Ram C MenenDivisional Senior Vice President Cargo

Emirates

17th November 2006

Mumbai

Source: Boeing WACF 2006/07

For India, the time is right and the environment is right!

India’s strengths are language and highly advanced and skilled pool of labor force

India current split in activity:Manufacturing 20% (China : 50%)Services          80% (China : 30%)

Government’s priority is to develop themanufacturing sector.

Current Scenario

Current Scenario

Current population split is 30% urban and 70% rural

Urban population is ideally suited for the services sector, rural population is perfect for manufacturing.

Over 30% of in the population is middle class – India is a retailers dream.

India’s FDI is only 1% of the total GDP[about US$5 billion].

Current Scenario

Value of exports: 1995 : US$ 31 billion 2005 : US$ 57 billion

Cultural: Some of India’s old traditions can slow and impedes growth. However, the good news is that the younger generation is breaking through the barriers

led by being on the receiving end of outsource in the services sector.

Unlike China, India has not had the benefit of political continuity which has resulted in greater bureaucracy and slow decision making process. This has led to less confidence and lower FDI than China. India’s FDI is only 1% of the total GDP [about US$5 billion]

Challenges

The good news is that the new approach of the government is inclusionary and consensual.

Golden Quadrilateral Project

Source: wikipedia.org

Inputs on the road project – National highway authority of India ( NHAI ).

NHDP - NATIONAL HIGHWAY DEVELOPMENT PROGRAMME has 7 phases in all.

1 & 2 PHASE : NORTH - SOUTH Corridor and EAST - WEST Corridor will be 100% complete by 2007.

PHASE 3 : 9 Projects of 10,000 kms of 4 lane traffic.

PHASE 4 : 20 Projects of 1,000 kms of 2 lane expressways.

PHASE 5 : of 1,000 kms of expressways.

PHASE 6 : of 5,800 kms of Golden Quadrilateral of 6 lanes.

Road Network

What’s wrong with this plan??

It will not even meet today’s needs !!

India needs highways with sixlanes on each direction , i.e. 12lane roads.

The new dedicated freight corridor (DFC) for rail freight is a good start.

However, this only connects the cosmopolitan points (slide) and not

very efficient for transportation of air cargo as it adds on more

processes which will add to the overall costs.

Rail

Direct (Rail) Freight Corridor

Today, because of the lack of proper distribution capability, Indian imports are

better served via hubs in Dubai and Singapore, reaching the internal industrial

areas directly from these hub. e.g. it is quite difficult to distribute from the current

airports like Bombay to Bangalore or Hyderabad … cumbersome transit

procedure as well as time taken to truck between any two points in India.

Mindset must change and bureaucracy must end!!

Trucks are the best regionalfreighters.

Flying domestically is expensivebecause of higher costs .. viz.cost of fuel etc.

TruckingOffline

EK Online

Pax & Freighter

Freighter

Trucking in India & Europe

How efficient is the supply line within your supply chain?

Air cargo is used as a planned tool in today’s supply chain management.

Time is a very critical part of any business decision and the higher cost of airfreight adds economies to the over all

supply chain.

Growth in air freight is roughly twice

the growth in the GDP of a country. At

the current GDP growth of 8-10% air

cargo should be growing at 16-20%. If

facilities are not provided to cater to

this growth, India’s economic growth

will be stunted.

J-I-T Assembly Line

Ground infrastructure is critical to developing air logistics activity. Proper investment in air side facilities as well as a proper road infrastructure is very

essential to create a seamless distribution network. China is an ideal

model to follow where the infrastructure was built before the opening up the

market for growth.

Creating an air cargo hub in Nagpur is a great idea. Along side this, there has got to be an industrial development

which in itself will create origin/destination traffic. Ideally a major free trade zone is a good catalyst. It will

be a greenfield development, hence, can be developed quite quickly.

Multi-modal Int’l Hub Airport at Nagpur [MIHAN]

MRO and training facilities

Special economic zone

World class health city

IT park

Manufacturing and assembly plants

Attractive fiscal and tax incentives with friendly labour laws

The house of Tata’s was always closely associated with Nagpur by way of Empress Mills (one of the first business

ventures by Tatas, established 1877).

The association also goes back to early Air India days (Tata Airlines) when:

in 1935, February 25, Tata Sons made a trial flight Bombay / Nagpur / Jamshedpur / Kolkata with Fox

Moth VT- ADZ (pilot Mr. Nevill Vincent).

scheduled services started only in 1945, April 16th when Tata Airlines began twice weekly Bombay /

Nagpur / Kolkata service with DC-3s.

DC3s transported mail and Nagpur was a mail hub!!

A New Era Is Dawning On Us !!

India has now opened up its skies,

however, it has not invested in

infrastructure at airports and cargo

areas. Unless the task force created by

the Civil Aviation Ministry moves in a

fast-forward mode, it will always be in a

catch up mode. This is less than ideal

environment for developing freight.

Interim Solution

Use Dubai & Singapore as a Hub

The air logistics in India will now have to transition from traditional forwarding to that of supply chain management. Multinationals are going to change the scene in the logistics industry.

India has now got the chance to

leapfrog technology. It should

refrain from recreating the past

and focus on creating a new

future.

Thank You !

BRIC : Brazil, Russia, India and China, in the next 50 years are expected to be the largest economic force.

BRIC economy will be larger than the G6 in the next 40 years and will create the largest consumer markets in the world.

Future

India is the world’s largest diamond exporter. Nearly 7 out of 10 diamonds in the world are cut and polished here (Surat).

Other commodities: Chemicals, pharmaceuticals, auto parts, textiles, IT, biotechnology and now also microchips and semiconductors.

Supplier Manufacture Customer Warehouse Warehouse

Coordination MARKETING

Purchase Production Distribution

MA = Materials Administration

India – Emerging Market

India is becoming an integral part of theglobal pharmaceuticals value chain in a simulated environment.

Clinical trials accelerating – 30-40% lowercost compared to US/Europe

Indian government stimulating thedevelopment With tax and customs incentives.

Multinationals cooperating with Indiancompanies

“Efficient Inventory Control Is Very Critical To Attaining

Cost Efficiency In The Supply-Chain”

Transportation modes can be leveraged to attain cost efficiency at market entry level

Air

Sea-Air

Sea

Transportation modes can be leveraged to attain cost efficiency at market entry level

Air

Sea-Air

Sea

TIME

In this millennium TIME has integrated with the other three dimensions. Time is

now firmly the 4th dimension.

Time as a dimension results in lack of shape or form, i.e. results in fluidity.

The state of fluidity can be seen in inventory and resource management.

Airline

Integrators

DEMAND0

SER

VIC

E

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SERVICE vs MARKET DEMAND

Emirates Route Network 2006

ECONOMIES OF SCOPE

"Leverage economies of scope by leveraging available economies

of scale’’

“India is at the right time and at the right place. It must, now, move in a fast-forward mode to take advantage of the opportunities.”

Emirates Route Network 2006

Change in Mind Set!!

Nagpur slide ..

Slides from Alston

SPEED

Paper-free Era & e-Freight

How efficient is your transportation?

Biggest Challenge!!!???

US$100A barrel?

VALUE CHAIN–TOTAL SOLUTION VALUE CHAIN–TOTAL SOLUTION

Door Pick-upInsurancePackagingCustom Clearance WarehousingInventory ManagementBrokerage

Door Pick-upInsurancePackagingCustom Clearance WarehousingInventory ManagementBrokerage

Door DeliveryInsurancePackagingCustom Clearance WarehousingInventory ManagementBrokerage

Door DeliveryInsurancePackagingCustom Clearance WarehousingInventory ManagementBrokerage

Customer

Customer

AirlineAirline

Service ProviderService Provider

AirlineAirline

Service ProviderService Provider

Customer

Customer

ORIGINORIGIN DESTINATIONDESTINATION

Providing total solution to the customer through commercial alliances with various

service providers

Providing total solution to the customer through commercial alliances with various

service providers

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