Pursuing growth in rural India

Supporting growth and manufacturing in India, Maersk Line has added new port calls to its Indian network giving companies in rural areas access to international markets. The new Transport & Logistics division promises to make the move from the Indian country side to world markets even easier.

India Ship
Shortly after initiating service to Krishnapatnam Port with smaller vessels, Maersk Line put in larger vessels to accommodate increasing demand. Maersk Kimi, with a 6,600 TEU capacity, sets the standard today.

On the road in Andhra Pradesh, a state on the southeastern coast of India, Account Manager at Maersk Line, James Francis, sees a large building going up. It could be a new factory, someone who will be importing or exporting in a short while. He makes a note to follow up.

“There is so much happing in this area, and you really have to be here to keep up. When I see that someone is constructing a new factory, I go home and find out who it is, make a call and pay them a visit. We want to build a relationship early on and win the business that might be there,” he says.

Beyond the mega-cities
About four years ago, Maersk Line began exploring rural areas and new ports in India. The rationale was straightforward: existing ports lacked capacity to sustain growth and calling new ports would enable Maersk Line to tap into the economic momentum that was building outside the mega-cities.

Calling a new port adds more than a million dollars to our network, but we map the market before entering and so far it is paying off in terms of growing volumes.

Franck Dedenis

FRANCK DEDENIS, MANAGING DIRECTOR OF MAERSK LINE INDIA

After an initial mapping of the market, including an assessment of the potential, the trades and the operational support that could be given, new ports were added to the network.

“We wanted to provide accessibility and proximity and offer ease of doing business. Not many carriers have the scale to cover all these ports, so this is also a competitive advantage for us,” Franck Dedenis, Managing Director of Maersk Line India, says.

During the past four years Maersk Line has deployed one-man-bands like James Francis, with support from main offices, throughout the country. Also, vessel calls have been added to Hazira, Kattupalli, Krishnapatnam and most recently Kakinada bringing Maersk Line’s number of port calls in India up to 15.

A new market
“This approach puts us in direct contact with the customers while having the operational support, enabling the customers to get their containers to the port. This gives cost savings, efficiency, reliability and frequency to the customers. Most importantly, however, is the opportunity for the businesses in rural areas to really tap into global markets,” Dedenis says.

We expect a lot of industries will move to Andhra Pradesh in coming years. Connectivity to world and domestic markets is essential for that to happen.

Anil Yendluro

CEO OF KRISNAPATNAM PORT, ANIL YENDLURI

The strategy has paid off. Maersk Line has added 250,000 FFE to its Indian business since 2013, breaking the one million FFE mark and landing at a 19% market share at end-2016. The new ports, each serving unique markets, are the primary drivers of the growth. Andhra Pradesh, for instance, was an underserviced growth area.

Here, Maersk Line’s biweekly call to the Krishnapatnam Port is helping to unleash the potential.

“When we opened the port in 2008, there were just five fishing villages surrounding us. Since, we have seen a lot of factories, power plants and new businesses come up, and we believe that there is much more in store,” says CEO of Krishnapatnam Port, Anil Yendluri.

The annual GDP growth for Andhra Pradesh sits at 13%, well about 7.4% for the entire country, supported by the Intra-Asia trade as well as the Indian government’s ‘Make in India’ initiative to boost manufacturing. When the Krishnapatnam Port added container terminal capacity in 2012, Maersk Line vessels began calling.

“Working on the East coast of India gives us a tremendous advantage. We expect India to become a base for world manufacturing and a lot of industries will move to this area in coming years. Connectivity to world and domestic markets is essential for that to happen,” says Yendluri.

Ship India Factory

Vessels bring business
Royale Marine, located 200 km north of the Krishnapatnam Port, is one of the area’s new businesses. The up-and-coming shrimp processing company opened its doors in 2014. It began exporting to Europe in 2015 and to the US in 2016 when Maersk Line also became the carrier of choice.

“Maintaining a quality product is our license to operate and we came to know that Maersk Line is a pioneer in the reefer industry. Also, their service from the port in Krishnapatnam links to our markets, so we felt that it was the right company to associate with,” says COO at Royale Marine Surendra Raju.

Ship India woman
At 2pm, COO at Royale Marine, Surendra Raju, speaks to employees from the morning shift who have just finished the day’s work. The shrimp exporter has an average workforce of 1,000 employees, which on busy days increases to 1,500.
Ship India Royal
Royale Marine shrimp is packed for retailers in the US and Europe to put straight on their shelves. Royale Marine COO Surendra Raju (right) and Maersk Line Account Manager James Francis in front a refrigerated container that acts as an intermediary, bridging the 12,000 km between production and consumption.

Filling another reefer container with frozen shrimp, sealing it and trucking it on the hot and dusty road to the port in Krishnapatnam, Raju is well aware of the importance that equipment and vessel service have to Royale Marine. A slip-up would knock the business back to square one, while successful shipments make for happy customers and pave the road for more business.

“We appreciate Maersk Line’s system to manage the temperature in the reefers from the origin to the destination. And the fact that we can get assistance all over the world makes us feel safe,” Raju says.

In 2016, Royale Marine’s exports reached 200 FFE. The company aims to reach 500 FFE in 2017.

New strategy: “Plenty to do”
Up until 2020, the ambition for Maersk Line India is to add another 500,000 FFE to the network – driven by a growing market, an aspiration to increase market share and not least by linking to the vision for Maersk’s new Transport & Logistics division.

“We have a good starting point in India. Maersk Line is strong and so is Damco and APM Terminals. We will need to consolidate our leadership positions, offer end-to-end services and develop value added services, but there is clearly a lot of potential for synergies,” Franck Dedenis says.

Returning to Andhra Pradesh and the port in Krishnapatnam, he illustrates the point:

“If you look at the case, Maersk Line made the decision to call the port, based on a mapping of the market. End of story. However, if APM Terminals put in an inland container depot and Damco offered customs clearance and intermodal services, we would have an end-to-end proposal for the market. This is something we are looking at and there is plenty to do.”