MUMBAI: ‘Cash is King’, ‘Survival of the Quickest’ and ‘Digitization’ will be the new mantras for tens of thousands of Customs Broking, Freight Forwarding and Logistics Service providers in the days to come irrespective of small, medium or big companies. Lock down or no lock down, active presence of COVID-19 or not, the industry will have to live with the severe effects and apprehension of the pandemic for many more months or years ahead.

The only way of getting out of potential depression is to be empowered with substantial knowledge to read the writings on the wall, to adopt correct strategy for survival and growing. The prolonged lockdown has provided an opportunity to the industry for gearing up to grab opportunity in future.

Accordingly, Federation of Freight Forwarders Associations in India (FFFAI) has initiated the knowledge gaining mechanism by hosting a webinar on May 1 on ‘Financial Planning of Custom Brokers’, which was addressed by eminent management consultant Sandesh Vasant Mestry as Keynote Speaker along with Mr AV Vijaykumar, Chairman, FFFAI; Mr Shankar Shinde, Chairman-Elect, FFFAI; Mr S Ramakrishna, Immediate Past Chairman, FFFAI and President Delhi Customs Brokers Association; Mr Samir Shah and Mr Debashis Dutta, Past Chairmen, FFFAI. The Webinar was moderated by Mr Tej Contractor, President, Indian Institute of Freight Forwarding, which is the training arm of FFFAI.  Mr Dushyant Mulani, Honorary Secretary of the Federation proposed vote of thanks. The webinar was participated by more than 500 FFFAI members from across the Country.

“Presently we are all in the middle of crisis and we never imagined such a devastating scenario in our lifetime. At this crisis period we need to work together for a common goal. Knowledge is power. We will have to acquire proper knowledge for our survival which can be disseminated by domain experts.  With this objective in mind FFFAI with its training arm IIFF initiated its first webinar, and many more to come”, said Contractor while moderating.

In his address Mr Vijaykumar maintained that the CB/FF/Logistics industry is going through crucial juncture owing to COVID-19 pandemic and worldwide lockdown. “FFFAI is in constant discussions with government to mitigate the hardship and got success to some extent. Entire manufacturing and Export Import industry is suffering very badly. However, we are providing every possible service to all our customers by taking huge burden on us,” he said. In his opinion, Covid 19 would erode CB/FF’s finance on various accounts including massive outflow but without having inflow of revenue. “We will have to go long way with this critical and uncertain time. Accordingly, we need to review and revisit our business model with proper financial planning and control. Our proficiency will be measured by our financial management, credit management, utilization of digital platform and reducing admin cost. So we need professional advice for course correction, we all (small, medium and big) are facing huge financial crisis at present and it would continue up to an uncertain time,” Mr Vijaykumar cautioned.

Management consultant Mr Mestry is also associated as Professor in renowned SP Jain Institute of Management & Research in Mumbai. He is a specialist in Family Business Management. “At this critical time first and utmost thing would be managing our finance. Especially when our business is not generating any revenue and our office remains shut for a quite long time because of ongoing lock down. At the same time we will have to follow compliances and MHA order issued on March 29 regarding payment of salary to our staff. The Act has superseded all other Acts and non-compliance will be an offence,” Mr Mestry pointed out.  Under this precarious scenario industry should seriously think about drastic cost cutting measures in all means. In his opinion, recovery pattern may be ups and down in the days to come, in view of the fact that there may be multiple lockdowns in ensuing months, can come all of a surprise, frequently, area wise, building wise, etc. Work from Home will be one of the viable mechanisms amid challenges, to keep business going.

He also cautioned about signing an agreement and putting Force Majeure Clause very carefully to avoid hassles. “When there is a contract signed, though usually it is a most neglected clause in the agreement throughout the year, we should be very careful about putting the Force Majeure Clause,” Mr Mestry suggested by analyzing the Clause and its conditions in details in light of the Finance Ministry’s directives on it related to COVID-19 lock down.

Commenting on new working norms and compliances laid by the Ministry of Home Affairs Mr Mestry said that the industry would be needing more money to comply with new norms and compliances guided by MHA and local authorities. As a result, they would have to work with half of strength of staff, less public conveyance, social distancing, frequent sanitization,  ‘work from home’ model with  techno savvy people, health insurance as organization’s responsibility, substantial investment in technology, etc. On the other hand there will be tremendous crisis in both demand and supply sides worldwide which would tremendously reduce volume of business and revenue earning. Entire logistics and supply chain and logistics system will witness severe disrupting.

“Under this critical condition we should focus on conserving cash as ‘cash is king’.  “Advance payment from customers, opting for bank credit, stopping capex except digitization or IT, right sizing of organisation, focused selling/marketing, frequently communicating with customers and sticking to business terms while dealing with customers would play as viable antidotes in preventing any possible disaster for an organisation,” Mr Mestry unequivocally stated.

Taking cue from Mr Mestry Mr Ramakrishna maintained that digitization, signing a contract in rightful manner and cash management would definitely play pivotal roles behind the success of a company at this difficult time.  “We at FFFAI are developing knowledge base for the entire Export Import industry and we are doing fabulously for the national interest as always. New normal like ‘work from home’ or digitization will definitely enhance our working ability supported by our experienced staff/executives,” he further added. He suggested for taking advantages out of lock down situation for developing knowledge base, which need to be passed on to the company’s work force to be enlightened. He also showed high optimism about ‘work from home’ concept as far as better results are concerned. “Lock down has provided an opportunity of thinking WFH concept that we need not to have huge working set up at our office, neither we need to go for downsizing the staff strength, by utilizing them in better way,” he opined.

“Silver lining is that we are updating ourselves.  A few months ago we were seemingly stuck up, but currently we are learning many more things like better utilization of digitization, working from home or working in a way which our next generations would follow, considering the fact that this will be the new normal irrespective of lock down or without lockdown,” Mr Dutta supplemented. According to him, focus should be on less field workers (exception will be clearing or delivery purpose) and digitization which would give new dimension to CB/FF fraternity and its work pattern.

Mr Shah emphasized on more collaboration with similar thinking and like-minded CBs/FFs in different parts of the country to reduce cost for a company and win-win benefits. “Healthy competition is the integral part of our business/working, but are we surviving because of competition? We are surviving because of our inherent ability and quality, rather than competing on ability of offering credit, appeasing and only relationship building,” Mr Shah further explained on healthy collaboration with each other. In his opinion, this is the correct time when the industry got an opportunity to strengthen them. “Every company has to think about their mechanism to live with new the new normal to stay afloat. Challenge will be for the old staff, who are reluctant to work with new dynamics. They will have to pick up with this new system. We also need to exchange ideas with our experienced staff for finding innovative/newer ways of business,” Mr Shah said. He also suggested CBs/FFs to make them updated with all rules and regulations and relevant information to make their position stronger. “We are resilient enough to come out with much better and stronger position,” he concluded.

Mr Shinde stressed upon the objective of this webinar, which is converting challenges to opportunity. “We never went through rigorous financial planning during our entire journey from ‘Mukadam’ to Logistician as a profession with MSME status. We have to do this meticulously now,” he said. In his opinion the industry should tremendously focus on adopting new technologies that Covid-19 especially taught them. Add to this the recent initiatives of government policies in terms of reduced human interfacing and digitization/digitalization are bringing in drastic changes in traditional CB/FF business. “Customs are implementing so many things ahead of we can think of. Our future will be very challenging if we cannot cope up. New E-initiatives by Ministry of Shipping and Civil Aviation will push us towards completely new structure of our industry, where everything will be online and through portals. In the dys to come customers’ loyalty, integrity with the customers and within the customs brokers for win-win situation, internal confidence building mechanism and searching for new areas of business will also play the critical roles,” Mr Shinde underscored.