality and quantity of service delivered by logistic service provider.

1.2. Industry Size and Growth of the Transportation, Logistics, Warehousing and Packaging Sector
The annual logistics cost in India is valued at Rs. 6,750 billion (US$ 135 billion) and it is growing at 8-10% annually2. Logistics cost3 by value accounts for around 13% of the GDP of India – this is much higher than that in the US (9%), Europe (10%) and Japan (11%) but lower than that in countries such as China (18%) and Thailand (16%). In particular, the percentage-wise share of transport cost (an important constituent of total logistic cost incurred by a nation) by value of GDP has been steadily increasing. The high cost of logistics in India when compared to developed nations may be attributed to poor quality of infrastructure and inadequate service quality vis-a-vis counterparts such as US and Europe. The Transportation, Logistics, Warehousing and Packaging Sector in India is dominated by the unorganised segment (small4 truck owning companies linked to intermediate brokers or transport companies, small warehouse operators, custom brokers, freight forwarders, etc.); the organised segment accounts for less than 10% of the total logistics market in India.

2 3

Cygnus research Logistic cost is inclusive of transport cost, estimated inventory carrying cost and administration cost 4 Possessing less than 5 trucks Page 7 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

As is the case with other industries, the employment is distributed across worker or supervisor or management levels in all segments with some unique feature particular to specific segments such as third party logistic providers, etc. Semi-skilled or minimally educated workers constitutes a large portion of the employment. The details of persons employed in various segments are provided in subsequent sections in this report. The type of logistics services provided in India are yet evolving; the focus in India has been on enabling ‘physical distribution’ as compared to developed nations where the focus has progressively shifted to ‘integrated logistics management’.5 Figure 3: Evolution of logistics services

External Integrated logistics-4PL Internal Integrated Logistics-3PL Physical Distribution
• India • Vietnam • Laos • China • Philippines • Indonesia • Hong Kong • Korea • Singapore

Global logistics Management
• USA,UK

Traditionally Indian logistic industry is made of core service providers and contracts are issued for trucking, shipping, Inland Container Depot (ICD), Container Freight Station (CFS) etc. There is a gradual shift towards 3PL (providers who bundle services such as transport, warehousing, freight forwarding etc.) and 4PL (who work as business process providers; manage co-ordination with various 3PL). This shift is driven by global customers’ demand for more control, higher technology and one-stop solutions for all logistics needs. Global logistic management is new generation futuristic concept where a single supplier will be able to meet customers’ logistic needs across geographies.

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ENAM logistics research report Page 8 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

1.2.1. Segments of the Transportation, Logistics, Warehousing and Packaging Sector
The logistics value chain consists if three main segments, namely, Transportation, Warehousing and Value Addition Services, as below: Figure 4: Segments of the Transportation, Logistics, Warehousing and Packaging Sector
Logistics

Transportation

Warehousing

Value‐added  services

•Packaging •Labeling and  assembling •Express Services •Tracking and tracing •Cold Chain

The transport service could be undertaken by different modes such as road and rail which are primarily used for inland transport of goods or by water (ship) or air (express or courier), which are used mainly for inter-country exchange of material. The warehousing services are by large fragmented in India; individual set ups are controlled by local clearing and forwarding (C & F) agents while there are some special multi modal warehouses such as ICD or CFS centres often used by rail, ship, road modes of transport. There are various kind of value adding services such as packaging, labelling, cross bundling, track and trace which are common irrespective of modes of transport and some special services such as express, cold chain etc. The growth rates of the various segments of the Transportation, Logistics, Warehousing and Packaging Sector are as below: Table 1: Growth rates of various segments of Transportation, Logistics, Warehousing and Packaging Sector Segment Road Airline Passenger Services Airline freight services Transportation Shipping Mode of transport Growth rate (CAGR%) between 2003-2008 5.50% 14% 11% 13%

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Segment

Mode of transport Rail Services6

Growth rate (CAGR%) between 2003-2008 8.30% 20% 14-15%

Warehousing Value Added Services

Organised Warehousing Packaging
IMaCS analysis

Source: CII study on Skill gaps in the Indian Logistics Sector, CMIE, Indo-Italian Chamber of Commerce,

Transportation  During FY2008, the share of Indian transport sector in GDP aggregated 6.38% at current prices and 6.36% at constant prices. This segment recorded a turnover of Rs. 57,530 crore in this year7. The segment has grown at a CAGR of 10.8% during 2003 to 2008. Historically, the share of transport sector in GDP increased from 3% in the 1950s to 4% by the late-1960s, 5% by 1980, and over 6% for the current decade Figure 5: Share of the Transport Segment in GDP
  7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 Constant Prices Current Prices

Source: Government of India (GoI), IMaCS Analysis

The transportation segment includes the sub-segments of road, rail, water, air (the major segments) and pipeline transportation (minor segment). The sub-segment-wise share is as below:

6 7

Growth rate for the period 2002-2008 CMIE, Excluding Railways Page 10 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 6: Sub-Segment wise share in Transportation
  
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1971-80 1981-90 1991-99 2000-03 2004-08 Railways Road Water Air Others Source: Government of India (GoI), IMaCS Analysis
 

Road Transportation Sub-Segment India has the world’s second-largest network of roads (3.83 million km after US’s 6.43 million km)8; national highways form only 2% of the total roads by length and carry about 40% of the traffic. About 80% of the roads in India are village roads. The road sector is significant to India’s Transportation Segment as it accounts for nearly 65% of the freight and 85% of the passenger traffic in the country. This sub-segment is highly fragmented, with the truck operators owning less than five trucks estimated to account for over 75% of the truck fleet. It is estimated that 10% of the market belongs to those with 6-10 trucks; 4% to those with 11-15 trucks; 3% belongs to those with 16-20 trucks; and only 4% of fleet belongs to those with more than 20 trucks. This industry is also characterised by intense competition which is the result of relatively lower capital requirement, ease of obtaining driving licenses and permits. The small operators are involved mainly in the physical movement of goods and depend on brokers and other fleet operators who in turn depend on the booking agents for obtaining business. The small operators are not in a position to perform functions of aggregating, handling, delivering of cargo and marketing. Besides, they do not have the geographical reach and necessary infrastructure to tap business on a continuous basis, and thus rely on brokers.

8

CII Institute of Logistics Page 11 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

The large fleet operators are small in number, and generally operate throughout the country. These fleet operators primarily work on a hub and spoke model. The hub and spoke distribution system enables optimisation of costs and higher revenues for the transport companies and fleet operators. These transport companies generally have formal contracts with the users, which is very rare in the case of small operators. Large operators can also bid for the contracts with customers. They utilise the services of the smaller operators when additional vehicles are required. Over the period FY2001-07, for which detailed data is available from the Government of India (GoI), the average annual growth in the road sector was around 14.3% at current prices and 9.6% at constant prices, which was much higher than the overall GDP growth during the period.

Railway Transportation Sub-Segment India has the second largest rail network (63,000 km) in the world9. The Indian Railways have grown into a vast network of over 7,500 railway stations, a fleet of about 8,600 locomotives, 41,000 coaches & over 2,40,000 wagons10. Railways serve as a major mode of transportation for freight and passengers and provide low cost effective options for long distance transportation. Rails are operated by the Indian Railways, which records about 70% of its revenues and most of its profits from the freight sector. Railway freight loading has increased at a CAGR of 8.3% during the period 2002 to 200811. About 90% of rail freight traffic is contributed by eight major commodities - coal, fertilisers, cement, petroleum products, food grains, finished steel, iron ore, and raw materials to steel plants. A privatisation scheme was introduced recently to improve the performance of freight trains and companies are now being allowed to run their own container trains. The wagon industry certainly stands to reap a rich harvest from the large investment in the rail sector of the order of US$ 46 billion in the 11th Plan. The Ministry of Railways has also planned to construct a new Dedicated Freight Corridor (DFC) covering about 2,762 route km on two corridors, Eastern Corridor from Ludhiana to Sone Nagar and Western Corridor from Jawahar Lal Nehru Port Mumbai to Tughlakabad or Dadri along with interlinking of two corridors at Khurja. Upgrading of transportation technology, increase in productivity and reduction in unit transportation cost are the focus areas for the project. The Indian Railways employs about 1.4 million people12. Recruitment in the Indian Railways is formalised through the Railway Recruitment Board, with the Government being the only employer.

9

Economic Survey 2007-08 IRFC 11 Centrum
10

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

The comparison between road and rail transport in terms of the goods traffic handled is as below: Table 2: Trends in Rail-Road Modes in Passenger and Goods Traffic
Figures in brackets indicate % of total

FY 1951 1961 1971 1981 1991 2000 2001 2002 2003 2004 2005

Goods Traffic (billion tonnes km) Road Railways 23.0 (15.4) 66.5 (84.6) 80.9 (51.0) 210.0 (64.0) 541.8 (72.2) 767.7 (72.2) 1,831.6 (81.0) 2,075.5 (82.0) 2,413.1 (83.1) 2,814.7 (84.5) 3,070.2 (85.0) 3,469.3 (87.1) 77.7 (49.0) 118.1 (36.0) 208.6 (27.8) 295.6 (27.8) 430.7 (19.0) 457.0 (18.0) 490.9 (16.9) 515.0 (15.5) 541.2 (15.0) 515.7 (12.9)

Source: GoI, IMaCS Analysis

Air Transportation or Aviation Sub-Segment The air freight segment presently accounts for a small pie of India’s freight market but it is growing at a fast pace. Liberalisation and globalisation has given a fillip to the growth of this segment. For example, about 740 thousand tonnes of cargo was handled at airports during 2007-08 as against about 655 thousand tonnes during the previous year13. Sophisticated machinery components, pharmaceutical dyes, fruits, vegetables, flowers, fish and meat form part of air cargo. An investment of about Rs. 400 billion (US $ 8 billion) is projected for the development of airports during the 11th Five Year Plan. Airports Authority of India (AAI) has taken action for the development of infrastructure in the country through the PPP model and joint ventures for the modernisation of Delhi and Mumbai airports and development of Greenfield airports at Bangalore and Hyderabad. The level of formalisation and standardisation of operations in the air freight segment is greater than in other sub-segments such as in roads transportation. This sector has traditionally been

12 13

Economic Survey 2007-08 Airports Authority of India Page 13 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

relatively more organised leading to greater regard for manpower development. The aviation companies typically have established internal structured training practices to train the staff employed at this level (which is typically 10th pass or sometimes 10+2). Indian aviation provides direct employment to over 1 lakh persons. Employment in aviation is further expected to increase to a large extent.

Sea Transportation Sub-Segment Approximately 95% of India’s international trade by volume and 70% by value are seaborne. India has 12 major ports, 1 corporate port, and 187 minor ports along 7,517 km long Indian coastline14. It is strategically located as a major maritime nation due to its long coastline that flanks important global shipping routes. The Indian shipping tonnage increased from 0.19 million GRT15 in 1947 to 867 ships of 8.99 million GRT at end-March 2008. The strongest growth was witnessed during the 1960-80 period (the GRT increased from 0.48 million GRT at end-FY1961 to 5.54 million GRT at end-FY1980), when factors such as expanding foreign trade, availability of finance on easy terms and major support by the government encouraged the expansion of the Indian shipping industry. However, after this period the growth slowed and even declined for some part of the 1990s.

14 15

CII Institute of Logistics Gross Tons (GT) or Gross Registered Tons (GRT): GT/GRT is the fundamental measurement of the physical size of a ship. It refers to the volume enclosed by the ship’s hull and superstructures in hundreds of cubic feet. All registered ships will be assessed for their GT and this is the parameter normally referred to when the size of a merchant ship is quoted in tons. Page 14 of 67

Human R Resource and Skill Requirem ments in the T Transportation Logistics, W n, Warehousing a Packaging Sector and g

Fig gure 7: Grow in India’s Shipping F wth s Fleet
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 200 2005 200 2007 Sep 6 8 0 2 04 06 p07 7 6,555 7,100 6,916 0 7,066 6,843 6,868 3 21 6,817 6,82 6,178 6,94 44 8,013 GRT (thousa tonnes) and No. of ships f 8,46 8,595 64 900 9,06 60 800 700 600 500 400 300 200

002-07, the G GRT of India fleet incre an eased signific cantly in resp ponse to firm trends in th freight m he From 20 market and introdu uction of to onnage tax scheme by the Indian governmen with effe from n nt ect FY2005.Both tonnag and fleet s have gro significa ge size own antly over the last few ye ears. The major players in the ship transportation s n segment are as below: Fi igure 8: Maj players in the Ship T jor n Transportatio Segment (based on Tu on Turnover, 200 08)
Shipping Co orporation of India 25% Others 38%

Mercator L Lines 5% Varun Shipp ping Compan ny 6% Relia ance Ports and Terminals T 8%

n Great Eastern Shipping Company 18%

Source: C CMIE, IMaCS Analysis S

80% of total volume of ports traffic handled is in the form of dry and liquid bulk, with the About 8 residual consisting o general cargo, includ of ding containe erised cargo. Oil and pr . roducts’ traff is the fic orm d c, g s her major fo of liquid bulk traffic accounting for around 33% of total major ports traffic. Oth major

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

traffic comprises iron ore (18%), and coal (13%). Container traffic of various items constitutes around 16% of traffic handled at major ports. There are around 128 institutes approved by the Director General of Shipping, offering various presea and post-sea training courses in various disciplines, and about 6,500 candidates pass out in a year. The Government is responsible for creation of the trained manpower required for the country's merchant navy fleet and also facilitation of training and employment of seafarers for possible employment in foreign flag vessels. This is being met through the Government training institutes and number of other approved training institutes in the private sector; trained maritime personnel from India are much sought after by other nations.

Pipeline Transportation Sub-Segment This is used by oil sector companies for mass movement of petroleum products including gases. It is one of the preferred modes of transportation due to significantly low operating cost. Warehousing  Warehousing refers to the storage of product and goods to be transported, whether inbound or outbound. A warehouse is often used as a stock piling location to manage demand-supply gaps over a longer term. The Warehousing segment is expected to grow from Rs. 1,000 billion (US$ 20 billion) to Rs. 2,750 billion (US$ 55 billion) by 2011, constituting about 35% of the total logistics industry in India16. Major players in the warehousing segment are Central Warehousing Corporation, State Warehousing Corporation, and Food Corporation of India, and other private players. Various material handling equipments or systems are used in warehouses for loading and unloading operations and movement of goods over short distances. Components of material handling systems include lifting and storage equipment (fork lift trucks, order picking trucks, overhead cranes, tower cranes and belt, chain and overhead conveyors), storage equipment (racks, mobile shelf units, and plastic, wood and steel containers), automated handling equipment (automated guide vehicles, storage and retrieval equipment, conveying systems and product sorting equipment). Robots may be used for repetitive, monotonous, mundane tasks that need precision. Warehouses also make use of Warehouse Management Systems (WMS) whose basic objective is to help manage warehouse resources. WMS are generally associated with larger, more complex distribution operations. However, even smaller and mid-size companies are increasingly recognising the significance of WMS in today's environment of integrated logistics, JIT delivery, and e-commerce
16

CII Institute of Logistics Page 16 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

fulfilment. WMS uses advanced technology and operating processes for optimising all warehousing functions, beginning from receipts from suppliers and ending with shipments to customers; it includes all inventory movements and information flows in between. Table 3: Warehouse capacity plans of major 3PL Companies Company Current capacity Planned capacity (million sq. ft.) 10 10 5 3.5 2 2 2 7.5 10.5 16.5
Source: Centrum

Expected by year

(million sq. ft.) TCI Safexpress DRS Logistics Indo Arya Blue Dart Gati TNT ProLogistics TranSmart Total 7.5 3 1.5 2 1 1 0.5

2010 2010 2010 2010 2010 2009 2010 2011 2013

52.5

3PL and 4PL  3PL services are a combination of all logistics activities - 3PL providers manage all the logistics functions of a company. 3PL could imply the use of a transportation carrier, a warehouse, or a third party freight manager to perform all or part of a company’s production distribution functions. Demand for integrated 3PL solution providers has grown dramatically over the last several years and they are increasingly becoming an effective way to reduce costs and spread risks for traditional, vertically integrated firms. 3PL is estimated to grow at about 30% annually and become a Rs. 1,500 billion (US$ 30 billion) industry by 201017. The various kinds of logistics service providers are as below:
17

Cygnus Page 17 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Value­Added Services  Packaging Packaging is a coordinated system of preparing goods for transport, warehousing, sale, and end use. Packaging mainly protects the goods from damage and spoilage. The various types of packaging are as below: Figure 10: Types of packaging
Packaging

Rigid packaging

Semi Rigid Packaging

Flexible Packaging

Bottle, Metal Can

Carton Box

Paper, Plastic

Wooden Box

Plastic Bottle

Film, Alu- Foil

Metal Box, etc

Cellophane

The Indian packaging industry was valued at Rs. 700 billion (US$ 14 billion) in 2007. It is growing at the rate of 14-15% annually and is expected that this rate would double over the next two years18. Indian packaging industry is highly fragmented and unorganised, dominated by small players.

The growth of the packaging industry is closely linked to the growth of its major user industries. The major user industries such as retail industry including food and beverages, pharma and auto components industries are expected to play a major catalyst role in driving the packaging industry growth. Indian packaging industry is expected to reach Rs. 3,000 billion (US$ 60 billion) by 2014 from the current US$14 billion19.

18 19

Centrum and CII Institute of Logistics Centrum and CII Institute of Logistics

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Cold Chain logistics Cold chain logistics system may be defined as a series of inter-related facilities for maintaining ideal storage conditions for perishables from the point of origin to the point of consumption in the food supply chain. The chain starts at the farm level (e.g. harvest methods, post-harvest and pre-cooling) and continues till the consumer level or the retail level. A well organised cold chain reduces spoilage, retains the quality of the harvested products and guarantees a cost efficient delivery to the consumer.

Emerging sub-sectors Express services by both road and air modes are fast growing. While the Air Express and Courier segment is reasonably organised, the Road Express segment is relatively less developed. Track and trace as a technology is inevitably going to become a dependable part of transportation. Human Resource capable of operating and maintaining the systems would be increasingly in demand. Cold chain services are likely to gain significance with the growth organized food retail. This would particularly give rise to the need for technically competent manpower capable of understanding the temperature and humidity control requirements of various perishables and operating sophisticated controlled atmosphere equipment.

1.3. Demand Drivers of the Transportation, Logistics, Warehousing and Packaging Sector
Figure 11: Demand drivers for the Transportation, Logistics, Warehousing and Packaging Sector

Robust Trade Growth Emergence and growth of 3PL & 4PL Globalisation of manufacturing systems

Growth of MNCs and organised retail

Demand Drivers

Streamling of indirect tax structure

•

Growth fuelled by emergence of MNCs and organised retail: The key driver of demand for world-class logistics services is the growth of MNCs whose bottom line success requires lowcost manufacturing locations, connected to consuming markets through highly efficient
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

supply lines. A comprehensive supply chain strategy is one that achieves flexibility, responsiveness and reliability with cost savings. Thus the growth in these MNCs increases the demand for efficient logistics services. Also the rapid growth of organised retail in India is increasing the demand for logistics services to support the industry. • Emergence and growth of 3PL & 4PL: Third party logistics or 3PL is a concept where a single logistics service provider manages the entire logistics function for a company. While the Indian 3PL market is still very much in its infancy compared to other countries, it is experiencing healthy growth and attracting new companies eager to capitalise on the plentiful opportunities it offers. • Robust Trade Growth: Strong economic growth and liberalisation have led to considerable increase in domestic and international trade volumes over the past five years. Consequently, the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions. • Globalisation of manufacturing systems: Globalisation of manufacturing systems along with advancements in technology is increasingly compelling companies across verticals to concentrate on their core competencies and avail the cost saving potential of outsourcing logistics function. This is expected to contribute to an increase in the need for integrated logistics solutions. • Streamlining of the indirect tax structure: The standardisation of tax regimes across states is a welcome step for Indian logistics firms. Logistics firms have been facing difficulties because of several policies regarding local taxes and central sales tax. With the standardisation of tax structure, 3PL logistics is expected to gain more market share.

1.4. Key Success Factors and Risk Factors for the Transportation, Logistics, Warehousing and Packaging Sector
1.4.1. Key Success Factors
• Quality manpower: With the growth of 3PL and 4PL services in India, many trucking and warehousing companies that are competent only in a particular sub-segment are quickly rebranding themselves as overall logistics service providers. The present manpower available with these companies does not have the requisite skills to handle the entire supply chain, and training of personnel will be key to the success of these players. • Keeping pace with technology: Information Technology (IT) plays a key role in supporting the Transportation, Logistics, Warehousing and Packaging Sector. Some of the areas of logistics industry where IT plays an important role include WMS, Transportation
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Management System, Track and Trace, Enterprise Resource Planning, etc. Technology has crept into all areas of logistics such as product movement (RFID tags for tracking, GPS), warehousing (WMS), etc. Technology helps organised logistics companies score over the unorganised ones, and will be key to their operations going ahead given the competition. • Enhanced operational efficiency: With industry margins under constant pressure and the growing competition, improving operational efficiency will be critical to the success of logistics firms.

1.4.2. Key Risk Factors
• Highly unorganised and fragmented market: A large part of the Transportation, Logistics, Warehousing and Packaging Sector in India is unorganised. A fragmented market increases costs and the efforts required for efficient resource utilisation. • Infrastructure issues: The inadequate infrastructure and poor condition of roads in India translates directly into higher vehicle turnover. This in turn increases operating costs and reduces efficiency. • Lack of standards and processes within the sector: The highly unorganised nature of the sector and the prevalence of ownership-based firms make it difficult for implementation of standard operating procedures in this sector. • Regulatory restrictions: Container transportation charges through railways in India are among the highest in the world and can have an unfavourable impact on the growth of the container business20. Besides this, in road transportation, whenever there is a sudden rise in demand of a certain product, transporters make alliances and overcharge customers due to lack of suitable regulations. This increases the overall logistics costs. • Lack of skilled manpower: The Transportation, Logistics, Warehousing and Packaging Sector is considered an unattractive career option and fails to attract skilled manpower – this is especially critical in the case of integrated logistics providers.

20

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1.5. Drivers of competitiveness of the Transportation, Logistics, Warehousing and Packaging Sector
To obtain leadership in the industry, companies will need to focus on the following drivers of competitiveness that will generate increasing shareholder and customer value: • Efficiency in operations: Logistics companies need to be efficient in their operations and mechanise operations to the extent possible so as to achieve cost saving and reduce losses. Benchmarking processes and systems and formulating metrics so as to meet world class efficiency and productivity levels is a necessity when dealing with international customers. Companies need to use metrics to measure on-time delivery, order fulfilment, fill rate etc. • Trained human resources: There is a shortage of expertise in Transportation, Logistics, Warehousing and Packaging Sector in India, due to the lack of institutions providing training in logistics. Training of human resources in the Transportation, Logistics, Warehousing and Packaging Sector is critical to bridging the current gap. Resources need to be trained in different systems and components used by companies dealing in logistics, to provide branded customer service. • Addressing the geographical diversity of India: Varied and comprehensive logistics expertise is required for each region and state to address the geographical diversity of India. Logistics providers need to address this factor to remain competitive. • Investment in infrastructure and technology and capacity increases: Investment in infrastructure and mechatronic warehouses with sophisticated material handling equipment, racking and security systems are required to remain competitive. Investments in technology to provide real time, online connectivity by offering intelligent tracking of packages, pallets and vehicles are also required to achieve competitiveness. The capacity of Indian ports and airports also needs to be increased - cargo traffic at ports is estimated to reach 1,011 million tonnes by the year 2011-12 and will need doubling of capacity of ports21; also Indian airports are not yet prepared to handle the 20% annual growth in cargo traffic in future.

21

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2. Human

Resource

and

Skill

Requirements

in

the

Transportation, Logistics, Warehousing and Packaging Sector
Varied skill requirements in Indian logistics emerge due to the different modes, i.e. the road, rail, sea, air available for transport, the range of service providers operating in the industry and the corresponding activities performed. The movement of the Indian Transportation, Logistics, Warehousing and Packaging Sector from in-house staff, who simply manage inventory to complex third party supply chain management has intensified the skill gap situation. This is emphasised by the fact that apart from domain training and expertise, supply chain managers are required to be analytical, capable of multi-tasking, delegation, and able to handle stressful situations. Specialised managerial, interpersonal and analytical skills are a must for the Indian Logistics industry today, particularly in its nascent stages when it struggles to overcome critical infrastructure and organisational challenges. At management and mid-tier levels, the unorganised structure of the Transportation, Logistics, Warehousing and Packaging Sector in India has lead to problems of poor organisation, lack of leadership, disjointed skills and positions, and a lack of process-driven systems which needs to be tackled for achieving targets set for sectoral growth and support to overall development. A broad overview of the Indian Transportation, Logistics, Warehousing and Packaging Sector is as below:

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 12: Broad overview of the Indian logistics space
Service providers: * Broker/ agent *Trucking company *Multi mode operator *3PL/4PL

Customer seeks logistics services

Loading of goods

Transportation Rail/road

Intermediate storage (Warehouse/ ICD, CFS)

No Is it International Transport? Inland Distribution

Yes Customs origin, port services

International transport (Usually Sea/ air; may Service providers: *Freight forwarders *Express Cargo *3PL/4PL *Multi mode operator be land)

Received at port (customs, services)

Container de-stuffing and storage in warehouse Inland transport Source: Primary Research and IMaCS Analysis Final delivery

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.1. Current employment pattern
The Transportation, Logistics, Warehousing and Packaging Sector in India currently employs around 7.3 million persons22. Of these, the maximum proportion is employed in the Road Transport Segment and personnel employed in the Road Transport and Rail Transport Segments constitute over 90% of the total employment in this sector in India. Established logistics hubs in India include Mumbai, Kolkata and Chennai while the emerging hubs are Gurgaon, Vizag, Nagpur and Indore. Emerging hubs such as Jamshedpur, Alwar, Ahmedabad, Bangalore and Ambala, and nascent hubs such as Kochi will further help fuel the growth of the Transportation, Logistics, Warehousing and Packaging Sector in India.

2.1.1. Functional / hierarchical distribution of human resource
During our interaction with the industry as part of our Primary Research, we analysed the proportion of workforce at various functional levels across different segments. As seen in the following tables, a significant proportion of the workforce is involved in operations at the worker level, followed by supervisory and other top level management personnel across functions. While in road transport, warehousing the majority of employment is across core operations; in ship and rail a considerable percentage is also involved in support activities such as communication with customer, sales and marketing functions. The functional distribution across various segments / sub-segments is as follows: Table 4: Level-wise Distribution of Human Resources in the Road Transport Segment23 Functions Senior management Middle management Supervisory staff Worker level (truck drivers, loaders, goods handlers) Distribution 1-2% 3-5% 10-13% 70-80%

Source: Primary Research and IMaCS analysis

22 23

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 5: Functional Distribution of Human Resources in the Railway Transport Segment Functions Operations and Maintenance Health and Safety Corporate Management Support Functions Distribution 60-70% 3-5% 3-5% 10-20%

Source: Primary Research and IMaCS analysis

Table 6: Functional Distribution of Human Resources in the Ship Transport Segment / at Logistic providers dealing in export-import, freight forwarding Function Sales and marketing Customer service Operations HR, admin, finance Senior management Distribution 20-25% 15-20% 30-35% 10-15% 1-5%

Source: Primary Research and IMaCS analysis

Table 7: Level-wise Distribution of Human Resources in the Warehousing Segment Function Senior management Middle management Operational-front line staff Distribution 1-2% 5-8% 85-90%

Source: Primary Research and IMaCS analysis

2.1.2. Distribution of human resource by education level
The following table represents the education-wise break-up of people across various segments of the transportation, logistics, warehousing sector in India. As seen, most of the persons employed in the transport sector in India are minimally educated and most have studied till 10th standard or below.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 8: Distribution of human resources by education level Educational Qualification Graduate Matriculate Road Transport 0-5% 10-15% Warehousing 5-10% 35-40% 3 PL Providers 50-60% 20-25% Rail Transport 20-30% 50-60% (including diploma holders) Ship Transport 40-50% 30-35%

Literate but non matriculate Very minimally educated

50-55%

25-30%

10-15%

10-15%

20-25%

15-20%

10-15%

Source: Primary Research and IMaCS analysis

2.2. Skill Requirements and Skill Gaps in the Transportation Segment: Road Transport
2.2.1. Value chain of the Road Transport Sub-segment
The following figure illustrates the composition of the value chain in the Road Transport Subsegment: Figure 13: Value chain of the Road Transport Sub-segment
Pick up from customer’s end Delivery for further shipping Warehousing Transport or rail transport Delivery at customer’s end Pretransport
Loading

Inland Trucking

Value addition Consulting

Consulting Receiving goods Storing Pick up Express/cold chain

Packaging Track and trace

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

The Road freight transport sub-segment in India is unorganised and fragmented, and the majority is composed of small-time entrepreneurs owning one to ten trucks and this segment constitutes around 93% of the total players24. These entrepreneurs have limited resources and capital investment capabilities, and their focus on investing in the future by improving the technology or by training their manpower is limited.

2.2.2. Skill requirements and skill gaps in the Road Transport Sub-segment
The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in the Road Transport Sub-segment. Table 9: Skill requirements and skill gaps in the Road Transport Sub-segment 25 Function Operations Level Manager / Owner Skills required Sound knowledge of taxation policies and inter state laws to train and educate supervisors and drivers for applicable laws and policies Ability to undertake activities such as fleet management, network optimisation, etc. Ability to take decisions on long term and short term investments or spends, new equipment etc. Ability to be conversant with new technologies such as the use of GPS in road transportation so as to upgrade systems appropriately and ensure efficient usage – this helps keep pace with emerging needs of clients Excellent spoken and written language skills to be able to correspond with customers on a daily basis Skill gaps Inadequate knowledge of procedures, paper-work for inter-state movement, taxation related aspects Inadequate understanding of the importance of long term investments in capacity building, manpower development, etc. Inadequate ability to ensure training of personnel employed with them, leading to no incremental skill improvement and thus no motivation to perform better at the existing profile

24 25

CII study on skill gaps in the Indian Logistics Sector This is elaborated on at different levels for employment intensive functions such as driving, supervisory staff Page 29 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level

Skills required Ability to be responsible for forward looking initiatives for increasing revenues as well as increasing profits while running the business efficiently

Skill gaps

Supervisor

Ability to ensure efficient route planning, so that it is cost effective way, entails less turnaround and ensures the highest safety levels Practical knowledge of equipment usage used in loading or unloading goods in trucks - such as the optimum or efficient use of truck loading racks, lorry loaders, etc. Ability to optimise the time spent in loading or unloading trucks Adequate spoken and written language skills for efficient record keeping and effective communication with team Knowledge of the local language to be able to effectively communicate with diverse agencies such as client, the driver, truck owners Knowledge of inter-state transport laws applicable Ability to ensure that goods are loaded properly into trucks Ability to record and track transactions

Lack of knowledge of best warehousing practices Inadequate knowledge of new technologies such as IT in the transportation sector, SCM techniques such as LIFO, FIFO, inventory management etc. Insufficient knowledge of taxation policies Experienced drivers or helpers move up the ladder to become supervisors and this set of personnel is still characterised to a large extent by the skill issues seen in drivers

Drivers, Helpers

Basic reading and writing skills to be able to read signage, proper documentation of tax levied, octroi paid etc. Ability to understand routes and the

This set of persons is characterised by a largely illiterate workforce that has inadequate formal training in driving leading to

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level

Skills required geographical profile of the route being traversed Ability to handle increasing tonnage and heavier trucks Excellent driving skills - Apart from the basic driving skills, knowledge of precautions in case of transporting is critical Knowledge of road safety practices, basic knowledge of the tax regime (region wise), traffic permit rules, etc. Ability to handle dangerous and sensitive cargo Basic spoken language skills for communication with supervisors and fellow drivers or unloaders and supervisors at the customers end Ability to understand basic sanitation and hygiene requirements the and importance of parameters such as nonusage of drugs or not being drunk while driving (this is critical to help avoid accidents)
Source: Primary Research and IMaCS analysis

Skill gaps inadequate availability of trained drivers Inadequate exposure to handle increasing tonnage and higher capacity trucks Inadequate knowledge of safety and first-aid Inadequate knowledge of Octroi, VAT applicable Ignorance towards safe driving practices and special precautionary measures in case of handling sensitive materials such as chemicals, petroleum tankers, etc Poor working conditions, combined with inadequate manpower development initiatives by owners or managers, leads to low motivational levels

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Human R Resource and Skill Requirem ments in the T Transportation Logistics, W n, Warehousing a Packaging Sector and g

2.3. Skill Req quiremen and Skill Gaps in the T nts s Transport tation Seg gment: Ship Tra ansport
2.3.1. Val chain of the Ship T lue f Transport Sub-segmen S nt
The following figure illustrates the composition of the va chain in the Ship Tra e alue ansport Sub-s segment: Figure 14: Value chain of the Ship Transport S n Sub-segment t

Sou urce: Primary Research and IMaCS anal y d lysis

o nvolved in ship based logistics ar logistic providers w re who provide for the The two entities in warehou using, transpo ortation and shipping nee of the cu eds ustomer, and the compani that own ships. In ies some ca ases the logis providers don’t own the ship and containers (Non-Vessel Operating Common stic s d l C Carrier). They arran for the ca nge argo shippin by buying space in the ships throu their net ng g e ugh twork. In these cases they cou provide fo FTL (Full truck load) consignmen or Less Th Truckloa (LTL) uld or l nts han ad consignm ments (wher one comp re pany doesn’ buy the full containe space). In other case where ’t f er n es company own the sh they may run in the F or LTL mode depen y hips y FTL nding on requ uirements.

ons d rs gment are: Typical configuratio of small, medium and large player in this seg

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 10: Typical configurations of small, medium and large players in Ship-based Transport Operation in few locations (No. of people employed) 10-15 Operation in multiple locations (No. of people employed) 30-50 Average number of containers handled per month

Size of players

Remarks

Small

100-200

1-2 people employed in each location 3-5 people employed in each location Turnover (> Rs. 200 crore)

Medium

30-40 >40 (Normally 125150)

100-150

200-600

Large

400-500

>600

Source: Primary Research and IMaCS analysis

2.3.2. Profile of people employed
The following figure illustrates the profile of people employed in the Ship Transport Sub-segment. Figure 15: Profile of people employed in the Ship Transport Sub-segment Graduates with 7-8 years of experience Graduates with 4-5 years of experience Graduates (freshers + with 1-2 years experience are preferred)
Workers - school educated/minimally educated

Managers

Assistant Managers Assistants / Executives Assistants / Executives

Assistant Managers

Supervisors

Workers

Workers

Source: Primary Research and IMaCS analysis

2.3.3. Skill requirements and skill gaps in the Ship Transport Sub-segment
The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in the Ship Transport Sub-segment.
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 11: Skill requirements and skill gaps in the Ship Transport Sub-segment Function Operations Level Supervisor (as these companies may also be engaged in warehouse management) Skills required Ability to assist customer service staff in tracking the vehicle at different points in time Ability to undertake insurance payments to customer in case of loss according to terms and conditions agreed upon Understanding of Bill of Lading and Letter of Credit (LCs) Ability to understand and use basic and advanced features of Warehouse Management Systems (WMS) Ability to ensure pick up of the cargo by customer or delivery at customer’s doorstep according to the consignments’ terms and conditions Advanced computer usage skills, including the use of tools such as MS Excel and ERP software such as SAP Ability to minimise turnaround time in operations Worker Ability to execute consolidation at the sender’s end and deconsolidation at receiver’s end in the case of LTL shipments and depending on requirements Ability to undertake loading or unloading of cargo and manage all activities related to load handling Inadequate ability to execute specific instructions according to customer requirement – this leads to mix up in goods and thus time lags and value losses Skill gaps Inadequate ability to verbally communicate and timely co-ordinate with the customer service staff Inadequate knowledge of Bill of Lading and Letter of Credit (LCs) Inadequate knowledge of procedures related to CFS and ICDs Inadequate ability or level of comfort with using WMS In case the customer is internally using an advanced inventory management system, the ability to facilitate information in a compliant format is inadequate

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level

Skills required Ability to understand and use basic features of WMS

Skill gaps

Sales and marketing

Manager

Ability to maintain good working relationships with old customers while scouting for new customers for consignment filling from time to time Ability to undertake negotiations with concerned parties, finalise the quotation for the service and close the deal Ability to coordinate with agents for customs clearances in the absence of an in-house officer at the receiving end

Inadequate ability in using tools/spreadsheets for tracking customer behaviour, identifying old customers from whom there is currently no business or reduced business, etc. Inadequate verbal communication skills for influencing new customers about the services offered Inadequate ability to lead sales team Inadequate ability to devise plans to incentivise customers for more transactions and thus more business Inadequate ability to negotiate effectively on quotes, specifically at the entry level

Executive

Ability to prepare appropriate quotes for the customers and issue feasible rebates depending on the customer’s requirements of volume transfer and time constraints Ability to streamline the flow of cargo by road or rail from the warehousing stop to the port Ability to coordinate and consolidate consignments in the case of LTL operations

Customer service

Manager

Excellent communication skills to be able to interact with the customer while solving their queries about the consignment and assist them in keeping track of the same

Inadequate management skills to resolve coordination problems with operations team – this leads to delay in resolving customers problems
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level

Skills required Ability to assist in relationship management with the client and complement the sales and marketing team in their operations Ability to track the cargo for the customer during inland transport also

Skill gaps

Executive

Ability to undertake timely data entry for different consignment issued by different customers at the concerned locations Ability to maintain data of different activities which are undertaken – for example, clearance by customs, delivery of cargo at customer point and various intermediate points Ability to coordinate with the operations personnel for receiving information about on field activities and update them in system

Inadequate verbal communication skills for coordinating with operations personnel Insufficient domain expertise (operational or technical) and domain knowledge to be able to address customer problems instantly

Document ation

Executive

Ability to maintain receipts, which are a confirmation of goods delivery at the consumers end Ability to maintain various documents depending on customer requirements of door to door delivery, warehousing, transport etc. Ability to use computers and available tools for effective documentation
Source: Primary Research and IMaCS analysis

Inadequate knowledge of Bill of Lading and Letter of Credit (LCs) Inadequate knowledge of procedures related to CFS and ICDs Inadequate technical knowledge of using tools such as MS Excel, advanced MS Excel, especially at entry level

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.4. Skill Requirements and Skill Gaps in the Transportation Segment: Railway Transport
The Indian Railways, under the aegis of the Ministry of Railways of the Government of India, operates most of India’s rail transport. About 70% of its revenues and a substantial profit is received from the freight sector and most of its freight earnings come from transporting bulk goods such as coal, cement, food grains and iron ore. Ports and major urban areas might have their own dedicated freight lines and yards, and many important freight stops have dedicated platforms and independent lines. The railways carry a large variety of goods ranging from mineral ores, fertilisers and petrochemicals, agricultural produce, iron & steel, and others. In case of multi-modal transport rail is one of the modes used most often. The rail freight segment faces competition from trucks which offer cheaper rates and this may lead to resultant decrease in freight traffic.

2.4.1. Profile of people employed in Indian Railways
The following figure illustrates the profile of people employed in the Railway Transport Sub-segment. Figure 16: Profile of people employed in the Railway Transport Sub-segment Graduate engineers / diploma engineers with 56 years experience

Group A

Graduate engineers / diploma engineers with 23 years experience

Group B

Group B

Diploma holders/matriculation (given training)

Group C / D

Group C / D

Group C / D

Source: Primary Research and IMaCS analysis

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 12: Cadre-wise Staff Strength in Indian Railways Cadre Group A & B Group C Group D Total FY 06-07 15,800 906,600 484,000 1,406,400 FY 05-06 15,400 883,900 513,000 1,412,300 FY 04-05 14,300 873,700 535,700 1,423,700

Source: Indian Railways website

The recruitment in railways at all levels is directly controlled by the Government of India; the infrastructure available for training and development is also in place in the Indian Railways. There is a keen focus on manpower development in this segment – for example, the non-salary expenditure on manpower is about 36% of the total expenditure on manpower, which is much higher than the overall sector average of 13-14%26. However, this segment would require skill building given that Container Operations has been opened to private participation. Table 13: Strength and Profile of employees in Groups A, B, C and D % of Total strength Group A Group B Group C Group D 1-2% 60-70% 30-40% Management personnel Workshop employees, Engineers in mechanical, civil, electrical trades, signaling, telecommunication staff Profile

Source: Indian Railways website, Primary Research and IMaCS analysis

As regards training needs of railway officers, there are seven Centralised Training Institutes (CTI) which cater to this. These are the Railway Staff College (Vadodara), Indian Railways Institute of Civil Engineering (Pune), Indian Railways Institute of Signal Engineering & Telecommunications (Secunderabad), Indian Railways Institute of Mechanical & Electrical Engineering (Jamalpur), Indian Railways Institute of Electrical Engineering (Nasik), Indian Railways Institute of Transport Management (Lucknow), and, Jagjivan Ram Railway Protection Force Academy (Lucknow). The CTI’s apart from probationary training cater to the various specialized training needs of Indian Railway officers – for example, the Railway Staff College provides inputs in general management, strategic management and function-related areas for serving railway officers. Other CTIs conduct specialized technical training courses in respective functional areas. Training Programmes on Information Technology are also being conducted by the CTIs to provide
26

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

solutions for information management and decision support requirements. Training needs of nongazetted staff are being taken care of by over 200 training centres located over IR. Training regarding safety has been made mandatory at different stages for staff.

2.4.2. Skill requirements and skill gaps in the Railway Transport Sub-segment
The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in the Railway Transport Sub-segment. Table 14: Skill requirements and skill gaps in the Rail Transport Sub-segment Level Grade A Function Applicable to all functions Skills required Supervising the operations on a regular basis for detecting non-compliance and the ability to address the issues depending on the scale and the impact in least time possible Verbal Communication skills for interacting with other departments while addressing inter disciplinary issues Managerial skills - Ability to manage the productivity of operations and constantly improve the quality for ensuring more value (in profit terms) on the same input Ability to evaluate and suggest new investments in areas such as introducing better technology, incremental skill improvement, infrastructural investments, etc. Dealing with personnel issues: Ability to handle recruitment, training, disciplinary issues, kind of training for different levels Grade B Supervisor Administrative skills: Ability to manage the day to day activities and manage and supervise the targets set Ability to report issues to be addressed by other departments or directorates Verbal and written communication skills for Inadequate ability to upgrade to new technologies Inadequate ability to undertake initiatives for productivity Skill gaps Inadequate communication skills to deal with key customers Inadequate ability to convey targets or plans, etc. to personnel working with them Inadequate ability to coordinate among diverse agencies or directorates

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Level

Function

Skills required interacting with Grade C employees for communicating the daily schedule, targets, and record output Verbal and written communication skills for interacting with Grade A employees and for communicating issues being faced, issues to be handled by other departments, etc.

Skill gaps improvement Inadequate supervisory and team management skills

Grade C and D

Mechanical engineers

Ability to check the working of machines, such as, the status of fuel, oil pressure for the pump etc., check against specified norms, identify discrepancies, and in case of faults which cannot be addressed make a report for further follow up at higher levels Ability to identify breakages such as wearing off of tyres and replacement needs if any Ability to conduct necessary checks such as alignment before making fittings

Inadequate ability to check all parameters for smooth operations which may lead to problems being left unattended to Inadequate written communication skills for documentation of faults etc. in the detailed format (at entry level)

Electrical engineers

Ability to maintain the efficient working of electrical equipment and timely checking the same for defects such as wiring faults etc. if any. Ability to prepare reports detailing technical faults (technical details, machine failure, etc.)

Civil engineers

Ability to conduct timely checks for finding faults such as breakage in track Ability to address faults in a timely manner Ability to undertake and track maintenance activities Ability to maintain the properties of railways such as buildings, stations for civil breakdowns such as leakages in buildings, breakages in pipes.

Signalling staff

In large stations with electric signalling systems, the ability to check the lights indicating signals at crossings constantly in control rooms and

Inadequate attention to timely check signals for any defects and

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Level

Function

Skills required finding rail defects, if any, is critical Ability to report faults for instant correction to supervisors Manual signal: In cases, where manual signals are operated, ability to timely keep track of incoming or outgoing trains and pull levers accordingly is critical

Skill gaps take action accordingly

Communic ation staff

Ability to record fault and communicate the same to respective departments in the stipulated time. Adequate verbal and written communication skills for effectively interacting with the people from other departments and reporting the problems to them as they arise
Source: Primary Research and IMaCS analysis

Inadequate verbal communication skills and inadequate ability to articulate ideas while interacting with other departments

The skill requirements and gaps with respect to warehousing, ICD/CFS is covered in the following sections separately.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.5. Skill Requirements and Skill Gaps in the Third Party Logistics Segment
Third Party Logistics companies act as a third party or facilitator between the first party or supplier and the second party or customer (Buyer or User). This concept is still at a nascent stage in India (55% of large corporate use this service as compared to international benchmark of 75%) but with the advent of multinationals in India and trends such as more companies wanting to outsource non-core activities while concentrating on the core business activity, the requirement for 3PL is set to increase. It is most commonly used for import or export management and customer clearing & forwarding aspects of outbound transportation and inbound transportation in India. Over 30% of the 3PL users, use the services for transportation, custom clearing & forwarding. Of the rest about 75% don’t use these services because of doubtful quality of delivery of services. The popular services of 3PL providers are as below: Figure 17: Popular services of 3PL providers

Inventory management Labelling & Packaging Information technology

Fleet management & Consolidation

Popular services of 3PL Providers

Order processing • Order picking • Distribution

Outbound transportation • Outbound warehousing • Import/ Export management • Customer clearing & forwarding

Inbound warehousing

Source: Primary Research and IMaCS Analysis

The major use of third party logistic provider is for reducing costs incurred in transactions by using expertise of these providers and making the operations flexible. The existing network reach of these service providers is usually higher than the in-house reach of the company which gives a much wider net for the customers to tap in less time and more efficiently. With more Indian companies going

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Human R Resource and Skill Requirem ments in the T Transportation Logistics, W n, Warehousing a Packaging Sector and g

global th trend is s his slated to inc crease manifo - this wi boost dem old ill mand for all services provided by 3PL providers.

2.5.1. Val chain in the Third Party Logis lue n stics Segme ent
e the tion of the va chain in 3PL, specifi to import or export alue ic o The following figure illustrates t composit ment, custom clearing an forwarding m nd g: managem Figure 18: Value c e chain in 3PL (for import L t/export man nagement, cu ustom clearin and forw ng warding)

Sou urce: Primary Research and IMaCS anal y d lysis

When a customer s seeks service a query i generated specifying the demand an accoun of the e, is d d, nt facilities required. T s This is sent t the respec to ctive (import t/export) team A budget is then pres m. t sented to the custo omer and a t transportation plan involving a comb bination of ro oad/air/sea is prepared de s epending on the l location. Cle detailing of the type of containe (full load or consolid ear g e er d dated) is und dertaken. Containe specificat er tions also c consider the transport requirement for special material such as e ts controlle temperatu restricte humidity for food ite ed ure, ed ems etc. The specificatio for trans e ons sport are detailed (including t tying up with trucking co h ompanies or rail service providers) a commun and nicated to omer. Once a approved, th order is pic he cked and tran nsported. In case of door r-to-door del livery the the custo consignm ment is take to the rec en cipient by th 3PL provi he ider. Deliver status is c ry communicate to the ed custome who initiat the reque for service and approp er ted est e priate payments are made e. Various segments op perational in 3PL are: • Express Ser rvice Segmen In the ex nt: xpress service segment in India both documents and nonn document ca argo is handled by logist provider with docu tics rs, uments cargo constituting 52% of o g the cargo h handled. Ex xamples of p players ope erating in th space ar Blue Dar AFL, his re rt, Continental air express, DTDC, Gati TNT India, etc. i, , • al TO s ated service providers p Multi-moda Transport Operations (MTO): MT Providers are integra who acts as a link betw s ween differen modes of transport (a sea, land in order to ensure nt f air, d) t efficient and cost effecti door to d d ive door moveme of goods. They provi safe trans at low ent ide sit
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Human R Resource and Skill Requirem ments in the T Transportation Logistics, W n, Warehousing a Packaging Sector and g

costs due to their wide p presence, effi icient inland and ship tra ansport and d delivery syste ems. The two cargo s division are: FCL (Full Conta sub ns ainer Load) i.e. cargo e enough to fill a full fi container an LCL (Les than Conta nd ss ainer Load) i.e. consolid dation of vari ious small sh hipments to fill a cont tainer – LCL operations are high ma L argin business while FCL operations are low s margin. The benefit to the client is that there is a single point of c e e e contact and a single document ca be used f all modes of transpor thus leadi to reduct an for s rt, ing tion in time and cost when multip modes of transport se ple f ervice are req quired. The m main custom of the se mers ervice are Customs Ho ouse Agents ( (CHA) and f freight forwa arders. The se of activitie are as belo et es ow: Figure 19: V F Value chain in Multimod Transpor Operation dal rt ns

Sou urce: Primary Research and IMaCS anal y d lysis

2.5.2. Prof of peop employe ofile ple ed
The following figure illustrates the profile of people emp e f ployed in the 3PL Segmen nt.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 20: Profile of people employed in the Third Party Logistics Segment

Graduate with 5-6 years experience

Managers

Graduate with 3-4years experience

Assistant Managers

Assistant Managers

Graduates with no experience or with 1-2 years experience (these account for ~60% of the workforce)

Executives / Sr. Executives

Executives / Sr. Executives

Source: Primary Research and IMaCS analysis

2.5.3. Skill requirements and skill gaps in the Third Party Logistics Segment
The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in warehousing of 3PL operations: Table 15: Skill requirements and skill gaps in the Third Party Logistics Segment (Specific to Warehousing) Function Operations Level / Description Import and export manager Skills required Domain knowledge of logistics as well as knowledge of the laws governing inter country export-import deals for dealing with agents Ability to interact with customers and showcase the company’s competitive edge of services provided as compared to other providers Key networking skills, since multi-level and multi-organisation contact has to be established Ability to negotiate – clients are Skill gaps Inadequate practical knowledge of the logistics sector, especially at the entry level Inadequate ability to coordinate among diverse agencies, leading to inadequate knowledge of the status of goods – this leads to inadequate
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level / Description

Skills required typically well networked and well versed with the operations and thus the ability to negotiate and finalise terms and conditions of the deal is critical Ability to coordinate between department and ensure that there is seamless data and information flow within department members and between departments

Skill gaps ability to indicate the transaction status to customers

Documentation staff

Adequate ability to use computers and the required software – many air and road express-courier service providers now give online track and trace facilities and all documentation is computer based, thus making this ability critical

Inadequate technical knowledge of specialised software Inadequate ability to apply theoretical knowledge in practical situations

Executives and Senior Executives

Technical knowledge - day to day operations of the warehouse need to be performed at client site, and thus these personnel need to be conversant with the SCM techniques applicable such as Warehouse Management System (WMS), Transportation Management Systems (TMS), Warehouse Control System (WCS) in future. Ability to coordinate with diverse agencies – these personnel need to maintain contact with diverse agencies, such as transportation (internal or external) facility vendors (internal or external) and the ability to handle such coordination, delivery and recording simultaneously is critical

Inadequate communication skills (written/spoken), leading to information loss and operational issues such as inability to provide correct information of consignment status

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Function

Level / Description

Skills required Ability to manage workmen or labour for operations such as loading and unloading which are manually handled

Skill gaps

Managers

Ability to undertake client co-ordination and interact with clients to finalise the terms and conditions of the operation, regularly monitor the operation and report progress to the client Ability to ensure client satisfaction – this is critical since most customers provide repeat orders Ability to manage the team and ensure that storing and handling, transportation requirements are met and proper documentation is done in this regard

Inadequate understanding of the industry, leading to inadequate monitoring Inadequate ability to provide support in case of crisis such as loss of goods Inadequate ability to face customers Inadequate ability to upgrade technological skills according to changing requirements At supervisory level, the language ignorance is very persistent

Sub contracted services

Loaders (supervisor level)

Basic reading and writing skills so as to understand basic scales, measurements, check packages for number of items, consolidate or deconsolidate and number consignments as required before dispatch. Knowledge of good handling practices especially in case of sensitive goods Ability to pick, pack, load and unpack after unloading at the two ends of process Basic monitoring skills, labour handling skills and ability to ensure appropriate documentation
Source: Primary Research and IMaCS analysis

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in export and import transactions, custom clearances and freight forwarding of 3PL operations: Table 16: Skill requirements and skill gaps in the Third Party Logistics Segment (Specific to Export and Import Transactions, Custom clearances and Freight forwarding) Function Sales and marketing Level Experienced personnel Skills required Ability to maintain good working relationships with old customers while scouting for new customers Entry level personnel • Domain knowledge so as to understanding the functioning for efficient co-ordination and execution of the order • Ability to assert appropriate terms and conditions Skill gaps Inadequate spoken language skills, especially in the local language Inadequate ability to negotiate, leading to unfavourable terms and conditions or terms and conditions which are more beneficial to the customer and lesser to the company Customer service team Operator Ability to interact with customers from varied organisations and various hierarchical levels Ability to articulate thoughts well and give precise and correct information to clients Adequate spoken language skills to be able to directly interact and solve questions about the delivery in question
Source: Primary Research and IMaCS analysis

Inadequate communication skills for dealing with client personnel across hierarchical levels and diverse organizations

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Human R Resource and Skill Requirem ments in the T Transportation Logistics, W n, Warehousing a Packaging Sector and g

2.6. Skill Req quiremen and Sk Gaps in the Wa nts kill i arehousin Segmen ng nt
2.6.1. Val chain of the Wareh lue f housing Seg gment
The following figure illustrates the composition of the va chain in the Warehou e alue using segmen nt:

Figure 21: Value c chain of the Warehousing Segme e ent

using activit commence when goo are recei ty es ods ived from th supplier or factory or port. An he Warehou acknowl ledgement fo receipt of goods is ge or f enerated at the warehou Further t this, inspe t use. to ection of quantity of goods rec y ceived, and i inspection of the conditio of packag f on ging are cond ducted. The goods are g then placed in the wa arehouse dep pending on th plan of di he ispatch an ap ppropriate loc cation. The processes p of packa aging, re-pac ckaging, bun ndling with promotion items (in som cases wa i me arehouses bu undle the promotio onal items w main good at their en for cuttin costs) may be carried out as value addition with nd ng y steps on a case to ca basis. Pro n ase ocessing (wh hich includes prioritising orders, sch g heduling disp patch etc) is undert taken as and when orders are receive from custo d ed omers. Value addition ma also be ca e ay arried out at the w warehouse, a includes packaging activities su as MRP tagging, r and s uch P repackaging, product , mixing b before actual distribution assembly, etc. After co l n, onfirmation o the order, goods are picked up of p using FI IFO methodo ology and sh hipped or tra ansported to the customer location. T delivery of goods t r The is ascert tained by a su upporting rec ceipt issued b the custom at the tim of deliver by mer me ry. The reg gional tax re egime which existed in India has led to frag n gmented wa arehouses which are w common owned by C&F agent rather than centralised set ups unde direct supe nly y ts n er ervision of co ompany.

2.6.2. ICD and CFS D
ICD and CFS as per definition a “common user facilit with publ authority status equip d r are n ty lic pped with fixed ins stallations an offering s nd services for h handling and temporary storage of im d mport or export laden and emp container carried un pty rs nder customs control and with custom and other agencies co s d ms r ompetent to clear goods for h home use, w warehousing, temporary admissions, re-export, te a emporary sto orage for onward transit and o outright expo Trans-shi ort. ipment of car can also take place fr rgo rom such stat tions”27.

27

Source Ministry of Commerce an Industry, G e: nd Government of India f Page 49 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

These providers facilitate the country’s export, import, domestic trade and commerce by providing the requisite logistic support. ICDs and CFSs act as concentration points for long distance cargoes and their unitisation. They also service as a transit facilities and enable customs clearance facility available near the centres of production and consumption. Some other features include reduced level of demurrage and pilferage, no customs required at gateway ports, issuance of through bill of lading by shipping lines hereby resuming full liability of shipments, reduced overall level of empty container movement, competitive transport cost and reduced inventory cost. Key industry users of ICDs and CFSs include exporters and importers across industries such as steel, agri-products, auto-components, telecom equipments, retail, consumer durables, etc. The import and export cycles with respect to ICD and CFS are as below: Figure 22: ICD and CFS: Import Cycle
Job order from shipping line/importer

LCL Cargo

FCL Cargo

Seal Cutting Custom examination

De-stuff and tally Loaded for delivery - If not loaded or Storage in warehouse followed by custom examination Exit from CFS Source: ENAM Logistics Report found cargo is de-stuffed and tallied

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 23: ICD and CFS: Export Cycle
Cargo moved from manufacturer Stored at open yards/ sheds at CFS

Exporter / CHA / Consolidator give requisition for container

Custom examination/Stuffing

Exit from CFS to yard to vessel Source: ENAM Logistics Report

ICDs and CFSs follow the hub-spoke model for operation, whereby the cargo is picked from the customer’s door-step; after stuffing the container with cargo it is transported to the nearest ICD and CFS. Functionally there is no distinction between an ICD and CFS. Both act as transit facilities that offer services for containerisation of break bulk cargo and vice-versa. These could be served by rail and/or road transport. The difference lies in the location of the ICD and CFS – an ICD is generally located in the interiors (outside the port towns) of the country and away from the servicing ports while a CFS is an off dock facility which is located near the servicing ports. It helps in decongesting the port by shifting cargo and customs related activities outside the port area. CFS are largely expected to deal with break-bulk cargo originating or terminating in the immediate hinterland of a port and may also deal with rail borne traffic to and from inland locations. Operations or functions at ICD and CFS include Receipt and dispatch or delivery of cargo, Stuffing and stripping of containers, transit operations by rail or road to and from serving ports, Customs clearance, consolidation and de-segregation of LCL cargo, temporary storage of cargo and containers, reworking of containers, maintenance and repair of container units.

2.6.3. Profile of people employed
The following figure illustrates the profile of people employed in the Warehousing Segment.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Figure 24: Profile of people employed in the Warehousing Segment Graduates with 5-7 years of industry experience

Managers

Diploma holders/ graduates with 4-5 years of experience

Supervisors

Supervisors

10th /12 th pass with / without experience

Operators

Operators

Operators

Source: Primary Research and IMaCS analysis

2.6.4. Skill requirements and skill gaps in Warehousing
The following table presents the skill requirements and gaps across various functions and hierarchical/reporting ‘levels’ in the Warehousing Segment.

Table 17: Skill requirements and skill gaps in the Warehousing Segment
Level Manager (C & F agents) Skills required Excellent spoken and written language skills for meaningful interaction with customers and proper documentation Knowledge of local language for interacting with in house-workers Team skills to be able to motivate the team of workers for improving efficiency in day to day operations Awareness of the new warehousing technologies so as to be able to take decisions regarding capital investment in appropriate technologies Knowledge of inventory, order management Ability to maintain specific standards and Skill gaps Limited knowledge of the latest & innovative warehousing technologies / formats available Inadequate exposure / knowledge of IT systems in warehousing Inadequate ability to invest in human resource development of personnel working with them Inadequate knowledge of measures of safety and security of stock Inadequate knowledge of industry specific stocking and
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Level

Skills required requirements such temperature conditions in case of perishable goods, safety of goods, etc. Ability to ensure training of personnel in core warehousing operations as well as non-core or support or other value added services

Skill gaps handling practices (FMCG, perishables, textiles etc.)

Supervisors

Ability to monitor the day to day operations of the warehouse Ability to maintain records of the incoming or outgoing goods Ability to maintain records of wastages such as goods spill over during packaging, damages, and report the same to the managers Ability to undertake invoicing and order processing

Inadequate ability to maintain appropriate inventory levels, leading to typically high inventory levels at warehouses Inadequate verbal and written communication skills to manage flow of information between workmen and managers Inadequate team management skills, leading to the inadequate ability to motivate workmen for better and efficient delivery Inadequate knowledge of global best practices in warehousing

Operators / Workmen / Front line staff

Knowledge of stocking, packing and handling practices, including loading and offloading goods at different locations in the warehouse Ability to place goods in appropriate racks Ability to manually mark or pack goods, as required Basic reading skills for understanding the written or visual imagery communication about standard operating procedures Ability to undertake value added services such as MRP tagging, repacking, quality checks, etc.

Inadequate knowledge about material handling equipment such as stackers, hydraulic or hand pallet trucks, forklift trucks, jib cranes, etc. Inadequate formal training leading to learning on-the-job Inadequate ability to maintain service standards, leading to damages

Source: Primary Research and IMaCS analysis

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.7. Emerging trends
2.7.1. Emerging Trends in the Sector
• Growth in Consumption: The proportion of containerised cargo handled at Indian ports has been showing a constant increase driven by various trade liberalisation policies, increasing containerisation in general cargo commodities such as durables, engineering components, machinery, auto components, food products and apparels. Further, value added goods are expected to increase which will further increase the need for more secure containerized transport. Containerised transportation will also be driven by rising international trade, increasing investments in port infrastructure by the government and through public-private partnerships (PPPs). The cold chain industry is also expected to grow at a double digit growth rate. The growth will be driven by organised retail, shift towards horticultural crops, growth in processed food sector which be boosted by government initiatives and demand from the pharmaceutical sector.28 Consumer segments such as FMCG, organised retail are poised for growth in India driven by favourable shift of population towards middle income group and expanding disposable incomes. New customer segments are emerging for 3PL services; presently, auto and IT hardware industry as the largest end-user industry for 3PL services, with multinational companies being the predominant users of these services. Other sectors that have shown substantial contribution to 3PL market and significant growth potential include FMCG, pharmaceutical and retail sectors. As the consumption in these sectors will grow in volumes, the corresponding logistics support needs are also slated to grow proportionately. As more and more controls are applied on stocking levels at the point of sale, the demand for time bound deliveries will increase, because unavailability at selling point will translate in significant losses. New areas of operation by diversification in forward-backward integration: More service providers are diversifying in new allied services for providing multiple services to customers under one roof. This is expected to be supported mostly by acquisitions, alliances with national and international players going forward. For example, for servicing domestic demand in a better way, TNT India entered in the realm of air cargo movement of moderate tonnage and is complementing it with its already strong presence in the express courier market. The company had also acquired a leading road transportation company, in order to provide integrated express services through its air and road network in past.

28

Primary Research Page 54 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

•

Consolidation in the market: There are expected to be larger distribution centres to handle higher volumes as compared with the current small size. To benefit from pan-India coverage, an increasing number of larger warehouse facilities operated by transport companies or clearing and forwarding agents are expected with the consolidation of smaller warehouses this will be driven by mergers and acquisitions in this area. In the future, it is expected that suppliers and manufacturers will pick out the most central and convenient warehouse or DC for their needs, as opposed to having one in each state or location thereby driving economics of scale.

•

Foreign investments: In India, 100% FDI is allowed in logistics. Almost all large global logistics companies have their presence in India. However it is presently restricted to freight forwarding. For domestic transportation and warehousing these companies have tie-ups with Indian companies. As the Indian logistics scenario looks promising, these MNCs are expected to play a bigger role, probably by forming wholly-owned subsidiaries or taking the acquisition route. Going forward, the latter may be the preferred route of investment since the asset base and distribution network would already be in place. For example, DHL Express is the majority stakeholder in Blue Dart Express and holds over 80% equity in the firm. Blue Dart, however, continues to operate as an independent brand and provides a complete spectrum of domestic and international express services through synergies with DHL.

•

Product innovation- Market view: With customers becoming more selective about services on cost and quality basis, the operations of companies going global and more track-trace sought today by customers, the new internationally popular services in warehousing, freight forwarding are becoming popular in India as well. For example, TCI Supply Chain Solutions is offering some unique value added services such as Reverse Logistics, PDI or COD Services, Kitting Services, Customs Clearance, E-logistics, Facilitating Risk and Tax Management29. Indian players entering new markets – for example, after acquisition of Air Deccan (Low-frill Indian airline carrying a 60:40 mix of passenger to cargo weight) by Kingfisher airlines, Deccan Cargo and Express Logistics Pvt. Ltd have been started which links Indian customers with international locations. Deccan 360 is the only Indian cargo airline that is operating on both domestic and international routes.

•

Infrastructure:

India’s

soon-to-be-expanded

national

highway

network,

improved

efficiencies in rail cargo network schemes such as airport terminal expansion , Golden
29

www.tcil.com Page 55 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Quadrilateral will ensure improved efficiencies in road or rail transport and reduce delays, losses due to accidents to a considerable extent. The national tax regime will bring changes in terms of network designs for companies distributing in India. There will be a sea change in the domestic distribution landscape resulting from a normalisation of inter-state taxes. Schemes have been launched by GOI to increase private participation in containerised cargo market. It has given out new licenses for private players to generate a competition for CONCOR and consequently improve efficiency in segment. This complemented with lower cost of ownership for reach stackers many more companies will enter this business. Presently, container train operation is restricted on account of non-availability of train engines or driver from CONCOR. With improved servicing, long distance road cargo is expected to decline and boost container rail transportation for domestic movement, which at present takes about one week time to deliver. • Information technology: The present IT requirements in the Indian logistics and shipping industry are Track and Trace, Warehouse Management System (WMS), Transportation Management System (TMS), ERP and Scanner Implementation, Automatic Conveyor Belt system, Scan based Auto Sorting tables and process, etc. For example, WMS is used for stacking and retrieval. WMS is used only by logistics companies which have a large warehouse at multiple sites and carry a large number of SKUs. The TMS gives an idea about the pickup point and delivery. • New technologies: The technologies which are not widely used as of now but are becoming popular in India are Warehouse Control System (WCS), Standard Interfaces (EDI standards) for B2B transactions, Web Services, RFID technology to track shipments and Telematics, GPS use for tracking for the fleet, Telemetric: It is similar to GPS but also provides information about the expected time of arrival, and monitoring and analysing the vehicle and route usage, Advanced track and trace (SMS-based or e-mail-based tracking), RFID: It is a mobile technology, wherein customers can keep tabs on a particular shipment. Besides time, position or destination of the shipment some specialties include ability to track configurations and temperature etc. The e-commerce segment is set to be a significant contributor to top line of companies such as Blue Dart and it is expected to be one of the fastest growing segment, so more companies are expected to enter this market in future as all the B2B or B2C consumers want to do online transactions.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.7.2. Emerging Skill Requirements in the Sector
• Technological skills: The rapid advancements in technology deployed in the Transportation, Logistics, Warehousing and Packaging Sector have necessitated training in handling technology across levels and upgradation of skills with advancing technology is required. For example, the efficient use of ICT reduces operating costs, thereby increasing margins. Drivers will be expected to know skills about using GPRS effectively. Emerging fields of information technology applied in logistics will also bring about the need for specialised skills. For example, with ERP, CRM, WCS and internet based or mobile based track and trace services becoming more popular in India, people specialised in these systems will be in high demand. E-commerce is a service which will increasingly used by players across segments and this will create demand for IT developers, testers and business analysts etc who will service these needs. • Driving Skills: Driving skills in road transport are expected to undergo a change. Drivers are currently not formally in handling heavy weight vehicles and safety procedures. They also need to be aware of compliance to road rules, procedures for inter-state movement, etc. This problem is further compounded by the fact that they are generally minimally educated.. They are also not aware of the specifics of handling complex materials, hazardous substances/chemicals or newer trucks with complex controls or working, and need to be formally trained in these areas. With the growing impetus of government in improving the situation on national level more government supported IDTRs, private institutes such as Maruti Driving Schools, etc. are emerging.. The focus of these training would also include behavioural or attitudinal training regarding issues such as lane discipline, no usage of drugs while driving, apart from technical aspects such as maintenance activities for vehicle, etc. Going forward, the drivers will also be trained in segments such as route planning based on peak hours or normal hours basis, map reading which will help them in increasing efficient fuel usage. • Better overall understanding of industry by Agents: Logistics organisations consist of analysts who design and engineer the optimised supply chain. The customer agents implement these solutions, speak to shippers, receivers, and book loads. A customer service agent who understands all the workings of the supply chain and the transported commodity will be able to optimise delivery and lead times, saving on costs. Sound analytical skills need to be developed so that they can create efficient systems, and provide customers with information which might add value to their business. Most employees at worker level have experience based skills and no formal training in skill which impedes the personal growth of a worker in
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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

this industry. Areas such as good handling practices, supervisory skills have not been focused on in formal training organised at national level. Warehouse handlers have to acquire skills in using equipments such as printing devices, scanning devices, basic computing devices, etc. They are also expected to become conversant with more popular value addition services such as labelling, handling requirements specific to heavy or fragile material, special consolidation or bundling requirements etc. • Multi-operations skills: Multi-skilling will be required in the Transportation, Logistics, Warehousing and Packaging Sector going ahead. In case of providers dealing with multiple areas such as freight forwarding, warehousing, road transport etc, people with skills across areas will be required. For example, in case of 3PL or 4PL providers, people with skills across IT systems (specific to logistics) integrated with supply chain practices and basic cargo handling practices will be required. Also, with increasing track and trace service requirements by customers from service providers, people who can fulfil system requirements and simultaneously coordinate with customers will be further needed. Apart from these, the service providers need to be skilled in aspects related to state-specific rules, procedures, compliances to required paper-work, excise, etc.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2.8. Projected Industry Size and Human Resource Requirements
2.8.1. Projected Industry Size in GDP terms
The GDP of the Transport sector30, in real terms at 1999-00 constant prices, increased from Rs.1,107 billion in 2001 to Rs. 1,991 in 2008, recording a Compounded Annual Growth Rate (CAGR) of 8.7%. In the same period, the GDP of the Indian economy grew by about 8%. For the period 2008 to 2022, we expect the GDP to grow between 7.5% and 8%31. Accordingly, we project that the Transportation sector would record a growth of 8.5% to 9% over the same period. Figure 25: Projected GDP growth in Transportation sector – 2008 to 2022 (Rs. billion, constant prices 1999-00)
7,000 6,000 5,000 4,000 3,000 2,000 1,000 2008 Source: IMaCS analysis 2012 2018 2022

8.6%

2.8.2. Projected Industry Size and Human Resource Requirements in the Road Transport Sector
The requirement for human resource in the Road Transport sector will be driven by the production of Commercial Vehicles, Cars, and Three Wheelers (3Ws). A major portion of this requirement will arise from Medium and Heavy Commercial Vehicles (M&HCVs). The following projection takes into account the current M&HCVs in India, expected projection, number of drivers and cleaners required, keeping in mind the retirement of a portion of the fleet of onroad vehicles32.
30 31

classified as ‘Railways’, and ‘Transport by other means’ Source: IMaCS analysis Page 59 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Table 18: Projected on-road M&HCVs and human resource requirement in M&HCVs for drivers and cleaners (in ‘000s) Number of M&HCV sales (units) 2008 2012 2018 2022
Source: IMaCS analysis

Number of M&HCV on-road 1,989 2,088 2,828 3,885

Number of drivers for M&HCV 1,989 2,088 2,828 3,885

No. of cleaners and helpers 2,983 3,132 4,242 5,828

271 231 367 499

On similar lines, keeping in mind the expected growth in the Auto Sector, we estimate the following current and incremental human resource requirement for drivers, cleaners, and loading supervisors33 in Road Transport sector34. Table 19: Incremental human resource requirement in the Road Sector till 2022 (in ‘000s) 2008 Drivers 1,872 Helpers 2,113 No. of loading supervisors
Source: IMaCS analysis

2022 6,942 7,833 1,041

Incremental 5,070 5,720 761

281

2.8.3. Projected Industry Size and Human Resource Requirements in the Port Sector
According to the report titled ‘Coordinated Port Development Plan’ of the Indian Ports Association, the projected revenue of major ports in India is expected to grow at a CAGR of 9.5% from Rs. 5,446 crore in 2008 to Rs. 9,375 crore by 2014. Keeping in mind the overall GDP growth, we project that
32

Source: IMaCS analysis; assumes a retirement of about 10% - 12% of older M&HCVs every year from the previous year’s total. 33 Every M&HCV would require 1 to 2 cleaners/helpers; the number of loading supervisors is assumed to be 15% of M&HCVs on-road 34 Refer IMaCS report for NSDC on Human Resource and Skill Requirement in the Auto and Auto Components sector for details. Page 60 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

the revenue of all ports would grow from Rs. 7,000 crore in 2008 to over Rs. 25,150 crore in 2022, at about at a CAGR of 9.5%35. The employment in the port sector would increase from the current levels of over 93,000 persons to about 2.2 lakh persons by 2022.

2.8.4. Projected Size and Human Resource Requirement of the Airline Industry
Air Transport in India has been growing at a CAGR of 18% to 20% between 2005 and 2008. Usually, the Airline sector grows at twice the GDP growth. Accordingly, we expect the airline sector 15% to 16% between 2008 and 2022. The following details the expected growth in the Airline sector as per projections of Airports Authority of India36. Table 20: Projected growth in the Airline Industry in India Air Traffic Movements (in '000s) Traffic 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 International 191 216 244 276 312 353 400 442 487 538 595 659 736 822 918 1,025 Domestic 647 738 843 966 1,108 1,275 1,471 1,654 1,862 2,100 2,373 2,686 3,055 3,475 3,952 4,495 Passenger (in million) International Domestic 22 26 30 35 40 46 54 61 69 78 89 101 116 132 151 173 51 61 73 87 105 126 151 176 204 237 276 321 379 447 527 621 Cargo (in '000 tonnes) International Domestic 920 1,029 1,151 1,289 1,446 1,622 1,823 1,998 2,192 2,407 2,644 2,906 3,221 3,570 3,957 4,385 484 532 585 643 708 781 861 932 1,009 1,094 1,186 1,287 1,405 1,534 1,675 1,828

35 36

Including minor ports AAI, FICCI report on ‘Indian Aviation: Scaling New Heights’ - 2008 Page 61 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Air Traffic Movements (in '000s) 2021-22
Source: AAI

Passenger (in million) 199 733

Cargo (in '000 tonnes) 4,861 1,996

1,144

5,113

The projected human resource requirement in the Airline sector is detailed below. Table 21: Projected Industry Size and Human Resource Requirement in the Airline Industry Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
IMaCS analysis

No. of aircrafts 184 221 265 318 382 458 549 632 747 884 1,046 1,237 1,463 1,730 2,046 2,420 2,862 3,385

Pilots/CoPilots 1,900 2,280 2,736 3,283 3,940 4,728 5,673 6,524 7,718 9,131 10,803 12,780 15,120 17,887 21,162 25,036 29,619 35,041

Aircraft Cabin Engineers Crew 11,174 13,409 16,091 19,309 23,170 27,804 33,365 38,370 45,396 53,708 63,542 75,176 88,941 105,226 124,493 147,288 174,257 206,163 5,907 7,088 8,506 10,207 12,249 14,699 17,638 20,284 23,998 28,392 33,590 39,740 47,016 55,624 65,808 77,856 92,111 108,976

Other Airline Staff 29,279 35,135 42,162 50,594 60,713 72,856 87,427 100,541 118,950 140,729 166,496 196,981 233,048 275,719 326,202 385,929 456,591 540,192

Airport Staff 20,969 20,969 15,941 17,272 18,737 22,353 24,120 26,061 29,091 32,473 36,248 40,462 45,166 50,417 56,278 62,820 70,124 78,276

Total 69,413 79,102 85,701 100,983 119,191 142,898 168,772 192,412 225,900 265,316 311,724 366,376 430,753 506,602 595,989 701,349 825,564 972,033

Source: AAI, FICCI report on ‘Indian Aviation: Scaling New Heights’ – 2008 – projections till 2012, and

2.8.5. Projected Industry Size and Human Resource Requirement in Warehousing and 3PL
India has about 1,800 to 1,900 million sq. ft. of warehouse space of which only about 8% is in the organised sector. The organised sector, which includes warehouses of companies and 3PL providers, is growing at over 10%37.

37

CII Report on Skill Gaps in the Indian Logistics sector - 2007 Page 62 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Based on the GDP growth of the Transportation sector, we estimate that the warehousing space would continue to record a CAGR of over 10% till 2022. Accordingly, the warehouse space in the organised sector would increase from about 150 million sq. ft. in 2008 to about 450 million sq. ft. of space in 2022. This would drive the requirement for human resource in this sector. Accordingly, we project the human resource requirement for the Warehousing and Transportation sector in the organised and 3PL space38. Table 22: Incremental human resource requirement till 2022 in Warehousing (organised sector) and 3PL (in ‘000s) 2008 No. of warehouse managers No. of warehouse workers 1,520 5,952 4,432
Source: CII Report on Skill Gaps in the Indian Logistics sector – 2007 and IMaCS analysis

2022

Incremental (in ‘000s)

15

60

44

2.8.6. Projected Human Resource Requirement in the Transportation, Logistics, and Packaging sector
The overall projected human resource requirement in the Transportation, Logistics, and Packaging sector is shown in the following table. Table 23: Incremental human resource requirement till 2022 in the Transportation, Logistics, and Warehousing sector (in ‘000s) 2008 Road Drivers Helpers 1,872 2,113 6,942 7,833 5,070 5,720 2022 Incremental (in ‘000s)

38

Assumption: A warehouse of 10,000 sq. ft. of space requires about 1 warehouse manager and about 100 workers Page 63 of 67

Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

2008 No. of loading supervisors Sea Ports Railways Railways staff Pilots and Co-Pilots Aircraft Engineers Cabin Crew Other airline staff Airport Staff No. of warehouse managers No. of warehouse workers Total
Source: IMaCS analysis

2022 281 1,041

Incremental (in ‘000s) 761

94 1,378 Air 3 19 10 51 17 15 1,520

220 2,085 35 206 109 540 78 60 5,952

126 707 32 187 99 490 61 44 4,432

Warehousing and 3PL (organised)

7,374

25,101

17,727

The demand for human resource in the Transportation, Logistics, and Warehousing sector is thus expected to increase from about 7.3 million to about 25 million, leading to an incremental human resource requirement for about 17.7 million persons.

2.9. Focus areas for skill building
The possible focus areas for skill building through short-term (3 to 6 months) and medium-term (under a year) skill building initiatives are mentioned in the following table. Table 24: Focus areas for skill building Sector Road transport Personnel for skill building Truck drivers Indicative coverage areas Core driving skills Road safety Basic knowledge of documentation

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

Sector

Personnel for skill building

Indicative coverage areas related to octroi, VAT, excise Sanitation and hygiene Ability to handle complex trucks of higher tonnage Basic knowledge when handling hazardous chemicals Good driving practices.

Warehouse

Loading supervisors

Goods arrangement Ensuring quick Turn Around Time (TAT) Safety and compliance People management skills Ability to train and supervise operators of equipment

Warehouse Managers

Recording of goods movement Safety related aspects Ability to supervise training in picking, packing, distribution Knowledge of IT systems, WMS, RFID, etc.

General warehousing skills, especially Supervisors

Stock keeping Loading and unloading Picking and handling Equipment usage – stackers, pallet trucks IT systems, labelling Supervisory skills

Air Transport

Pilots Aircraft Maintenance Air Traffic Control Instructors Safety and security

Source: Primary Research, FICCI Report on Aviation, and IMaCS analysis; Indicative and not exhaustive

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

The above are areas indicative of skills which are in demand to a great extent and the possible areas of training content for the same. Addressing these requirements is critical for the competitiveness of the Transportation, Logistics, Warehousing and Packaging sector in the long run.

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Human Resource and Skill Requirements in the Transportation, Logistics, Warehousing and Packaging Sector

This report has been prepared by ICRA Management Consulting Services Limited (IMaCS). IMaCS is a multi-line management and development consulting firm headquartered in India. It has an established track record of over 15 years in consulting across various sectors and countries. IMaCS has completed over 950 consulting assignments and has worked in over 30 countries across the globe. Through the process of carrying out several assignments over the last decade and half, IMaCS has accumulated considerable analytical and consulting expertise, backed by the following capabilities: • • • • • • • Deep understanding of policy formulation. Extensive and organised database on several sectors. Knowledge of key factors of success in different projects and programmes. Ability to research emerging trends in the economy, as well as in specific sectors. Insight into different programmes and organisational processes. Ability to carry out economic analysis, build quantitative and financial models to project future performance and identify imperatives. Ability to identify the various types of risks and suggest appropriate strategies to mitigate the same.

The Education and Skills practice at IMaCS focuses on identifying skill gaps, mapping future skill requirements, and formulating strategies to address them. Our service offerings encompass diagnosis, design and implementation of education and skill development interventions for government and private sector.

R. Raghuttama Rao Managing Director IMaCS 4th floor, Electric Mansion Appasaheb Marathe Marg, Prabhadevi Mumbai – 400 025 Tel: 91 22 3047 0047, Fax: 91 22 3047 0081 Email: [email protected]

M. Sairam Head – Process Consulting IMaCS 5th floor, Karumuttu Centre 634, Anna Salai, Nandanam, Chennai – 600 035 Tel: 91 44 2434 0043, Fax: 91 44 2434 3663 Email: [email protected]

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National Skill Development Corporation D-4, Clarion Collection, (Qutab Hotel) Shaheed Jeet Singh Marg New Delhi 11 0 016 Tel : 011 46 56 0414 Fax : 011 4656 0417 Email : [email protected]

www.nsdcindia.org