Food Marketing and Technology Magazine, India had an opportunity to interact with Rubal Jain, Managing Director, Safexpress. He talked in detail about logistics and changing scenario in the industry.
Could you tell us about Safexpress’ services for food and beverage industry?
Everything stops if supply of food is disturbed. Countries without exception have ensured that all the players involved in its value chain are treated as essential actors, much like hospitals and pharmacies. In India, more than two-third of final products manufactured and processed by food & beverage companies is comprised of non-food grain items like poultry, dairy, fruits & vegetables, frozen food, edible oil, sugar, and other perishable items. These are low-shelf life products and are handled mostly by non-farm players.
In India, several large enterprises including TNCs are operating from over 40 Mega Food Parks, running their own food processing and manufacturing facilities. These mega food parks then are connected with 21 other food parks located in different zones. The National Sample Survey suggests that post-farmgate activities are undertaken in semi-urban areas, towns, and tier-II cities in regions that are close to farm areas. Such physical proximity reduces transit time and logistics cost, and add a measure of speed to the whole process that is relevant to perishable goods.
Safexpress per se doesn’t operate in perishable goods. Nonetheless, Safexpress specializes in all-season products and edibles like spices, HYV seeds of different crops and food supplements like almonds, apricots, cashew, and other nuts which are grown in specific climatic zones (and) are distributed across the distributors and retailers across the country. Furthermore, as the NSSO data reveals, more than 2/3rd of value added services like packaging and labelling are provided by MSMEs which have developed around processing centres with which Safexpress is long entrenched as a preferred partner.
How challenging is logistics now when there is rise in fuel cost? Do you transfer hike in input cost to customers or observe to some extent?
Indeed, a truck without fuel in its tank is a body without food in its belly. Close to 40% of input cost for players involved in express distribution is contributed by fuel and this is a mammoth figure in final computation which anyone can subsume. For players in this business there is simply no way they can endure fuel prices without passing them on to the customers. Higher the fuel prices, the difficult it becomes for everyone concerned – the manufacturer, the logistics player and the consumer.
For Safexpress, there are threshold limits of price differences and time when prices are revised on mutually agreed terms.
Could you throw some light on the growth of logistics industry? How do you see Safexpress’ role in connecting rural hinterland?
Logistics goes to the time when organised human settlements and interactions go. In business terms, we can trace its origin to the days sell and purchase and in more nuanced form, trading of commodities began. This involved a seller, consumer, storage of goods, its movement and distribution. Modern logistics though can be said to have evolved with the growth of organised manufacturing. Much through its history, logistics has been a conspicuously unknown and unplanned though. Over the centuries and decades, it grew in size and scope. Its current shape, however, coincides with the beginning of globalism.
In India, with adoption of liberal policy initiatives since the early 90s unleased the forces of manufacturing and production and simultaneously mandate the need for organised logistics. Our own Company, Safexpress Pvt. Ltd, was borne in 1997 and since then has embarked on the journey of expansion and network penetration. Our network built on hub and spoke model was so designed to serve the growing needs of the manufacturers – a network that can connect manufacturers with its sourcing units and to its products to consumers. Safexpress has been able to provide for the movement of primary goods to the manufacturing plants and warehousing and distribution of the finished products up to the consumer without escalating the cost by creating an infrastructure which is agile and flexible enough to customize.
Safexpress has 74 logistics parks spanning 18 million sq. feet, 97 transhipment hubs which operate more than 2300 express distribution routes across the country. It delivers to every nook and corner of the country spread across all 31188 pin codes through 738 delivery gateways. A route vehicle departs every 29 seconds for one of our hubs!
Continuous expansion in network has come from the continued investment in infrastructure and going forward, this will stay to be our central dogma of growth – investment in infrastructure and network expansion.
What were your learning from Covid? How did company manage in these difficult times?
The days of pandemic were traumatic. Highways were desolate, seas were chaotic and everything stopped. It is also true that the pandemic exposed the vulnerabilities of businesses of all hues and just about everywhere. Manufacturer’s strategy to connect with their consumers exposed them to the recognition and importance they usually attached to distribution. It is after all, the distribution partner who is exposed to the dynamics on the long haul and challenges in the last mile delivery. This was especially so in B2B distribution wherein the movement was in bulk but which required both manufacturer and distributor to be open to the services.
So, what happened is there was disequilibrium between demand and supply on the one hand and localized lockdowns and movement restrictions on the other. Supply issues especially during the second half of 2020 generated a pent up demand which when were sufficed by the manufacturers; distributors and retailers could not consume because of prevalent reasons. Distribution partners ran chock-o-block; distributors and retailers were either closed owing to restrictions or hardly have capacity to absorb new supplies. This was not a great place to be in for the distribution partner many of which took the brunt. It took months for the situation to normalize.
On the better side, it brought all the stakeholders closer to each other, ready to understand and appreciate the role that distribution partner play but are hardly recognized for. Second, there is no substitute for network optimization in logistics and distribution business. Network optimization means availability of processing centres in proximity to the delivery area and with sufficient number of trucks and manpower available there to service the requirement on time. Network optimization also means that the turn-around-time in loading and unloading activities is considerably reduced and long haul vehicles are processed faster. After all, congestion on the road is same for everyone and so is the challenge in the last mile delivery.
We have sought to address these teething issues by developing logistics parks with cantilever sheds with multiple loading and unloading bays. Availability of skilled manpower and mechanized tools help achieve faster processing and make operation-floor activities user-friendly while enhancing cargo transit-worthiness at the same time.
Continued investment in network expansion and infrastructural development connecting hubs with spokes reduce transit time in the long run considerably.
How has ecommerce impacted logistics business? Is it a challenge or opportunity as new players are entering the logistics business?
Ecommerce in general and online retail in particular has been a very fresh and welcome intervention in the space of logistics and distribution business. With the consumer occupying the locus, online retail brought about sort of a paradigm shift in the way logistics business was seen a done. Technological innovations that broke new grounds of transparency in transaction management, automation to reduce human intervention, and speed with which transactions were completed was something very new for B2B business in general.
B2B players long into the business have to adapt and adopt quick time with the changing requirements of the business. This has opened up a host of other business opportunities like B2B2C. Online retail has also broke new grounds in warehousing in tier-II & tier-III and marketplace sourcing. Warehouses in these cities and distribution centres meant to serve ultra-local given an opportunity to start ups and manufacturers alike.
When seen in entirety, both B2B and B2C businesses essentially work on the same principle with B2C being the most recent entrant, is also the more evolved one. However, B2C has consumer at the centre whereas in B2B, the business is.
Entry of new players is always good in the sense that they bring in new energy, question status quo, innovate and in more ways than one, lead to opening up new frontiers.