‘We want to grow with the market, profitably’

Maersk Line having served the Indian market for almost a century, is committed to the growth of this market. Franck Dedenis, Managing Director – Maersk Line (India and Sri Lanka) reveals more in discussion with Sachin Jagdale

What is the history of Maersk Line in India and how does it tie in with supporting the growth seen in the pharma sector in India?

India is the third largest pharmaceutical products producing nation. The Indian pharma industry is the world’s third-largest in terms of volume (10 per cent share) and tenth largest (2.1 per cent share) in terms of value. Exports are growing at a very rapid pace and have clocked a CAGR of around 16 per cent between 2005 and 2013. The prospects too, look very good given that the demand for generics (especially in the US and Africa) is growing very fast. Around $148 billion worth of patent expiries are expected between 2013 and 2018 which the Indian companies will be looking to tap into. Pharma exports should touch at least $35 billion (by value) by the year 2020. It should be noted that the pharma industry accounts for 4.34 per cent (by value) of India’s total exports. This is based on numbers from various globally renowned research reports.

Our country is the largest exporter of generic formulations in volume globally. It exports vaccines to 150 countries and produces 40-70 per cent of the WHO demand for DPT (Diptheria, Tetanus) and BCG (tuberculosis) and 90 per cent of measles vaccines. India is home to more than 20,000 manufacturing units and over 6,000 pharma companies. India exports all forms of pharmaceuticals from APIs to formulations, both in modern medicine and traditional Indian medicines. Over the last 30 years, India’s pharma industry has evolved from almost non-existent to a world leader in the production of high quality generic drugs. India has garnered a worldwide reputation for producing high quality, low cost generic drugs.

Of late the concept of ‘pharmerging’ countries is also finding favour wherein a group of 17 countries has been identified as the fastest emerging markets in pharma, by IMS Health, the largest research agency in the field of pharma. These 17 pharmerging countries are China, Brazil, Russia, India, Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine, Pakistan, and Vietnam. The pharmerging countries—led by China, India, Brazil and Russia— will represent 30 per cent of the total pharma sales in 2016, up from 20 per cent of the total in 2011.

• Maersk Line is fully equipped to support this growth through its vast network, technological know-how and extensive inland coverage in India. The Maersk Line story in India begins way back in 1921 with Marie Maersk calling India for the first time. The organisation has been in serving the Indian market for almost a century, first through joint ventures with the Tata Group and Ballarpur Industries and then as a separate entity
• It is an evolving market. We want to grow with the market profitably and in the right segments and in a cost effective manner.
• We have 11 dedicated services out and into India, in a way, making the world accessible to India. Two of these services were launched just this year, the ME-5 connecting South of India and Colombo to the Mediterranean in addition to our ME-3 service which connects North and West India to the Med and The Mesawa – a direct service to South and West Africa
• In 2014, we added three new services from Far East to India in addition to the Chennai Express

Other existing services include:

• ME1 service into North Europe
• Mawingu Express to East Africa
• MECL1 into North America and Canada
• AE-1 from Colombo, Our cargo from the East coast connects with the service through a comprehensive feeder network
• We started calling on Hazira in Gujarat in March, 2013 and before that at the new Krishnapatnam port in Andhra Pradesh. We recently also started calling Kattupalli to strengthen our coverage from the south East coast of India.

The ports in India which Maersk Line currently calls are:

• Krishnapatnam
• Cochin
• Tuticorin
• Mangalore
• Marmagao
• Mundra
• Hazira
• Pipavav
• Nhava Sheva
• Haldia
• Kolkata
• Vishakhapatnam
• Chennai
• Kattupalli

Supporting this, we also have a network of offices and inland acceptance points to make it more convenient for our customers to do business with us and in general.

In addition to the above, we have also a dedicated pharma vertical manager who specialises in understanding the needs of the industry and the services that are needed thereby.

We realise that it is a complex industry and the level of engagement required is high. Just to give you an example of our interaction with our customers, we recently organised a conference called the ‘Pharma Congress’ which brought together some very well-known players from the industry to discuss common industry challenges and logistics solutions that a shipping line like Maersk can provide to our customers. The event had speakers from several reputed brands and close to 35 participants from the industry in attendance, which included many of the top most pharma companies in India, along with various global freight forwarders. Remarks from participants were very encouraging. The fact that Maersk is the first shipping line to have arranged such a conference was much appreciated.

Longer the delivery period more will be the risk of cargo deterioration. How have you managed to handle this problem?

When it comes to the pharma industry logistics play a very critical role in providing the right medicine to the right patient at the right time, place and dosage and most importantly at the right price . Hence, the logistic needs of this industry are different when it comes to medicines because they are both temperature and time sensitive. For long distance shipments requiring trans-shipments on the way, special care is required in order to not disturb the nature of the drug.

Maersk Line aids in minimising the risk by providing customers with best in class transit times and high schedule reliability ratios especially on services into the US and North Europe, which are also the biggest markets for pharma (generic drugs) out of India.

During transit as well, the containers are monitored by a reefer electrician. In addition to this a 24*7 hotline is available to the chief engineer for technical assistance on reefer related issues that cannot be resolved with existing know-how of technicians on board the vessel.

In all cases, successful shipping begins at the product sourcing area. It is also essential that all products are treated correctly prior to the time of stuffing. Even with correct temperature, ventilation and humidity during the voyage, cargo will only arrive in perfect condition if the pre-treatment has been performed correctly. As we say with a smile – “the reefer container is not a hospital. It can maintain your good quality cargo – not improve it.”

We have managed the security problem by introducing new containers that deliver high safety and security benefits. Shipments of whisky used to suffer from substantial breakage and theft. Shipping containers slashed these losses by up to 90 per cent. Before containers, 30 per cent of a product’s price used to be accounted for by freight costs. Now, that figure is less than 1 per cent.

Tell us about the arrangements made for the shipping of pharma cold chain products?

The cold chain involves the transportation of temperature sensitive products along a supply chain through refrigerators packaging delivery method. We do it via our reefer technology. To secure optimal cargo quality and to avoid rejection due to temperature deviations, we ensure that the correct temperature is maintained throughout the journey. By continuously circulating cold air around the cargo, heat entering the cargo space through the container walls, will be removed.

Indian pharma industry is very cost sensitive. How are your services cost effective?

Maersk Line ensures that it provides support to customers’ logistical needs through proximity, accessibility, reliability and service.

Proximity: We want to be closer to all our customers across the length and breadth of this cluster. We have over 45 acceptance points, besides our local offices to help ease of doing business at the local level to help our customer carry out trade. Reducing inland transportation cost

Accessibility: Through our dedicated and transhipment services, we have made the global markets more accessible for businesses in India and Sri Lanka. Increasing profitability by enabling companies to increase market share by entering new markets

Customer service: Our focus has always been around customer satisfaction and ease of doing trade. We have a comprehensive E-Solutions suite which helps customers book, track and pay online. It also lets them release and print their bills of lading in their office itself, reducing administrative costs considerably.

Our schedule reliability, as mentioned earlier, leads to lowering of inventory holding costs

For the pharma logistics developing more focused, cross divisional processes that reduce costs, minimise risk will ensure the veracity of the pharma product. To offer better insight into supply chain Maersk follows steps like:

Physical flow: Handling and protection of cargo from theft, counterfeit and adulteration

Information flow: Receiving real time supply chain data which can ensure prompt responses without compromising on information

Financial flow: Monitoring inventory tie-up, offering choices and improved invoicing.

Have you formulated any special business plans for emerging markets like India?

India has a great potential as an investment point of view. India is a big market for us and we are certainly interested in expanding our coverage both inland and ocean with respect to India. We are definitely going to continue to invest in providing more services – more frequency, more departures, better port coverage as the market develops.

Why should pharma companies select shipping over other modes of transports like air and road? How will shipping be the cost effective mode of transport for the pharma products?

When shipping cargo of a pharma company or any other company, it’s important to choose the appropriate mode of transportation to ensure your products arrive on time and at the right cost with right mode of shipping. Your decision to ship by land, sea, or air depends on a careful evaluation of business needs and a comparison of the benefits each method affords. Picking the best possible mode of transportation is critical to export success.

Transportation through air is an expensive affair. One will pay almost double when they choose air transportation. When pharma companies are getting tremendous deals through shipping then, why should they spike up their expenses?

If you are moving a large shipment that does not require an especially fast delivery, sea transport is the most economical and cost effective option available for companies. Choosing an appropriate method is heavily dependent on distance, the geographic location of your destination, the nature of your items, your budget, and any necessary deadlines or schedules that must be adhered to. Items that must be moved quickly should be shipped by air, while goods that aren’t needed in a hurry can be shipped inexpensively by sea. Most shipping routes often require the use of several different modes of transport. Finding the best way to coordinate this logistic chain can save your business a lot of time and money in the long run.

Additionally, another reason why customers are moving to sea exports is that the quality of the end-to-end supply chain in sea exports is superior to that by air. While exporting by air, often the tarmac temperature leads to temperature outages in the cargo. This has been a longstanding concern for quality assurance teams of many pharma companies.

Explain the reefer technology

Reefers are refrigerated shipping containers typically used to transport cargo requiring temperature-controlled conditions such as vegetables, fruit, fish, protein or other commodities. This enables customers to expand into new markets and capitalise on new opportunities.The majority of Maersk Line’s reefer containers are manufactured at Maersk Container Industry’s (MCI) facilities in Qingdao, China.

The unique reefer design ensures:

• Low tare weight to maximise payload and reduce CO2 emissions during transit
• Low heat leakage and good air tightness to maintain optimal product temperature
• Integrated reefer design for reduced energy consumption and further improvement of the above
• Patented Supotec insulation foam for zero ozone depletion and significant reduction of CO2 emission
• The production of MCI is conducted under the strict health, safety, and security and environment (HSSE) regulation of the AP Moller-Maersk Group and complies with the United Nations Global Compact

In addition, Maersk Line reefer containers can dehumidify the air in the range of 65 per cent to 85 per cent which is an important consideration factor for the effective transit of generic drugs

All Maersk Line operated reefer units have the ASC feature installed. The Automated Set-point Change (ASC) is a feature that allows the user to run the cargo at one set-point for a selectable amount of time and once that time has expired, the set point will automatically be changed to a second selectable temperature allowing customers to ensure that the cargo is shipped in a controlled environment.

Maersk Line containers follow the new generation of the container side lining panels (walls) which are made of Q Liner, a thermo plastic polypropylene material. This material ensures maximum strength, with reduced risk of foam delamination. The insulating material used in the reefer box is SuPoTec, a patented environment-friendly foam insulation, meeting tomorrows environmental requirements.

Before a reefer container is released to our customers, a pre-trip inspection is carried out. This includes checking for structural damage, cleaning, and certainty that the reefer machinery is operating according to the specifications.

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