Executive Briefings

HP Pushes Aside Obstacles in India

Few countries pose a greater number of unique challenges to logistics professionals than India. Its population of more than 984m offers a huge opportunity for foreign suppliers. But getting product to market is a formidable task.

Darien, Conn.-based AEI Corp. has extensive logistics operations in Asia. Yet India requires three times the effort of serving other countries in the region, said Trevorlyn Menezes, AEI's director of sales for Asia, the Indian subcontinent, Middle East and Indonesia.

Just getting enough airlift into India is a major concern. So is clearing Indian Customs, which has a reputation for being slow and bureaucratic. First, imports must be processed by handling agents, who may or may not be employed by the airline that flew them in. A day might go by before they can manually key in information about the shipments and pass them on to Customs.

Import clearances can only be handled by a limited number of certified individuals. Many are part of family-run businesses chosen for their close ties to Customs, not the quality of their work, Menezes said. Then there's the generally poor state of India's road system, making key locations in the immense country difficult to reach.

All of those concerns were factors in the decision of Hewlett-Packard Co. last year to change logistics partners in India. The Palo Alto, Calif.-based high-tech leader had been shipping personal computers, printers and toner cartridges into the country for a number of years, said Yew-Khuan Tan, HP's regional logistics manager in Singapore. But the relationship wasn't working out.

"In India, it's a tricky situation," said Tan. "A partner must be willing to invest in the country. Not many are willing to do that, because there are still a lot of limitations on foreign ownership."

HP solved the dilemma with the help of AEI, which has a long-standing, exclusive partnership with Lemuir Air Express, an Indian-owned warehouser and logistics firm. Lemuir supplies the kind of home-grown expertise and physical infrastructure needed to serve the country, Menezes said.

AEI's door-to-door program for HP begins in Singapore. It relies on twice-weekly freighter service by Singapore Airlines, as well as belly capacity on passenger aircraft, and private charters.

Many HP shipments received by AEI in Singapore fly out on the same day. There, AEI breaks down and reconfigures incoming shipments to take maximum advantage of limited space. It works closely with airlines to guarantee that whole orders travel on the same aircraft.

All HP shipments to India are customized and prekitted at factories in Asia and Europe. Monthly volumes range between 180 and 200 metric tons. AEI handles documentation and tracking electronically through its in-house LOGIS system, with daily booking reports uploaded to HP. In addition, it faxes invoices and manifests from Singapore the moment a shipment departs.

AEI has made a substantial investment in serving India without a long-range commitment from Hewlett-Packard.

Product travels to three Indian hubs, in Delhi, Mumbai and Bangalore. AEI has three or four certified agents at each location to expedite Customs clearance. Through prefiling under Customs' "green channel" program, reserved for trusted, well-established importers, AEI can save up to one and half days in the clearance process, Menezes said.

For payment of duties, it maintains a prepaid deposit account that is debited by Customs when the shipment arrives. "In the last few years," said Menezes, "Indian Customs has become very flexible."

AEI retains responsibility for HP's shipments all the way to customers, who are mostly distributors but may also be end users. The result is a 94-percent achievement of HP's goal of 10 days' turnaround time, from receipt in Singapore to final delivery. "The moment a shipment hits our doorstep," said Menezes, "the clock starts ticking."

Tan said AEI has gone a long way toward offsetting the lack of capacity and poor infrastructure that plague shippers to India. And while she doesn't attribute HP's recent boost in sales there entirely to the AEI program, she points to a marked increase in customer satisfaction on deliveries.

She lauds AEI making a substantial investment in serving India without a long-range commitment from HP. The contract has no fixed period and can be terminated in 30 days. "The partners have to trust that our philosophy is strong enough to warrant that kind of decision-making," Tan said.

Few countries pose a greater number of unique challenges to logistics professionals than India. Its population of more than 984m offers a huge opportunity for foreign suppliers. But getting product to market is a formidable task.

Darien, Conn.-based AEI Corp. has extensive logistics operations in Asia. Yet India requires three times the effort of serving other countries in the region, said Trevorlyn Menezes, AEI's director of sales for Asia, the Indian subcontinent, Middle East and Indonesia.

Just getting enough airlift into India is a major concern. So is clearing Indian Customs, which has a reputation for being slow and bureaucratic. First, imports must be processed by handling agents, who may or may not be employed by the airline that flew them in. A day might go by before they can manually key in information about the shipments and pass them on to Customs.

Import clearances can only be handled by a limited number of certified individuals. Many are part of family-run businesses chosen for their close ties to Customs, not the quality of their work, Menezes said. Then there's the generally poor state of India's road system, making key locations in the immense country difficult to reach.

All of those concerns were factors in the decision of Hewlett-Packard Co. last year to change logistics partners in India. The Palo Alto, Calif.-based high-tech leader had been shipping personal computers, printers and toner cartridges into the country for a number of years, said Yew-Khuan Tan, HP's regional logistics manager in Singapore. But the relationship wasn't working out.

"In India, it's a tricky situation," said Tan. "A partner must be willing to invest in the country. Not many are willing to do that, because there are still a lot of limitations on foreign ownership."

HP solved the dilemma with the help of AEI, which has a long-standing, exclusive partnership with Lemuir Air Express, an Indian-owned warehouser and logistics firm. Lemuir supplies the kind of home-grown expertise and physical infrastructure needed to serve the country, Menezes said.

AEI's door-to-door program for HP begins in Singapore. It relies on twice-weekly freighter service by Singapore Airlines, as well as belly capacity on passenger aircraft, and private charters.

Many HP shipments received by AEI in Singapore fly out on the same day. There, AEI breaks down and reconfigures incoming shipments to take maximum advantage of limited space. It works closely with airlines to guarantee that whole orders travel on the same aircraft.

All HP shipments to India are customized and prekitted at factories in Asia and Europe. Monthly volumes range between 180 and 200 metric tons. AEI handles documentation and tracking electronically through its in-house LOGIS system, with daily booking reports uploaded to HP. In addition, it faxes invoices and manifests from Singapore the moment a shipment departs.

AEI has made a substantial investment in serving India without a long-range commitment from Hewlett-Packard.

Product travels to three Indian hubs, in Delhi, Mumbai and Bangalore. AEI has three or four certified agents at each location to expedite Customs clearance. Through prefiling under Customs' "green channel" program, reserved for trusted, well-established importers, AEI can save up to one and half days in the clearance process, Menezes said.

For payment of duties, it maintains a prepaid deposit account that is debited by Customs when the shipment arrives. "In the last few years," said Menezes, "Indian Customs has become very flexible."

AEI retains responsibility for HP's shipments all the way to customers, who are mostly distributors but may also be end users. The result is a 94-percent achievement of HP's goal of 10 days' turnaround time, from receipt in Singapore to final delivery. "The moment a shipment hits our doorstep," said Menezes, "the clock starts ticking."

Tan said AEI has gone a long way toward offsetting the lack of capacity and poor infrastructure that plague shippers to India. And while she doesn't attribute HP's recent boost in sales there entirely to the AEI program, she points to a marked increase in customer satisfaction on deliveries.

She lauds AEI making a substantial investment in serving India without a long-range commitment from HP. The contract has no fixed period and can be terminated in 30 days. "The partners have to trust that our philosophy is strong enough to warrant that kind of decision-making," Tan said.