Logistics Cities World Forum

Logistics Cities World ForumMichael ProffittLaredo29th May 2013AGENDAIntroductionOverviewShare Personal Experiences: - Dubai Logistics City - India Key Learnings

FIRST OPTION

Build it and they will comeSECOND OPTIONUNDERSTANDYOUR MARKET

Supply Chains Visual Representation Component SuppliersManufacturers

DistributionCustomersBuildPlan

Sales DataDemand PlanningSupply ManagementProcurement

Key Supply Chain Issues - SummaryForecastingExtended supply chains Environmental issuesCollaborationVisibility through the Supply ChainCustomsCorruptionSecurity / RiskInfrastructure99

Complexity of DevelopmentsLogistics ClustersLogistics ParksLogistics VillagesLogistic Cities

Why Develop?Support Ports and AirportsEnable Efficient Transit MovementEnable Efficient National DistributionProvide Stockholding OpportunitiesAllow Value Added Services to be PerformedSupport Reverse Logistics

Key Parties Involved in DevelopmentsUsers/CustomersGovernmentsDevelopersInvestorsWhat is Required?Adequate Road Network inside the zone and outsideProximity to RailwaysIT InfrastructureAdequate PowerContainer Park and Support ServicesTruck Facilities Commercial Support FacilitiesOver-Dimensional Cargo AreasWarehousesPeople

Game ChangerArticulateValuePropositionThe 4Ps/SAVEPRODUCT/SOLUTIONPLACE/ACCESSPRICE/VALUEPROMOTION/EDUCATIONMARKETING MIX6Ps/SAVEPRODUCT/SOLUTIONPLACE/ACCESSPRICE/VALUEPROMOTION/EDUCATIONMARKETING MIXPUBLIC OPINIONPOLITICAL AUTHORITYDubai Development of an Airport City and a Logistics City

Images of Dubai18Dubai: Sustainable Growth Through Diversification192 bn consumers in greater region, and growingHealthy growth, liberal business environmentProminent geographical location

Oil & Gas

Tourism

Finance & Banking

Trade & LogisticsCreate an integrated logistics platform to establish Dubai as the leading hub for the region19A Unique Opportunity

20A visionary approach Thinking long-termStrengthen Dubai as hub for the greater regionCreate the best trading and distribution environmentBuild the worlds first truly integrated logistics platform, with all transport modes, logistics and value added services, including manufacturing and assembly, in a single bonded and Free Zone environment.20Dubai as a Logistics Hub for the Region21

2 Billion consumersSolid growth ratesThe most liberal business environment in the RegionThe most professional location for distribution business

Next step into the future: Integrating logistics into a single platform a quantum leap for logistics21Projected Passenger Growth Dubai International Airport2218.121.724.828.833.738.442.946.950.854.457.760.964.067.070.173.276.379.382.39.19.710.812.313.516.00.010.020.030.040.050.060.070.080.090.0199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202122Dubai An Excellent Location for Innovative LogisticsFor global supply chains

23As a hub for the region23Dubais Logistics Platform24

Jebel Ali Port and Free ZoneDubai Logistics CityDubai World Central International Airport 24Jebel Ali Port and Free Zone14 m. TEU in 2012#8 world-wideArea of 100+ square kilometers100,000+ tons sea-air via DXB 7,000+ companies in JAFZA

25

25Jebel Ali Terminal ExpansionExtension of existing Terminal 1, with total additional capacity of 5m TEUsPhase 1 will consist of 1.6km of quay, 4 berths, 17m depth alongside, 2.0m TEUs capacityPhase 2 will consist of additional 1km of quay, 3 berths, 17m depth alongside, 3.0m TEUs capacity Estimated Phase 1 operational commencement: July 2007

26Demand-led investment, able to cater for Suezmax + vessels (12,000 TEUs)Adjacent to Terminal 1 and, therefore, the Free Zone alsoMaintain leading position in customer service having the most advanced infrastructure and superstructure

Terminal 2Future Possibilities26Dubai: Integrated Logistics and Freedom for BusinessFREE ZONE:No customs dutiesNo taxesLiberal visa policyFree capital transfer100% ownershipLogistics know-howQuality labor at competitive cost Abundant space27Integrated Logistics-Platform27

Linking DLC and JAFZA28

Jebel Ali Port and Free ZoneDubai Logistics CityMain road Port DLC(bonded, within Free Zone)Dubai World Central International Airport28

Dubai Logistics CityDubai Logistics City Master Plan30

30India Infrastructure Game Changer India has experienced a consistent GDP growth of over 6% in the last decade, and a 7% growth in 2011 (Indias Central Statistical Organization)

India has been one of the 10 fastest-growing economies in the world in the last two decades

Domestic consumption is the largest contributor to the GDP (58% in FY11)

Foreign exchange reserves totals over US$ 250 billion (as of Dec11) India ranks 26th in terms of world exporters, contributing over 1.3% of globally consumed merchandise, with exports growing at a rate of 22%

India ranks 17th in terms of world importers, consuming over 2% of globally produced merchandise, with a consumption rate growing at 35% (WTO)

Indias urbanization rate is the fastest growing in the world. By 2030, over 40% of Indias population will be living in urban areas (U.N. Population Fund)

OVERVIEW OF THE INDIAN ECONOMY A32 By 2025, India will have a middle class population of 583 million people, becoming the worlds 5th largest consumer market (McKinsey Global Institute)

Consumption in India will grow in real terms from US$ 378 billion presently to US$ 1.56 trillion by 2025 a fourfold increase

By 2020, India is projected to have an additional 47 million working population, almost equal to the total world shortfall, with an average Indian age of 29

Comparatively, the average population age of other economies at that time will be 37 in China, 45 in the U.S. & Western Europe and 48 in Japan

66% of India's 1.1 billion population is currently under the age of 35 & is expected to outpace China by 2030

The estimated size of Indias real estate market in terms of total economic value of development activity is US$ 40-45 billion, representing 5 - 6 % of GDP, growing at 30% p.a

Residential property constitutes almost 75% of the real estate market in India

GROWING CONSUMERISM & EVOLVING MIDDLE CLASS A33INDIAS EMERGING MIDDLE CLASS

2 out of the top 5 most populous cities in the world are in India (Mumbai 13 mil & Delhi 12.56 mil)

Population in major metro cities in India which exceed 4 million, including the above, are Bangalore, Chennai, Hyderabad, Kolkata, Ahmedabad & Pune

Additionally there are 48 agglomerations with a population of 1 million or more

By 2030, India will have 68 cities with a population of over 1 million, 13 cities of over 4 million & 6 megacities of over 10 million

In 2030, India's largest cities will be bigger than many major countries in both population and economic output

Ahmedabad Pune Population > 4 million34

MumbaiSingaporeSTRATEGIC POSITIONING 35BUT ITS NOT ALL OPTIMISM .36 As per World Banks 2010 survey, India is ranked 134th amongst 183 economies in terms of Ease of Doing Business, - It includes variables such as Starting a Business, Registering Property, Paying Taxes, Trading Across Borders, Enforcing Contracts & Closing a Business

As per the Transparency International's Corruption Perception Index, 2010, India ranked 87th out of 178 countries in terms of corruption in public & private sector

Delay in legal proceedings & litigations

Lack of implementation & enforcement of intellectual property laws

Inadequate or lack of infrastructure for supporting the fast pace economic growth, specially in transportation (Road & Rail) and logistics (Ports, Warehousing, Distribution, Hinterland Connectivity & Domestic Consolidation Hubs)

Complex Tax structure (Direct & Indirect)

Archaic labour & property ownership laws CHALLENGES OF DOING BUSINESS IN INDIA 37 Logistics cost in India is high at around 14% of GDP against 8% - 9% in most developed nations.

On a GDP of USD 1.6 trillion, this represents an absolute value of in-efficiency (and therefore logistics market potential) of over USD 65 billion

India's level of containerization is less than 25% as against a global average of 60% - 70%

The average time taken to clear import & export cargo at ports is about 19 days in India against 3 to 4 in Singapore

India's container throughput in CY10 was just over 7.7 million TEU's as compared to Dubai (12 million), Singapore (24 million) & China (186 million)

India burns nearly US$2.5 billion worth of fuel on account of trucks standing idle on state check-posts

World Banks 2010 Logistics Performance Index (LPI) ranks India 47th in terms of logistics in-efficiency as compared to 130 countries globally in terms of - Customs Clearance, Infrastructure, Timelines, Shipments, Logistics Competences, Tracking & TracingINDIAS LOGISTICS REALITIES: Leading to Strategic & Operational in-efficiencies for doing business in India38Transport Challenges

39Free Trade Warehousing Zones (FTWZs) To enable EXIM cargo Consolidation, Value Addition and allowIndia to become a Regional Trading HubDomestic Distriparks For Domestic distribution, cargo value addition and consolidation for Rail transportation to remove dependency on road Rail Infrastructure Solutions Comprising of innovative Customized Containers for specific product types, Service Level agreements on timeline and deliver with Key Performance IndicatorsState-Of-The-Art Rail Terminals at strategic locations across India with modern equipment to increase speed of loading/unloading Integrate Logistics Infrastructure with Global Logistics, Domestic Supply Chain Management, Transport & Handling and IT Global ocean & air logistics, domestic forward and reverse supply chain management with ownership on reduction of working capital and product visibility & control, through technology CAPITALIZING ON INDIAS LOGISTICS OPPORTUNITY What does it take?ARSHIYAS PAN-INDIA INFRASTRUCTURE FOOTPRINT5 FTWZs Rail Connected, Planned Pan-India Mumbai (Operational since Nov10), Delhi (Go Live Q2FY12) followed by Nagpur, Chennai & one in the East 5 Domestic Distriparks - Planned Pan-India, Complimenting the FTWZ NetworkFirst of the Domestic Distriparks (in Khurja near Delhi) operational by Q2FY12150 Train Pan-India Rail Operations Providing unique and customized solutions to marquee customers with long term contractsInducted 15 trains since FEB09 and one of the most profitable Private Container Train Operators (PCTO) Pan-India Rail Terminal Network complimenting each FTWZ, Domestic Distripark & Rail Operations accelerating cargo distribution through aggregation

INDIAS FIRST - ARSHIYAS FTWZ IN MUMBAI 165 Acre State-of-the-Art facility 24 kms from JNPT Port featuring: - 24x7 On-Site Custom Clearance House- State-of-the-Art Infrastructure, Equipment & Facilities - Connectivity to our Pan-India Rail Network accelerating distribution through aggregation at strategic locations42MUMBAI FTWZ - JULY 2009

MUMBAI FTWZ - JULY 2009

SAME VIEW AUGUST 2010

CONTAINER YARD - AUGUST 2009

CONTAINER YARD - SEPTEMBER 2009

CONTAINER YARD - JULY 2010

ARSHIYAS MUMBAI FTWZ Warehouse & Main Access RoadARSHIYAS MUMBAI FTWZ Customs Office

ARSHIYAS MUMBAI FTWZ Container Yard & Material Handling Equipment

ARSHIYAS MUMBAI FTWZ Date Center & Electrical Sub Station

ARSHIYAS MUMBAI FTWZ Warehouse Interiors & Loading Dock

ARSHIYAS UPCOMING INFRASTRUCTURE KHURJA (DELHI) 315 Acre Comprehensive Facility 90 km from Delhi & 53 km from Dadri- Side-by-Side FTWZ (135 Acres) and Domestic Distripark (130 Acres) - Arshiya Rail Infrastructure (50 Acres), including on-site Rail Siding- Operations live as of CY Q211 to be joined by similar models in Chennai & Nagpur 54GLOBAL AUTOMOBILE MANUFACTURERS CURRENT SUPPLY CHAIN

International SuppliersInternational SuppliersInternational SuppliersInternational SuppliersInternational SuppliersIndianPortsIndia Manufacturing Plant

Dealers in India

Dealers in India

Dealers in India

Dealers in India

Dealers in India

Supply of spares and parts to Dealers in India for after sales and serviceRejection after duty paymentStorage of Spares, Parts and Components for after sales & service post duty paymentRejection after duty paymentARSHIYAS SOLUTION THROUGH FTWZInternational SuppliersInternational SuppliersInternational SuppliersInternational SuppliersInternational SuppliersFTWZDealers in India

Dealers in India

Storage of Spares, Parts and Components for after sales & service without duty paymentRejection without duty paymentRegional distribution of spares and parts enabling the income tax exemption on the re-export of imported spares and partsRejection without duty paymentInternational Dealers

International Dealers

International Dealers

FTWZ : A GAME CHANGER FOR INDIAIndia is worlds 2nd largest developing & fastest growing economy just behind China

With a population of 1.1 billion, the domestic consumption comprises 58% of GDP

Strategically located between South East Asia & Middle East there are 7,000 kms of coastline & unlike China Indias population is evenly spread across hinterland

Unlike Dubai, India has a strong manufacturing base where global companies are producing products for domestic as well as export opportunities

Logistics infrastructure is the single largest challenge as well as the biggest opportunity for sustaining Indias fast paced GDP growth

The FTWZ is a game changer for India

Key LearningsLogistics Cities are not Products they are Supply Chain EnablersSuccessful Planning and Development Requires Extensive CollaborationThe Key Infrastructure must be Planned but then Retain FlexibilityClarifying the Value Proposition is MandatoryMarketing the City to Potential Sectors/Clients needs a very Professional Approach

THANK YOUGRACIAS