Based in Delhi and called APL Logistics Vascor Automotive, the joint venture has been set to meet the increasingly complex needs of the automotive supply chain in India according to the company.
“This collaboration between APL Logistics and Vascor marks the first international 3PL to be dedicated exclusively to India’s auto sector, and underscores India’s growing importance as a major global automotive manufacturer,” said Bill Villalon, APL Logistics vice president for Automotive and chairman of the joint venture.
Bill Garrett, president and CEO of Vascor, will serve as CEO of the joint venture and Umesh Bhanot has been appointed chief operating officer.
As part of the initial service offering, the joint venture will offer rail transportation, yard management and containerised transport via APL Logistics’ AutoDirect racking technology. The racks can be configured to fit up to six passenger cars into one intermodal container for secure transport door-to-door.
The company has also developed a rail wagon that it said can accommodate a wide range of vehicles, including the bigger SUVs. The wagons will be central to the company’s AutoLinx service, which it said is designed to offer more reliable, damage-free and cost-efficient distribution of cars and motorcycles across the country.
The complete door-to-door service will include collection of finished cars from OEM plants, vehicle loading and unloading at terminals, and long-distance rail haulage and last mile delivery.
Trial runs of AutoLinx will begin in early 2013 with full-scale operations slated to begin mid-2013 following regulatory approvals.
Cost efficiency is going to be an important consideration for carmakers using the service given the rise in freight rates India Railways is imposing this month and in February next year.
The rail provider, which has a monopoly on the rail infrastructure in India, is reported to be raising haulage rates by 31% for container train operators, something that will hit margins and affect manufacturers as the operators pass on costs to their customers.
Currently the percentage of total automotive freight moved by rail is small, at between, 4%-5% but according to Srinath Manda, program manager, Automotive & Transportation, at Frost & Sullivan India, rail's share within the industry was expected to grow significantly upon entry of private container train operators in 2008.
However, because of the restrictions on capacity allocation and the higher haulage rates charged by Indian Railways, which owns the rail infrastructure, several industries, including automotive, could not enhance their cargo share of the rail mode.
“As of now only Maruti Suzuki (based near Delhi) has a notable use of rail for its cars intended for exports,” said Manda. “The scenario is similar even for the auto components industry, which transports less than 10% of its cargo by rail mode,” he said.
“Considering the above, this new round of increment in haulage charges would only mean that automobile and auto component industries may further reduce their reliance on rail,” sad Manda.
However, given the expertise and investment behind the APL Logistics Vascor Automotive service, greater efficiency in the number of cars able to be transported per container, when combined with plans for inbound containerized movements, could offer a solution.
“APL Logistics Vascor Automotive will seek to raise the bar for automotive logistics in India by developing and offering innovative solutions that meet the increasingly sophisticated requirements of original equipment manufacturers (OEMs) and Tier suppliers,” said Garrett
