Logistics providers APL Logistics and Vascor have joined forces to step up their business focus in India’s fast-growing vehicle market, according to an interview with the chief operating officer of the new company with Automotive Logistics News. The logistics provider, called APL Logistics Vascor Automotive Private Limited (LVA), will provide a full range of services including inbound logistics, yard and claim management, rail transport and outbound logistics, including finished vehicle services.
APL and Vascor already have a significant presence in the industry. APL Logistics, owned by Neptune Orient Lines, designs and operates global supply chains with a strong presence in the automotive sector and is already handling inbound for some automotive OEMs in India. Vascor, which is itself a joint venture between APL and Japan’s Fujitrans, has been established as a leading player in the US vehicle logistics market for more than 25 years.
The joint venture company has recruited Umesh Bhanot, former senior executive at Adani Logistics and an ex-Indian Railways technical service officer, as chief operating officer to spearhead the operation.
Notswithstanding the recent slide in Indian passenger car sales, which Bhanot called a “temporary blip”, longer-term forecasts over the next decade are positive. Faith in these forecasts was evident in the fact that senior executives from both APL and Vascor declared an interest in bringing in foreign direct investment to the automotive logistics segment during recent meetings with the railway board chairman Vinay Mittal and others, Bhanot told Automotive Logistics News.
For Bhanot, this is not a virgin territory. He was instrumental in helping Adani (a group focused on building infrastructure) establish its presence in the Indian automotive logistics segment from scratch. But the collective expertise in automotive at Vascor and APL helped to allure him. "The vast knowledge bank at our disposal to offer most value-added service convinced me to switch over," said Bhanot.
What also convinced him was the conviction that automotive companies have begun to look for 3PLs with certified and time-tested systems to manage their operations.
By and large, Indian automotive OEMs – mostly involved in foreign partnerships – have gone in for large-scale outsourcing in several areas, something that is expected to be of benefit to LVA.
This is likely to be the case in the rail sector as the new venture is reported to be keen to enter the automotive freight train operator (AFTO) segment. The existing policy document is not 'bankable', according to industry sources, but India’s Railway Board is expected to produce a revised version of the document in the near future that will make the policy more palatable. In the meantime, LVA has got its design team working on the proposed wagon and has an 'in principle' clearance from the Research Designs and Standards Organisation (RDSO) to get into this segment.
Bhanot said he has begun knocking on the doors of automotive OEMs looking for opportunities to move finished vehicles by rail and was hopeful of garnering business once a 'bankable' AFTO policy is in place.
One area that is bound to gain currency once OEMs' volumes increase is the multi-user yard. Vascor has been managing an extensive number of yards in US, Mexico and Canada for decades and that experience is viewed as vital in the Indian market.
An exclusive feature on yard management and handling in India will be featured in the October-December issues of Finished Vehicle Logistics.
Lower EBIT for APL Logistics
In other APL Logistics-related news, its parent NOL reported quarterly earnings today, with an improvement in earnings before interest and tax (EBIT), but a wider loss than last year because of a $112m restructuring charge. APL Logistics reported second quarter revenue of $361m, up 15% from a year ago. Contract logistics revenue increased 20% thanks to growing demand for rail and other land-based logistics services. International logistics services revenue at APL Logistics improved 7% on rising volume.
APL Logistics’ core EBIT was down 25% from a year ago. The decrease was partly attributed to investments to improve technology products and commercial infrastructure.