From moving a 5000 tonne package to a less than 5 milligram mask, Bertling Logistics India Pvt Ltd, a pure project logistics company, is evolving with changing time. Dr Sharmila Amin, Managing Director of the company talks about the ongoing industry consolidation, the massive infrastructure development happening and of course the impact of COVID-19
Let me begin by asking you a simple question. Among so many players in delivering logistics solutions, how do you differentiate Bertling Logistics? What is so unique about your company?
You are very right. Lots of logistics companies offer various verticals, maybe 10, 11, 12, whereas Bertling only specialises in projects, oil and gas. We have our own in-house IT company BESITEC. We have a fleet of our own 20 odd ships and what we do is we are a very small limited team with over 100 officers in 45 countries specialising in projects on oil and gas. So, the people in this field are absolutely hands-on, whether it is MD like me who knows exactly every pin or paper that is moving in the office for a particular project. So, we don’t get into the other verticals where we are involved in other things and we lose focus of what we are going to do. Now, the global players as you can see, like the shipping industry. It is so fragmented. Even the freight forwarders are now getting consolidated by itself as you can see.
The big global players are also joining hands and now realizing that the game is over, because it is very expensive mode of operating because you are not only competing with your other smaller players but now you are even competing with the shipping lines who are offering the door-to-door or the up-to-door end services. So, there’s going to be a time when most of us will disappear. And I suppose only a handful like today how we have only 10 of the really big players in the shipping, we are also going to be a handful shortly.
I see a lot of consolidation happening in ports sector and also globally, the liners segment; lot of shipping lines have now joined together and then formed into big groups. What could be the reasons?
If you look at big business houses that are run here in India, they are basically all family-owned, the really big players are all family owned. When we started our career, there were really big houses that were operating like Lemuir, AFL, Dubash & Co, McKinsey and all of them over a period of time have disappeared. Either they have decided to merge with bigger players globally by joining hands with them or sell off, and the same thing is going to happen. What is going to happen is – it’s like our transport industry, it is so fragmented; we have something like 25,000 all registered transport operators; you know 1-2 vehicles. And the same thing is happening with our licenses.
So, when we say logistics in India, we call ourselves a customs house agent and also a logistics player. A truck owner or mechanical trailer also calls himself a logistics player, which is right, in some way he is offering some service. But you he calls himself a complete 3PL or 4PL logistics player. And the global ones are still considered as still the global logistics player, and still holding the global positions of 1, 2 and 3. So, the problem with the smaller ones is at some point of time, they will either die down or continue, and the problem with India is that they don’t want service, they only look at the bottom line price. I am sorry to be so crude. But most of the Indian companies do this. They never look at the quality service. The difference in service with a liability issue if a damage happens which is not covered by these small players or consolidated players is missing. No doubt, there are services done by them, I do not deny or dispute it. But they are creating a market scenario where everybody wants to run their own business.
Nobody wants to say, lets join hands or say, I specialise in only projects. Why would I want to do a shampoo or a garment which I cannot handle or a pharmaceutical which I cannot handle, which is not my core business. I may do it for a client who asks me but for sure I still go out and ask for services from companies in India who really are specializing in this particular field, like even I would go to a competitor like Agility and say, can you please handle my pharmaceutical because you are the number 1 player for these. Or probably go to somebody else saying, listen, you are very very good at the automobiles or the upstream, downstream petrochemical. But that doesn’t happen to the India players. Somehow they don’t believe in sharing, like today the shipping lines are doing – let’s share and give, or like the Japanese do. They decide or the big EPC companies decide and ask you 3 or 4 players globally, which job would you like. So, we all sit and discuss that I am very strong in South Asia, so I will take your projects in South Asia, or I am very good in Americas, so I’ll handle Americas, or I am very good in Africa, so I’ll handle Africa. This is probably where we are not able to reach the global levels, barring one or two companies and one or two players who are now aspired or by having bought over global companies following those global standards and trying to reach that level.
I would say all cargos in that category, we have Adani Logistics following that, we have JM Baxi to a certain extent following that also. But barring those two or three players, you will not find this kind of level offering all the 9 or 10 verticals in any organisation.
Coming to the core expertise part of it, you mentioned project logistics, and oil and gas as your core activity. So, how did you manage during this COVID-19 pandemic period? What was the impact on these two segments, especially with the economy slowing down and people are under lockdown most of the time and new projects are not seeing the light of the day. So, how was it?
Even before the pandemic – the global economy, it’s that we are going through turbulence, let’s put it like that, and the Covid has aggravated it more. With the sudden lockdown, what has happened is it has taken us 6 months for not doing anything and we were already at a stage where we were into a transition. We were expecting our GDP to cross between 9 and 10, which would have been one of the best in the world. But we really had a serious issue with actually trying to ship out cargo, because even in spite of the containers being delivered by Concor or somebody after a month, there were no officers at the port to do even examination. There were no labourers to do your stuffing.
So, we really had a tough time for 2 months; I must say March, April was bad. In May, we were able to little bit kind of get factory stuffed and just straight rail it into the ports and at least some of our projects – we were able to service them. For example, we are doing some projects in Malaysia, Singapore, South America and the CIS countries. Now those we were able to service by documentation, electronic media played a very very significant role in our success of how we are able to treat our clients or ensure that we gave that seamless service to them. Because every project cargo has timelines and we are dealing with refineries and power transmission lines here. And we were able to release these BLs expressly. So, I must say the companies that we partner with, really helped us to ensure that our BLs were released at the destination online. Maybe, we had to pay little bit extra for that but it was worth the effort and we did manage to stay onboard.
Apart from the operational challenges, what is the kind of impact on the business as such? Can you quantify that in terms of percentage – that okay, this is the impact?
Let me tell you, the project logistics business in this country, I have got the figures written down just for everyone’s knowledge. The market size of transport and logistics is close to 215 billion in 2020, and which is really 14% of our GDP. So, we are looking at 8.27 million people being employed and that has now come down to even – we are looking at a GDP of at 4 to 5. So, you can imagine where we are going to go in our transport logistics. Per se, most of our projects are right now on hold.
Because the Capex expenditure that we are talking, that is required for our infra, power, big time Capex. And that the whole industry of the bank, NBFC, everything will be restructured. New stimuluses are being given. So, I think, most of them are on hold. But for how long. I see a little, another 2, 3 months and we should start moving – personally, if you ask me; because this cannot continue – we need the power, we need our infrastructure to go on and we can see the world’s highest tunnel is just completed after 10 years. I remember doing a project two years back in Leh, which is one of the highest points of power transmission and project. It took us a year to complete it because of the weather. We could never cross Zoji-La pass on that site because it is closed for nearly 6 months. Now with this tunnel and this kind of infrastructure being streamlined, I think things will start moving much much faster.
And I think India and China will be the only two countries who will be bouncing back faster than the rest of the world, per se. And we do expect a lot of our nuclear power plants to be coming up, our coal-based thermal will come up once our coal deals are signed for the new coal mining contracts. We are expecting all our fertiliser plants which are more than 30 years all to be revamped; once the fertiliser policy also changes with our new farm sector that the government is giving, so I look at a big boom in our infra which is our – those various port projects, our roads, bridges, access to lots of places, power, fertiliser, and power could be both thermal, solar and nuclear. So, India has a great future as far as the projects are going to be concerned. Oil and gas, globally, till the prices of oil which is gone as low as $22 per barrel, till this increases, it’s going to be tough. But we will continue with our gas projects. So, I happen to be on the board of oil and gas company- India’s first private oil and gas company. In the Covid times, this was the only sector, believe me, which we could work. I actually found our first gas find, it will be the first private company finding gas in India, which is called Hindustan oil exploration. And really, I must say hats off to our chairman, managing director. They really worked and we hit our first gas even in the Covid times. And gas is what we still need in this country because that will play a more important role as crude is still down but gas maintains the same price. Maybe little bit up and down, but we are now, as you have read recently, we will be on similar lines as that of global players. So, oil and gas is also great.
When it comes to logistics, we complain about poor infrastructure, whether it is roads or at ports. Don’t you think that things are improving? Or what is your take?
If I talk from the time I started my career to now, yes it has improved. But not to the extent it should have improved, to the scale it should have improved. It has not improved to that level. I remember when Nhava Sheva Port was being built, we actually supplied even the lighting pole; if you see Nhava Sheva, it is so beautiful, and it came from Germany. Even today, it stands there. And they mentioned to us that after Rotterdam, which takes about one minute for a container to discharge, Nhava would take 7. I am not so sure it still happens. I am not so sure. It was designed for that. Now I am talking this in 1988-89 sir. And we are in 2020. So, the pace at what things were developed, it has not grown to that level, really. Maybe, we have had lots of governments changing hands, there will be lots of disruptions; there will be new initiatives. We have taken off in telecom as one of the largest or biggest players. But unfortunately in this sector, we don’t even have a lot of companies setting up infras today.
Who is the competition today? Barring Larsen & Toubro, you tell me. Who is on that scale to build your infras so fast, so quickly. Like, we have thousands of players there, do we have thousands of players in construction, at that scale. Are we able to invite those foreigners, not as yet. Why? It is a very recent and nice thing that now, the labour laws we are changing. Yes, we will be able to probably get into it. Or our legal laws, where our payments are not made – cheque bouncing and things like that where we still are – I have a case of a client who has not yet paid me for 10 years – a small amount of hardly 1 million. So, you know, till those two things don’t change, even though people want to come and want to invest, they are bit still hesitant, a bit scared. Check our own companies, they are a bit scared, they always ask me two questions – are you sure your client will pay or we take them to court, we get paid. The labour laws; will they change? Look at our port, Bombay Port, one of the best ports, natural port, it is completely deformed because of our labour problems. Of course, the city infrastructure is built around it, so you cannot take out any big project cargo from it or bring it in. So, we lost it. Then of course, the GST changed it because of the OCTROI issue. So, that also got solved.
With Sagarmala I think things are going to change but we hope for the best. Now with the tolls gone away at most posts – I think it’s going to be a much much better scenario in the next year or two. If the Covid had not come, I would presume we would have been a little bit more far ahead than where we are, still at a standstill.
So, what are the lessons that you have learnt from Covid-19 pandemic?
Change is inevitable in life and we have to change. We had to change ourselves by deciding that we also need to work; people who thought we could do everything depending on secretaries, people and everything, we had to learn to work ourselves and actually get our hands back to the same level we started our career from; get the grease and oil and do everything ourselves. So, we have learnt that, one biggest lesson. Be self-reliant, totally, Cash is kind. So, money in your pocket is money everywhere. Digital, you have to change. Then you have to shift towards localisation; that means, stop depending on everything from outside. Because you can see what happened; today we have a shortage of containers, we are not able to export. Why we are not thinking; there is not a single company that manufactures containers in India, not a single. And nobody thought of going into it. Everybody thinks, logistics is great, let’s go and do it; why not in all the components that form the logistics – let’s make world-class vehicles, world-class containers.
Why can’t we make world class tyres. Of course, some of them did, but you can’t put Indian tyres still on a bulldozer hydraulic axles. Then, you need to change your model, move towards a variable cost model. Then you say, building census and control tower capabilities. That means, you need to build offices which are sensible to how are capable of handling, like I have an office in Baroda, let that handle what it can do there. Let another office handle something else. You cannot consolidate everything sitting in one place. And building agility, that means have the capacity to say, okay, Covid in Bombay was so bad, that I should have the agility and ability to pack up here and say I can go somewhere else and be able to operate out of that place. You know, anyone can do it anywhere in the world – so we should have thought of at least these 7 things that we should learn from this.
Let me give you a quick example of what we did; we are a pure project logistics company. So, when I was asked to meet this gentleman, a doctor from United Nations, he said we needed to do business with you. So, for 2 minutes, I thought, I had to shift ambulances, ventilators – it will be a big project for me. When I went to meet him, he said you know, we need to send these masks to USA, and for 2 minutes, I looked at my colleague and said, I didn’t understand when he said masks. Can you imagine a five grand mask to send; that’s not my core specialty but I had to sit with a straight face and say, yeah of course doctor, we will look at it…and he says, “Get the flight ready, one lakh masks next week,” and I was just thinking, he’s not serious, is he? I am happy to say that India-US trade relation, because of that, we have now air freighted or air lifted one lakh masks and sent to USA, delivered safely to the state of Philadelphia, where we now have a letter from White House thanking us for India doing such a good service. Now when you said, what have you learnt, I picked up any business that I could work on in spite of not knowing how to do the air freight. I have very good industry friends who helped me and told me – yes this is how we will do it. We will handle it for you. So, I changed while doing from a 5000 tonne package to a less than 5 milligram mask.
