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PROJECT REPORT ON
INDIAN LOGISTICS INDUSTRY
FOR PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT
SUBMITTED TO: Ms. Gunjeet Kaur Lect. of SVSM SUBMITTED BY: Rajnish Kumar Roll No. SVPG/07/05 PGDM – 6th Trimester
SWAMI VIVEKANAND SCHOOL OF MANAGEMENT
Ramnagar (near Banur), Patiala
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INDIAN LOGISTICS INDUSTRY 2009
LOGISTICS MANAGEMENT - INTRODUCTION
Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers' requirements rather to the customers’ delight. A professional working in the field of logistics management is called a logistician. Logistics, as a business concept, evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials, and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and services where they are needed or when they are desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible. b. Origin and Definition of Logistics: The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration"). Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were
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INDIAN LOGISTICS INDUSTRY 2009 military officers with the title ‘Logistikas’ who were responsible for financial management and distribution of supplies. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.” The American Council of Logistics Management defines logistics as“the process of planning, implementing and controlling the efficient and effective flow, and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.” c. Objective of Logistics Management: The primary objective of logistics management is to effectively and efficiently move the supply chain so as to extend the desired level of customer service at the least cost. Thus, logistics management starts with ascertaining customers’ needs till their fulfilment through product supplies. However, there are some definite objectives to be achieved through a proper logistics system. These can be described as follows: 1. Improving customer service: An important objective of all marketing efforts, including the physical distribution activities, is to improve the customer service. An efficient management of physical distribution can help in improving the level of customer service by developing an effective system of warehousing, quick and economic transportation, andmaintaining optimum level of inventory. 2. Rapid Response: Rapid response is concerned with a firm's ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory.
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they do not serve any purpose to the users. 5. Quality improvement: 4 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 3. Price stabilization: It can be achieved by regulating the flow of the products to the market through a judicious use of available transport facilities and compatible warehouse operations. Also by avoiding the out-ofstock situation. by decentralizing its warehousing operations or by using economic and efficient modes of transportation. 4. Creating time and place utilities: The products are physically moved from the place of their origin to the place where they are required for consumption. and any reduction in the cost of one element may result in an increase in the cost of the other elements. 7. 6. Generating additional sales: A firm can attract additional customers by offering better services at lowest prices. the prices can be stabilized. the objective of the firm should be to reduce the total cost of distribution and not just the cost incurred on any one element. Similarly. the loss of loyal customers can be arrested. For example. Thus. a firm can achieve larger market share. warehousing and inventory maintenance. Reduce total distribution costs: The cost of physical distribution consists of various elements such as transportation. By stocking the raw material during the period of excess supply and made available during the periods of short supply. the products have to be made available at the time they are needed for consumption.
etc. little. the orders received from customers should be processed within the least possible time. and assembling all such orders for transportation. once expended. size of shipment.INDIAN LOGISTICS INDUSTRY 2009 The long-term objective of the logistical system is to seek continuous quality improvement. Logistical costs. It is desirable to achieve movement consolidation. and distance. value is added by the logistics. which have to be properly managed to bring effectiveness efficiency in the supply chain of organization. 8. Premium transportation is typically high-cost. d. cannot be reversed. recording the order. Movement consolidation: Consolidation one of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product. if any. To reduce transportation cost. filling the order. The error committed at this stage at times can prove to be very costly. This process is consist of various functions. small shipment transportation. Many Logistical systems that feature premium service depend on high-speed. Logistics Management Function Logistics is the process of movement of goods across the supply chain of the company. Order processing: The starting point of physical distribution activities is the processing of customers’ orders. Order processing activity consist of the following ➢ Order checking in any deviations in agreed or negotiation terms 5 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . In order to provide quicker customer service. Total quality management (TQM) has become a major commitment throughout all facets of industry. Order processing includes receiving the order. The major logistical function are shown in figure 1. the company and the customers benefit when these steps are carried out quickly and accurately. If a product becomes defective or if service promises are not kept.
payment and delivery terms ➢ Checking the availability in of the material stocks ➢ Production and material scheduling for storage ➢ Acknowledge the order. Major decision in warehousing is as follow: ➢ Location of warehousing facility ➢ Number of warehousing ➢ Size of warehouse ➢ Design of the building ➢ Ownership of the warehouse 3. therefore. that the new concept of Just-in-TimeInventory decision is increasingly becoming popular with a number of companies. provide storage facility to store them. No wonder. Warehousing: Warehousing refers to the storing and assorting products in order to create time utility. consolidate them with other similar products. steel and automobiles). Thus. indicating deviation 2. The basic purpose of the warehousing activity is to arrange placement of goods. Generally.INDIAN LOGISTICS INDUSTRY 2009 ➢ Prices . A correct 6 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . larger the number of warehouses a firm has the lesser would be the time taken in serving customers at different locations. the firm has to strike a balance between the cost of warehousing and the level of customer service. 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. divide them into smaller quantities and build up assortment of products.. but greater would be the cost of warehousing.g. The decision regarding level of inventory involves estimate of demand for the product.
it is difficult to correctly assess the cost of 7 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . The cost inventory consists of holding cost (such as cost of warehousing. tied up capital and obsolescence) and replenishment cost (including the manufacturing cost). information about the availability of various modes of transport. information with respect to space utilization. About warehousing. dependable and equitable in terms of costs and benefits of the facilities and service provided. Transportation: Transportation seeks to move goods from points of production and sale to points of consumption in the quantities required at times needed and at a reasonable cost. work schedules. an efficient management information system would be of immense use in controlling costs. Degree of accuracy of the sales forecasts. their costs. For example. In order to receive all the information stated above. ability of the system to transmit inventory needs to the factory and get the products in the market. The transportation system adds time and place utilities to the goods handled and thus.e. transportation and warehousing. 4. increases their economic value.. The major factors determining the inventory levels are: The firm’s policy regarding the customer service level. in respect on inventory. regular. information about present stock position at each location. future commitment and replenishment capabilities are constantly required. improving services and determining the overall effectiveness of distribution. 5. To achieve these goals. is required. Of course. unit load performance. etc. 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. services and suitability for a particular product is needed. Similarly.. Information: The physical distribution managers continuously need up-to-date information about inventory. before choosing a 16 carrier. Responsiveness of the distribution system i. transportation facilities must be adequate.INDIAN LOGISTICS INDUSTRY 2009 estimate of the demand helps to hold proper inventory level and control the inventory costs.
RELEVANCE OF LOGISTICS INTERNATIONAL MARKETING Marketing experts have recognized that for developing a position of sustainable competitive advantage. training. storage. Also included are any utility requirements. field and depot maintenance. operational. Planning must be comprehensive and include the need for new construction as well as modifications to existing facilities. 6. space requirements. It also includes studies to define and establish impacts on life cycle cost. and testing) are available concurrently with system fielding. funding requirements. Facility construction can take from 5 to 7 years from concept formulation to user occupancy. for both fixed and mobile facilities. Thus. marketing managers are 8 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . marketing and manufacturing as largely separate activities within the business.INDIAN LOGISTICS INDUSTRY 2009 physical distribution operations. they need to be unified. a major source is superior logistics performance. all of which are directed toward ensuring that all required permanent or semipermanent operating and support facilities (for instance. not just the India . In recent years. But if correct information is available it can be analyzed systematically and a great deal of saving can be ensured. with emphasis on limiting requirements of scarce or unique resources. it can be argued that instead of viewing distribution. particularly at the strategic level. numbers of companies have become aware that the market place encompasses the world. Business can only compete and survive either by winning a cost advantage or by providing superior value and benefit to the customer. Facilities: The Facilities logistics element is composed of a variety of planning activities. and security restrictions. safety and health standards requirements. facility locations and improvements. environmental impacts.As a practical matter. One might be tempted to describe such an integrated approach to strategy and planning as ‘Marketing Logistics’. duration or frequency of use.
integrating services and technologies globally. Following are the reasons behind the extension of logistics activities at global level to do business internationally. usually in the least desirable parts of cities or large towns. Modern warehouses now are being located in carefully manicured industrial parks that are sprouting as fast as the corn and wheat once did in these open spaces-often in out-of-the-way places. They focus on key objectives. differentiating themselves from the competition. the traditional warehousing and logistics facility was located by railroad tracks. • Increase in Global competition. and delivering comprehensive solutions that create value for 3PL users and their supply 9 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . The magnitudes of global business are: • Increase in the magnitude global business. state-of-the-art facilities began to sprout in more rural areas on the outskirts of transportation and population hubs. • Fall of global trade barriers. Prospects of Growth in the Industry In years gone by. Why the emphasis on such locations for logistics companies? Much of it is due to the great flux that the logistics industry has been undergoing in the first three years of the 21st century. a water port. The World started beginning to see such facilities showing up in even less "traditional" areas. designing . 3PL providers are continually looking to provide innovative supply chain solutions to customers by focusing on value-added capabilities. and implementing logistics initiatives to market effective globally.INDIAN LOGISTICS INDUSTRY 2009 finding that they need to do much work in terms of conceptualizing . instituting effective management processes. Most of these changes are being driven by a growing trend in the manufacturing and retail sectors to form partnerships with companies to which they can outsource non-core logistics competencies-3PL providers. • Business is relying on foreign countries to provide a source of raw materials and markets for finished goods. and/or freeways. In turn. such as implementing information technologies. This stereotype then faded as gigantic.
relocations. Logistics is inevitable in the future and essentially the management policy also has a significant role in the future of world. morale and momentum? To be a logistics winner in the coming years organizations need to use the downturn to reshape for growth. and Value Adding) 10 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . propelled by an unshakeable conviction that the mission is still important. Profit warnings. These are exceptionally difficult times and it has never been more important to connect logistics and freight planning to executive board thinking than now. has opened the door for logistics facilities to operate effortlessly in a myriad of locations. Generally the study is being featured with all aspects of management in Logistics and Freight areas. along with the advances in technology and enhanced communication. or faces of a cube. It’s easy to lose sight of the bigger picture in the rush to cut infrastructure cost and conserve cash. Network Design. This need to partner with customers and become more integrated into their supply chain processes has created the ancillary need to locate close to these customers. Hopefully organization succeed in protecting the business. but what about capacity and flexibility. that more prosperous times lie ahead. The corporation’s future will be dominated by six factors. That isn't to say the need for easy access to transportation hubs and different modes of transportation won't continue to be important. mergers. (Logistics include Transportation. reorganizations. Own passion for running the race matters most of all in a downturn.INDIAN LOGISTICS INDUSTRY 2009 chains. disposals. painful layoffs and great geopolitical uncertainties can sweep away even the most comprehensive logistics strategies – and that’s despite outstanding management over many years. Warehousing. spelling F U T U R E. But the above shift in business strategy. satisfying shareholders and analysts. and that in some way the company infrastructure is helping to build a better kind of world. see only savage cost savings. and loyalty is tested. when people are insecure. Cross docking. share price pressures.
INDIAN LOGISTICS INDUSTRY 2009 OBJECTIVE OF STUDY: ➢ To study the performance of Indian Logistics industry with other countries and cost associated with it. ➢ To study the impact of Logistics industry on performance of other industry ➢ To study the Logistics cost associated in different industries 11 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .
The objective of the research is to study the Indian Logistics industry growth drivers and its comparison with the other countries. Defining the problem and the research objective: The research objective states what information is needed to solve the problem. analysis and reporting of data and findings that are relevant to different marketing situations facing the company. 12 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 ➢ To study the transportation cost associated with different modes and their choice to choose mode. Market research is the systematic design. ➢ To study the role of global 3PL service providers in India ➢ To study the current scenario of Indian Logistics Industry ➢ To study economic zone development for Logistics industry RESEARCH METHODOLOGY The objective of the present study can be accomplished by conducting a systematic market research. collection. The marketing research process that is adopted in the present study consists of the following stages: a.
Analyze the collected information: This involves converting raw data into useful information. coupled with liberalisation. CII and other consultant firms.. forced both private and public firms to commit themselves to making available to their customers the right 13 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Secondary data is use to complete this project report from various source like World Bank. logistics has been becoming efficient only since the globalisation wave of the early 1990s and hence. Report research findings: This phase marks the culmination of the marketing research effort. have been pushed for competitive balance-sheets. The present study adopted the descriptive approach wherein there was a need to gather large amount of information before making a conclusion. Statistical Tools: ➢ Percentage Analysis ➢ Bar Diagrams ➢ Column Diagram d. providing consumers a better product/service and yet adding value to its investors. the next step is to prepare a plan for getting the information needed for the research. worldwide. Although quite an old concept. Developing the research plan: Once the problem is identified. d. Triggering intense competition.e. Secondary data was collected from various books and web sites.INDIAN LOGISTICS INDUSTRY 2009 b. Collection and Sources of data: Market research requires two kinds of data. It involves tabulation of data. c. globalisation. The report with the research findings is a formal written documen THE INDIAN LOGISTICS SECTOR : Wars have been won or lost on the strength of logistics capability or lack of it. primary data and secondary data. i. the businesses supported by it. using statistical measures.
has developed a Logistics Performance Index (LPI) that can serve as a benchmarking tool for measuring performance of businesses along a country’s logistics supply chain.64 2. at the right time and place at the lowest cost — be it a product or a service. Country USA UK Singapore India China Mexico LPI Score 3. The Bank study asserts that countries that are able to connect to the global logistics web would not only have access to vast new markets but also remain a part of the global trade growth.07 3. The report avers that it is not the income of nations but their undergoing trade expansion that determines their logistics efficiency. It also warns that those countries whose links with the global logistics chain are weak are bound to face large and growing costs of exclusion from international trade. in a recent survey Connecting to Compete: Trade Logistics in the Global Economy.19 3. logistics competence and tracking of shipments. it has traditionally not been accorded the attention it deserves as a separate sector in itself.INDIAN LOGISTICS INDUSTRY 2009 material of right condition. overall infrastructure quality.84 4. One of the relatively lesser known but significant sectors that support almost all industrial activity . as the survey shows that nations with increasing trade (imports and exports) to GDP emerged as the out-performers on the LPI scale relative to their income levels. The World Bank. However. India trails behind China on important indices such as customs procedures.64 14 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .the logistics sector . international shipment. not withstanding its importance and size (INR 4 trillion).is also witnessing this growth as a follow through. Healthy economic growth in India is increasingly supported by robust industrial growth. but is ahead of the latter on the domestic logistics efficiency front.85 3.
the absence of a single logistics 'champion' (whether in form of a ministry or otherwise) in the government (or industry) led to a disintegrated approach to development of the sector.S. skill development will emerge as a key capability while skill issues exist in varying degrees in all segments of logistics. At the same time. those segments where the gaps are not only wide but also widening at a relatively fast pace. India's indirect tax regime discouraged large centralized warehouses and led. India’s spend on logistics activities . to fragmentation in the warehousing sector. core issues around enabling infrastructure.equivalent to 13 percent of its GDP is higher than that of the developed nations. The required pace of efficiency and quality improvement will demand rapid development of capabilities of logistics service providers. Europe Japan Logistics Cost/GDP 13% 9.INDIAN LOGISTICS INDUSTRY 2009 The level of inefficiency in logistics activities in the country has been very high across all modes. with lower average trucking speeds. over time. With the evolving business environment creating a strong demand pull for quality and efficient logistics services. And with logistics being a service oriented sector. These inefficiencies have arisen over the years from a combination of a non-conducive policy environment. Country India U.9% 10% 11. extensive industry fragmentation and lack of good basic infrastructure.4% 15 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . The key reason for this is the relatively higher level of inefficiencies in the system. higher turnaround time at ports and high cost of administrative delays being just a few of the examples. The most severe and immediate requirement for skill development is found to be in the road freight and warehousing segments. regulatory environment and the fragmented nature of the industry are being overcome gradually.
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).and consequent limited investment and market development capability . the evolving business landscape and increasing competition across industries. At the same time. While logistics service providers are struggling to keep pace with the growth. 16 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 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. In addition. regulations around rationalization of tax structures and prevention of overloading for example are creating an environment of positive change. However. Fundamentally.INDIAN LOGISTICS INDUSTRY 2009 Extensive fragmentation meant the incapacity of industry players to develop the industry as a whole and poor support infrastructure. a fragmented industry with low average scale . logistics service users with limited or no outsourcing are finding it increasingly difficult and / or undesirable to manage this non-core activity inhouse. much of this is changing with the government now demonstrating a strong commitment towards providing an enabling infrastructure and creating conducive regulations. led to a situation where the opportunity to create value is limited. The result is a wide need gap that is seemingly widening much faster than it is being filled. Players now have the opportunity to leverage economies of scale. to provide integrated logistics solutions which are cost effective.is worst placed to serve these needs. is creating the need for more efficient and reliable logistics services than what exist today For example. ports and telecom. such as roads. complemented with better infrastructure. 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.
is likely to be a key impediment in the growth of the logistics sector in India. 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. manpower capabilities assume utmost 5 importances. 6 A look at the financials of a set of 80 logistics companies in India across sectors reveals that manpower spends comprise 8-10 percent of overall sales of the sector. and in consequence. and the action that needs to be taken to bridge the gaps. This share for the unorganized companies would expectedly be much less. The sector currently employs about 40 million people. As against this leading global logistics companies spend around 20 percent of their employee expenditure on non-salary items. SIZE OF THE LOGISTICS MARKET IN INDIA: Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size and is the backbone of Indian Economy. Only about 13 -14 percent of the overall manpower costs are spent on nonsalary. unless addressed urgently. and developing focused action plans to improve the situation. training etc. In the near 17 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . logistics being a service industry. we analyze each segment of the Logistics sector in India to identify the skill gaps that exist in each. manpower development items (welfare.INDIAN LOGISTICS INDUSTRY 2009 It is in this context that capability development of logistics service providers assumes critical importance. This underscores the need for identifying areas where such manpower and skill gaps are critical.). could impact growth in industry and manufacturing sectors as well. While rapid development across all dimensions of organizational capability will be required to achieve and sustain demand growth. In the next section. These gaps are then prioritized to identify key focus areas. This gap. This lack of focus on developing manpower and skills for the logistics sector has resulted in a significant gap in the numbers and quality of manpower in the sector. a number that will rise rapidly with exponential growth expectations in the sector. This roughly translates to about an INR 500 billion spend on logistics manpower in the country annually.
notwithstanding the temporary jolt due to the economic slowdown. which is a significantly lower proportion vis-à-vis the developed markets. pharmaceutical. Therefore. Several factors have favourably impacted the growth of the logistics industry. The future of the Indian logistics and warehousing industry is currently governed by three key factors a) BURGEONING DOMESTIC DEMAND Emergence of organised retail: 18 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . growth across major industry segments such as automobile. the development of organized Retail and Agro-processing industries. we expect strong Foreign Direct Investment inflows in the Indian markets. like the country's changing tax regime. Growth in this industry is currently being driven in India by over USD 300 billion worth of infrastructure investments. LOGISTICS ON A HIGH GROWTH TRAJECTORY The Indian logistics sector grew by 8 to 10 per cent annually between 2002 and 2007. At present. However. In addition. Outsourced Logistics accounts for only one-third of the total Logistics market in India. companies are increasingly focusing on their core competencies by outsourcing their logistics requirements to third party logistics (3PL) players.INDIAN LOGISTICS INDUSTRY 2009 future. which would lead to increased market opportunities for providers of Third-Party Logistics in India. fast moving consumer goods (FMCG) and the emergence of organised retail. along with a strong manufacturing growth. With escalating competition and cost pressures. the big ticket growth would come from the Value Added Logistics services in the near future. the phased introduction of VAT. Traditional Logistics services like Transportation and Warehousing would continue to growth at a good rate. India possesses substantial opportunities for growth in the Supply Chain & Logistics industry in the coming years.
The total retail industry in India is expected to 1 grow from US$ 320 billion in 2006 to US$ 421 billion by 2010. in turn. contract manufacturers will be required to provide integrated logistics solutions that will bolster the cost savings potential of the outsourcing initiative. India's current share in global trade is around 0. transportation. Increase in foreign trade: In 2007. b) Reducing logistics costs The logistics cost in India – which includes inventory holding. wherein every retailer relies on strong logistics and warehousing infrastructure for the success of its business. In order to remain costcompetitive. drive strong demand for logistics solutions in the country. India will emerge as one of the global 'manufactured product' outsourcing hubs and reach revenues of approximately US$ 50 billion by 2015. packaging. high-technology manufacturing activities. According to Confederation of Indian Industries (CII). The increasing trend of outsourcing will.6 per cent by 2012. the Indian economy witnessed a growth of 13 per cent in exports and 17 per cent in imports. warehousing.8 per cent and is expected to increase to 1. Organised retail in India has been growing at over 30 per cent year-on-year. losses and related administration costs – is estimated at approximately 13 per cent of GDP and is high when compared to the corresponding figures for major economies India's 19 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . This changing business environment should give further impetus to the logistics sector by generating increased demand for high-quality and efficient logistics and warehousing services. Robust growth in foreign trade will increase the demand for good quality and timely logistics and warehouse services. India becoming a manufacturing hub: The world over. retail has been a key growth driver for the logistics industry and India is no exception to this phenomenon.INDIAN LOGISTICS INDUSTRY 2009 Globally. India is being recognised as a destination for outsourcing of custom-based. The growth of organised retail has created demand for specialised logistics services.
These multiple warehouses have resulted in high inventory costs. As a result. India's core sectors are witnessing a significant change. improvement of logistics and warehousing industry can make Indian industries more cost-competitive. increased working capital and other overheads. From multiple taxes to a simplified tax regime: Union Budget 2008-09 has proposed the phasing out of Central Sales Tax (CST) 2010-11. The implementation of Value Added Tax (VAT) in 2006 has played a role in reducing logistics costs. Under the existing tax structure. a 0. 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. c) Improvement in infrastructure Transportation in India accounts for nearly 40 per cent of the total cost of production. However. companies have had to maintain small warehouses and depots in every state in order to avoid paying CST on Inter-state sales. 2 per cent Central Sales Tax (CST) is levied on inter-state sales. 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 country 20 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . thereby enabling a GDP growth of 11 to 12 per cent.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. One of the major barriers faced by the Indian logistics industry has been the lack of quality physical infrastructure. According to the Confederation of Indian Industry (CII). As per the World Bank's report on the Logistics Performance Index. from the existing 7 to 8 per cent. Once implemented.INDIAN LOGISTICS INDUSTRY 2009 multi-layered tax regime. The proposed implementation of Goods and Service Tax (GST) could lower logistics costs further. infrastructure bottlenecks and other inefficiencies have been the primary reasons in keeping logistics costs high in India.
Even the organized sector that contributes slightly more than 1% of the logistics cost.7 per cent of GDP in 2007 to 8 per cent of GDP by 2012. 21 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Competitive dynamics and other issues The following problems existing in the Indian logistics industry make it unattractive for investments and also create entry barriers. ➢ Logistics is a high-cost. is highly fragmented. Though VAT (Value Added Tax) has been implemented since April 1. It is rarely used for bulk transportation. delays in critical projects may lead to a failure of this measure to provide the much needed impetus to the growth of this sector. Air. ➢ Economies of scale are absent in the Indian logistics industry. 2005. Almost every mode of transportation in India is fraught with inefficiencies. However. is a costly mode and its use is restricted to courier shipments. have lost ground to road transportation due to limited access to smaller towns. the railways. which were a popular mode for freight transportation (especially the movement of bulk goods). low-margin business. on the other hand. Better connectivity to small towns and cities is another area planners need to work upon. Similarly. The problem of organized players is compounded by unfair competition with unorganized players. who can get away without paying taxes and following operating norms stipulated in the Motor Vehicles Act such as quality of drivers and vehicles.INDIAN LOGISTICS INDUSTRY 2009 is expected to increase its infrastructure development spend from 4. Road transportation is currently the most dominant form of transportation with more than half of the goods in the country being moved by road. For instance. Existence of the differential sales tax structure also brought in diseconomies of scale. failure in implementation of a uniform VAT structure across different states has let the problem persist even today. ports – that are vital for foreign trade—have very high turnaround times when compared with statistics for other countries. This increased spend will help boost the logistics industry. etc. volume and weight restrictions.
and institute world-class information systems for more visibility and real-time tracking of shipments. octrois. sometimes as high as 80%). they are unwilling to match the same with increased billings. are not able to match the same. are able to offer low freight rates and extend credit for long periods.000 pays USD 7. Indian freight forwarders. However. High costs of operation and delays involved in compliance with varying documentation requirements of different states make the business unattractive. ➢ There is lack of trust and awareness among Indian shippers with regard to outsourcing logistics. Fuel worth USD 2. The volume of outsourcing by Indian shippers is presently very low (~ 10%) compared to the same for the developed countries (> 50%. which include the excise duty on fuel. 22 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . even pay little attention to timely payments that leave LSPs short of adequate working capital. of sensitive organizational information. which most of the time happen to be the multi-national freight forwarders.500 per annum in the form of various taxes. perceived risk. and losing control. a vehicle on Indian roads loses 24-48 hours in complying with paperwork and formalities at different check posts en route to a destination. This is why freight cost is a major component of the cost of a product in India. on the other hand. MNCs. because of their smaller size and lack of access to cheap capital. ➢ Indian freight forwarders face stiff competition from multi-national freight forwarders for international freight movement. Indian LSPs have to pay numerous other taxes.5 billion is spent on waiting at check posts annually. and vested interests in keeping logistics activities in-house. This is sort of a non-tariff barrier imposed on Indian freight forwarders. ➢ Indian shippers expect LSPs to own quality assets. and face multiple check posts and police harassment. A vehicle that costs USD 30. clients of MNCs often want to deal with a single service provider and especially for FOB (Free on Board) shipments specify the freight forwarders. The unwillingness to outsource logistics on part of Indian shippers may be attributed to skepticism about the possible benefits. Moreover.INDIAN LOGISTICS INDUSTRY 2009 ➢ Apart from the non-uniform tax structure. provide more value-added services and act as an integrated service provider. because of their size and operations in many countries. On an average.
rather than seafreight. it has to pay more. unnecessary paperwork and delays. So. Moreover. the shipper ends up paying LTL rates for a FTL 23 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . For example. At present. Unavailability and absence of a seamless flow of information among the constituents of LSPs creates a lot of uncertainty. The service provider may still convert this LTL shipment into a FTL shipment at its own warehouse before delivering at the destination. which adds to the costs of shipments making them uncompetitive in international markets. and lack of visibility and real-time tracking ability. Therefore. when a shipper books a LTL shipment. red-tapeism and delay in government clearances. a shipper has to pay a higher freight rate if it cannot ensure return load. it has no idea about the status of its shipment after it leaves the warehouse at the origin and before it reaches the warehouse at the destination. carry 40% of the freight movement by roadways. Dubai and Colombo. Another example would be that LTL (Less than Truckload) shipments cost more than FTL (Full Truckload) shipments. multiple check posts and documentation requirements. coupled with unreliable power supply and slow banking transactions. make it difficult for exporters to meet the deadlines for their international customers. Now. and highways that constitute 1. bureaucracy. many large shipping liners avoid Indian ports for long turnaround times due to delays in loading/unloading and hence Indian exporters have to resort to transshipments at ports such as Singapore. Road transportation accounts for more than 60% of inland transportation of goods. Had the market information been available to both the shipper and the service provider.4% of the total road network. ➢ Low penetration of IT and lack of proper communications infrastructure also result in delays.INDIAN LOGISTICS INDUSTRY 2009 ➢ Poor physical and communications infrastructure is another deterrent to attracting investments in the logistics sector. there is no real time process by which a shipper may know about the availability of trucks and going rates at the destination market. Slow movement of cargo due to bad road conditions. which adds to the costs of shipments and also delays delivery. the service provider’s cost structure would have been transparent to the shipper and it would have ended paying the actual market rate. they have to book as airfreight. congestion at seaports due to inadequate infrastructure. and lack of transparency in terms of cost structures and service delivery. To expedite shipments.
they cannot provide the entire range of services. etc. there is immense potential for growth of the sector. The major opportunities are highlighted below. Had there been visibility during delivery. ➢ Since most of the LSPs are of relatively small size. distribution. ➢ Service tax levied on logistics service fees (currently 12. They started providing in-house logistics services. ➢ Large express cargo and courier companies such as Transport Corporation of India (TCI) and Blue Dart have also started logistics operations. These companies enjoy the advantage of already having a large asset base and an all-India distribution network. The inability of service providers to go beyond basic services and provide value-added services such as small repair work. packaging/labeling. order processing. customer support. shippers would like service providers to offer more value-added services and a single-stop solution to all their logistical problems. Since the organized sector accounts for merely 1% of the annual logistics cost. has not been able to motivate shippers to go for outsourcing in a big way. have started providing services to other corporates as well. FUTURE PROSPECTS Despite problems. service providers have to move beyond the level of brokers and truckers to attract and retain talent. this problem would not have occurred. However. ➢ There is lack of skilled and knowledgeable manpower in the logistics sector. To improve the status of the industry. Management graduates do not consider logistics as a prime job.INDIAN LOGISTICS INDUSTRY 2009 shipment. 24 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .36% with educational cess) may make outsourcing costly and outweigh the possible benefits. Some large distributors have also forayed into the logistics business for their clients. and soon sensing the growth of the market. kitting/dekitting. ➢ Many large Indian corporates such as Tata and Reliance Industries have been attracted by the potential of this sector and have established logistics divisions. The Indian logistics industry is growing at 20% vis-à-vis the average world logistics industry growth of 10%.
the biggest logistics company in the world. mainly involved in freight forwarding. and the need for building everything from scratch can thus be avoided. they have tie-ups with Indian companies.INDIAN LOGISTICS INDUSTRY 2009 ➢ Since logistics service can be provided without assets. Almost all large global logistics companies have their presence in India. It is expected that infrastructure development would boost investments in the logistics sector. ➢ In India. DHL Danzas. ➢ The Indian government has focused on infrastructure development. They are now realizing that customer service and delivery performance are equally important as cost to remain competitive in this global economy. east-west and north-south corridors (connecting four major metros). has taken over Blue Dart. Free Trade and Warehousing Zones (FTWZ) in line with Special Economic Zones (SEZ) with 100% Foreign Direct Investment (FDI) limit and publicprivate partnerships (PPP) in infrastructure development. until recently. Examples include the golden quadrilateral project. MODES OF TRANSPORTATION & WAREHOUSING: 25 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . ➢ Indian shippers are gradually becoming more aware of the benefits of logistics outsourcing. The latter may be the preferred route of investment since the target company is readily acquired with its asset base and distribution network. 100% FDI is allowed in logistics whereas in China. For domestic transportation and warehousing. As the Indian logistics scenario looks promising. As an example. probably forming wholly-owned subsidiaries or taking the acquisition route. these MNCs are expected to play a bigger role. which implies more outputs and more demand for specialized logistics services. foreign investment was not allowed in domestic logistics. ➢ The Indian economy is growing at over 9% for the last couple of years (compared to the world GDP growth rate of 3%). there is growing interest among entrepreneurs to venture into this business. The benefits for the acquired company include the patronage of an MNC and access to the MNC’s global network.
Taking a level-wise view of the skill issues. skill issues are widespread across the board with the situation being most severe at the operational level 26 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . low pay scales relative to alternate careers. have been minimal historically. As a result. For example. investments that pay off in the longer term.direct and immediate impact on the top line / bottom line of the business being the key decision criterion. such as those in manpower development. there exist gaps in core technical skills of the existing set of personnel. these businesses are typically tightly controlled by the proprietor and his / her family and as such. Manpower spends amount to only about 4 percent of sales as against the overall sector average of 8-10 percent. The industry has traditionally been extremely fragmented .INDIAN LOGISTICS INDUSTRY 2009 ROAD : The road freight industry in India is worth about INR 1. it is seen that in the road sector. Also. the backbone of the trucking industry truck drivers lack knowledge of good driving practices and areas associated with driving like understanding of VAT. Given their small scale and limited investment capability. most of their investments have been focused on short term gains . The result has been that in the current scenario. poor or non-existent manpower policies and prevalence of unscrupulous practices have added to the segment's woes creating the image of a segment that holds few attractions for those seeking employment. proper handling practices etc.42 trillion and is growing at about 6-8 percent year on year (refer figure 6). the government has also not focused sufficiently on the same. While industry players have been incapable of investing in manpower development.almost 75 percent of the trucking 'companies' are single truck operators and almost 90 percent of trucking companies have a turnover of less than INR 10 million A majority of players in this industry have been small entrepreneurs running family owned businesses. Poor working conditions. making it unattractive for professionals. There exist very few formal training institutions for driver training and practically none for operational training on associated areas like loading / unloading supervisory.
000 km of National Highways are to be upgraded to four/six lanes.INDIAN LOGISTICS INDUSTRY 2009 Advantages: ➢ Road network of 3. Manpower spends amount to about 45 percent of revenues as against the overall sector average of 8-10 percent. 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. Though the employee numbers are high (around 1. recruitment systems in the railways segment are formalized and there exists an institutionalized training infrastructure and policy. certain jobs are made redundant every year with the people on these jobs being absorbed in newer areas through training.500 km and covering around 7000 stations. non-salary expenditure comprises 36 percent of overall manpower expenditure compared to the sector average of 13-14 percent. With the government being the only employer.4 million) there are no significant skill gaps owing to this traditionally strong in-house training infrastructure.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. However. the rapid introduction of modern technology that is 27 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . With technological up gradation. Also.
therefore.500 km. With competition from road and air. To counter the emerging gaps. the Railways is facing increase in attrition levels due to gradual opening of the sector. the Railways is focusing on making its large manpower more customer friendly. this could become a gap area going forward Advantages: ➢ Spread over 81. Also. the Railways is overhauling the curriculum and infrastructure and rolling out training to the lowest levels (Grade D) to increase productivity. In the overall assessment. While the quantum of requirement at this stage would be small and the need would likely be filled by the buffer created by the Railways. the skill gaps situation in the railways segment does not seem to be alarming. The host of new players entering into the rail container services segment (15 licenses have been awarded for the same) will however require skills that hitherto were only residing with the Indian Railways. railways carries 25% of total freight movement ➢ Low transportation cost as compared to roads Disadvantages: ➢ Bulk commodities account for 90% of total freight revenues ➢ Inflexibility to reach deep interiors Key Developments: ➢ Phase 1 of dedicated freight corridor along Golden Quadrilateral to be initiated in 2008-09 Water/Port 28 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 creating gaps even in technical areas such as signalling and telecom.
the potential and opportunities for container transport and logistics companies are enormous. In addition to the above. imparting pre-sea and post sea training in various disciplines. Accentuating the situation is the inherent disadvantage to the Indian ship owners as employers arising by virtue of extra burden of income tax on Indian seafarers' income. 29 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . The Directorate General of Shipping maintains a system of inspections to ensure the quality of training.! 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. . Manpower spends amount to about 8-10 percent. ! Indian share of maritime transport services is 1 percent of world market. 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. and thereby denies the best talent to the local shipping industry.INDIAN LOGISTICS INDUSTRY 2009 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. With the nature of goods being shipped changing. 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. India is globally recognized as a very important source of mercantile manpower. Over the past few years the size and the number of vessels that are being deployed by India has increased. non-salary expenditure varies greatly between companies ranging from 320 percent of overall man power expenditure. With increasing capacity and infrastructural support. . there are about 124 training institutes in the private sector approved by the Director General of Shipping. This makes the employment on a foreign flag the first choice of any Indian seafarer.
it is growing at a fast pace. the issue here is that of quantity with an increasing number of qualified people being attracted towards working on foreign vessels as they offer better salaries and perks. the level of formalization and standardization of operations in the air freight segment is greater than in the road sector. the Indian air cargo industry is expected to double in size by the year 2010.INDIAN LOGISTICS INDUSTRY 2009 Thus. there is an increasing lack of trained manpower for pilotage functions and equipment operators 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. if one were to look at the ports side. it has traditionally been relatively more organized leading to greater regard for manpower development. The 30 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . While India accounts for meagre 3 percent of the global air cargo market. network and relationships required to be a player in this segment. while the manpower situation in terms of quality fares much better than the other segments of logistics. By virtue of the level of investments in assets. in the core shipping industry. However. as per an expert estimate. As in the case of sea freight.
interpersonal and managerial. there exist perceived gaps at the operational / front line level and are primarily to do with soft skills. this segment has traditionally been extremely fragmented.INDIAN LOGISTICS INDUSTRY 2009 market leaders typically have established internal structured training practices to train the staff employed at this level. stuffing / de-stuffing cross docking and temporary storage (including CFS and ICD) The warehousing segment is perhaps where the greatest growth potential exists. and supervisory skills. 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. Like road transportation. with tax paid on cross border (state border) sales not being fully set off against local tax liabilities. Nevertheless. rather 31 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . small scale and scattered geographically. most players resorted to setting up small warehouses across different states. As a result. A key reason for this has been India's indirect tax structure. such as relationship management.
This has led to the prevalence of small scale. warehouses are being used to serve several important functions. 32 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . repackaging . fragmented warehouses. warehouse are being used as the customer service and repair centers. centralized set-ups. ➢ Value Addition Increasingly. ➢ Stockpiling A warehouse is often used as a stockpiling location to manage demand-supply gaps over a longer term.INDIAN LOGISTICS INDUSTRY 2009 than large. ➢ Product mixing A warehouse may be used as a place where material from different factories of an organization is mixed and dispatched to common set of distributors. beyond mere storage of products ➢ Customer service Increasingly. These include MRP tagging. with corresponding inefficiencies. thus. promotion bundling. warehouses are also being used to do higher end tasks associated with production till now. This ensures quick availability of spare parts and offers low turnaround time ➢ Distribution The goods are dispatched to the dealers/distributors from the warehouse. performs functions like invoicing and order processing. This cause and effect cycle is depicted in Increasingly. quality checking etc. The warehouse.
apart from being physical storage points such as Stockpiling. 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. inventory management. As mentioned earlier. Distribution and Customer Service. while implementation of the VAT regime is expected to drive consolidation and hence larger scale warehouses. while the overall sector growth may be estimated to be around the GDP growth rate of 8-9 percent. These developments would drive the need for specialized warehousing skills like picking and packing. pallet trucks etc. However. Figure outlines the several additional functions that warehouses perform today. A majority of players in this industry are small / medium entrepreneurs running the warehouse as a CFA for one or more companies.INDIAN LOGISTICS INDUSTRY 2009 While no organized players have evolved in this segment. the scale of these warehouses was never large enough to tap scale economies or justify investments in higher standards. These functions require different skill sets and hence. proper handling practices including usage of warehousing equipment like stackers. the rapid growth of organized retail is expected to drive sophistication and efficiency in warehousing practices. several trends are driving the need for a more professional and organized approach to warehousing. the organized portion of this market is estimated to be growing at over 20 percent. Product Mixing. going forward. and ability to understand and use warehouse management systems (WMS) 33 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .2 trillion in 2006. Value addition.
commodity derivatives markets have proved to be extremely beneficial to farmers. a national-level end-to-end solutions provider in warehousing. 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. markets closer to the producers. farmers would have to make distress sales. And this has attracted investors and participants from various backgrounds. hence. The development of logistics by creating good warehouse infrastructure would surely go a long 34 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Creation and development of warehouses followed the emergence of these markets or exchanges. While growers can store (hold back) their produce in NBHC-monitored warehouses in anticipation of realizing higher prices later. stuffing / destuffing etc. In the few years of its existence. at the operational level Newly developed electronic commodity markets. grading and inspection. they can avail of loans against warehouse receipts (WRs).INDIAN LOGISTICS INDUSTRY 2009 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). (MCX) have played an instrumental role in the logistics. pest management and collateral management of commodities. being used more for transhipment than storage per se. during the pre-futures era. such as Multi Commodity Exchange of India Ltd. Earlier. require basic skills around loading / unloading. Sticking to their mandate. bulk handling. These 'warehouses'. is playing a key role in taking logistics and. MCX’s collateral management arm National Bulk Handling Corporation Ltd (NBHC). creating better linkages among the markets. when prices would slump immediately after harvest. to help them carry on with their crop operations for the next season. commodity care. with the opportunity to sell for a better price at futures markets. NBHC has built a rather strong and wide logistics network with professionally managed scientific warehouses armed with market-approved quality-testing techniques. they stand to benefit enormously. But today.
but also about exploring and revamping other areas by way of diverting energy. 35 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . costs and time that were otherwise wasted in a weak logistics system. the lesson for private investors is that it is not just about creating efficient business to thrive in the logistics sector. Such infrastructure is expected to get a fillip with the recent passage of the Warehousing (Regulatory & Development) Bill and its effective implementation. Very importantly.INDIAN LOGISTICS INDUSTRY 2009 way in lifting farmers’ incomes. Both public and private enterprises’ participation in equal measures is required for developing logistics and improving supply chain management.
36 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 GLOBAL LOGISTICS SCENARIO: In a move to cut down costs. transportation industry is stretching its reach longer than ever before. producers are exploring around the globe in search for the lowest cost exporters/suppliers. Web-based sales. services and supplies are emerging vertically. The rest of the plants are gaining the developing rhythm. And acceleration in manufacturing capacity is driving many producers to shutter superfluous plants. This result in outbound logistics. Lured towards developing countries in south-east Asian region for lower-wages. but must export overseas now to sustain their positions in the market. Global transportation and relevant services includes much complex documentation than for domestic shipments. Boom in the Internet based services made overseas suppliers capable to match foot with local suppliers. The expanding reach has compelled logistic industry to spur cross-border trade. Evaluation of the arrival times of international shipments is just a magic than solid fact. it is commonplace also for expert managers of local logistics to get acquainted with the complexity of international trade logistics. It almost includes longer delivery times. Major players are focusing overseas markets for outsourcing cheap manufacturing as well as expanding their businesses. Regardless-of this outbreak of activity.
which are operational in dozens of regions. vendors can cater massive numbers of global shipments. 37 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . which is necessary in continuous tracking of both international logistics network. They opt to establish their operations in each country and let them to manage logistics individually. The boom in Internet services changed international logistics rapidly. which would certainly result in big loss. Materials managers have had modest choice. the pieces of the puzzle are gradually coming together. thus it aspires enhanced build to order model and lot-size-of-one shipments. However vendors are now offering tracking system. a ship that started its journey from Asia could meet harsh weather. it is really hard to assume reaching time. Normally. Factually. so they had get around by adding more safety stocks. the shipping personals would decide for carriers. On the other hand. which may delay its reaching on the West Coast for three days. ports. Complying with this. Logistics industry has usually been old-fashioned traditions. and so on are likely counted for moving a shipment. The uncertainty of delivery time is due to not tapping of international shipments closely and step by. which cover country-specific laws and regulations. These kind of unpredictable losses are usual in international logistics. Although there is much to be done to achieve this stage. Usually. For example. their search doesn’t go beyond the initial service providers who cover all the minimum requirements. Once the shipment kicks-off its journey towards its destination. thousands of combinations of containers. which results more pressure on logistics industry.step.INDIAN LOGISTICS INDUSTRY 2009 The business players always look for just-in-time shipments. they create and uphold substantial databases. At present. Thus. and electronic visibility in each yard and carrier. customs agents and so on. the costs of inventory management in the overseas parts are naturally higher. Thus. which offers both lower freight bills and cutting of delivery times. even the largest multi-national companies avoided logistic services on a worldwide basis. A biggest disadvantage in international logistics is the vagueness in arrival times. the trucks at the West Coast would have to wait and sat empty and ideal for the three days. This is easier said than done. International logistics vendors also maintains cost and route information on hundreds of hundreds carriers.
For any country.INDIAN LOGISTICS INDUSTRY 2009 Even though vendors are offering a worldwide network. Maintaining the clear vision also needs tracking the containers as soon as they leave the yard. In 2003 and 2004. Ryder. and others will carry on showing the way. Size of the global logistics industry Currently the annual logistics cost of the world is about USD 3. As a result. there is still 38 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . the industry does not provide step-by-step tracking of container. considering the fact that the logistics market in the US is about 10% of its annual logistics cost (Foster and Armstrong. An important trend among logistics services providers would aid the industry. use of these systems are not usual at present. Inc. Though most of the large LSPs are headquartered in Europe. In 2004. tracking completed products needs a yard management system. Web-based companies and technically ground-breaking carriers such as UPS Logistics. Global logistics in near future should be distant more faultless and reasonably priced than ever. the annual logistics cost varies between 9% and 20% of the GDP. it grew to USD 89 billion. the corresponding figures were USD270 billion and USD 333 billion. US-based Armstrong & Associates. it was about USD 80 billion. whose place is detected by antennas located in the yard. 2005. in particular. This tracking is possible by Global Positioning (GPS) systems and satellites. however. it registered an impressive growth rate of 16% to cross the USD 100 billion mark for the first time and reach USD 103. 2006). However. the figure for the US being about 9%. USD 25 billion and USD 56 billion. Logistics industry veterans unveil that logistics service providers are extending reach worldwide and expanding their services too. significantly added and dedicated. registering high growth rates.5 trillion. 2006). equipment is still required. global logistics should obviously improve. According to the firm. the US logistics market is the largest in the world capturing one-third of the world logistics market.7 billion (Foster and Armstrong. and in 2005. tracks the issues and trends in the world logistics market and in the US logistics market. in their annual surveys of top 25 global LSPs. For example. respectively. which recognizes each container in the yard and its placement. the global logistics market sizes in 1992. The radio frequency Identification (RFID) tags in containers. In 2003. Regardless of understandable limitation. 2004. 1996 and 2000 were USD 10 billion.
2006. acquisitions and alliances.INDIAN LOGISTICS INDUSTRY 2009 immense potential for growth of 3PL in the US in particular. the world logistics market is going through a consolidation phase. Current status and dynamics of the industry The extant literature on the logistics industry points to a number of issues that service providers have to address. demand for customized solutions and more value-added services. and industry verticals and geographic areas served. and in the world in general. Service providers complain that clients expect them to have the latest software. databases and ERP (Enterprise Resource Planning) packages. in November. 2005 while A. 2004. integration of two different cultures was one of the most difficult challenges faced by these firms in the consolidation process. and Deutsche Post World Net. mergers and acquisitions have their own set of problems in terms of integration of two diverse business units. service providers have to differentiate themselves from their competitors in terms of offering value39 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Tibbett & Britten Group of North America was acquired by Exel Logistics in August. took over Exel in December. 2006. Bax Global was taken over by Deutsche Bahn. pressure from clients to broaden the range of service offerings and internationalize operations. However. Carbone and Stone (2005) tracked the evolution of 20 leading European LSPs between 1998 and 2004 in terms ofbtheir approach to mergers. parent company of DHL. P. P. and often do not want to match the same with increased payments for these additional services. Recent trends in the logistics industry indicate that to be successful. parent company of Schenker. in November. high costs of operations and low returns on investments. and invest in new technologies such as RFID and satellite-based real-time tracking systems. and TNT Logistics was sold to Apollo Management L. Pressure from clients to broaden the range of service offerings and internationalize operations. 2005. mergers and acquisitions that help fill the gaps in service offerings. Currently. besides infrastructural bottlenecks and government regulations. achieve economies of scale and enhance service providers’ capability to support international operations. Möller acquired P&O Nedlloyd in February. Clients perceive that these investments are part of the basic service package. and found that although growth led to more coverage. such as pricing pressures. has forced service providers to look for suitable alliances. hiring and retaining talent.
1 40 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 added services. Through its domain of logistics services. In 1979. and sell logistics services to clients’ suppliers and customers. freight and parcels. The company offers time and day definite delivery in about 200 nations across the world.000 road vehicles and has a network of 2. the company has delivered world class service in India. It operates 47 jet freighter aircraft and 26. A few years back the value of the India logistics market was is $14 billion and will grow at a rate of 7-8 per cent.the company introduced the first ever courier service by forming an alliance with DHL World Wide Express. AFL : One among the acknowledged leaders among the logistics companies in India is AFL.300 companies. The company ensures safe and on time delivery of your documents. Courier Company and Custom Consultant. LIST OF TOP LOGISTICS COMPANIES OF INDIA: TNT Express: This company is a key leader in the international market in the sector of global express services. focus on key customer accounts that have the potential to generate high profitability for a long term. air freight and international express. The company offers services like Logistics and warehousing. The logistics companies in India cater to millions of retailers and meet the requirements of about a billion people. Logistics Companies of India The land which opens up wide array of opportunities for the logistics service providers across the world is India. enter into suitable alliances to complement the range of services offered and geographic areas served. thus leading to complete supply chain integration. The high demand for the logistics services is due to the significant growth of economy. The company ranks No. DHL : This company is one among the major logistics companies in India. It is a market leader globally in overland transport. The list below gives the name of the best logistics companies in India.
INDIAN LOGISTICS INDUSTRY 2009 in the world in contract logistics and ocean freight. The biggest logistics and express network in the world has a network in about 220 territories and countries,72,000 vehicles,350 Aircrafts,36 hubs and 4,700 bases. Blue Dart : This logistics company is South Asia's top integrated express package Distribution and Courier Company. The domestic network of the company covers about 21,340 locations and provides service to 220 countries by the company's sales alliance with DHL. It provides the best service like Free Pick up from Your location, Regulatory Clearances, Real Time Tracking, Free Computerized Proof of Delivery etc.
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. Agarwal Packers and Movers: This popular Indian logistics company provides logistic services like the home shifting, car packing etc. across India. The company believes in keeping technology and people and of
41 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING
INDIAN LOGISTICS INDUSTRY 2009 course heart and soul in the movement of the individuals respective items. The company offers quality service in transportation and packing. DTDC : The biggest Domestic Delivery Network Company is DTDC. The company offers high class delivery service in about 3700 Indian locations and 240 international places. The company dispatches about 10 million parcels in a month. It also offers low cost for bigger parcels to US, UK, India, Nepal, Dubai and other places across the world. First Flight: This logistics company in India specializes in courier services worldwide. The multi-tracking programs of the company are Domestic, International, First Wheels, First Wings and many others. The overseas offices of the company are in Malaysia, Singapore, UK, US, UAE, Quatar, Oman.
THE INDIAN SITUATION:
India is being touted as the land of opportunity for logistics service providers all over the world. The demand for logistics services in India has been largely driven by the remarkable growth of the economy, projected to grow at 9-10 per cent in next few years. The Indian logistics market, valued at $14 billion a couple of years ago, is expected to grow at a CAGR (compounded annual growth rate) of 7-8 per cent. It is felt that the growth will continue, and might even scale newer heights, as the economy is experiencing a retail boom with Western companies such as Metro, Wal-Mart planning to start operation in this country, and large local retailers such as Shoppers Stop, Pantaloon, RPG and Big Bazaar planning to expand their operations in smaller cities. 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.
42 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING
INDIAN LOGISTICS INDUSTRY 2009
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.
Comparison of Indian Logistics industry with other countries: USA LPI Score LPI Rank Logistics contribution From GDP Share of 3PL in overall Industries
43 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING
India 3.07 39 13 % 10 %
3.85 3.84 14 9 9.9 % 10 % 57 % 30 %
a 4.02 3.64 6 21 11.4 % 12 % 80 % 15 %
packaging etc. warehousing.INDIAN LOGISTICS INDUSTRY 2009 Logistics activity by Organised sector 57 % 40 % 80 % 10 % 6% EMERGING TRENDS IN INDIAN LOGISTICS INDUSTRY Growth within the organised sector The logistics and warehousing sector in India. organised players accounted for only 6 per cent of the total US$ 100 billion Indian logistics industry However. till now. changing business dynamics and the entry of global third party logistics players (3PL) has led to the remodelling of the logistics services in 44 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . In 2007. A large number of players have been providing services in individual segments like transportation. has been highly fragmented and characterised by the presence of numerous unorganised players.
INDIAN LOGISTICS INDUSTRY 2009 India. CH Robinson and Kerry logistics – have also forayed into the Indian market in order to capitalise on the vast emerging opportunities within this industry. Entry and expansion plans of logistics firms • • • • • • DHL and India-based the Lemuir Group entered into a 76: 24 joint venture – DHL Lemuir Logistics Private Ltd. Besides expansion of distribution network by both national and regional players. The Future Group plans to develop 3 million square feet of warehouses by 2010. For instance. Logistics players that provided limited logistics services. The Indian conglomerates foresee huge potential for specialised logistics and warehousing facilities. thereby lowering costs and improving efficiencies. Blue Dart Express is planning to add 1 million square feet of warehousing space to develop 58 warehouses across the country by 2010. From a mere combination of transportation and storage services. Tatas and Reliance Industries Limited – into the logistics sector. National Bulk Handling Corporation plans to set up 200 warehouses across the country by 2012. Many of them are planning to develop their own logistics parks across the country. the sector is also witnessing considerable M&A (merger & acquisition) activity. The UAE-based Swift Freight has forayed into the Indian market. are also planning to broaden their areas of operation. Another trend witnessed over the last few years has been the entry of several large Indian corporate houses – such as the Bharti group. DHL acquired Blue Dart. Tata 45 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Consolidation within the industry will lead to economies of scale for the existing organised players. Global logistics companies – like Gazeley Broekmen (Wal-Mart's logistics partner). TNT acquired Speedage Express Cargo Service and Fedex bought over Pafex. Germany-based Rhenus AG and Hyderabad based Seaways Shipping Ltd have set up a joint venture – Seaways Rhenus Logistics Ltd. Companies like Bharti. logistics is fast emerging as a strategic function that involves end-to-end solutions that improve efficiencies. particularly in industries like retail.
INDIAN LOGISTICS INDUSTRY 2009 Realty & Infrastructure. Although still at a nascent stage. coupled with the rapid growth in the Indian manufacturing sector. Fuelled by the increasing trend of outsourcing. 3PL is estimated to grow at about 30 per cent annually and become a US$ 30 billion industry by 2010. As per estimates. the Indian 3PL industry is growing at a rapid pace. Emerging concept of third party logistics Third party logistics or 3PL is a concept where a single logistics service provider manages the entire logistics function for a company. the market share of organised logistics players is expected to double from 6 per cent in 2007 to approximately 12 per cent by 2015. 46 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Global sourcing activity and fierce competition amongst manufacturers to cut costs have made movement of materials rather complex. giving rise to the emergence of several third party logistics players. 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. nvestment Details/ Plan Firms Investment Details/ Plans (2007-08) (in US $ DHL TNT Gati Shreyas Shipping and Logistics mn) 250 115 200 350 The entry of large third party logistics (3PL) carriers – like Federal Express (FedEx) and 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. 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.
Some of the major players in each category are as illustrated. labelling. The organised 3PL market in India can be categorised into three major segments – public sector. Warehousing and related activities currently account for about 20 per cent of the total logistics industry. P u Public Sector Companies Transport Corporation of India Container Corporation of India Food Corporation of India Central Corporation Foreign Entrants DHL Fed Ex Blue Dart Warehouse TNT Private Sector Gati Safexpress Reliance Corporation Logistics All cargo Rapid growth of the warehousing sector The role of a warehouse has also transformed from a conventional storehouse to an inventory management set-up with a greater emphasis on value added services. warehousing. packaging. labelling. It has emerged as a critical growth driver. The end-users of 3PL services include major players from the retail. it is estimated that by 2010. packaging. private sector and foreign entrants. leading to large investments by logistics companies for the development of warehouses and logistics parks. reverse logistics etc. Warehouses now provide additional services like consolidation and breaking up of cargo. The traditional concept of establishing warehouses in the proximity of manufacturing facilities 47 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . auto components and the electronics industry. tracking of shipments etc have witnessed huge demand from the corporate sector.INDIAN LOGISTICS INDUSTRY 2009 Value added services like inventory management. bar coding. However. this proportion would increase to approximately.
48 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . connectivity to multiple markets across states and proximity to industrial clusters has led to the emergence of some tier-2 and tier-3 cities as favoured destinations for the development of logistics parks and warehouses.INDIAN LOGISTICS INDUSTRY 2009 and raw material sourcing centres is also undergoing a transformation. Majority of the upcoming logistics parks are being planned in close proximity to state capitals. By 2012. Logistics parks – One-stop shop for logistics needs The concept of a consolidated logistics centre can be traced back to the Foreign Trade Policy of 2004. An investment of approximately US$ 500 million is being planned by various logistics companies for the development of about 45 million square feet of warehouse space by 2012. Majority of these logistics parks will be developed in the proximity of established and emerging industrial hubs in the country in order to tap their logistics needs. packaging and repackaging. the organised warehousing industry in India has a capacity of approximately 80 million metric tonnes (MT) and is growing at 35 to 40 per cent per annum. container freight stations etc. redistribution. are expected to come up across India at an estimated cost of US$ 1 billion. A logistics park is a notified area that facilitates domestic and foreign trade by providing services like warehousing. spread over approximately 3. around 110 logistics parks. the need for a one-stop shop that could additionally cater to the domestic market led to the development of logistics parks as a part of the infrastructure industry in 2005-6. multimodal transport facility. availability of large land parcels at relatively low cost. cold storage. This area also acts as a place where a company can unload cargo for distribution. Currently. which led to the development of Free Trade Warehouse Zones (FTWZ). However. While FTWZ were aimed at facilitating import and export of goods.500 acres. there is an increased trend of relocating warehouses near consumer markets. Today.
This would particularly give rise to the need for technically competent manpower capable of understanding the temperature and humidity control requirements of various perishables and operating sophisticated controlled atmosphere equipment Value Added services associated with warehousing. The third party logistics (3PL) market in India is still in a relatively nascent stage While multinational companies in all industries have been predominant users of these services. While the Air Express and Courier segment is reasonably organized. starting with outsourcing their basic logistics functions. Sophistication and competition along with scale building among the industry players is expected to drive the need for deeper skills at the operational level and a broader range of skills at the middle and senior management levels in future.INDIAN LOGISTICS INDUSTRY 2009 VALUE ADDED AND EMERGING SERVICES Besides the core transportation and warehousing services. Cold chain services are likely to gain significance as organized food retail takes off. Track and trace as a technology finds limited acceptance currently but is inevitably going to become an indispensable part of transportation. the Road Express segment is relatively less developed. such as packaging. Express services by both road and air are fast growing. the business of logistics is evolving to encompass services that either enhance the effectiveness of existing transportation and warehousing services or cater to associated value chain elements. inventory management etc. Realizing 49 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . domestic majors in leading industrial sectors have also begun to follow the footsteps of their multinational counterparts. Manpower that is capable of operating and maintaining the systems would be increasingly in demand. All such services that do not directly involve transportation and warehousing have been classified as value added and emerging services. would create a corresponding demand for personnel with matching skill sets.
Gujarat and Rajasthan) has emerged as the most prominent destination for the logistics industry. on the middle and senior management levels. 50 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .INDIAN LOGISTICS INDUSTRY 2009 the significant cost reductions and several other benefits gained by these companies. Upsurge in In western India (Maharashtra. resulting in tremendous potential for 3PL market in India. approximately 30. the 3PL business being an amalgamation of all other logistics services combined. machinery and electronic goods. Tamil Nadu and Karnataka ➢ East: Orissa and West Bengal Western India (Maharashtra. INDIAN LOGISTICS INDUSTRY – A REGIONAL PERSPECTIVE Industrial clusters in India can be broadly divided into four economic zones. Himachal Pradesh. while soft skills around customer relationship management would need to be developed and enhanced on the one hand. This should lead to increased demand for logistical services in the region. We will now look at selected specific profiles in each of these segments the development of which would be critical for achieving and sustaining the projected growth. necessitates the all round development of skills in each sub sector as far as operational and front line skills are concerned. Gujarat and Rajasthan).000 acres of land has been notified for the development of nonIT/ITeS SEZs. based on the concentration of key industries like pharmaceuticals. textiles. The presence of these industries is likely to favourably impact the development of the logistics industries in these locations. auto and auto-components. As far as skills go. Delhi and Punjab ➢ West: Maharashtra Gujarat and Rajasthan ➢ South: Andhra Pradesh. breadth of management skills across various segments of logistics would also need to be developed. a large number of small to medium companies in all the industries are gearing up to use 3PL services for their logistic functions. Major states that fall in these four economic zones are: ➢ North: Haryana.
Tamil Nadu and Karnataka) is a key automobile and auto ancillary manufacturing market. 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. Himachal Pradesh. manufacturing clusters and consumer markets has brought to fore key locations that would witness increased logistics activities. the region also has major clusters of consumer goods and food processing industry. These locations can be classified as established. The presence of a booming pharmaceutical. Established hubs 51 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Delhi and Punjab) is a well-established market for organised retail. Several SEZs are expected to come up in this region. Northern India (Haryana. Over the next two to three years. including multi-product. With increased emphasis being given to stepping up trade with China. consumer goods and textile industries. infrastructure development projects like the DelhiMumbai Industrial Corridor. West Bengal (which is also the gateway to north eastern states) is strategically poised to become a major logistics hub within this zone. automobile and textile SEZs. an exploration hub.INDIAN LOGISTICS INDUSTRY 2009 Southern India (Andhra Pradesh. In addition to the Golden Quadrilateral.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). promising and nascent. LOCATION ATTRACTIVENESS ANALYSIS A detailed analysis study of the existing and developing logistics infrastructure. Several logistics parks and Free Trade Warehouse Zones are being developed in this region so that the logistics requirements of ports (for international trade) and upcoming SEZs can be met. maximum supply of retail malls in the country will come up in northern India. merging. is rich in mineral deposits and has clusters of steel. Apart from textiles. Kundli.
Mumbai has emerged as the most-favoured location for the development of logistics parks. Ahmedabad. Alwar. Infrastructural developments will make these hubs develop into attractive opportunities for logistics activities. At present. Bangalore and Ambala and have considerable prospect of being developed into logistics hubs. Major ports and existing logistical hubs – like Mumbai. High penetration of organised retail. Increase in manufacturing activities is bringing about a change in these areas and opening up opportunities for the logistics players. Promising hubs Promising hubs comprise of areas such as Jamshedpur. these hubs have moderate presence of organised retail and an absence of multiple industries. but lack the supporting infrastructure as of now. These hubs however have major infrastructure projects underway which are scheduled to be completed within the next three to five years. rail and sea port connectivity and are also witnessing significant investments in infrastructure.INDIAN LOGISTICS INDUSTRY 2009 These hubs offer excellent road. Nagpur and Indore fall under this category since these hubs have a high potential. Emerging hubs Gurgaon. involving logistics and warehousing projects. presence of industrial clusters and upcoming industrial projects and SEZs in and around these areas make these 'established' hubs all the more attractive. An investment of approximately US$200 million has been planned towards the development of seven to eight logistics parks on approximately 600 acres of land around Mumbai. Kolkata and Chennai – fall under this category. These 'emerging' logistics hubs are also characterised by high growth industries. connectivity with multiple markets and availability of large land parcels at relatively lower rates (as compared to the established hubs). Vizag. though this scenario has begun to 52 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . They have also witnessed significant land transactions in last one year.
Kochi has immense potential for growth due to the presence of an international airport and a port. textile. an important tourist destination.5%) and Japan (10.56m tones against 1. 53 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . mostly because of the growing economic activities in the country. total air cargo traffic is estimated to be over 1. The potential of these hubs is restrained by factors such as limited penetration of retail. India’s spending on logistics industry is much higher than the developed economies like the US (9.65%. RECENT TRENDS IN INDIAN LOGISTICS INDUTRY: The global logistics industry was valued at US$3.INDIAN LOGISTICS INDUSTRY 2009 change in the last two to three years. Logistics costs in India are estimated to be around 13% of the GDP.4m tones during 2005-06. AIR CARGO: Air transport sector contributes over 0. whereas US logistics industry size was around US$900 billion. registering a growth rate of 14.2% to the country’s GDP at constant prices (19992000 Prices). fall under this category.80% from 2001-02 to 2006-07. Nascent hubs Nascent hubs are marked by untapped market potential and limited infrastructure. Hubs like Kochi. These hubs are known for industries like oil and gas exploration. Transport sector’s contribution to the GDP has been firming up over the last couple of years. Domestic air cargo traffic has been growing at CAGR of 12. During 2006-07.5 trillion in 2007. 25% of the global logistics industry. whereas international air cargo traffic has been moving at CAGR of 13% during the same period. oil and information technology. which comes to around US$94 billion in 2006-07. lack of connectivity to multiple markets and the absence of multiple industries. Infrastructure in these hubs is still a challenge and needs to be enhanced in order to attract logistics players.5%). However.
Major ports in India together have handled 463. service delivery and infrastructure have to be designed very well for the Railways Logistics Parks to add value to the supply chain. growing at a CAGR of 10. The fleet strength at the end of December 2006 was 774 vessels with 8. It has the potential to streamline and optimize the supply chain and reduce the supply 8 chain costs. India’s shipping fleet strength will be increased up to 15m GRT (as per the 3rd target) by the end of 2011-12.INDIAN LOGISTICS INDUSTRY 2009 According to the Planning Commission.37%. The petroleum-oil-lubricants (POL) accounted for 33. India’s air cargo movements would grow at over CAGR of 11. container traffic 15. with an estimated investment of US$17. According to the Planning Commission. The port throughput will increase up to 1. Transport sector’s contribution to the GDP has been firming up over the last couple of years. RAIL: The plan by the Indian Railways to develop Logistics Parks [‘hubs’ in supply chain parlance] is a good one. and others 17. Ports serve as the gateways to the international trade in India.42m Gross Registered Tonnage (GRT). special chemicals and high-value pharmaceuticals. MARINE: Marine transport sector contributes over 0. coal 12. Shipping industry plays a significant role in the Indian economy. mostly because of the growing economic activities in the country.04%.517km.5% from 2007-08 to 2011-12. Riding high on export of gems and jewellery. international air cargo traffic at all Indian airports have been growing rapidly. India has 12 major and 187 minor/intermediate ports along its coastline of around 7. For the 54 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .7 billion. fertilizer 3. while iron ore constituted 17.96% from 2007-08 to 2011-12. The service concept.84%.84m tones of cargo in 2006-07.38% of the total traffic at major ports during April-March 2007.008m tones. a growth of 9.2% to the country’s GDP at constant prices (1999 2000 prices).98%.51% against the same period of the previous year.49%.
because reliability in a supply chain is a big cost saver [reduces inventory levels. is by road. 55 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Currently about 80% of the products in India move by road.The Global Manufacturing Hub: Manufacturing hubs emerge due to a process of agglomeration. To take a more recent example China. The shift from west to east is evident in industry after industry. nearly one-fourth of the world fuel demand now originates in nonJapan Asia. It makes more sense. nearly two. from a supply chain standpoint. The same is true when auto industry shifted from Detroit to Mexico across the order and Brazil. to have the hub on the highway. time-tabled parcel trains etc. One simple innovation could be to introduce time-tabled container trains. The Indian Railways would have to introduce innovative train services. compared to just one-tenth in mid-seventies.third of world fibre production comes from Asia today. Thus when textiles manufacturing shifted from the US North East to the US South. then again to South East Asia. it fits a predictable pattern. then the Logistics Park adds no value to the supply chain. either the incoming or outgoing. then to Japan. outside the city limits. at least one part of the transportation. It is essential to have a few time-tabled freight trains. a disproportionate surge of manufacturing is attracted to locations with a lower wage cost or higher market access or both. It then makes more sense for the Railways to act as a landlord and build a Mall or Hypermarket. Because of agglomeration. A Mall or Hypermarket would give much better rentals and higher returns on the land that the Railways own. Thailand and India have contributed to 36% of the vehicle production between 2001 and 2004. improves customer service] If the transportation.INDIAN LOGISTICS INDUSTRY 2009 Railways Logistics Park to add value to the supply chain. outside the octroi limits and outside any ‘No Entry’ zone. India . has to be by rail. so that customers shift to rail from road and use trains for either the incoming or outgoing from the hub. For instance. close to the city bypass. Korea and now finally to China and India. incoming and outgoing.
commodity markets. product. a manufacturing revolution has been well underway in the Indian economy. Cummins is making India its manufacturing hub for newly developed line of generator sets. manufacturers from across the world are transforming India--which has all the required skills in process. (SEZ).INDIAN LOGISTICS INDUSTRY 2009 After the IT boom. Ford is making India its manufacturing hub for engine manufacturing. Indian logistics industry is expected to grow annually at the rate of 15 to 20%. scaling up of operations by the domestic companies and expanding domestic market. FUTURE OF LOGISTICS . spurred on by the increasing presence of multinationals. Suzuki and Hyundai are making India the manufacturing and exports hub for small cars.THE INDIAN SCENARIO: India’s logistics sector attracted investments worth Rs. and capital engineering. planning to make India their global hub for host of operations has only been increasing by the day.890 cr).3 per cent in 2006-07.200 crore in first half of 2008. spanning diverse industries."Every major company has India on its radar screen. 23. all the top five telecom manufacturers have set up manufacturing facility in India. which is the fourth-largest among emerging economies. India's manufacturing base." And the number of companies. with a record 12. Samsung plans to make its manufacturing plant in Chennai its global hub. In fact. Market share of organized logistics players is also expected 56 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . is among the fastest growing and has seen more investments as a proportion of gross domestic product than any country except China. The sector has been averaging 9 per cent in the last four years (2004-08). metals and mining (Rs 8500 cr) and consumer durables (Rs 6000 cr) among others. according to a study by Assocham. reaching revenues of approximately $385 bn by 2015. real estate consultants. Consequently. According to a report by Cushman and Wakefield. Among the factors cited by analysts for the rapid growth of Indian logistics include the growth of organized retail industry. It outclassed some of the major sectors including aviation (Rs 20. growth in manufacturing and development of Special Economic Zones.
Pargana. A large number of upcoming SEZs have necessitated the development of logistics for the domestic market as well as for global trade. Demand for warehouses and logistics services are expected to accelerate further due to increase in foreign trade and the upcoming Maha Mumbai Special Economic Zone. Falta. It scores high as a logistics destination as 10 it provides excellent connectivity to large markets in southern and western India and has established clusters of textile and engineering firms. Kharagpur. logistics parks. Centers like Haldia. distribution centres and other facilities to tap the trade opportunities fuelled by revolution in the retail. almost all logistics players are in the process of setting up warehouses. as well as an important centre for the pharmaceutical industry. Dankuni.500 acres at an estimated cost of $1 bn are expected to be operational and an estimated 45 mn sq ft of warehousing space with an investment of $500 mn is expected to be developed by various logistics companies by 2012. spread across 220 acres and approximately 10 mn sq ft of warehouse space coming up by 2012. Warehouse rentals in Panvel are expected to increase by 15 to 20% over the next two years. inland container depots.INDIAN LOGISTICS INDUSTRY 2009 to double to approximately 12% during the same period. Eight logistics parks with an approximate investment of $200 mn is 600 acres of land around Mumbai. container freight stations. ports etc. and road connectivity and are witnessing significant investment in infrastructure. Ten Special Economic Zones (SEZs) in the proximity of Kolkata have received in-principal approvals. There are plans for 4 logistics parks spread across approximately 400 acres. Mumbai. The report said about 110 logistics parks spread over approximately 3. This will result in major demand for logistics in this region. Chennai and Hyderabad have become preferred locations for logistics parks. rail. Kolkata. Five logistics parks are being set up in Hyderabad. Proximity to textile and auto-component industry clusters and other manufacturing units has made Kolkata a major economic centre. 57 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . According to industry analysts. These locations are characterized by excellent port. Bantala and Durgapur are expected to witness substantial logistics activities in the near future.
India and Mexico. Mexico and China are ranked in logistics performance in global market at 9th. Singapore has high performance in global logistics as compare to other countries also gain rank 1st among all by World Bank. As the above graph shows that LPI score of USA.84 4. UK. indicates the performance of logistics in global transport and logistics hubs.07 2.64 2. Also as the performance of developed countries in logistics are high as compare to the developing nation.19 3.71 58 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 14th. Logistics performance of Index of India with other countries: Country USA UK Singapore India China Mexico LPI Score 3. USA.64 Interpretation: The Logistics Performance Index (LPI) and its indicators provide the first indepth cross-country assessment of the logistics gap among countries. 56th and 30th respectively.07 3. India is ranked 39th in the Global market show the high logistics performance than in the global market.INDIAN LOGISTICS INDUSTRY 2009 1.85 3. 2.87 2.89 2. Singapore. LPI top 10 countries of low income group : Country India Vietnam São Tomé and Principe Guinea Sudan LPI score 3. UK.71 2.
62 2.63 2. 3.50 Interpretation: This graph shows that India had performed well among all the low-income countries. This shows the among the low income countries India’s performance in global transportation and logistics hubs is better. indirect tax regime and extensive industry fragmentation. India has scored 3.52 2.INDIAN LOGISTICS INDUSTRY 2009 Mauritania Pakistan Kenya Gambia Cambodia 2. Logistics cost contributed from GDP in different countries : Country India U. non conductive policy. Europe Japan Logistics Cost/GDP 13% 9.9% 10% 11.S.07 LPI score and ranked 1st among all other low income countries. High logistics cost is due to the incomplete and under developed infrastructure.4% Interpretation: Above graph show that in India logistics cost high than developed countries and contribution in GDP is 13 %. 59 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .52 2. environment.
S.INDIAN LOGISTICS INDUSTRY 2009 4. Logistics Activity by Organized Sector: %age of Logistics activity by Country USA Japan organized sectors 57 % 80 % 60 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Share of 3PL in overall industry: Country India U. In India share of 3PL is 10 % show that in India 3PL service provider are less. 5. Europe Japan Share of 3PL in overall Logistics 10 % 57 % 30 % 80 % Interpretation: Above graph shows that in Japan share of 3PL in overall industry high as compare other developed countries is 80 %.
Europe. packaging. Metal & Mining and Consumer Durable. losses and related administration are high in India as compare to the China . 20. transportation.INDIAN LOGISTICS INDUSTRY 2009 Europe India China 40 % 6% 10 % Interpretation: The above graph shows that cost of logistics include the inventory holding. USA and Japan. Aviation sector investment is highest than the Metal & Mining and Consumer Durable.890 8500 6000 Interpretation: Above graph shows that as different sectors invest in Logistics industry there are major sectors those invest are Aviation. 6. warehousing. Major Sectors investment in Indian Logistics Industry: Sector Aviation Metal & Mining Consumer Durable Investment in Cr. 61 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .
Revenue generated from 3PL: 62 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 8. Among all these SS & Logistics invest more as compare to other three. TNT. Gati and Shreyas shipping & Logistics.INDIAN LOGISTICS INDUSTRY 2009 7. Global 3PL service providers invest in India: Investment Details/ Plans (2007-08) in $mn 250 115 200 350 Firms DHL TNT Gati Shreyas Shipping and Logistics Interpretation: Global 3PL providers investment in India by four major player are DHL.
1 % 63 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .7 % 10.3 84 9172 100 (USD Percentage growth 8% 8.2 % 9. Impact on Logistics industry on growth with the performance of other industry: Year 2002 2003 2004 2005 2006 2007 Revenue billion) 65 70.INDIAN LOGISTICS INDUSTRY 2009 Year 2005 2008 2012 E Revenue (mn USD) 890 1622 3556 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. 9.2 76.1 % 9.
10. FMCG. Maximum share in Cement industry (15%) and Steel industry (6%) sale as compare to the other industries like Food & Beverage.INDIAN LOGISTICS INDUSTRY 2009 Interpretation: The above graph shows that in Indian logistics industry the revenue is increased by 8 – 10 % annually from 2002 to 2007. 64 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .Share of Logistics cost in total sale for various industries: Name of Industry Cement Steel F&B FMCG Durable Apparel Auto Percentage share of Logistic cost in Total sale 15% 6% 5% 4% 4% 3% 3% Interpretation: Above graph shows that logistics cost contribute to sale of different industries. The maximum growth in the revenue in the year 2005 and minimum in 2003. Apparel and Auto. Consumer Durable.
INDIAN LOGISTICS INDUSTRY 2009 11.4 Sea 364 578 Air 478 667 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.9 1. 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. Transportation Growth with different modes in India (in million tonnes): Year 2002 2006 Road 1075 1560 Railway 0. 12. Road Freight in India (INR billion): Year 1995 2000 2005 Road Freight ( INR billion) 610 840 1430 65 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING .
The road freight is increased continuously with 6-8 % annually. Rail freight in India Rail Freight (million tonnes) 493 519 557 602 667 Year 2002 2003 2004 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. Sea Freight in India: 66 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 14. 13.INDIAN LOGISTICS INDUSTRY 2009 Interpretation: The graph shows that movement of goods is continuously increased due to the improvement of infrastructure and more area coverage.
This tells that the movement of the goods by sea is increased as the increase in the international market.INDIAN LOGISTICS INDUSTRY 2009 Year 2003 2004 2005 2006 Sea Freight ( million Tonnes) 422 464 519 578 Interpretation: Above graph shows that the movement of goods by the sea. Air Freight in India: Year Domestic 2002 2003 2004 2005 2006 (million tonnes) 300 340 375 480 510 International (million tonnes) 575 650 700 810 900 67 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 15.
INDIAN LOGISTICS INDUSTRY 2009 Interpretation: The above graph shows that movement of goods by air is increased continuously due it is fast and safe way.5 % of total cargo Mode of Transportation Air Sea Railway Road Interpretation: Graph shows that the preferred mode of cargo movement in India is Road as compare to the Rail. As road covers almost all the rural. Air and Sea.5 % 20 % 23 % 54. In India cargo movement by air is least among the other three modes this due to high cost involved in this mode of transportation. Due to underdeveloped infrastructure and other service to choose best mode of transportation is road. 68 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 16. Also air mode of transportation is preferred better for the international market as compare to the domestic market. Preferred mode of cargo movement: Percentage movement 2. urban and hilly area as compare to railway. Because roads are almost covers all the areas in India as compare to the other mode of transportation.
18. Growth of container volume in India (mn TEU) Container volume (mn TEU) 2.9 3. Economic Zonal attractiveness for logistics: SEZ’s Retail Warehouse Logistics Parks 30 % 50 % 10 % 10 % Zone Development Capacity South West North East 40 % 55 % 5% 0 20 % 50 % 20 % 10 % 20 % 60 % 15 % 5% 69 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . The maximum growth in the container volume in the year 2004 and 2006 as compare to other years.INDIAN LOGISTICS INDUSTRY 2009 17.5 5.4 4 4.1 Year 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.
07 and secure 39th position in the global logistics industry. 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 3rdposition for the development of the zone respectively. UK and Singapore witness that Indian Logistics industry is one of the growth drivers for Indian economy. Due to the poor infrastructure and other logistics service is not better than the developed countries like USA and Japan. and port efficiency are all critical to whether countries can trade goods and services on time and at low cost. USA and Europe. This is also one of reason of high cost in India. customs. 3PL service providers share is less in overall industry of India as compare to Japan. Here India LPI score is 3. that show that Indian Logistics sectors perform better among all the low income countries or developing countries. 3. The third party logistics (3PL) market in India is still in a relatively nascent stage. The logistics performance index shows the performance of country in the global logistics industry. Logistics cost contribution of India in GDP is 13 % which shows the high logistics cost of the Indian Logistics industry and also higher than the developed countries. FINDING 1. Also significant cost reduction and several other benefits provided by these companies. As the share of Indian Logistics Industry is more than the Mexico and less than the USA. 70 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . inland transit.INDIAN LOGISTICS INDUSTRY 2009 Interpretation: The above graph shows that zonal attractiveness in India. logistics services. 2. 4. trade-related infrastructure. While multinational companies in all industries have been predominant users of these services but the Indian companies are not. In the global logistics sector India at the top position among the all the low income group countries. information systems.
Revenue generated from 3PL providers increase the Indian economy and also the percentage growth the revenue increased continuously from 2005 to 2008. Among these sectors share of Aviation sector is higher due to increasing international business in India also cost of transportation is higher. packaging. As logistics cost share in sale of cement industry higher than other industries shows it play an important role in sale. But organized sectors are well established in Japan. Road is use maximum for the movements of goods in India due better area coverage of road as compare to the other modes of transportation and also the economic and 71 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Logistics grow with 8–10 % rate between 2002.INDIAN LOGISTICS INDUSTRY 2009 5. IT and pharmaceutical industries that shows high growth rate. USA and Europe also one of the reasons to low logistics cost. Logistics industry also improves the performance of other industries in India as these are auto. Organized sector include the cost of inventory holding. Shreyas Shipping and Logistics is investing high as compare to the DHL. 12. 8. warehousing. According to Planning Commission India this is growth continuous and it reached to $3556 million till 2012 is estimated. Major sectors investment in Indian Logistics industries are Aviation. 9. Metal & Mining and consumer durable. Different transportation modes in India also improved with the increase in the international market. 7. But maximum growth is shown by the rail and sea as compare to the road and air. Logistics cost contribute to sale indicate importance of logistics in different industries. losses and related administration which shows the high logistics cost in India due to less organized sectors.2007 implies that improvement in the supply chain of the other industries in India 10. fast and safe for overseas movement of goods. transportation. 11. Among the different modes of transportation maximum road is used most preferred mode of transportation due maximum area cover by the roads as compare to other modes of transportation. 6. Now 3PL service providers are start investment in India to reduce the logistics cost which include both domestic and international companies. TNT and Gati. Logistics cost play an important role for the growth of industry. This shows that trend of 3PL providers is increased in India.
For instance. 15. is a costly mode and its use is restricted to courier shipments. textiles. Sea freight also shows the improvement due to better movement for the overseas movement of goods and also least cost incur when shipping of goods by sea but it takes more time and less safe than the air modes. Road transportation is currently the most dominant form of transportation with more than half of the goods in the country being moved by road. 16. Almost every mode of transportation in India is fraught with inefficiencies. 14.INDIAN LOGISTICS INDUSTRY 2009 faster some time due to that road is preferred first and maximum for the movement of goods in India. 13. 17. Air mode of transportation is help in both the domestic and international movement of goods as it incur high cost but this is safe and fastest modes of transportation than the others modes. Rail freight also increase with the improvement of logistics industry in India due to less cost as compare to the other modes of transportation and also growth of the infrastructure of the railways. Air. Growth of container volume represents the increasing share of the Indian logistics industry in International market as it is grow continuously from year to years. on the other hand. have lost ground to road transportation due to limited access to smaller towns. auto. But sea and air mode shows the least percentage for the cargo movement due to less share of India in the International market as compare to the domestic. West zone is show high attractiveness due most prominent 72 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . machinery and electronic goods. the railways. which were a popular mode for freight transportation (especially the movement of bulk goods). ports – that are vital for foreign trade—have very high turnaround times when compared with statistics for other countries. Industrial cluster in India can be dividing into four economic zones based on the concentration of the key industries like pharmaceutical. Similarly. this shows the continuously improvement in roads freight in India. movement of cargo by road is maximum than other modes. Cargo movement also witnesses the choice of the transportation mode in India. It is rarely used for bulk transportation 18. Air mode of transportation is used maximum for the overseas movement as compare to the domestic therefore growth in air mode of transportation higher in international level as compare to the domestic.
CONCLUSION Indian Logistics industry is continuously improving its performance in the global logistics industry by improvement of customs. The key reason is the relatively high level of inefficiency in the system with lower average trucking speeds. information systems. and port efficiency help to provide trade goods and services on time and at low cost. India spend in Logistics activities equivalent to 13 % of its GDP is higher than that of developed countries. 3PL service provider share is less in logistics sector in India as compare to developed countries and still at the nascent stage. UK and Singapore in global logistics sectors due inefficiency in logistics services and highest among the low-income group countries. Also in India organised sector not well established as compare to developed nation this contain cost of 73 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . trade-related infrastructure. higher turnaround time at ports and high cost of administrative delays. inland transit. 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. Multinational companies in all industries have been predominant users of this service as one of reason for lesser share 3PL in India. Also upsurge in the retail sector along with the fact that has several industrial clusters of industries. logistics services. Indian Logistics industry has low performance than developed countries like USA.INDIAN LOGISTICS INDUSTRY 2009 destination for the Logistics industry.
Also logistics industry in India improves the performance of other industries year to year and share of logistics cost in sale also important which is maximum in cement sector. warehousing. In Indian logistics sector major sector investors are Aviation. general and specific . Transportation modes grow with of domestic and international market and in India road better mode of transportation because of well infrastructure of roads in India as compare to other mode like water. transportation. The laws are out mode and require comprehensive amendments. The laws are infect remnant of British Rule and provision contained therein do not meet the requirements of modern and complex international trade. ships and plane has great scope for improvement. ➢ Legal system is not in keeping with the modern outlook of life and business. It is response to free trade regime being speedily established under the compulsive auspicious of WTO in the interest of humanity. Metal & Mining and Consumer Durable. ➢ It augurs well observing development of national and selected state highways for faster movement of traffic. safe and faster way as compare to others modes. They never run on time and require national discipline. It is hoped that the implementation of the gargantuan project would be on schedule or at least without much time cost overrun. loss and related to administration is higher. Sea freight also increase better for overseas movement of goods at low cost as compare to air but consume more time as compare to air.INDIAN LOGISTICS INDUSTRY 2009 inventory holding. UPA-2 has lent first priority and 74 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . rail and sea. ➢ In this connection the UPA-1 government initiated the greatest ever emphasis on infrastructure development. Road freight in India grows with increase of domestic and international trade also large area coverage. packaging. SUGGESTIONS & RECOMMODATIONS ➢ Scheduling of service time point of arrival and departure of rails. Railway freight also increases due low freight as compare to road but cover some of area and better for long distance movement of goods. Air mode of transportation is also helps in both domestic and international movement of goods but for international movement is more as compare to the domestic due to the higher cost.
➢ At present agriculture contribute nearly 25 % to Indian economy (GDP) and also require development of warehouse sector. The official are trained as ever in manage development. taxation. Sometimes data which is published by the researchers cannot analyse fresh situation means old data and wrong data is collected by inherent error. books and journals of the researchers. Hence extra picture cannot be received and the finding cannot be generalized. ➢ Logistics development is absolutely necessary. There should be time to bound programme of simplify procedure and format.INDIAN LOGISTICS INDUSTRY 2009 invited convergence of all ministries agenda to bear upon this infrastructure subject of international standard to facilitate movement of foreign capital with promise of high profitability as the country cannot movelise resources of the required dimension. There is need to increase FDI in logistics sphere and relaxing of norms relating to entry. LIMITATION OF STUDY ➢ The study is based on the secondary data published in newspapers. import of material handling and movement of equipment etc. the MNCs shy away from doing business in India. ➢ 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. This service sector has good prospects of equipping top place in services of diverse types. time consuming and not at all business centric. In the absence of flow less and latest logistics. 75 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . ➢ The system and procedure obtaining in government department are incontinent.
Closs (2007) “Logistics Management” Tata McGraw-Hill Publication. 76 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . Vinod V. pp 2 to 13. Sople (2007) “Logistics Management” Pearson Publication. Donald J. pp 3 to 20 3. “ Indian Logistics Industry” (2008) published by Cushman & Wakefield 4.INDIAN LOGISTICS INDUSTRY 2009 BIBLIOGRAPHY 1. “ Skill Gap in Indian Logistics Sector” (2007) published by CII and KPMG “Trade Logistics In Global Economy” (2007) report by World Bank. Bowersox & David J. 5. 2.
4.com www.cushmanwakefield. 3.thehindu.com www.org. www.com www. www.com www.google. 2.com 77 | P a g e SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING . 5.com 6.scribd.financialexpress.worldbank.INDIAN LOGISTICS INDUSTRY 2009 Websites: 1.
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