NYK, Adani form Rail JV for India auto-handling

India’s vehicle trade rose 25 percent in value terms in the first quarter of 2018.

Japan-based conglomerate NYK has established a joint venture (JV) with port owner Adani Group to capitalize on the rapid growth in India’s automotive trade.

NYK Auto Logistics (India) Pvt. Ltd. will provide rail logistics services for automobile transportation as the Indian light vehicle market grew 11.8 percent year to date through May, according to IHS Markit Automotive, which expects Indian car sales to expand 9 percent year over year in calendar 2018.

The NYK Auto Logistics-Adani Logistics venture appears to be a strategic progression from a 2008 deal under which the duo joined hands with Wallenius Wilhelmsen Lines of Norway to build a dedicated roll-on, roll-off (ro-ro) terminal at Mundra, Adani’s flagship cargo facility.

The announcement said the new collaboration comes as India’s automobile sector logs robust growth — registering a 16 percent increase during fiscal 2017-2018 — and as government authorities vigorously explore alternative, environment-friendly transport solutions to improve supply chain efficiency and reduce costs.

The statement said the JV unit plans to begin operations with six dedicated freight trains and as demand increases, it will add 25 trains over the next three years. It will also vie for Indian Railways’ “automobile freight train operator” status to jumpstart operations.

“This formidable association combines the strengths of individual parent companies, putting the JV in a very unique position,” Adani Group CEO Karan Adani said in a statement.

The announcement, however, did not comment on the fate of the previous ro-ro partnership deal. Officials at Adani Group were also reluctant to provide any further details, when contacted by RailNews.

“We would not like to comment as of now. We shall update soon,” officials told RailNews.

Naotaka Ishizawa, managing director of NYK Auto Logistics (India), said the rail venture with Adani Group will strengthen the company’s inland capabilities in the country through “a reliable association focusing on quality and visibility in the supply chain.”

With growing competition on India’s west coast region, Adani Group has been drumming up hinterland shippers’ support for Mundra, and the new rail venture is expected to play a part in that push. To that end, the port giant last year opened a large multimodal logistics park at Kila Raipur, near Ludhiana, a key inland point.

Statistics collected by RailNews show terminals at Mundra together handled 376,998 TEU in May.

Ironically, NYK India operates a ro-ro terminal with APM Terminals at the Gujarat Pipavav Port, a rival to Mundra for container and bulk/liquid cargo. Several domestic and international automobile giants, including Ford, General Motors, Suzuki, and Tata Motors, are already using Pipavav for moving finished cars to global destinations from their production sites in Gujarat State.

Indian exports of automobiles and parts rose 23 percent year over year in the first quarter to $4.7 billion, while imports rose 29.7 percent to $1.5 billion, as total trade rose 24.6 percent to $6.2 billion, according to the Global Trade Atlas, a sister product of RailNews.

Japanese logistics companies have history in Indian auto sector

NYK in 2009 formed a partnership arrangement with state-owned rail operator Container Corporation of India to jointly handle automobile movements by rail. However, that plan hit a roadblock, due to an unfavorable government policy, and was eventually abandoned.

NYK’s peers MOL and “K” Line also have separate inland automobile logistics subsidiaries in India. “K” Line made its entry into the local market in 2016 via a JV between its wholly owned subsidiary Nitto Total Logistics Ltd. and Mumbai-based J.M. Baxi Group. Nitto Baxi Pvt. Ltd. is owned 50 percent by J.M. Baxi, 40 percent by Nitto, and 10 percent by “K” Line.

MOL is considered the frontrunner to identify the underlying growth potential for automobile handling in India, having established MOL Auto Logistics (India) Pvt. Ltd. in 2008. As Japanese automaker Nissan Motor Co. began exporting substantial volume of finished vehicles from its Chennai site, MOL entered into a strategic partnership arrangement with Chennai-based Sical Logistics Ltd. to operate an automobile management yard at the Port of Ennore. Nissan has a long-term “car export contract” with the Ennore authority, which involves minimum volume commitments by the carrier, as well as special tariff concessions and priority handling by the port trust.

Mumbai-based third-party logistics provider Allcargo Logistics is also an emerging player in the automobile inland logistics market, with specialized warehousing infrastructure at Mumbai, Chennai, and Guwahati.