Logistics

Geneva’s MSC picks up logistics start-up MatchLog to drive efficiencies, lower costs

P Manoj MUMBAI | Updated on October 13, 2019 Published on October 13, 2019

The triangulation of containers by MatchLog will lead to quick turn around of boxes by eliminating the empty container movements.

 

Geneva-based Mediterranean Shipping Company or MSC, the world’s second-biggest container carrier, has taken the help of an Indian logistics start-up to cut costs, reduce wastages and drive efficiencies in the country’s container logistics chain.

MatchLog Solutions, founded by industry veterans Dhruv Taneja, Laxmi Narayan Gurjar and Karan Khosla from the shipping, logistics and supply chain industry in July this year, will enable MSC to reutilise the import containers it ships into India by triangulating the import boxes for export movements, thereby optimising on repositioning empties.

The concept, if implemented on a pan-India basis, will help cut costs on container logistics by as much as $10 billion a year.

The biggest challenge facing India’s 18 million twenty-foot equivalent units (TEUs) container industry is empty container repositioning on ships - a dead freight to India- and hinterland cycles which are 99 per cent of the times vacant, says Abhishek Baheti, CEO and Co-Founder, Ambily Technologies.

The logistics spend on India’s container business is about $25 billion a year, of which 40 per cent or $10 billion is wastage. If we remove the 40 per cent wastage from the container logistics chain, then the overall spend as a percentage of GDP will be impacted by 1.5 per cent, Baheti stated.

MatchLog has created its offering built around technology and data (enabled by artificial intelligence and robotic process automation), backed by a transportation network of 8,000 trailers and seven virtual on wheels triangulation points to turn around and match-back containers with resultant reduction in empty repositioning on vessels and empty runs in the hinterland.

Exports higher

MatchLog’s technology platform assumes significance because India’s exports are higher than imports, making an import box critical for export movements. In fact, shipping lines prefer the importer to return the container the day it is destuffed at his factory.

The average turn-around of boxes in India is around 39 - 40 days - if a box coming into India has to move out of India, it takes these many days, compared to the world average of about 17-18 days.

“That’s a huge difference,” says Rajesh Kumar, Head, Imports at MSC.

Importers have to pay detention charges – ranging from $90 to 100 a day - to the shipping line if they hold on to the empty container beyond a 14-day free period. The detention charge rises as days linger.

“If an importer keeps the empty container for long, his logistics costs is going to go haywire,” says Kumar.

“If we can turn around the containers from 40 days to 9 or 10 days, that will actually help us in getting more revenue. For instance, if a box is held up longer by the importer, that means we have to get more empties into India to facilitate exports, that’s an additional cost for the lines; nobody pays for it. So, if we are able to turn around a box quickly, it helps us in reducing the empty repositioning into India which comes at a huge cost,” says Kumar.

“The triangulation will help us save money on the empty movement we have been doing here. It’s not only the importer and the exporter who is getting benefitted but for a shipping line, the empty movement will get reduced. Empty movement is a dead freight and in the end nobody – the importer, exporter or line - gains,” he says.

How does it work?

MatchLog will broadly use the model followed by riding hailing firms such as Ola and Uber, minus the app.

The concept works like this.

For Instance, for an importer based in Pune area, when a container comes into Jawaharlal Nehru Port (JNP) near Mumbai, he has to hire a truck/trailer to take the box to his factory.

The truck owner quotes a rate for the two-way trip - the container will be hauled to Pune, de-stuffed and the empty container will be taken back to JNP because the importer has to return it back to the port from where he has taken delivery of the laden box.

When the empty container is transported back to JNP, it is a loss of revenue for the importer because he pays for the return leg.

On the other hand, for an exporter also based in Pune, he has to send a truck to JNP to fetch an empty container, haul it to his factory for stuffing export cargo and send it to the port for onward journey by sea, paying a two-way fare.

The job of MatchLog is to find both an importer whose container is getting empty after de-stuffing the cargo and then in a span of one day or two days, locate an exporter who is also exporting the cargo through the same line and their load is ready and provide the empty container to him.

Triangulation

This triangulation of import and export containers by MatchLog will lead to quick turn around of boxes by eliminating the empty container movements, thus saving extra costs and the fuel costs for the trucker.

“So, we are saving for the country in terms of fuel; there is less congestion on the roads because in place of two trucks, only one truck is used and the importer and the exporter actually pay lesser than what they have been paying earlier for both the legs,” Kumar added.

MatchLog is also in discussions with other lines, including Maersk, the world’s biggest container line, to use the platform.

“If the lines have visibility where they can reuse their import containers using this kind of a platform for exports, they will bring a lesser number of empty containers into the country. These are the two major problems shipping lines have: one is the visibility of containers inside the country and second is based on this visibility how much of empties they need to bring into this country,” says Baheti.

MatchLog started operations in Gujarat enabling 10,000 pairs per month of match-back across key clusters of Gandhidham, Morbi and Silvassa and is in the process of extending their coverage to Ahmedabad, Vadodara, and Surat, increasing the potential to 30,000 pairs per month.

“As things progress, we are looking at implementing this concept on an all-India basis. We have also discussed with MatchLog to introduce the concept in Nepal which uses ports in Kolkata and Haldia to move their cargo,” Kumar said.

The concept will also allow lines to provide door-to-door service to the customers besides enabling importers and exporters entering into long-term contracts with lines to freeze their logistics costs.

“With MatchLog, knowing that they have a fleet of trucks that are more reliable, now we can deliver at the door-step or warehouse or factory of the importer. As a shipping line, we will be able to give more value-added service to the customer, which was earlier getting limited only to the port or the surrounding areas of the port known as container freight stations or CFS. From a pure shipping line, we are thus becoming a solutions provider to the customers by offering an inter-modal solution”, Kumar said.

“The transporters are prone to charging rates depending on the season. For example, come Diwali, and he will charge double the rate because of the shortage of drivers; those things will be negated now. We will be able to tell customers that this will be our rate for the next one or two years. So, for an importer or exporter, he knows his logistics costs for the full contract period”, Kumar added. Ends/

Published on October 13, 2019
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