The pandemic has led to an increase in the adoption of technology and digitalisation of the logistics industry, which is expected to further accelerate in 2022, mainly driven by e-commerce. With its digital-first strategy, Allcargo Logistics, ECU Worldwide and Gati are also looking to further tap the potential of emerging technologies, chairman Shashi Kiran Shetty said. In an interview with FE’s Rajesh Kurup, he elaborated on the rationale behind the recent demerger of Container Freight Stations (CFS) and Inland Container Depots (ICDs) into Allcargo Terminals, and equipment rental, logistics parks and real estate into Trans India. Edited excerpts:

Q. Allcargo Logistics’ net profit soared to Rs 354 crore in Q3. Where is the growth coming from?
Our growth over the past few quarters is an outcome of sustained efforts over the years and transformational initiatives undertaken in the last 2 to 3 years. We have a sharp focus on asset-light models and digitally-enabled businesses and that has made the difference. Our sales acceleration across the world on the back of transformation initiatives combined with digitisation initiatives provided us with the operating leverage. Our yield continues to improve on the back of utilisation in the international supply chain business. All digital interfaces put together, over 55% of all export bookings in this business are now digital. Other businesses have also continued to perform well, with both organic and inorganic growth, contributing to the bottom line.

Q. The rationale behind the demerger of CFS and ICDs into Allcargo Terminals, and equipment rental, logistics parks and real estate into Trans India.
The demerger was to help the company accelerate growth by creating independent business undertakings, with sharper management focus, better access to the right capital, and greater operational and financial flexibility. Following the demerger, each business will have an independent structure with mirror shareholding. Allcargo Logistics would continue to be the leader in the international supply chain, express logistics and contract logistics businesses with an increased focus on digitisation. Allcargo Terminals will be the market leader in the CFS business in India and continue to expand its footprint in ICDs. TransIndia will focus on asset-heavy business opportunities such as grade A warehouses.

Q. The pandemic has disrupted warehousing and last-mile logistics businesses. Do you see further disruptions in the industry?
The pandemic has accelerated the technology-led transformation and digital adoption, and this will continue in 2022 driven by e-commerce. The digitisation of the supply chain to enhance visibility, transparency and operational efficiency and the integration of new-age technologies such as artificial intelligence and big data to boost predictability will gain further momentum. Various sub-segments of the logistics industry would benefit from such disruptions enabling customers with more efficient service offerings.

Q. Allcargo had always banked on acquisitions for growth.
All our acquisitions over the years have added strategic value to the group. The acquisition of Belgium-based ECU-Line (now ECU Worldwide), with revenues almost five times that of Allcargo Logistics in 2006 made us a global player. The acquisition of Gati in 2020 marked our foray into express logistics. The diversification and consolidation of operations through acquisition have helped Allcargo evolve into an integrated logistics solutions provider.

Among recent acquisitions, our joint venture with Swedish logistics player Nordicon Group has witnessed a multi-fold increase in profitability. Digital adoption has put Gati on the growth path. Our acquisition of Speedy Multimodes and the joint venture in Korea have also proven to be highly value-accretive.

Q. On the group’s adoption of technology and digitisation of business verticals.
As a part of our digital-first strategy, we have deployed new-age technology and data science tools, automation, to boost our network and pricing efficiency of the digital platform ECU360. At Gati, we have collaborated with Salesforce to develop an advanced CRM tool to boost customer service, client management, and analytics. Besides, our booking platform for customers and vendors to onboard has come alive, payment gateway adoption has been done. Going forward, our focus on digitalisation continues to remain strong.

Q. Allcargo has been increasingly hiring top-level executives.
The group has hired almost 60 CXO-level resources and onboarded nearly additional 100 critical managers across the globe to facilitate growth and digital adoption. Attracting and retaining top talent across the world is a key focus for us and it’s a part of our mission to build a leadership strength to reinforce our position as a multinational logistics player and drive robust growth.