Beruflich Dokumente
Kultur Dokumente
PROJECT REPORT
ON
SUBMITTED TO:
Ms. Gunjeet Kaur
Lect. of SVSM
SUBMITTED BY:
Rajnish Kumar
Roll No. SVPG/07/05
PGDM 6th Trimester
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RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING
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1. Order processing:
The starting point of physical distribution activities is the processing of customers orders. In
order to provide quicker customer service, the orders received from customers should be
processed within the least possible time. Order processing includes receiving the order,
recording the order, filling the order, and assembling all such orders for transportation, etc.
the company and the customers benefit when these steps are carried out quickly and
accurately. The error committed at this stage at times can prove to be very costly.
Order processing activity consist of the following
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2. Warehousing:
Warehousing refers to the storing and assorting products in order to create time utility. The
basic purpose of the warehousing activity is to arrange placement of goods, provide storage
facility to store them, consolidate them with other similar products, divide them into smaller
quantities and build up assortment of products. Generally, larger the number of warehouses a
firm has the lesser would be the time taken in serving customers at different locations, but
greater would be the cost of warehousing. Thus, the firm has to strike a balance between the
cost of warehousing and the level of customer service.
Major decision in warehousing is as follow:
3. Inventory Management:
Linked to warehousing decisions are the inventory decisions which hold the key to success of
physical distribution especially where the inventory costs may be as high 15 as 30-40 per cent
(e.g., steel and automobiles). No wonder, therefore, that the new concept of Just-in-TimeInventory decision is increasingly becoming popular with a number of companies. The
decision regarding level of inventory involves estimate of demand for the product. A correct
estimate of the demand helps to hold proper inventory level and control the inventory costs.
This is not only helps the firm in terms of the cost of inventory and supply to customers in
time but also to maintain production at a consistent level. The major factors determining the
inventory levels are: The firms policy regarding the customer service level, Degree of
accuracy of the sales forecasts, Responsiveness of the distribution system i.e., ability of the
system to transmit inventory needs to the factory and get the products in the market. The cost
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OBJECTIVE OF STUDY:
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RESEARCH METHODOLOGY
The objective of the present study can be accomplished by conducting a systematic market
research. Market research is the systematic design, collection, analysis and reporting of data
and findings that are relevant to different marketing situations facing the company. The
marketing research process that is adopted in the present study consists of the following
stages:
a. Defining the problem and the research objective:
The research objective states what information is needed to solve the problem. The objective
of the research is to study the Indian Logistics industry growth drivers and its comparison
with the other countries.
b. Developing the research plan:
Once the problem is identified, the next step is to prepare a plan for getting the information
needed for the research. The present study adopted the descriptive approach wherein there
was a need to gather large amount of information before making a conclusion.
c. Collection and Sources of data:
Market research requires two kinds of data, i.e., primary data and secondary data. Secondary
data was collected from various books and web sites. Secondary data is use to complete this
project report from various source like World Bank, CII and other consultant firms.
d. Analyze the collected information:
This involves converting raw data into useful information. It involves tabulation of data,
using statistical measures.
Statistical Tools:
Percentage Analysis
Bar Diagrams
Column Diagram
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LPI Score
USA
3.85
UK
3.84
Singapore
4.19
India
3.07
China
3.64
Mexico
2.64
The level of inefficiency in logistics activities in the country has been very high across all
modes. With the evolving business environment creating a strong demand pull for quality and
efficient logistics services, core issues around enabling infrastructure, regulatory environment
and the fragmented nature of the industry are being overcome gradually.
The required pace of efficiency and quality improvement will demand rapid development of
capabilities of logistics service providers. And with logistics being a service oriented sector,
skill development will emerge as a key capability while skill issues exist in varying degrees
in all segments of logistics; those segments where the gaps are not only wide but also
widening at a relatively fast pace. The most severe and immediate requirement for skill
development is found to be in the road freight and warehousing segments.
Indias spend on logistics activities - equivalent to 13 percent of its GDP is higher than that of
the developed nations. The key reason for this is the relatively higher level of inefficiencies in
the system, with lower average trucking speeds, higher turnaround time at ports and high cost
of administrative delays being just a few of the examples.
These inefficiencies have arisen over the years from a combination of a non-conducive policy
environment, extensive industry fragmentation and lack of good basic infrastructure. India's
indirect tax regime discouraged large centralized warehouses and led, over time, to
fragmentation in the warehousing sector. At the same time, the absence of a single logistics
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Country
India
U.S.
Europe
Japan
Logistics Cost/GDP
13%
9.9%
10%
11.4%
Extensive fragmentation meant the incapacity of industry players to develop the industry as a
whole and poor support infrastructure, such as roads, ports and telecom, led to a situation
where the opportunity to create value is limited.
However, much of this is changing with the government now demonstrating a strong
commitment towards providing an enabling infrastructure and creating conducive regulations.
There is significant current and planned investment in infrastructure to the tune of (INR 15
trillion) over the next few years and an increased emphasis on public-private partnership. At
the same time, regulations around rationalization of tax structures and prevention of
overloading for example are creating an environment of positive change. Players now have
the opportunity to leverage economies of scale, complemented with better infrastructure, to
provide integrated logistics solutions which are cost effective.
In addition, the evolving business landscape and increasing competition across industries, is
creating the need for more efficient and reliable logistics services than what exist today For
example, rapid growth of organized retail and the need to reach out to the large untapped
rural markets in India are necessitating development of strong back end and front end supply
networks.
Fundamentally, a fragmented industry with low average scale - and consequent limited
investment and market development capability - is worst placed to serve these needs. It is not
surprising therefore that there is a frantic pace of consolidation and organic growth that the
industry is witnessing (refer box and figure 4). While logistics service providers are
struggling to keep pace with the growth, logistics service users with limited or no outsourcing
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Entry
of
M NCs
Better
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Greater
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activity
Greater Prosprensity to
outsourcing logistics
Growth in
Outsourcing logistics
Gre
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Incre
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Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size and is the
backbone of Indian Economy. Our industry is growing at a rate of 8-10% annually and has
been a crucial contributor in the growth and development of the Indian economy. In the near
future, Traditional Logistics services like Transportation and Warehousing would continue to
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The Indian logistics sector grew by 8 to 10 per cent annually between 2002 and 2007. Several
factors have favourably impacted the growth of the logistics industry, like the country's
changing tax regime, growth across major industry segments such as automobile,
pharmaceutical, fast moving consumer goods (FMCG) and the emergence of organised retail.
With escalating competition and cost pressures, companies are increasingly focusing on their
core competencies by outsourcing their logistics requirements to third party logistics (3PL)
players.
The future of the Indian logistics and warehousing industry is currently governed by three
key factors
a) BURGEONING DOMESTIC DEMAND
Emergence of organised retail:
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Under the existing tax structure, 2 per cent Central Sales Tax (CST) is levied on inter-state
sales. As a result, companies have had to maintain small warehouses and depots in every state
in order to avoid paying CST on Inter-state sales. These multiple warehouses have resulted in
high inventory costs, increased working capital and other overheads. A simplified tax regime
will help logistics players service multiple markets and offer end-to-end solutions far more
efficiently and at much lower costs.
As per the World Bank's report on the Logistics Performance Index, a 0.5 per cent decrease
in logistics cost leads to 2 per cent growth in trade and a 40 per cent increase in the range of
products that get exported out of the country.
From multiple taxes to a simplified tax regime:
Union Budget 2008-09 has proposed the phasing out of Central Sales Tax (CST) 2010-11.
Once implemented, this measure will promote outsourcing of logistics operations and
encourage the creation of large warehouses at key strategic locations that could operate on the
'hub-and-spoke' model. The implementation of Value Added Tax (VAT) in 2006 has played a
role in reducing logistics costs. The proposed implementation of Goods and Service Tax
(GST) could lower logistics costs further. According to the Confederation of Indian Industry
(CII), improvement of logistics and warehousing industry can make Indian industries more
cost-competitive, thereby enabling a GDP growth of 11 to 12 per cent, from the existing 7 to
8 per cent.
c) Improvement in infrastructure
Transportation in India accounts for nearly 40 per cent of the total cost of production. One of
the major barriers faced by the Indian logistics industry has been the lack of quality physical
infrastructure. However, India's core sectors are witnessing a significant change. The country
is expected to increase its infrastructure development spend from 4.7 per cent of GDP in
2007 to 8 per cent of GDP by 2012. This increased spend will help boost the logistics
industry. However, delays in critical projects may lead to a failure of this measure to provide
the much needed impetus to the growth of this sector.
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Better connectivity to small towns and cities is another area planners need to work upon.
Road transportation is currently the most dominant form of transportation with more than half
of the goods in the country being moved by road. Almost every mode of transportation in
India is fraught with inefficiencies.
For instance, ports that are vital for foreign tradehave very high turnaround times when
compared with statistics for other countries. Similarly, the railways, which were a popular
mode for freight transportation (especially the movement of bulk goods), have lost ground to
road transportation due to limited access to smaller towns. Air, on the other hand, is a costly
mode and its use is restricted to courier shipments. It is rarely used for bulk transportation.
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While industry players have been incapable of investing in manpower development, the
government has also not focused sufficiently on the same. There exist very few formal
training institutions for driver training and practically none for operational training on
associated areas like loading / unloading supervisory, proper handling practices etc.
The result has been that in the current scenario, there exist gaps in core technical skills of the
existing set of personnel. For example, the backbone of the trucking industry truck drivers
lack knowledge of good driving practices and areas associated with driving like
understanding of VAT. Taking a level-wise view of the skill issues, it is seen that in the road
sector, skill issues are widespread across the board with the situation being most severe at the
operational level
Advantages:
Road network of 3.3 million km is the second largest globally
55% of total freight movement is via roadways
Roads offer wide reach and easy accessibility to even small markets
Disadvantages:
High cost of transportation
National Highways account for only 2% of the total network but carries 40% of total
freight
Key Developments:
National Highway Development Project to upgrade and modernise highways
24,000 km of National Highways are to be upgraded to four/six lanes. Connectivity to
ports is also being improved
Railway
Rail freight traffic revenues stood at around INR 350 billion in 2006 having grown at around
8 percent in the recent past with the growth in the last couple of years being around 10
percent. It is the world's second largest rail network spread over 81,500 km and covering
around 7000 stations. Manpower spends amount to about 45 percent of revenues as against
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Water/Port
The growth in shipping has been even higher than that of the railways driven by strong
growth in foreign trade both in bulk and containerized cargo. Manpower spends amount to
about 8-10 percent; non-salary expenditure varies greatly between companies ranging from 320 percent of overall man power expenditure.
The nature of liner shipping services to and from India has undergone a sea change in the last
few years as a result of the growth in break-bulk and conventional cargoes. With the nature of
goods being shipped changing, the potential and opportunities for container transport and
logistics companies are enormous. Over the past few years the size and the number of vessels
that are being deployed by India has increased.
With increasing capacity and infrastructural support, the scope of the operations is set to
increase! India now has the largest merchant shipping fleet among the developing countries!
India ranks 17th in the world in shipping tonnage. ! Indian share of maritime transport services
is 1 percent of world market.! The container traffic has registered an impressive growth of 15
per cent over the last five years.
The Government is responsible for creation of the trained manpower required for the
country's merchant navy fleet and also facilitation of training and employment of seafarers in
foreign flag vessels. .
In addition to the above, there are about 124 training institutes in the private sector approved
by the Director General of Shipping, imparting pre-sea and post sea training in various
disciplines. The Directorate General of Shipping maintains a system of inspections to ensure
the quality of training. India is globally recognized as a very important source of mercantile
manpower.
.
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Advantages:
Cheapest mode of transportation
Disadvantages:
Poor state of inland waterways in the country
High turnover time
Key Developments:
Cargo handling capacity of ports to be increased from 600 million tones in 2007 to
1500 million tones by 2015
AIR :
Though the air freight segment holds a small share of India's freight market, it is growing at a
fast pace. While India accounts for meagre 3 percent of the global air cargo market, the
Indian air cargo industry is expected to double in size by the year 2010, as per an expert
estimate.
As in the case of sea freight, the level of formalization and standardization of operations in
the air freight segment is greater than in the road sector. By virtue of the level of investments
in assets, network and relationships required to be a player in this segment, it has traditionally
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Advantages:
Fastest mode of transportation
Disadvantages:
Low freight movement
87% of total freight traffic being handled by airports in metro cities
Key Developments:
Modernisation of 37 operational airports and development of new airports will
increase air cargo handling capacity
WAREHOUSE:
The warehousing segment consists of storage warehousing related to distribution whether
inbound or outbound trans shipment warehouses or 'terminals' used for bulking / de-bulking,
stuffing / de-stuffing cross docking and temporary storage (including CFS and ICD)
The warehousing segment is perhaps where the greatest growth potential exists. Like road
transportation, this segment has traditionally been extremely fragmented, small scale and
scattered geographically. A key reason for this has been India's indirect tax structure, with tax
paid on cross border (state border) sales not being fully set off against local tax liabilities. As
a result, most players resorted to setting up small warehouses across different states, rather
than large, centralized set-ups. This has led to the prevalence of small scale, fragmented
warehouses, with corresponding inefficiencies. This cause and effect cycle is depicted in
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Increasingly, warehouses are being used to serve several important functions, beyond
mere storage of products
Customer service
Increasingly, warehouse are being used as the customer service and repair centers. This
ensures quick availability of spare parts and offers low turnaround time
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The goods are dispatched to the dealers/distributors from the warehouse. The warehouse,
thus, performs functions like invoicing and order processing.
Value Addition
Increasingly, warehouses are also being used to do higher end tasks associated with
production till now. These include MRP tagging, promotion bundling, repackaging , quality
checking etc.
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Stockpiling
A warehouse is often used as a stockpiling location to manage demand-supply gaps over a
longer term.
While no organized players have evolved in this segment, several trends are driving the need
for a more professional and organized approach to warehousing. Figure outlines the several
additional functions that warehouses perform today, apart from being physical storage points
such as Stockpiling, Product Mixing, Value addition, Distribution and Customer Service.
These functions require different skill sets and hence, warehouse service providers today need
to develop proficiencies in a diverse set of both core and non-core activities
The size of the warehousing segment is estimated to be INR 1.2 trillion in 2006; while the
overall sector growth may be estimated to be around the GDP growth rate of 8-9 percent, the
organized portion of this market is estimated to be growing at over 20 percent.
A majority of players in this industry are small / medium entrepreneurs running the
warehouse as a CFA for one or more companies. As mentioned earlier, the scale of these
warehouses was never large enough to tap scale economies or justify investments in higher
standards.
However, going forward, while implementation of the VAT regime is expected to drive
consolidation and hence larger scale warehouses, the rapid growth of organized retail is
expected to drive sophistication and efficiency in warehousing practices.
These developments would drive the need for specialized warehousing skills like picking and
packing, inventory management, proper handling practices including usage of warehousing
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The growth in the proportion of containerized cargo in addition to the opening up of
container rail transport is giving a boost to the development of Container Freight Stations
(CFS) and Inland Container Depots (ICD). These 'warehouses', being used more for
transhipment than storage per se, require basic skills around loading / unloading, stuffing /
destuffing etc. at the operational level
Newly developed electronic commodity markets, such as Multi Commodity Exchange of
India Ltd. (MCX) have played an instrumental role in the logistics. Creation and development
of warehouses followed the emergence of these markets or exchanges.
MCXs collateral management arm National Bulk Handling Corporation Ltd (NBHC), a
national-level end-to-end solutions provider in warehousing, bulk handling, grading and
inspection, commodity care, pest management and collateral management of commodities, is
playing a key role in taking logistics and, hence, markets closer to the producers. Sticking to
their mandate, commodity derivatives markets have proved to be extremely beneficial to
farmers.
The gap between prices (many of the commodities) in the post-harvest season and those in
any lean season has narrowed down significantly over the past few years.
Earlier, during the pre-futures era, when prices would slump immediately after harvest,
farmers would have to make distress sales. But today, with the opportunity to sell for a better
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Even though vendors are offering a worldwide network, significantly added and dedicated,
equipment is still required. For example, tracking completed products needs a yard
management system, which recognizes each container in the yard and its placement. The
radio frequency Identification (RFID) tags in containers, whose place is detected by antennas
located in the yard. Maintaining the clear vision also needs tracking the containers as soon as
they leave the yard. This tracking is possible by Global Positioning (GPS) systems and
satellites, however, use of these systems are not usual at present. As a result, the industry does
not provide step-by-step tracking of container.
An important trend among logistics services providers would aid the industry. Logistics
industry veterans unveil that logistics service providers are extending reach worldwide and
expanding their services too. Regardless of understandable limitation, global logistics should
obviously improve. Web-based companies and technically ground-breaking carriers such as
UPS Logistics, Ryder, and others will carry on showing the way. Global logistics in near
future should be distant more faultless and reasonably priced than ever.
Size of the global logistics industry
Currently the annual logistics cost of the world is about USD 3.5 trillion. For any country, the
annual logistics cost varies between 9% and 20% of the GDP, the figure for the US being
about 9%. US-based Armstrong & Associates, Inc. tracks the issues and trends in the world
logistics market and in the US logistics market, in particular, in their annual surveys of top 25
global LSPs. According to the firm, the global logistics market sizes in 1992, 1996 and 2000
were USD 10 billion, USD 25 billion and USD 56 billion, respectively. In 2003 and 2004, the
corresponding figures were USD270 billion and USD 333 billion, registering high growth
rates. Though most of the large LSPs are headquartered in Europe, the US logistics market is
the largest in the world capturing one-third of the world logistics market. In 2003, it was
about USD 80 billion.
In 2004, it grew to USD 89 billion, and in 2005, it registered an impressive growth rate of
16% to cross the USD 100 billion mark for the first time and reach USD 103.7 billion (Foster
and Armstrong, 2004, 2005, 2006). However, considering the fact that the logistics market in
the US is about 10% of its annual logistics cost (Foster and Armstrong, 2006), there is still
immense potential for growth of 3PL in the US in particular, and in the world in general.
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TNT Express:
This company is a key leader in the international market in the sector of global express
services. The company ensures safe and on time delivery of your documents, freight and
parcels. The company offers time and day definite delivery in about 200 nations across the
world. It operates 47 jet freighter aircraft and 26,000 road vehicles and has a network of
2,300 companies.
AFL :
One among the acknowledged leaders among the logistics companies in India is AFL.
Through its domain of logistics services, the company has delivered world class service in
India. In 1979,the company introduced the first ever courier service by forming an alliance
with DHL World Wide Express. The company offers services like Logistics and warehousing,
Courier Company and Custom Consultant.
DHL :
This company is one among the major logistics companies in India. It is a market leader
globally in overland transport, air freight and international express. The company ranks No.1
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Gati :
The company is a key leader in then arena of express cargo delivery and a significant one in
the supply chain management solutions and distribution in India since the year 1989.The
company provides services like the Ware Housing, Express Cargo etc. Logistics Solutions of
the company are Warehousing, Supply chain Management. The Distribution Solutions of the
company are Gati Surface Express, Gati coast to coast and Gati Air Express etc.
Safexpress :
It is one of the largest express company in India. The company offers the best and integrated
logistics solutions. In 2002 the Limca Book of Records declared the company as the Largest
Logistics service Provider in India. The company has a network over 550 locations in 28
states and 7 countries. It has 3000 weather proof ISO-9002 vehicles.
Ashok Leyland :
The leading provider of logistic vehicles for the India Army is this company. It is a key leader
in the tractor-tailers and multi axle trucks. The company manufactures buses, trucks, engines
and special application vehicles in India. It is promoting a new company called Ashley
Transport Services Ltd. for exchange of information and integrated services related to
logistics in order to tackle the business of freight contractors.
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But, then, logistics management in India is too complex, with millions and millions retailers
catering to the requirements of more than one billion people and the infrastructure yet to
develop to cater properly to a growing economy.
The poor condition of roads translates directly to higher vehicle turnover, which in turn
pushes up the operating costs and reduces efficiency. The reduced efficiency is passed on the
logistics service providers, with transportation costs accounting for nearly 40 per cent of the
total logistics cost. The National Highways are being upgraded but these highways account
for a meager two per cent of the total road network in the country.
There are other problems such as complex tax laws and insufficient technological aids. The
fragmented market increases costs due to huge paperwork and the individual truck owners,
dominating the market, are unable to contract directly with customers, with the result freight
consolidators and brokers take a commission to generate business for the truck owners. Only
about a few thousand vehicles out of a total of several millions have tracking system. The use
of IT, thus, is limited.
Despite these challenges, the country's logistics industry is set to grow. Industries such as
chemicals and pharmaceuticals, metals, FMCG, cement, textiles and capping it all the retail
segment have been identified as the top contributors to the projected growth of the economy
and therefore to logistics revenues. The new generation corporate are looking to outsource
non-traditional logistics requirements such as reverse logistics, inventory management, order
processing, distribution, and labeling and packaging.
LPI Score
LPI Rank
Logistics contribution
USA
3.85
14
9.9 %
Europe
3.84
9
10 %
Japan
4.02
6
11.4 %
China
3.64
21
12 %
India
3.07
39
13 %
From GDP
Share of 3PL in overall
57 %
30 %
80 %
15 %
10 %
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Industries
Logistics activity by
57 %
40 %
80 %
10 %
6%
Organised sector
DHL and India-based the Lemuir Group entered into a 76: 24 joint venture DHL
Another trend witnessed over the last few years has been the entry of several large Indian
corporate houses such as the Bharti group, Tatas and Reliance Industries Limited into the
logistics sector. The Indian conglomerates foresee huge potential for specialised logistics and
warehousing facilities, particularly in industries like retail. Companies like Bharti, Tata
Realty & Infrastructure, GE Equipment Services and Reliance Logistics cater to the logistics
needs of their own group companies as well as provide services to the other companies.
The growth of the organised sector would enable the industry to provide cost-effective and
integrated logistics solutions in order to meet the ever-increasing demand. As per estimates,
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DHL and network expansion by the existing domestic players (such as Gati and Shreyas
Shipping) have also contributed to the transformation of services and the business practices
across this sector.
Value added services like inventory management, warehousing, packaging, labelling, tracking
of shipments etc have witnessed huge demand from the corporate sector. The end-users of
3PL services include major players from the retail, auto components and the electronics
industry.
The organised 3PL market in India can be categorised into three major segments public
sector, private sector and foreign entrants. Some of the major players in each category are as
illustrated. P
u
Public Sector Companies
Foreign Entrants
Private Sector
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DHL
Gati
Fed Ex
Safexpress
Blue Dart
Reliance
Warehouse TNT
Corporation Logistics
All cargo
Corporation
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Western India (Maharashtra, Gujarat and Rajasthan) has emerged as the most prominent
destination for the logistics industry. Upsurge in In western India (Maharashtra, Gujarat and
Rajasthan), approximately 30,000 acres of land has been notified for the development of nonIT/ITeS SEZs. This should lead to increased demand for logistical services in the region.
Southern India (Andhra Pradesh, Tamil Nadu and Karnataka) is a key automobile and auto
ancillary manufacturing market. Several SEZs are expected to come up in this region,
including multi-product, automobile and textile SEZs. The presence of a booming
pharmaceutical, auto component and agro-input industry along with the presence of seven
ports facilitating international trade are likely to give fillip to the logistics sector in southern
India in near future.
Northern India (Haryana, Himachal Pradesh, Delhi and Punjab) is a well-established market
for organised retail. Over the next two to three years, maximum supply of retail malls in the
country will come up in northern India. Apart from textiles, the region also has major clusters
of consumer goods and food processing industry.
In addition to the Golden Quadrilateral, infrastructure development projects like the DelhiMumbai Industrial Corridor, Kundli- Manesar-Palwal Expressway and the Taj Expressway
have led to the development of several warehousing hubs and inland container depots by the
logistics sector Eastern India (Orissa and West Bengal), an exploration hub, is rich in mineral
deposits and has clusters of steel, consumer goods and textile industries. With increased
emphasis being given to stepping up trade with China, West Bengal (which is also the
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Air transport sector contributes over 0.2% to the countrys GDP at constant prices (19992000 Prices). Transport sectors contribution to the GDP has been firming up over the last
couple of years, mostly because of the growing economic activities in the country. Domestic
air cargo traffic has been growing at CAGR of 12.80% from 2001-02 to 2006-07, whereas
international air cargo traffic has been moving at CAGR of 13% during the same period.
During 2006-07, total air cargo traffic is estimated to be over 1.56m tones against 1.4m tones
during 2005-06, registering a growth rate of 14.65%.
According to the Planning Commission, Indias air cargo movements would grow at over
CAGR of 11.5% from 2007-08 to 2011-12. Riding high on export of gems and jewellery,
special chemicals and high-value pharmaceuticals, international air cargo traffic at all Indian
airports have been growing rapidly.
MARINE:
Marine transport sector contributes over 0.2% to the countrys GDP at constant prices (1999 2000 prices). Transport sectors contribution to the GDP has been firming up over the last
couple of years, mostly because of the growing economic activities in the country. Shipping
industry plays a significant role in the Indian economy. India has 12 major and 187
minor/intermediate ports along its coastline of around 7,517km. The fleet strength at the end
of December 2006 was 774 vessels with 8.42m Gross Registered Tonnage (GRT). Ports serve
as the gateways to the international trade in India. Major ports in India together have handled
463.84m tones of cargo in 2006-07, a growth of 9.51% against the same period of the
previous year. The petroleum-oil-lubricants (POL) accounted for 33.38% of the total traffic at
major ports during April-March 2007, while iron ore constituted 17.37%, coal 12.98%,
container traffic 15.84%, fertilizer 3.04%, and others 17.49%.
According to the Planning Commission, Indias shipping fleet strength will be increased up to
15m GRT (as per the 3rd target) by the end of 2011-12, with an estimated investment of
US$17.7 billion. The port throughput will increase up to 1,008m tones, growing at a CAGR
of 10.96% from 2007-08 to 2011-12.
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LPI Score
USA
3.85
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3.84
Singapore
4.19
India
3.07
China
3.64
Mexico
2.64
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
USA
UK
Singapore
India
China
Mexico
Interpretation: The Logistics Performance Index (LPI) and its indicators provide the first indepth cross-country assessment of the logistics gap among countries. As the above graph
shows that LPI score of USA, UK, Singapore, India and Mexico , indicates the performance
of logistics in global transport and logistics hubs. Also as the performance of developed
countries in logistics are high as compare to the developing nation. Singapore has high
performance in global logistics as compare to other countries also gain rank 1 st among all by
World Bank. USA, UK, Mexico and China are ranked in logistics performance in global
market at 9th, 14th, 56th and 30th respectively. India is ranked 39th in the Global market show
the high logistics performance than in the global market.
2. LPI top 10 countries of low income group :
Country
LPI score
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3.07
Vietnam
2.89
2.87
Guinea
2.71
Sudan
2.71
Mauritania
2.63
Pakistan
2.62
Kenya
2.52
Gambia
2.52
Cambodia
2.50
LPI Score
LPI Score
3.07
2.89
2.87
2.71
2.71
2.63
2.62
2.52
2.52
2.5
Interpretation: This graph shows that India had performed well among all the low-income
countries. India has scored 3.07 LPI score and ranked 1st among all other low income
countries. This shows the among the low income countries Indias performance in global
transportation and logistics hubs is better.
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Country
India
U.S.
Europe
Japan
Logistics Cost/GDP
13%
9.9%
10%
11.4%
India
US
10.00%
Europe
Japan
Interpretation: Above graph show that in India logistics cost high than developed
countries and contribution in GDP is 13 %. High logistics cost is due to the incomplete and
under developed infrastructure, non conductive policy, environment, indirect tax regime and
extensive industry fragmentation.
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Country
India
U.S.
Europe
Japan
Logistics
10 %
57 %
30 %
80 %
80%
Japan
30%
Europe
57%
U.S.
10%
India
0%
10%
20%
30%
40%
50%
60%
70%
80%
Interpretation: Above graph shows that in Japan share of 3PL in overall industry high as
compare other developed countries is 80 %. In India share of 3PL is 10 % show that in India
3PL service provider are less.
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Country
%age
of
Logistics
USA
Japan
Europe
India
China
organized sectors
57 %
80 %
40 %
6%
10 %
activity
10%
China
6%
India
40%
Europe
80%
Japan
57%
USA
0%
by
10%
20%
30%
40%
50%
60%
70%
80%
Interpretation: The above graph shows that cost of logistics include the inventory
holding, transportation, warehousing, packaging, losses and related administration are high in
India as compare to the China , Europe, USA and Japan.
Investment in Cr.
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Aviation
Metal & Mining
Consumer Durable
25,000
20,890
8500
6000
20890
20,000
15,000
8500
10,000
6000
5,000
0
Aviation
Investment Details/
Plans (2007-08) in
$mn
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250
115
200
350
350
300
250
200
150
100
50
0
Interpretation: Global 3PL providers investment in India by four major player are DHL,
TNT, Gati and Shreyas shipping & Logistics. Among all these SS & Logistics invest more as
compare to other three.
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Year
2005
890
2008
1622
2012 E
3556
4000
3556
3500
3000
2500
1622
2000
1500
890
1000
500
0
2005
2008
2012 E
Interpretation: The above graph shows that 3pl share in the logistics industry increased
with the increased in revenue of the 3PL in the logistics industry in India.
Year
Revenue
2002
billion)
65
2003
70.2
8%
2004
76.3
8.7 %
2005
84
10.1 %
2006
9172
9.2 %
2007
100
9.1 %
12%
10%
10.10%
9.20%
8.00%
9.10%
8.20%
8%
6%
4%
2%
0%
2003
2004
2005
2006
2007
% age growth
Interpretation: The above graph shows that in Indian logistics industry the revenue is
increased by 8 10 % annually from 2002 to 2007. The maximum growth in the revenue in
the year 2005 and minimum in 2003.
Name of Industry
Cement
Steel
F&B
FMCG
Durable
Apparel
Auto
sale
15%
6%
5%
4%
4%
3%
3%
15
16
14
12
10
8
2
0
Cement
Steel
F& B
FMCG
Durable Apparel
Auto
Interpretation: Above graph shows that logistics cost contribute to sale of different
industries. Maximum share in Cement industry (15%) and Steel industry (6%) sale as
compare to the other industries like Food & Beverage, FMCG, Consumer Durable, Apparel
and Auto.
Year
2002
2006
Road
1075
1560
Railway
0.9
1.4
Sea
364
578
Air
478
667
3000
2500
1560
2000
1500
1000
500
667
578
478
1075
364
1.4
0.9
Air
Sea
Road
2001
Railway
2006
Interpretation: Above graph shows that out of the different modes of transportation Road
transportation is used maximum in Indian Logistics industry as compare to other modes of
transportation and railway is used minimum among all others modes of transportation this is
due to lesser area coverage by the rail lines and the poor infrastructure as compare to the
other modes of transportation. The above graph shows that increase in the modes of
transportation annually and the maximum growth shown by the railway and sea as compare
to other two modes of transportation.
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1995
2000
2005
610
840
1430
840
610
1995
2000
2005
Interpretation: The graph shows that movement of goods is continuously increased due
to the improvement of infrastructure and more area coverage. The road freight is increased
continuously with 6-8 % annually.
2002
493
2003
519
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2005
602
2006
667
Rail Freight
Rail Freight
667
493
2002
519
2003
557
2004
602
2005
2006
Interpretation: The above graph shows that the increase in the movement of goods by
railway. But the movement of goods by railway is almost domestically.
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578
600
500
519
464
422
400
300
200
100
0
2003
2004
2005
2006
Interpretation: Above graph shows that the movement of goods by the sea. This tells that
the movement of the goods by sea is increased as the increase in the international market.
(million tonnes)
300
340
375
480
510
International
(million tonnes)
575
650
700
810
900
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1600
1400
1200
1000
800
600
700
650
575
400
200
0
900
810
2002
2003
2004
Domestic
510
480
375
340
300
2005
2006
International
Interpretation: The above graph shows that movement of goods by air is increased
continuously due it is fast and safe way. Also air mode of transportation is preferred better for
the international market as compare to the domestic market.
Percentage
Air
movement
2.5 %
Sea
20 %
Railway
23 %
Road
54.5 %
of
total
cargo
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55%
Railway
23%
Sea
Air
20%
3%
Interpretation: Graph shows that the preferred mode of cargo movement in India is Road
as compare to the Rail, Air and Sea. Because roads are almost covers all the areas in India as
compare to the other mode of transportation. Due to underdeveloped infrastructure and other
service to choose best mode of transportation is road. As road covers almost all the rural,
urban and hilly area as compare to railway. In India cargo movement by air is least among the
other three modes this due to high cost involved in this mode of transportation.
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5.1
4.5
5
4
3.4
4
2.9
3
2002
2003
2004
2005
2006
Interpretation: The above graph shows that container volume grows continuously with
the increase in the export and import in India. The maximum growth in the container volume
in the year 2004 and 2006 as compare to other years.
SEZs
Retail
Warehouse
Logistics
Development Capacity
Parks
South
40 %
20 %
20 %
30 %
West
55 %
50 %
60 %
50 %
North
5%
20 %
15 %
10 %
East
10 %
5%
10 %
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60%
50%
40%
SEZs
Retail Development
30%
Warehouse Capacity
Logistics Parks
20%
10%
0%
South
West
North
East
Interpretation: The above graph shows that zonal attractiveness in India. Out of the four
zones West zone is better develop as compare to the other zones and the least develop zone is
East zone. South and North are shows the 2nd and 3rd position for the development of the zone
respectively.
FINDING
1. The logistics performance index shows the performance of country in the global
logistics industry, customs, trade-related infrastructure, inland transit, logistics
services, information systems, and port efficiency are all critical to whether countries
can trade goods and services on time and at low cost. Here India LPI score is 3.07
and secure 39th position in the global logistics industry. As the share of Indian
Logistics Industry is more than the Mexico and less than the USA, UK and Singapore
witness that Indian Logistics industry is one of the growth drivers for Indian economy.
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8.
9.
18. Industrial cluster in India can be dividing into four economic zones based on the
concentration of the key industries like pharmaceutical, auto, textiles, machinery and
electronic goods. West zone is show high attractiveness due most prominent
destination for the Logistics industry. Also upsurge in the retail sector along with the
fact that has several industrial clusters of industries.
CONCLUSION
Indian Logistics industry is continuously improving its performance in the global logistics
industry by improvement of customs, trade-related infrastructure, inland transit, logistics
services, information systems, and port efficiency help to provide trade goods and services
on time and at low cost. The World Bank's 2007th Global Logistics Report ranks India 39
amongst 150 countries in terms of logistics performance during the year as well as its future
potential.
Indian Logistics industry has low performance than developed countries like USA, UK and
Singapore in global logistics sectors due inefficiency in logistics services and highest among
the low-income group countries. India spend in Logistics activities equivalent to 13 % of its
GDP is higher than that of developed countries. The key reason is the relatively high level of
inefficiency in the system with lower average trucking speeds, higher turnaround time at
ports and high cost of administrative delays.
3PL service provider share is less in logistics sector in India as compare to developed
countries and still at the nascent stage. Multinational companies in all industries have been
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LIMITATION OF STUDY
The study is based on the secondary data published in newspapers, books and
journals of the researchers. Sometimes data which is published by the
researchers cannot analyse fresh situation means old data and wrong data is
collected by inherent error.
The time & cost plan an important role when one goes for a particular study.
Due to the time & cost constrains the large sample was not taken. Hence extra
picture cannot be received and the finding cannot be generalized.
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BIBLIOGRAPHY
1. Vinod V. Sople (2007) Logistics Management Pearson Publication; pp
2 to 13.
2. Donald J. Bowersox & David J. Closs (2007) Logistics Management
Tata McGraw-Hill Publication; pp 3 to 20
3. Skill Gap in Indian Logistics Sector (2007) published by CII and
KPMG
4. Trade Logistics In Global Economy (2007) report by World Bank.
5. Indian Logistics Industry (2008) published by Cushman & Wakefield
Websites:
1. www.google.com
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2.
3.
4.
5.
6.
www.scribd.com
www.thehindu.com
www.financialexpress.com
www.worldbank.org.com
www.cushmanwakefield.com
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