Arun Paryadath
Head of Retail and Lifestyle - South Asia A.P. Moller - Maersk
Digitalisation has taken the whole world of supply chains by storm
A.P. Moller - Maersk is an integrated container logistics company working to connect and simplify its customers’ supply chains. As the global leader in shipping services, the company operates in 130 countries and employs approximately 95,000 people. For the retail and lifestyle segment, Maersk is developing solutions that meet customer needs from one end of the supply chain to the other. Maersk’s Head of Retail and Lifestyle – South Asia Arun Paryadath speaks to Fibre2Fashion about shipping, logistics and supply chain issues.
Have Indian ports benefitted from the crisis in Sri Lanka?
Sri Lanka is an important supply-chain hub for South Asia mainly because of its strategic location and ability to cater to the increasing trade flows to and from the Indian sub-continent.
Though the political protests and lack of fuel have partially slowed cargo movement within the country, port and terminal operations are largely unaffected, owing to their classification as essential services. Most yard operations and Container Freight Station (CFS) activities continue to see no impact.
In the interim, the crisis is prompting some carriers to detour to ports in India. This is a transitory phenomenon. The Port Authorities continue to emphasise that adequate fuel reserves are available and that port activities will not be allowed to falter.
Maersk remains committed to ensuring a seamless flow of containers through Colombo and is working closely with our partners and valued customers to fulfil our commitments.
The waiting time for in-bound cargo, especially when it comes to retail and lifestyle products, is very high. What are the reasons for this delay, and what’s being done to reduce this?
India and South Asia are significant sourcing locations for retail and lifestyle products. That said, customers struggle with long gestation at destination ports in major consumption markets like North America and Europe. Supply chain bottlenecks worldwide are causing record shortages of many products, leading to rise in prices.
Production delays due to lockdowns, especially in China, and the limited supply of key input commodities are adversely impacting suppliers and buyers. Warehouses are full of goods, and there is immense pressure on the overall logistics infrastructure, especially with the clogging of Western ports, causing matters to deteriorate. The Western markets are witnessing a severe shortage of manpower at warehouses, truck drivers and chassis to haul containers. While the pandemic and market are showing some signs of recovery and normalisation, we still don’t know exactly if and when would the whole ecosystem go back to pre-pandemic levels.
With the dynamic consumer behaviour, the market has limited capability to forecast demand and anticipate disruptions.
Governments across the world are making a concerted effort to stamp out existing inefficiencies and strengthen supply chains. The industry, too, is investing in long-term supply chain models that are resilient enough to take disruptive blows in the future.
Businesses are building agility and resilience by creating a diversified and robust supply chain which can ensure business continuity and cost controls. Companies are investing in technology to automate critical supply chains, improve visibility, milestone transparency and forecast, and better manage any major disruptions.
What kind of impact has the Russia-Ukraine crises had on the retail and lifestyle sector especially? Has this impacted freight costs and container availability?
We are seeing most retailers suspending sales and operations in Russia. The situation also makes most retail and lifestyle manufacturers factor in the financial impact while forecasting their outlook for the year. The other implications, such as rising costs of input materials and energy and disrupted supply chains, will impact at some point.
What factors have a major impact on the companies exporting readymade garments and textile products?
Most retailers prefer reliability and predictability whilst lifestyle brands prioritise speed to store. The key to success for our partners is dynamic product development to cater to ever-changing buyer preferences and maintain minimal unsold inventory, thereby markdowns on goods sold.
Production is primarily outsourced to developing countries with economic and geopolitical stability to ensure seamless supply chains. Input costs are also a key element which makes developing countries an attractive hub for manufacturing.
Other factors include volatile demand-supply dynamics and seasonality. Since unpredictable supply chains can lead to loss of sales, markdowns, and inventory mismanagement, companies are reconfiguring their supply chains to remain competitive in an increasingly VUCA (volatility, uncertainty, complexity and ambiguity) world. Product life cycles are shortening; hence, a unique supply chain model is becoming a key differentiator.
Lastly, an agenda that has gained prominence over the last few years is the ever-increasing importance of ESG (Environmental, Social, and Governance) and Sustainability initiatives. Most prominent players have or are in the process of embracing ambitious sustainability goals that include measures like last-mile green deliveries, EV (electric vehicle) adoption, etc.
Finally, digitalisation has taken the whole world of supply chains by storm – especially in the pandemic times where this aspect got accelerated a lot more than anticipated.
What is the percentage share that retail and lifestyle products account to in the total annual shipping exports from India?
India is the sixth largest exporter of textiles and apparel. It contributes to approximately 11 per cent of India’s total exports. India, along with other countries in South Asia, is one of the top three sourcing locations globally.
What are the major export and import markets for readymade garments and textile products? Where is the traffic growing?
Trade agreements, quality at scale, production and logistics cost, and sustainability initiatives remain key sourcing drivers. Manufacturers are looking for multiple sourcing options and implementing China+1 strategies. Bangladesh, Vietnam, Cambodia and India are expected to continue replacing apparel production from China as the China+1 strategy gains traction. Besides these, Malaysia, Pakistan and Sri Lanka are some other countries that are expected to maintain the forward momentum gaining a share of the overall sourcing market.
As near-sourcing gains importance, Turkey and Morocco are expected to continue having mild growth serving European locations. Egypt, Tunisia and Ethiopia continue to scale production. They are expected to remain relative minnows as a share of global production.
While on the consumption side of the supply chains, North America and Europe continue to remain the top import markets.
What kind of connectivity and trade ties can help Indian textile and garment exporters? What would be your suggestions to the government?
Like any sector, policy support is integral for growth. The Government of India has done much in terms of FDI relaxation in textiles, the Textile PLI scheme for MMF and technical textiles, and the duty support to contain the rising price of cotton and key milestones in this direction.
It is also important for the government to continue investing in Integrated Textile Parks and the Technology Upgradation Fund to drive innovation and employment in the sector.
It would greatly help for the authorities to ease further cross-border movement of cargoes to and from Bangladesh. There should be a continued push to invest in R&D for India to move up the textile value chain.
What are the future plans at Maersk to improve shipping logistics for retail brands and export houses?
The start point for Maersk is to understand the meaningful customer pain points, needs and aspirations. We have been implementing a strategy driven by outside-in thinking. Through our end-to-end integrated logistics solutions, we are building complementary capabilities both organically and inorganically and investing in assets, digital platforms and people as we co-create enduring solutions for our customers.
Maersk is committed to this market segment and works closely with industry bodies to offer integrated solutions.
Published on: 06/08/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
