Nisha Summer Project Report

Logistics & Supply chain industry in India: Current status

SUMMER PROJECT ON


A REPORT SUBMITTED TO IMED, BHARTI VIDYAPEETH UNIVERSITY, PUNE

SUBMITTED TO

SUBMITTED BY

Director, Honorable

SARANSH SINGH

Dr. Nitin Nayak IMED,BVU,PUNE

KR. KUMUD RANJAN


INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT,

BHARATI VIDYAPEETH UNIVERSITY, ERANDAWANE, PAUND ROAD, PUNE-411038(INDIA)


INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT,

BHARATI VIDYAPEETH UNIVERSITY, ERANDAWANE, PAUND ROAD, PUNE-411038(INDIA)

Logistics & Supply chain industry in India: Current status PREFACE The success of any business entirely depends on the survey done about the particular product. This survey should be effective and it is very important to do it cauti cautiou ousl sly. y.

The The topic topic give given n to me was" was" LOGISTICS & SUPPLY CHAIN

INDUSTRY IN INDIA” I have tried to put my best efforts to complete this task on the basis of skill that I have achieved during my studies in the institute.



CERTIFICATE

ASSESSING G CUSTOME CUSTOMER R Thi This s is to cert certiify that that the the proj projec ectt work ork done done on “ASSESSIN POTEN POTENTIA TIAL L AND AND PREFER PREFEREN ENCES CES FO FOR R NVOCC NVOCC IN THE THE LO LOGIS GISTIC TICS S INDUS INDUSTR TRY” Y”

submit submitted ted to Ishan Ishan Instit Institute ute of Manage Manageme ment nt & Techno Technolog logy, y, Greate Greaterr Noida Noida by Nisha Singh in partial fulfillment of the requirement for the award of degree of PG Diploma in Business Management, is a bonafide work is the original one has not been submitted anywhere else for any other degree/diploma

Name of the guide. -MR. ALOK TRIPATHI

Seal/Stamp of the guide

AddressesTVS

Date:


Logistics & Supply chain industry in India: Current status ACKNOWLEDGEMENT It gives me immense pleasure to express my deepest gratitude towards Mr.Sarwan Karwedkar and other faculty members for providing me with the

opportunity to undertake this summer training, which helped me to learn so much. I would also like to express my sincere thanks to prof. Kakde who professed me to choose the right title for my project study and whose constant guidance and support helped me to use my efforts & potential efficiently, enabled me to rectify all possible errors to present this report impressively.His constant support has been the key to my achievements on the projects. I would also forward my gratitude to Mr.John Mathew who had arranged for my summer training. My acknowledgement and gratitude to my Guide Mr.Alok Tripathi whose timwly guidance made me complete this project and further

enhance my skills and knowledge to grow as an accomplished virtuoso from a bumbling amateur in the management field. I would also thanks to Mr. and all other staff in TVS logistics who were very amicable and cooperative.

Lastly, I would also take a moment to express my heartfelt thanks to my parent and professors who gave their constant assistance propelling me to prove my best.

SARANSH SINGH MUDGAL Kr.KUMUD RAJAN



DECLERATION

The

summer

PREFERENCES

Project

on

“ASSESSING

CUSTOMER

POTENTIAL

AND

FOR NVOCC IN THE LOGISTICS INDUSTRY ” under the

guidance of Ms. Sona Handa is the original work done by me. This is the property of the Institute and use of this report without prior permission of the Institute will be considered illegal and actionable.

Date:

Signature

(Student Name)

Logistics & Supply chain industry in India: Current status EXECUTIVE SUMMARY Definition LOGISTICS IS THE ART AND SCIENCE OF MANAGEMENT, ENGINEERING AND TECHNICAL

ACTIVITIES

CONCERNED

WITH

REQUIREMENTS,

DESIGN

AND

SUPPLYING, MAINTAINING RESOURCES TO SUPPORT OBJECTIVES, PLANS AND OPERATION. Fierce competition in today’s market has forced business enterprises to invest in and focus on supply chains. The growth in telecommunication and transportation technologies has led to further growth of the supply chain. The supply chain, also known as the logistics network, consists of suppliers, manufacturing centers, warehouses, distribution centers and retail outlets, as well as raw materials, work-in-process inventory and finished products that flow between the facilities. The logistics management takes into consideration every facility that has an impact on cost. It plays an important role in making the product conform to customer requirements. Also it involves efficient integration of suppliers, manufacturers, warehouses and stores and encompasses the firms’ activities at many levels, from the strategic level through the tactical to the operational level. Logistics is a challenging and important activity because it serves as an integrating or boundary spanning function. It links suppliers with customers and it integrates functional entities across a company. With the ever-growing competition in today’s market place it becomes necessary for a firm to use its resources to focus on strategic opportunities. This includes several internal factors like management style, culture, human resources, facilities and several external factors like technology, globalization and competition. This is where the concept of logistics plays a major role, i.e. it helps to leverage certain advantages the firm has in the marketplace.

B. Role of Logistics It is important to recognize the importance of a dynamic balance between the minute details and the main elements involved in a product. The Role of Logistics

Logistics & Supply chain industry in India: Current status is to maintain that balance. Once the firm realizes the importance of logistics it is necessary that the firm make full and efficient use of logistics. The first step is to create a buyer value for the customer and a strategic value for the firm. The customer is the most important asset for a company. He drives the entire supply chain including manufacturing, marketing and logistics. Hence it is important for a firm to have a clear understanding of what the customer demands and to keep up to the customers expectations. Once a company has a clear understanding of its customer’s requirements it must device a strategy on how to use logistics to achieve it. This means that the company has to have a clear understanding or assessment of company’s strategic direction. Various steps involved in a logistics strategy development and planning process.

Visioning: this includes the systematic development of an organizational consensus regarding the key inputs to the logistics planning process as well as identification of the potential alternative logistics approaches. This is an important step for the following reasons: •

Helps to define a strategic direction to the company and also to get a clear

understanding the role of logistics in it. •

Get a clear idea of the requirements of the various segments of customers.

•

Have a look at the various factors that would affect the strategy of the

company. •

Define alternative strategies and also the scope of the planning effort.

Strategic analysis: this involves taking a look at the various components involved in the process and selecting the best logistics process among the alternatives. These components, which are to be reviewed, are revealed during he first step. This may include revamping the entire process to assessing how a single component can be used more effectively.

Planning: this involves the assembling of a plan that outlines the mission and goals for the logistics function and the programs and activities to achieve these goals. Logistics planning is an iterative process. The plans have to be redefined every year to improve the quality of performance.

Logistics & Supply chain industry in India: Current status Managing change: this involves effective management to implement enhanced ways of conducting business. The management should keeping changing the plans in accordance with the change in the market and also coach the organization to effectively embrace this change.

Logistics & Supply chain industry in India: Current status C. Current Logistics Related Issues There are several factors that affect logistics. These issues need to be anticipated, prepared for and taken advantage of for a company to be successful in today’s market. They are

External : •

•

Globalisation Technology

•

Workforce 2000

•

challenging nature of the work force

•

Environmental concerns

Internal : •

•

Customer service and quality Third party networks

•

Supply chain management

•

Changes in management and organization style

Listed below are some of the steps that could be followed to mitigate the above mentioned issues:

Performance: •

Better service for customers

•

Improved productivity

•

Assess just in time and quick response needs

System structure : •

Better relationship with vendors, customers and third parties to more

effectively manage the supply chain •

Better relationship within and across the organization

Technology integration: •

Better information systems that connect functions and organizations

Logistics & Supply chain industry in India: Current status •

Combine information and material handling systems for increased efficiency

and effectiveness Indian logistics market report provides vital insights into all facets of the Indian logistics market which is useful for manufacturers, importers, exporters and the people who are in the business of transporting cargo who require critical inputs about the logistics scenario in India. It covers most of the service providers associated with road, sea, air and railways along with inputs pertaining to the infrastructure. This report is a must have for anybody trying to understand the Indian logistics market. It will serve as an invaluable reference tool for the industry, government and academe. The report explains industry structure for different logistics - road, sea, air and rail. It also deals with intermediaries and support service providers separately. The report covers the market dynamics, cost structure, import duties and export-import processes, issues and challenges, government policies/initiatives, regulatory environment and policy related framework. Regulations include mainly guidelines for movement of hazardous goods and safety issues in transportation in all the segments. The report provides profiles of major players and information on key corporate data, business profile, financial performance, recent developments and their respective strategies. Lastly, the report gives outlook for Indian Railways; road transport providers; aviation; shipping and ports.



TABLE OF CONTENTS



TITLE PAGE



CERTIFICATE



ACKNOWLEDGEMENT



DECRERATION



EXECUTIVE SUMMARY

CHAPTER – ONE Company profile 1.

Introduction of Global logistic Solution (GLS)

2.

Area serves by GLS

3.

Clauses of Bill of lading

CHAPTER – TWO Comparison With Other Business 1.

Sea Sky

2.

GGL

3.

All Cargo Global Logistics

CHAPTER – THREE TRADE PROFILE

Logistics & Supply chain industry in India: Current status 1.

About Indian Industry, Economy & Trade

2.

About logistics

a) b)

History of logistics Evaluation of logistics

c)

Growth in logistics

d)

Logistics in India

e)

Logistics not a Chain

3.

Role of consolidator/NVOCC in international cargo business

4.

Container freighting practices

5.

Supply Chain Management

6.

About LCL load

7.

Export

8.

Evolution of container cargo

9.

Containerization

10.

Trends in containerization

11.

Processing of an Export order Preshipment

12.

Form of Export Sales Contract

CHAPTER – FOUR MARKETING STRATEGY OF THE COMPANY

1. Introduction 2. Key elements of successful market strategy 3. SWOT Analysis of the company 4. Developing market Strategy for the Company 5. Marketing Plan of the Company a.

Identifying Strength and Weakness

b.

Work Plan to Implement

c.

Clean up the Data Base

Logistics & Supply chain industry in India: Current status d.

Focus on the market

CHAPTER-FIVE MANAGEMENT HIRERACHY

CHAPTER – SIX GOVERNMENT POLICIES RELATED TO THE BUSINESS Export Import (EXIM) Policies

CHAPTER – SEVEN TAX ASPECTS 1. Sales Tax in relation to Export and Import 2. Foreign Exchange Management Bill 3. Avoidance of Double Taxation 4. Money Laundering Bill

CHAPTER – EIGHT OBJECTIVE

CHAPTER- NINE RESEARCH METHODOLOGY

CHAPTER-TEN LITARATE REVIEW

CHAPTER-ELEVAN SYNOPSIS

Logistics & Supply chain industry in India: Current status CHAPTER-TWELVE DATA ANALYSIS CHAPTER-THIRTEEN GRAPHICAL REPRESENTATION

CHAPTER-FOURTEEN SWOT ANALYSIS

Logistics & Supply chain industry in India: Current status CHAPTER-FIFTEEN LIMITATION

CHAPTER-SIXTEEN MAJOR PROBLEM

CHAPTER-SEVENTEEN FUTURE ASPECTS

CHAPTER-EIGHTEEN CONCLUSION

CHAPTER-NINETEEN BIBILOGRAPHY

CHAPTER-TWENTY WORDS OF THANKS

CHAPTER-TWENTY-ONE ANNEXURE


CHAPTER-1

Logistics & Supply chain industry in India: Current status Chapter 1 Company profile Global Logistics Solutions (I) Pvt. Ltd. Global Logistics: Bridging latitudes

The role of a Neutral NVOCC/MTO is to facilitate international trade for the Exim fraternity (through freight forwarders and CHAs) by playing a key role in the supply chain and facilitate domestic and overseas logistics both by air and SEA through services that are efficient, economical and easy to execute. In order to achieve this, Global Logistics Solutions India (GLS) was established in October 2006, by four dynamic young professionals with a burning entrepreneurial desire.

With a cumulative experience of more than 50 years behind them, a team of four professionals from a common background and a myriad of exposures, decided to come together to fulfil their entrepreneurial desire and at the same time create a company that values it’s people, who significantly contribute to the growth of a company (something the management themselves have experienced). Having travelled around the world and being exposed to businesses overseas makes it that much easier for the management to understand the domestic and international customer’s needs and provide just the perfect solutions that would benefit their businesses. Within the last six months GLS has become a name to reckon with in India and overseas for consolidation and freight forwarding activities. In its first phase of launch the company has set up four regional offices in Mumbai, Chennai, Kolkata and Delhi. In the second phase spanning a period of 18 months, the company will be opening 11 more offices in the secondary cargo centres, ports and ICDs taking the cumulative number of owned operations within India to 15. In addition to this GLS would be establishing its presence through a network of agents and franchisees in the tertiary cargo centres and take it’s presence to every corner of

Logistics & Supply chain industry in India: Current status the country, in the process become a true pan India logistics services provider with a global reach. GLS has had a very successful run overseas in terms of networking with some of the largest independent regional players. These independent entities network internally and along with GLS cross leverage the strengths to maximize synergies that translates to higher efficiencies in executing business and achieve customer satisfaction by providing cost effective world class services. This advantage has seen GLS grow from an entry level player six months ago to a major force in the consolidation and forwarding business. It offers Neutral NVOCC/MTO services to the local and multinational freight forwarding companies and Customs House Agents (CHA) across India and has been able to garner support from some of the biggest names in the business. The market has accepted GLS as a quality player and a company who can be trusted with their valuable produce and ship it globally giving it the GLS advantage. This trust helped GLS achieve it’s first milestone of 100 TEUS (twenty feet equivalent unit) of LCL consolidation boxes in Mumbai within three months of it commencement of operations. It has also establish 20 weekly direct services from Nhava Sheva and simultaneously take a lead in markets like Kolkata within three months of launch.. GLS has also established direct LCL import services from China, Hongkong and Singapore to Chennai, Nhava Sheva, Kolkata and Delhi and is able to carry LCL shipments to India from all the major sourcing points across Asia. It is in the process of starting import services from Europe and USA shortly. GLS has set very high standards to measure its performance and the management is focused on making the company have a pan India presence within two years and then expand overseas to create a global footprint. While the market watches this newest player on the block grow from strength to strength, the management is determined to make the company a leader in providing global logistics solutions. Bridging latitudes... With growing need for international logistics services and a constant evolution in the field of global transportation, GLS is committed to

Logistics & Supply chain industry in India: Current status continuously innovate itself as a comprehensive solutions provider for the international business community. Facilitating International Trade through.. •

Connections that ensure delivery commitments are lived up to.

•

Services that are, efficient, economical and easy to execute.

•

Network that covers around 2500 destinations.

•

Solutions that address special needs of your cargo

•

Technology that informs and empowers, and

•

People who make all the difference.

The Vision To emerge as a market leader in providing global logistics services, to be recognized for its values and ethical business practices, to deliver professional and personalized services to achieve highest levels of customer satisfaction.

Mission To mobilize all its resources to offer clients high quality integrated logistics solutions that adds value to the customer’s supply chain needs by bringing benefits of reduced costs and higher efficiencies through the implementation of systems and processes, innovative solutions and exceptional services from a highly motivated team of professionals.

Focus on lcl consolidation GLS

is

a

professional

international

NVOCC.

We

specialize

in

groupage/consolidation services via road, sea, air, and rail. We cater to exports from India to anywhere in the world and vice versa. GLS offers "direct" consolidation services to over 50 destinations around the world covering a ll major ports. Being one of the only neutral nvoccs/mto offering a uniform network within India, this makes GLS a ideal partner for our customers for executing their lcl shipments to and from the sub-continent.

THE 3E APPROACH

Logistics & Supply chain industry in India: Current status We benchmark our services on ease, efficiency and economy. Our simplified work procedures ensure ease in dealing. Our web based real time tracing and tracking services make it easy to monitor the progress of your consignment. Our customer focused and committed global network ensures efficiency while executing deliveries. We leverage our relationships with our business partners through global contracts to offer you competitive rates for every destination.

Ethical Relationship GLS maintains absolute Neutrality and follows ethical business practices to ensure that every intermediary's interest is protected and business is executed in strict confidentiality. Quite naturally, most Customs Brokers (CHA's), MNC's and freight forwarders consider GLS as an ideal business partner while trusting it with their valuable business, be it LCL or FCL. GLS believes in Fair Business Practices to create a win-win situation with business associates, global partners and internal customers as well. The Management is focused on creating that conducive environment which promotes ethical business practices across all its offices and in the process have an ideal environment for sound and fair business practices.

The GLS Advantage . GLS offers clients single window services for imports and exports. Our network of own offices, global network of agents and strategic partners ensure your shipments is given personal attention from departure to delivery.

GLS’s

investments into state of the art electronic tracking give you near to real time information on the progress shipments make till they are delivered safe and sound. GLS’s 3E service makes it the ideal logistics partner for all your shipping needs

Logistics & Supply chain industry in India: Current status AREA SERVE BY THE GLOBAL LOGISTIC SOLUTION

(INDIA )

PVT LTD

•

FCL

•

LCL

•

MULTIPLICITY CONSOLIDATION

•

AIR FREIGHT

•

PROJECT CARGO

3E FCL freight forwarding is just the beginning.. GLS offers competitive freight rates on premium carriers to global destinations. We add value to our freight forwarding service by offering value Added services such as: • Offering port to port services to destinations worldwide • Accepting "Door to Door" DDU/DDP moves for exports • Handling containerized over dimensional cargo • Handling cross trade business from origins around the world

GLS's extensive international network, contracts on premium carriers and competitive pricing achieved through economics of scale enables the company to offer FCL freight forwarding services that are truly unique and add value to the customers needs.

3E LCL Consolidation Services.. GLS offers regular LCL services to nearly 2500 destinations worldwide through a

host of direct services to major ports and at the same time using numerous International Hubs for distribution. Aggregation of LCL cargoes and consolidation activities being the core business of the company it is very focused about its execution. This is done through with a highly motivated team of professionals with a proven track record, a net work of

Logistics & Supply chain industry in India: Current status owned offices and franchisees in India that covers the length and breadth of the country, a established network of agents who are all majors in their respective regions giving our customers best of both worlds irrespective of which sector the business is headed. Our valuable customers comprise of some of the biggest names in Freight Forwarding in the domestic market, Multi-National Companies having global presence and conglomerates that have the most stringent business needs in the forwarding business goes to underline our commitment to being the ideal business associate for your global logistics needs.

MULTIPLICITY CONSOLIDATION GLS's

Multi-City Consolidation for export and import cargo is of great benefit to

small and medium trade centers. It facilitates transshipment of LCL cargo to and from India for delivering and sourcing globally.

EXPORT Accepting LCL cargoes from all major centers within India and Nepal, sending them in dedicated containers/CBTs to the gateway for final consolidation and distribution to ;worldwide destinations. These services empower customers to execute shipments from literally wherever they are thus empowering them with opportunities available from all the major

ports while custom clearing their LCL shipments locally.

IMPORT Offering LCL services for imports to all the major centers from the Gateway Ports in India. Currently these services cover LCL consolidation to New Delhi and Ahmedabad from Mumbai (Nhava Sheva), Bangalore and Hyderabad from Chennai. New services will be launched to cater to other major centers like Kanpur, Ludhiana, Jaipur and Moradabad in the North while the South would see

Logistics & Supply chain industry in India: Current status services to Tirupur, Selum and Coimbatore being introduced in phases. These services make it possible for importers across the length and breadth of the country to customs clear their goods locally instead of the conventional method of doing it all at the Gateway ports.

AIR FREIGHT With its global network of partners who are seasoned players in the Air Freight business and IATA affiliates. GLS is capable of offering it’s customers a very comprehensive Air freight service

to and from India. In order to retain and do justice to it’s neutral image as an NVOCC, GLS is offering services to the local freight forwarders who are either not affiliated with IATA or lack a global presence through owned offices or network partners. The ultimate objective is to focus on imports and offer the advantages of our network to the freight forwarding fraternity and provide a neutral service that enhances their productivity and control on business from the end customer. Exports are restricted to handling routed business that is not secured from sales efforts locally or poaching of controlled traffic of our customers.

PROJECT CARGO The core team of GLS is an experienced lot in handling projects, be it turnkey logistics contract executions and management to offering logistics solutions for bulk business, over dimensional cargoes and heavy lifts. Its subsidiaries and associates from whom some of the functions are outsourced have the extensive experience and have been involved in participating in some of the most prestigious logistics projects in the country.

Logistics & Supply chain industry in India: Current status Most of the network partners of GLS internationally are service providers to the infrastructure based industry, exposing them in handling small and large scale projects backed by a track record of successful completion of jobs on a turn key basis giving GLS the confidence to accept challenges globally. GLS offers all the services related to handling projects under one roof and

delivers a seamless logistics solution to the customer irrespective of the magnitude of the shipment making it the most aggressive entrant and a sound alternative to existing players in the field.

BILL OF LADING CLAUSES Carrier's Tarrif Warranty Negotiability and title to the goods Certain rights and immunities for the carrier and other persons Carrier's Responsibility Merchant's Responsibility Containers Temperature Controlled Cargo Inspection of Goods Matters affecting performance Methods and Route of Transportation Deck Cargo (and live stock) Notification and Delivery Clause Both to blame collision General Average General Average Charges Lien Variation of the Contract Partial Validity

Logistics & Supply chain industry in India: Current status 1.DEFINITIONS (a) "Carrier" means the Company stated on the front of this Bill of Lading as being the Carrier and on whose behalf this Bill of Lading has been signed. (b) "Merchant" includes the shipper, the consignee, the receiver of the Goods, the holder of this Bill of Lading, any person owning or entitled to the possession of the Goods or this Bill of Lading, any person having a present or future interest in the Goods or any person acting on behalf of any of the above mentioned persons. (c) "Goods" includes the cargo supplied by the Merchant and includes any container not supplied by or on behalf of the carrier but excludes live animals & goods carried on deck. (d) "Container" includes any container, trailer, transportable tank, lift van, flat, pallet or any similar article of transport used to consolidate goods. (e) "Carriage" means the whole of the operations and services undertaken or performed by or on behalf of the Carrier in respect of the Goods. (f) "Combined Transport" arises where the Carriage called for by this Bill of Lading is not a Port to Port Shipment. (g) "Port to Port Shipment" arises where the Place of Receipt and the Place of Delivery are not indicated on the front of this Bill of Lading or if both the Place of Receipt and the Place of Delivery indicated are ports and the Bill of Lading does not in the nomination of the Place of Receipt or the Place of Delivery on the front hereof specify any place or spot within the area of the port so nominated.

Logistics & Supply chain industry in India: Current status (h) "Hague "Hague Rules" Rules" means means the provis provision ions s of the Intern Internati ationa onall Conven Conventio tion n for Unification of certain Rules relating to Bills of Lading signed at Brussels on 25th August 1924. (i) "Hague-Visby Rules" means the Hague Rules as amended by the Protocol sign signed ed at Brus Brusse sels ls on 23rd 23rd Febr Februa uary ry 1968 1968 and and sche schedu dule led d to the the COGS COGSA, A, Singapore. (j) “COGSA” means the Carriage of Goods by Sea Act of Singapore. (k) “COGSA (USA)” means the Carriage of Goods by Sea Act of the United States of America. (l) “COGWA” means the Carriage of Goods by Water Act 1936 of Canada. (m) "Charges" includes includes freight freight and all expenses and money obligations obligations incurred and payable by the Merchant. (n) "Shipping Unit" includes freight unit and the term "unit" as used in the Hague Rules and Hague-Visby Rules. (o) "Person" includes an individual, a partnership, a body corporate or other entity. (p) "Stuffed" includes filled, consolidated, packed, loaded or secured. (q) “Authority” means a duly constituted legal body or person acting within its legal powers and exercising jurisdiction within any nation, state, municipality or port. (r) "Owner" equal to "Merchant".


2. CARRIER'S TARIFF

The provisions of the Carrier's applicable Tariff, if any, are incorporated herein. Copies of such provisions are obtainable from the Carrier or his agents upon request or where applicable from a government body with whom the Tariff has been filed. In the case of inconsistency between the Bill of Lading and the Tariff, this Bill of Lading shall prevail.

3. WARRANTY a. The Merchant warrants that in agreeing to the terms hereof he is or is the agent of and has the authority of the person owning or entitled to the possession of the Goods or any person who has a present or future interest in the Goods and is accepting these Terms & Conditions for and on behalf of all such persons. Nothing in this Bill of Lading may be varied or cancelled except by a Director of the carrier company endorsed on the Bill of Lading in writing and stamped by the company official stamp. b. The parties, in accepting this Bill of Lading, hereby unreservedly agree to the sole jurisdiction of the Singapore Courts and the applicability of Singapore Law to any dispute arising herefrom. 4. NEGOTIABILITY AND TITLE TO THE GOODS

(i) This Bill of Lading shall be non-negotiable unless made out "to order" in which event it shall be negotiable and shall constitute title to the Goods and the holder shall be entitled to receive or to transfer the Goods herein described. (ii) This Bill of Lading shall be prima facie evidence of the taking in charge by the Carrier of the Goods as herein described. However proof to the contrary shall not

Logistics & Supply chain industry in India: Current status be admissible when this Bill of Lading has been negotiated or transferred for valuable consideration to a third party acting in good faith. (iii) The Merchant accepts full liability for all Statements and particulars as to the contents, quality, quantity, weight, numbers, marks and/or value of the packages inserted herein and undertakes to indemnify and hold the carriers and all persons interested in the ship or vessel harmless from all demands, claims, liabilities, acti action ons s and and expe expens nses es arisi arising ng out out of such such Stat Statem emen ents ts and and to pay pay all all cost costs, s, expenses, losses and damages including costs of solicitors on an indemnity basis for any breach of warranty/description or resulting therefrom.

Logistics & Supply chain industry in India: Current status 5. CERTA CERTAIN IN RIGHTS RIGHTS AND AND IMMUNI IMMUNITIE TIES S FOR THE THE CARRIE CARRIER R AND AND OTHER OTHER PERSONS

(i) The Carrier shall be entitled to sub-contract on any terms the whole or any part of the Carriage and the Merchant agrees to be bound thereby on those terms. (ii) The Merchant undertakes that no claim or allegation shall be made against any person person or vessel vessel whatso whatsoeve ever, r, other other than than the Carrier, Carrier, includ including ing,, but not limited to the Carrier's servants or agents, any independent contractor and his servants or agents, and all others by whom the whole or any part of the Carriage, whethe whetherr direct directly ly or indire indirectl ctly, y, is procur procured, ed, perfor performed med or undert undertake aken, n, which which imposes or attempts to impose upon any such person or vessel any liability whatsoever in connection with the Goods of the Carriage; and if any claim or allegation should nevertheless be made, to defend, indemnify and hold harmless the Carrier against all consequences thereof. Without prejudice to the foregoing every such person and vessel shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were entered into expressly for his benefit and in entering into this contract the Carrier, to the extent of these provisions, does so not only on his own behalf but also as agent or trustee for such persons and vessels and such persons and vessels and such persons and vessels shall to this extent be or be deemed to be parties to this contract. (iii) (iii) The Merchant shall defend, indemnify indemnify and hold harmless the Carrier against any claim or liability and any and all expenses, costs or disbursements arising therefrom on a full indemnity basis arising from the Carriage of the Goods insofar as such claim or liability exceeds the Carrier's liability under this Bill of Lading, which shall apply irrespective of whether the claim lies in contract or in Tort. The Merchant specifically agrees that any judgment or award made in any jurisdiction whatsoever in so far as it exceeds the limits set out in this Bill or excluded by this Bill of Lading shall not be registrable or enforceable against the carrier. (iv) The Merchant undertakes, in addition and without prejudice to any of these conditions, that he shall in any event indemnify the Carriers against all liabilities

Logistics & Supply chain industry in India: Current status what wh atso soev ever er incl includ udin ing g but but not not limi limite ted d to pena penalt ltie ies s impo impose sed d by the the rele relevan vantt auth author orit itie ies s suff suffer ered ed dire direct ctly ly or indi indire rect ctly ly from from or in conn connec ecti tion on with with the the Merchant's instructions or their implementation or the goods and in particular the Merchant shall indemnify the carrier in respect of any liability whatsoever it may be under to any haulie haulier, r, carrie carrier, r, wareho warehouse useme men n or other other person person whatso whatsoeve everr at any time time involv involved ed with with the goods arisin arising g out of any claim claim made made direct directly ly or indire indirectl ctly y against any such party by the Merchant or by any sender, consignee or owner of the the good goods s or by any any pers person on inte intere rest sted ed in the the good goods s or any any othe otherr pers person on whatsoever. (v) (v) The The Carri Carrier er rese reserv rves es the the righ rightt at its its sole sole disc discre reti tion on at any any time time befo before re receiving or collecting or otherwise dealing with any goods or before transporting by conveyance any goods to refuse to receive or collect or convey or deal with the same or where received to return, offload, part-carry or transship the goods without assigning any reason whatsoever and without any liability whatsoever, notwithstanding whether the goods are booked or not or otherwise. (vi) In all cases of losses, damages, delay, non-delivery from whatsoever cause arising in a non-carriage by sea situation and which are not excluded by any other provisions in this Bill of Lading the Carriers liability shall be limited to and in no event whatsoever exceed S$1.00 per kilogram, unless otherwise provided by statute.

6. CARRIER'S RESPONSIBILITY (i) CLAUSE PARAMOUNT (a) Subject to clause 13 below this Bill of Lading insofar as it relates to sea carriage by any vessel whether named herein or not shall have effect subject to the Hague Rules or any legislation making such Rules or the Hague-Visby Rules compulsorily applicable (such as COGSA, COGSA(USA) or COGWA) to the Bill of

Logistics & Supply chain industry in India: Current status Lading and the provisions of the Hague Rules or applicable legislation shall be deemed incorporated herein. The Hague Rules or Hague-Visby Rules or COGSA or COGSA(USA) or COGWA if this Bill of Lading is subject to U.S. or Canadian Law respectively shall apply to the carriage of goods by inland waterways and reference to carriage by sea and such Rules shall be deemed to include reference to inland waterways. If and to the extent that the provisions of the Harter Act of the USA 1893 would otherwise be compulsorily applicable to regulate the Carrier’s responsibility for the goods during any period prior to loading on or after discharge from the vessel the Carrier’s responsibility shall instead be determined by the provisions of 6(3) below,

but if such provisions are found to be inapplicable or invalid such responsibility shall be subject to COGSA. (b) The Carrier shall be entitled to (and nothing in this Bill of Lading shall operate to deprive or limit such entitlement) the full benefit and rights to all limitations of and and excl exclus usio ion n from from liab liabil ilit ity y and and all all righ rights ts conf confer erre red d or auth author oris ised ed by any any applicable applicable law, statute or regulation regulation of any country and without without prejudice prejudice to the generality of the foregoing also any law, statute or regulation available to the Owner of the vessel(s) on which the Goods are carried. (ii) PORT TO PORT SHIPMENT The responsibility of the Carrier is limited to that part of the Carriage from and during loading onto the vessel up to and during discharge from the vessel and the Carrier shall not be liable for any loss or damage whatsoever in respect of the Goods or for any other matter arising arising during any other part of the Carriage Carriage even though Charges for the whole Carriage have been charged by the Carrier. The Merchant constitutes the Carrier as agent to enter into contracts on behalf of the Merchant with others for transport, storage, handling or any other services in respect of the Goods prior to loading and subsequent to discharge of the Goods from the vessel without responsibility for any act or omission whatsoever on the

Logistics & Supply chain industry in India: Current status part of the Carrier or others and the Carrier may as such agent enter into contracts with others on any terms whatsoever including terms less favourable than the terms in this Bill of Lading. (iii) COMBINED TRANSPORT Save as is otherwise provided in this Bill of Lading, the Carrier shall be liable for loss of or damage to the Goods occurring from the time that the Goods are taken into his charge until the time of delivery to the extent set out below. (A) Where the stage of Carriage where the loss or damage occurred cannot be proved:(i) The Carrier shall be entitled to rely upon all exclusions from liability under the Rules or legislation that would have been applied under 6(1)(a) above had the loss or damage occurred at sea or, if there was no carriage by sea, under the Hague Rules or COGSA or COGSA (USA) or COGWA if this Bill of Lading is subject to US, or Canadian law respectively. (ii) Where under (i) above, the Carrier is not liable in respect of some of the factors causing the loss or damage, he shall only be liable to the extent that those factors for which he is liable have contributed to the loss or damage. (iii) Subject to 6(C)(iii) below, where the Hague Rules or any legislation applying such Rules or the Hague-Visby rules (such as COGSA or COGWA) is not compulsorily applicable, the Carrier’s liability shall not exceed S$1.00 per kilo of the gross weight of the Goods lost, damaged or in respect of which the claim arises or the value of such Goods, whichever is the lesser. (iv) The value of the Goods shall be determined according to the commodity exchange price at the place and time of delivery to the Merchant or at the place and time when they should have been so delivered or if there is no such price according to the current market price by reference to the normal value of Goods of the same kind and quality, at such place and time, always provided that the onus of proving such current market price shall be on the claimant failing which the carriers valuation shall be valid absolutely for all purposes. (B) Where the stage of Carriage where the loss or damage occurred can be proved:

Logistics & Supply chain industry in India: Current status (i) the liability of the Carrier shall be determined by the provisions contained in any international convention or national law of the country which provisions: (a) cannot be departed from by private contract to the detriment of the Merchant; and (b) would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage of Carriage where the loss or damage occurred and had received as evidence thereof any particular document which must be issued in order to make such international convention or national law applicable; (ii) with respect to the transportation in the United States of America or in Canada to the Port of Loading or from the Port of Discharge, the responsibility of the Carrier shall be limited to procure transportation by carriers (one or more) and such transportation shall be subject to the inland carriers’ contracts of carriage and tariffs and any law compulsorily applicable. The Carrier guarantees the fulfillment of such inland carriers’ obligations under their contracts and tariffs. (iii) Where neither (i) or (ii) above apply, any liability of the Carrier shall be determined by 6(iii)(A) above. (C) GENERAL PROVISIONS (i) Delay and/or Consequential Loss Save as otherwise provided herein, the Carrier shall in no circumstances be liable for direct, indirect or consequential loss or damage caused by delay or any other cause whatsoever and howsoever caused.Without prejudice to the foregoing, if the Carrier is found liable for delay, and where such delay is not excluded elsewhere in these provisions, liability shall be limited to the freight applicable to the relevant stage of the transport. (ii) Insofar as the duties under this Bill of Lading relates to situations other than sea carriage, including but not limited to, pre-shipment or post-shipment, trucking, warehousing, storage, packing, labeling, stuffing/unstuffing, domestic or local trucking, clearance, customs, documentation, delivery, collection etc it is mutually hereby agreed that in any event whatsoever and whether the action is

Logistics & Supply chain industry in India: Current status in contract or in tort, the carrier's liability shall be limited to S$1.00 per kilogram only. Carrier’s liability as spelt out hereunder shall be without prejudice to the carriers’ rights to be paid/reimbursed for their costs of the services provided and which shall be paid in priority to any other claim. (iii) Package or Shipping Unit Limitation Where the Hague Rules or any legislation making such Rules compulsorily applicable to this Bill of Lading apply, the Carrier shall not, unless a declared value has been noted in accordance with (iii) below, be or become liable for any loss or damage to or in connection with the Goods in an amount per package or shipping unit in excess of the package or shipping unit limitation as laid down by such Rules or legislation. If no limitation amount is applicable under such Rules or legislation, the limitation shall be S$1.00 per kilogram or S$500.00 per package or invoice value, whichever is lesser always provided, that in respect of goods of a fragile or perishable nature or special goods, these are carried solely at the Merchant's risk without any liability whatsoever of the Carriers. (iv) Ad Valorem: Declared Value of Package or Shipping Unit The Carrier's liability may be increased to a higher value by a declaration in writing of the value of the Goods by the shipper upon delivery to the Carrier of the Goods for shipment, such higher value being inserted on the front of this Bill of Lading in the space provided and, if required by the Carrier, extra freight paid. In such case, if the actual value of the Goods shall exceed such declared value, the value shall nevertheless be deemed to be the declared value and the Carrier's liability, if any, shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value. (v) Definition of Package or Shipping Unit Where a Container is used to consolidate Goods and such Container is stuffed by the Carrier, the number of packages or shipping units stated on the face of this Bill of Lading in the box provided shall be deemed the number of packages or shipping units for the purpose of any limit of liability per package or shipping unit provided in any international convention or national law relating to the carriage

Logistics & Supply chain industry in India: Current status of Goods by sea. Except as aforesaid the Container shall be considered the package or shipping unit. The words shipping unit shall mean each physical unit or piece of cargo not shipped in a package, including articles or things of any description whatsoever, except Goods shipped in bulk, and irrespective of the weight or measurement unit employed in calculating freight charges. As to Goods shipped in bulk, the limitation applicable thereto shall be the limitation provided in such convention or law which may be applicable, and in no event shall anything herein be construed to be a waiver of limitation as to Goods shipped in bulk. (vi) Rust, etc. It is agreed that superficial rust, oxidation or any like condition due to moisture, is not a condition of damage but is inherent to the nature of the Goods and acknowledgement of receipt of the Goods in apparent good order and condition is not a representation that such conditions of rust, oxidation or the like did not exist on receipt. (vii) Notice of Loss or Damage The Carrier shall be deemed prima facie to have delivered the Goods as described in this Bill of Lading unless notice of loss of or damage to the Goods indicating the general nature of such loss or damage, shall have been given in writing to the Carrier or to his representative at the place of delivery before or at the time of removal of the Goods into the custody of the person entitled to delivery thereof under this Bill of Lading or, if the loss or damage is not apparent, within three consecutive days thereafter and the parties hereby agree that failure to give notice as aforesaid shall discharge the Carrier absolutely of all liability whatsoever. (viii) Time-bar (a) The Carrier shall be discharged of all liability in so far as it relates to sea carriage unless suit is brought in the proper forum and written notice thereof received by the Carrier within twelve months after delivery of the Goods or the

Logistics & Supply chain industry in India: Current status date when the Goods should have been delivered subject always to Clause 6(C) (iii) above. (b) In all other situations not incurred or related to during sea carriage, the Carrier shall in any event be discharged of all liability unless suit is brought within 9 months of the date of the event giving rise to the claim.

7. MERCHANT'S RESPONSIBILITY (i) The description and particulars of the Goods set out on the face hereof are furnished by the Merchant and the Merchant warrants to the Carrier that the description and particulars including, but not limited to, of weight, content, measure, quantity, quality, condition, marks, numbers and value are correct. (ii) The Merchant shall comply with all applicable laws, regulations and requirements of customs, port and other authorities and shall bear and pay all duties, taxes, fines, imposts, expenses and losses incurred or suffered by reason thereof or by reason of any illegal, incorrect or insufficient marking, numbering or addressing of the Goods or any other shipper/Merchant related fault or cause. (iii) The Merchant undertakes that the Goods are packed in a manner adequate to withstand the ordinary risks of Carriage having regard to their nature and in compliance with all laws, regulations and requirements which may be applicable. (iv) No Goods which are or may become dangerous, inflammable or damaging or which are or may become liable to damage any property or person whatsoever shall be tendered to the Carrier for Carriage without the Carrier's express consent in writing and without the Container or other covering in which the Goods are to be transported and the Goods being distinctly marked on the outside so as to indicate the nature and character of any such articles and so as to comply with all applicable laws, regulations and requirements. If any such articles are delivered to the Carrier without such written consent and marking or if in the

Logistics & Supply chain industry in India: Current status opinion of the Carrier the articles are or are liable to become of a dangerous, inflammable or damaging nature, the same may at any time be destroyed, disposed of, abandoned, or rendered harmless without compensation to the Merchant and without prejudice to the Carrier's right to Charges and to an indemnity for any costs, losses, expenses or fines. (v) The Merchant shall be liable for the loss, damage, contamination, soiling, detention or demurrage before, during and after the Carriage of property (including, but not limited to Containers) of the Carrier or any person or vessel (other than the Merchant) referred to in 5(ii) above caused by the Merchant or any person acting on his behalf or for which the Merchant is otherwise responsible. (vi) The Merchant shall defend, indemnify and hold harmless the Carrier against any loss, damage, claim, liability or expense whatsoever arising from any breach of the provisions of this clause 7 or from any cause in connection with the Goods for which the Carrier is not responsible or the consequences of which the Carriers’ responsibility is excluded by these conditions.

8. CONTAINERS (i) Goods may be stuffed by the Carrier in or on Containers and Goods may be stuffed with other Goods. (ii) The terms of this Bill of Lading shall govern the responsibility of the Carrier in connection with or arising out of the supply of a Container to the Merchant, whether supplied before or after the Goods are received by the Carrier or delivered to the Merchant. (iii) If a Container has been stuffed by or on behalf of the Merchant.

Logistics & Supply chain industry in India: Current status (a) the Carrier shall not be liable for loss of or damage to the Goods in any circumstances whatsoever. (b) the Merchant shall defend, indemnify and hold harmless the Carrier against any loss, damage, claim, liability or expense whatsoever arising from the matters covered by (a) above.

(iv) Where the Carrier is instructed to provide a Container, in the absence of a written request to the contrary, the Carrier is not under an obligation to provide a Container of any particular type or quality.

9. TEMPERATURE CONTROLLED CARGO (i) The Merchant undertakes not to tender for transportation any Goods which require temperature control without previously giving written notice (and filling in the box on the front of this Bill of Lading if this Bill of Lading has been prepared by the Merchant or a person acting on his behalf) of their nature and particular temperature range to be maintained and in the case of a temperature controlled Container stuffed by or on behalf of the Merchant further undertakes that the Container has been properly pre-cooled, that the Goods have been properly stuffed into the container and that its thermostatic controls have been properly set by the Merchant before receipt of the Goods by the Carrier. If the above requirements are not complied with the Carrier shall not be liable for any loss of or damage to the Goods caused by such non-compliance. (ii) The Carrier shall not be liable for any loss of or damage to the Goods arising from defects, derangement, breakdown, stoppage of the temperature controlling machinery, plant insulation or any apparatus of the Container, provided that the Carrier shall before or at the beginning of the Carriage exercise due diligence to maintain the refrigerated Container in an efficient state.

10. INSPECTION OF GOODS

Logistics & Supply chain industry in India: Current status The Carrier or any person authorised by the Carrier shall be entitled, but under no obligation, to open any Container or package at any time and to inspect the Goods.

11. MATTERS AFFECTING PERFORMANCE (i) If at any time the Carriage is or is likely to be affected by any hindrance, risk, delay, difficulty or disadvantage of any kind (including the condition of the Goods), whensoever and howsoever arising (whether or not the Carriage has commenced) the Carrier may: (a) without notice to the Merchant abandon the Carriage of the Goods and where reasonably possible place the Goods or any part of them at the Merchant's disposal

at any place which the Carrier may deem safe and convenient, whereupon the responsibility of the Carrier in respect of such Goods shall cease; (b) without prejudice to the Carrier's right subsequently to abandon the Carriage under (a) above continue the Carriage. In any event the Carrier shall be entitled to full Charges on Goods received for Carriage and the Merchant shall pay any additional costs resulting from the above-mentioned circumstances. (ii) The liability of the Carrier in respect of the Goods shall cease on the delivery or

other

disposition

of

the

Goods

in

accordance

with

the

orders

or

recommendation given by any government or authority or any person acting or purporting to act as or on behalf of such government or authority. (iii) The Carrier does not undertake that the goods shall arrive at any place, at any particular time or for any particular market or purpose. (iv) In the event of force majeure, the contract shall remain in force, the carriers’ obligation shall however be suspended for so long as the force majeure situation lasts. A force majeure is any and all circumstances which the carriers could not reasonably prevent and the consequences of which he could not avoid.

Logistics & Supply chain industry in India: Current status 12. METHODS AND ROUTE OF TRANSPORTATION (i) The Carrier may at any time and without notice to the Merchant: use any means of transport or storage whatsoever; load or carry the Goods on any vessel whether named on the front hereof or not; transfer the Goods from one conveyance to another including transshipping or carrying the same on another vessel than that named on the front hereof or by any other means of transport whatsoever; at any place unpack and remove Goods which have been stuffed in or on a Container and forward the same in any manner whatsoever; proceed at any speed and by any route in his discretion (whether or not the nearest or most direct or customary or advertised route) and proceed to or stay at any place whatsoever once or more often and in any order; load or unload the Goods from any conveyance at any place (whether or not the place is a port named on the front hereof as the intended Port of Loading or intended Port of Discharge); comply with any orders or recommendations given by any government or authority or any person or body acting or purporting to act as or on behalf of such government or authority or having under the terms of the insurance on the conveyance employed by the Carrier the right to give orders or directions, permit the vessel to proceed with or without pilots, to tow or be towed or to be dry-docked; permit the vessel to carry livestock, Goods of all kinds, dangerous or otherwise, contraband, explosives, munitions or warlike stores and sail armed or unarmed and to do such acts as in the sole opinion of the Carrier may be necessary, expedient or incidental to the performance of the Carrier's obligations. (ii) The liberties set out in (i) above may be invoked by the Carrier at its sole discretion for any purposes whatsoever whether or not connected with the Carriage of the Goods. Anything done in accordance with (i) above or any delay arising therefrom shall be deemed to be within the contractual Carriage and shall not be a deviation of whatsoever nature or degree.

Logistics & Supply chain industry in India: Current status (iii) The Carrier shall be entitled but under no obligation to depart from the Merchant's instructions in any respect if in the sole opinion of the Carrier there is good reason to do so in the Merchant's interest and the Carrier shall not thereby incur any additional liability whatsoever. The Merchant shall pay any additional costs resulting from the abovementioned circumstances.

13. DECK CARGO AND LIVESTOCK (i) Goods of any description whether containerized or not may be stowed on or under deck at the Carrier’s sole discretion and without notice to the Merchant and such stowage shall not be a deviation of whatsoever nature or degree subject to (ii) below, such Goods whether carried on deck or under deck shall participate in General Average and such Goods (other than livestock) shall be deemed to be within the definition of Goods for the purposes of the Hague Rules or any legislation making such Rules or the Hague-Visby Rules compulsorily applicable to this Bill of Lading. (ii) Goods (not being Goods stuffed in or on Containers other than open flats or pallets) which are stated on the front of this Bill of Lading to be carried on deck and which are so carried (and livestock, whether or not carried on deck) are carried without responsibility on the part of the Carrier for loss or damage of whatsoever nature arising during carriage by sea or inland waterway whether caused by unseaworthiness or negligence or any other cause whatsoever and are carried entirely at shipper's risk.

14. DELIVERY OF GOODS If delivery of the Goods or any part thereof is not taken by the Merchant at the time and place when and where the Carrier is entitled to call upon the Merchant to take delivery thereof, the Carrier shall be entitled without notice to remove from a Container the Goods or that part thereof if stuffed in or on a Container and

Logistics & Supply chain industry in India: Current status to store the Goods or that part thereof ashore, afloat, in the open or, under cover at the sole risk and expense of the Merchant. Such storage shall constitute due delivery hereunder, and thereupon the liability of the Carrier in respect of the Goods or that part thereof shall cease.

15. BOTH-TO-BLAME COLLISION If the vessel on which the Goods are carried (the carrying vessel) comes into collision with any other vessel or object (the non-carrying vessel or object) as a result of the negligence of the non-carrying vessel or object or the owner of, charterer or person responsible for the non-carrying vessel or object, the Merchant undertakes to defend, indemnify and hold harmless the carrier against all claims by or liability to (and any expense arising therefrom) any vessel or person in respect of any loss of, or damage to, or any claim whatsoever of the Merchant paid or payable to the Merchant by the non-carrying vessel or object or the owner or charterer or person responsible for the non-carrying vessel or object and set-off, recouped or recovered by such vessel, object or person(s) against the Carrier, the carrying vessel or her owners or charterers.

16. GENERAL AVERAGE (i) The Carrier may declare General Average which shall be adjustable according to the York/Antwerp Rules of 1974 at any place at the option of the Carrier and the Amended Jason Clause as approved by BIMCO is to be considered as incorporated herein and the Merchant shall provide such security as may be required by the Carrier in this connection.

(ii) Notwithstanding (i) above, the Merchant shall defend, indemnify and hold harmless the Carrier in respect of any claim (and any expense arising therefrom) of General Average nature which may be made on the Carrier and shall provide such security as may be required by the Carrier in this connection.

Logistics & Supply chain industry in India: Current status (iii) The Carrier shall be under no obligation to take any steps whatsoever to collect security for General Average contributions due to or by the Merchant.

17. CHARGES (i) Charges shall be deemed fully earned on receipt of the Goods by the Carrier and shall be paid and non-returnable in any event. (ii) The Charges have been calculated on the basis of particulars furnished by or on behalf of the Merchant. The Carrier shall be entitled to production of the commercial invoice for the Goods or true copy thereof and to inspect, reweigh, re-measure and revalue the Goods and if the particulars are found by the Carrier to be incorrect the Merchant shall pay the Carrier the correct Charges (credit being given for the Charges charged) and the costs incurred by the Carrier in establishing the correct particulars. (iii) All Charges shall be paid without any set-off, counter-claim, deduction or stay of execution and the Merchant shall remain liable for payment on all unpaid charges due to the carrier, irrespective of whether the charges be on "freight prepaid" or "freight collect" basis and the shipper, consignee and all parties claiming under the Bill of Lading shall be jointly and severally liable to reimburse the Carrier for the same upon demand. (iv) Where goods are accepted or dealt with upon instructions to collect freight, duties, charges or other expenses from the Consignee or any other person the Merchant shall remain responsible for the same if they are not paid by such consignee or other person immediately when due. (v) An interest charge of 2% per month shall be levied on all invoices/charges remaining unpaid more than 30 days from due date. (vi) In the event the Carrier has to commence legal proceedings for recovery of their payment for invoices/charges, the Merchant or Customer shall be liable to pay legal costs on a full indemnity/solicitor and own client basis.

18. LIEN

Logistics & Supply chain industry in India: Current status The Carrier shall have a particular and general lien on any and all Goods and documents belonging to the Merchant or shipped by or consigned to him in the possession, custody or control of the Carrier's or its agents for all sums whatsoever due at any time to the Carrier from the Merchant and for General Average contributions to whomsoever due and for the costs of recovering the same and if the lien be not satisfied within 28 days of a notice in writing by the Carrier to the Merchant the Carrier shall have the right to dispose or sell the Goods and documents by public auction or private treaty, without notice to the Merchant and at the Merchant's expense and without any liability towards the Merchant, and at the sole discretion of the Carrier. For the avoidance of doubt, in the event that the proceeds of sale are insufficient to satisfy all sums due to the Carrier, the Carrier shall be entitled to recover from the Merchant all sums which remain outstanding. All liens of the Carrier shall be considered as secured and the Carrier shall rank in priority as a secured creditor in the event of the Merchant’s bankruptcy or Winding-up.

19. VARIATION OF THE CONTRACT No servant or agent of the Carrier shall have power to waive or vary any of the terms hereof unless such waiver or variation is in writing and is specifically authorised or ratified in writing by a director or officer of the Carrier who has the actual authority of the Carrier so to waive or vary.

20. PARTIAL INVALIDITY If any provision in this Bill of Lading is held to be invalid or unenforceable by any court or regulatory or self-regulatory agency or body, such invalidity or unenforceability shall attach only to such provision. The validity of the remaining provisions shall not be affected thereby and this Bill of Lading contract shall be carried out as if such invalid or unenforceable provision were not contained herein.

21. NON-SUBROGATION

Logistics & Supply chain industry in India: Current status The Merchant hereby agrees that he shall insure the goods and keep the goods insured for the total period of the carriage and delivery under this Bill of Lading and covenants that such insurance shall contain a non-subrogation clause/waiver of subrogation. In the event the shipper/Merchant fails to do so, he hereby specifically waives for himself and for all his heirs, successors and subrogees any and all rights of claim against the Carrier arising out of the carriage and delivery of goods under this Bill of Lading.

22. DISPOSAL The Carrier shall be entitled but under no obligation, at the expense of the Merchant payable on demand and without any liability on the part of the Carrier to the Merchant, to sell or dispose, upon giving 21 days notice in writing to the Merchant at the last known address, of Goods which in the sole opinion of the Carrier cannot be delivered as instructed or without notice to the Merchant of goods which have perished, deteriorated or altered or which has caused or may cause loss or damage to any person or property or to contravene any applicable laws or regulations and such disposal shall be without prejudice to any claims the Carrier may have against the Merchant.

23. NOTICE Notice may be effected by service by post or telefax and shall be conclusively deemed to have been received on the third day following the day on which it was posted or faxed to the last known address or telefax of the recipient intended.

24. RATES The Carrier shall have the option of charging by value, weight or measurement.

25. WAIVER

Logistics & Supply chain industry in India: Current status The waiver by the Carrier of any breach or default of any of these conditions shall not be construed as any waiver of any delay or omission on the part of the Carrier to exercise any rights that it has under these conditions operate as any waiver of any breach or default of the Merchant.

26. CRTPA Clause A person who is not a party to this contract shall have no right under the Contracts (Rights of Third Parties) Act 2001 to enforce any of its terms.

INSURANCE • Loss for or damage to cargo occurring during the policy year as a result of Breach of Contract or

in common law where liability arises under MTO

documents. • Liability to third parties by reason of liability imposed upon the insured by law and/or assumed by the insured under the Insured's Contract. The loss of life or bodily injury, 3rd party property damage including 3rd party cargo. • Cost and expenses involved in re-routing of the cargo to the correct destination including any professional negligence, error or omission on the part of the insured and/or their agents. • Liability to Authorities like Customs, Port Authorities for any breach of regulations which can even lead to fine and penalties being imposed by the authorities. Claims arising under the Liability Insurance Policies particularly under B/L contracts will have to be supported by evidence of negligence on the part of the insured before a claim can be considered. Further, under MTO documents sub-contracting is allowed and therefore even a sub-contractors will be involved in the claims procedure particularly to establish whether there is any negligence attributable to them which will enable the Liability Underwriters to take recourse to recovery from such sub-contractors under their own documents which may be a normal ship owners B/L, or a road transport receipt or railway receipt.

Logistics & Supply chain industry in India: Current status Container Specfications Table CONTAINER TYPE OUTSIDE DIMENSION INSIDE DIMENSION VOLUME L W H L W H CBM 20' DRY BOX 6.045 2.438 2.438 5.918 2.337 2.21 31 20' HIGH CUBE 6.045 2.438 2.5915.918 2.337 2.413 33 20' REEFER 6.045 2.438 2.438 5.385 2.159 1.956 23 20' OPEN TOP 6.045 2.4382.438 5.918 2.337 2.286 32 20' FLAT RACK 6.045 2.438 2.438 5.6392.413 2.311 20' OPEN SLIDE 6.0452.438 2.438 5.918 2.337 2.21031 40' DRY BOX 12.192 2.438 2.59112.040 2.337 2.338 67 40' HIGH CUBE 12.192 2.438 2.896 12.040 2.3372.692 76 40' REEFER 12.192 2.4382.591 12.040 2.235 2.159 58 40' REEFER HIGH 12.192 40' OPEN TOP 12.192 45' HIGH CUBE 13.716

2.438 2.743 12.040 2.438 2.438 12.040 2.438 2.89613.564

2.235 2.311 62 2.337 2.26164 2.286 2.692 85

The insured accordingly will have to protect the recovery rights of the liability insurer in all cases where the negligence on the sub-contractor's part is established by evidence. The Liability Insurance Policy is a contract of pure indemnity and therefore it does not guarantee all claims that arise unless such claims are established under the contract. Under the MTO of Goods Act and under MTO documents the time limit for taking legal action against the MTO is 9 months only.


CHAPTER-2


CHAPTER-2 COMPETITION WITH OTHER BUSINESS

SEASKY LOGISTIC Services SeaSky Worldwide provides a wide range of services in logistics for shipping all

types of products. We offer a dynamic array of services from exporting even personal effects to providing the logistics for large industrial projects, we offer it all...personally managed and professionally executed. Our export clientele range from Bio-Parma to Large Industrial Manufacturers to Small Family owned business. Our experienced staff provide our customers with the guidance and coordination to get their shipments to its final destination...without any hassles. Our operations in India cater to all modes of international and domestic transportation. For both Import and Export with N.V.O.C.C operations and customs clearance we provide in-house worldwide transportation of cargo by Sea and Air Freight. We also specialize in value added logistics, door to door services to ensure that we maintain control of our customers’ product at all times. • Shipping • Air Cargo

• Baggage

• Customs Clearance

• Packing

Logistics & Supply chain industry in India: Current status • Transportation

GGL GGL (formerly Golden Gulf Line) is a leading global Neutral Non Vessel Operating Common Carrier (NVOCC), and the global front -ranking consolidator. Built on a strategic and strong global network of agents and partners, and with 30 offices worldwide, we are committed to providing our clients with the most proficient, cost effective, reliable and quality transportation of their freight all across the globe. We operate our hubs at Singapore, Port Kelang, Colombo, Dubai in addition to offering direct groupage services to and from strategic worldwide points. In course of our 18 years of operation, we at GGL have applied our expertise in the service industry and knowledge of the NVOCC market and achieved a reputation of delivering an unrivaled quality of standards, innovation and customer service. GGL, known for its hallmark for being a quality conscious organization, comprises of young and highly motivated professionals, dedicated to exceeding customers’ expectations and providing the ideal global freight transport solutions that international markets require from transportation partners worldwide. Our relentless pursuit of unending excellence through innovation has earned us not only the trust of customers, but the admiration of our competitors as well. With GGL Line’s extensive experience in the industry, you get a superior service which is known for its reliability GGL LINE has started direct sailings to Busan for less-than-container-load (LCL) shipments. The line said that it feels the trade between Singapore and Busan continues to grow and it is the right time to enter the market. Machinery, garments, windmills, exhibition cargo and metals are among the items exported from Singapore to

Logistics & Supply chain industry in India: Current status Busan. By using a number of ships the transit time from Singapore to Busan will be less than seven days. GGL Line is a separate NVOCC business division of the Dubai-headquartered logistics company, Freight Systems Ltd.

Logistics & Supply chain industry in India: Current status WSA Introduction WSA's position as a leading NVOCC / forwarder enables the choice of the more frequent, reliable sailings to any worldwide destinations. Our

team

of

international

transportation

specialists

ensures

punctual

documentation and necessary procedures are followed-up, to achieve the delivery time that we have made ourselves committed to our customers as we named ourselves "Warranted Safe Arrival". On top of our experience in operating our warehousing and long-term relationships with Customs globally, WSA ensures smooth customs clearance, cargo delivery, storage, and distribution. Being the founder of WSA Lines back in 1983. I am delighted to take this opportunity to thank all members of WSA Lines who devoted their tremendous effort in making this 15th anniversary a glorious one. I would address this as our 2nd milestone because our 1st milestone was laid in 1994 after our Singapore office was established. Why? Our overseas offices started multiplying since then. There are 39 offices in 14 countries at this moment of my writing. 1997 has been a historical year for Hong Kong. As a Hong Kong based company, we are proud of the return of Hong Kong to China. On top of that, the enormous resource from China benefited us. It was back in 1990 when the importance of cargo from China was foreseen, our first office was established in Shanghai, China in 1991. Until today we have 7 offices in China. The combined cargo force formed a major foundation towards our success today and the years to come. In this ever changing market it's so competitive that envisioned our survival depends on having our own network. We are not blindfolded in expanding. Detailed market research and thorough consideration have always been behind our setups. Proven success of our Shanghai & Singapore offices was the main driving force in our rapid expansion. It has been my good luck to have all these energetic, knowledgeable & aggressive young managers joining WSA Lines. With our experience and network,

Logistics & Supply chain industry in India: Current status we form a perfect combination complimentary to each other. Technology brings human beings closer and makes the world smaller. We are fully aware that unless we are well equipped, decent service can’t be provided. That's why our management spends great effort in studying the rapid developing technology world like computers, communications etc. With the backup our network, such can be induced into our system at an economy of scale. From then, it will be easier to link up with our future expansion into related industries like warehouse, inland transportation etc. We are not contented with our success at this moment. The precious experience, cargo source, client base, worldwide network, knowledgeable staff members etc, which we gained through the course of hard work in the past 15 years will form as part of our key resource for our future development. Whereby we are looking forward to provide a point to point, multimodal, total logistics service to our valuable customers, as a token of appreciation for their valuable patronage. Most of all, we are looking forward to creating more job opportunity by our doing so, linking up the different cultures of mankind and making the world better place to live in. While in the meantime, our staff members may enjoy a better career achievement in the rapid expanding world of WSA. Yes, we work harder everyday.

Vision To WSA, no business is too small, and yet no business is too big. The unity of WSA network forms a powerful partnership unmatched by our competitors. WSA prides itself on its focus on the customers - our partners. We believe in long-term, mutually beneficial relationships with our customers and create value through collaboration to enhance customer competitiveness. WSA understands that information technology plays a vital part in the container transportation industry and has been a pioneer in developing IT solutions for many years. Technology stands at the edge of this competition world. The more advanced it is, the more competitive one becomes in the market. That in turn will benefit our customers in long run in enjoying our economy of scale. We

Logistics & Supply chain industry in India: Current status recognized this many years ago. There's no end to technology, but we are working hard to keep up with the most updated ones. WSA will remain at the forefront of IT applications and solutions for the industry.

MISSION Customers are always right. We apologize even when our customer complains by mistake, because we let it happen. Years from now, it does not matter how much was in our bank accounts, what houses we lived in, or what cars we drove. But it makes a world of difference because we make our customers smile.

Opportunity think positive. Optimist sees opportunity in difficulty.

Success doesn't come to us. We go to it. The moment we wonder win or lose, we'll probably lose. "Wai Shing" Originates from "Great Success" in Chinese characters.

Teamwork allows common people obtain uncommon results. It collects individual accomplishment towards organizational objectives. We never doubt a small group of thoughtful, committed people can change the world. This is what made WSA today.

Venture unless we have the courage to lose sight of the shore, we can never discover new continents.

Service sales generates customers. Quality service keeps satisfied customers coming back to us

Insurance Coverage

Logistics & Supply chain industry in India: Current status To better serve your needs, we recommend and offer Marine Cargo Insurance for vessel, aircraft, rail and truck. Insurance will protect shipper and/or consignee when losses occur by providing full coverage of value or replacement cost.

Cargo Claim Basics To better serve your needs, we recommend and offer Marine Cargo Insurance for vessel, aircraft, railroad and truck. Insurance will protect shipper and/or consignee when losses occur by providing full coverage of value or replacement cost. Your attention is drawn to the obligation of the customer/shipper/consignee to insure the goods under clause 21 of the WSA Lines Bill of Lading. If a claim arises, please provide the following: 1.

A letter of claim setting out the circumstances of loss/damage, with the

name/voyage of the vessel, port of loading/port of discharge, WSA Lines Bill of

Lading No., Master B/L details, ETA/ETD of vessel, destination of cargo and nature of loss/damage (e.g. location short landed) 2.

Commercial Invoice

3.

Packing/Weight List

4.

Bill of Lading (Legible copies showing front and reduce of Original, will all

endorsements thereon 5.

Copies of any other B/L is issued/MBL

6.

Insurance Certificate/policy covering the goods

7.

Delivery Receipt for the cargo

8.

Customs/Trade-Net declarations for the cargo/Import/Export Permits

9.

Complete survey Reports with all attachments/photographs (clear originals)

10. Notice to carriers of loss / damage 11. All correspondence with parties on the claim, including carriers, freight forwarders, port authorities, insurers and hauliers 12. Port authority short landing/damage certificate if applicable

Logistics & Supply chain industry in India: Current status 13. Statement of claim/loss computation from the claimant 14. Salvage/Disposal Certificate if damaged cargo has been disposed of 15. Repair estimates 16. Photographs/diagrams/pictures of the loss/damage, where available 17. Stuffing tally if stuffed by Customer/FCL shipments 18. Analysis Certificates 19. Airway Bills (if air cargo consignments) 20. Where applicable, the Sale & Purchase Contract for the goods 21. All documents which are in a language other than the English Language must be accompanied by a certified translation in English in order to be considered

Logistics & Supply chain industry in India: Current status ALL CARGO GLOBAL LOGISTICS COMPANY PROFILE Established in 1993, Allcargo has emerged as a leading Logistics service provider today. In just 13 years of its existence the Company has entrenched itself well, not only on the Indian logistics scene, but also at a global level achieving a global footprint through the acquisition of the Belgium based ECU Hold NV. Allcargo has always been the leading LCL (Less than a Container Load) consolidator in India offering direct outbound and inbound LCL groupage services to and from major cargo destinations worldwide. Allcargo’s success stems from its commitment towards providing world class logistic services to international business. At Allcargo, the customer remains the focal point in the formulation of services that can be provided. This emphasis has led to a constant innovation in the services that we provide which in turn have enhanced our performance standards. We have added a host of services to our existing portfolio and are emerging as an integrated logistics player in the country. Allcargo’s present operations are in five key areas of the logistics business: •

Multi-modal Transport Operations

•

Container Freight Stations

•

Project Cargo Handling

•

Airfreight

•

Transport Logistics

Large as well as small exporters and importers often have cargo that is not enough to fill an entire container. To meet the requirement of shipping such LCL cargo, Allcargo offers Less than Container Load Consolidation services. Allcargo pioneered this service in India and maintains it’s leadership position in this business. With an extensive branch and franchisee network in India as well as a strong agent network internationally through ECU HOLD NV, Allcargo is able to deliver and receive cargo to and from over 4000 locations across the world. Our

Logistics & Supply chain industry in India: Current status strong focus on offering direct services to a large number of locations, the Company has provided our customers with the advantages of reduced transit time, reduced handling of cargo and higher cost efficiencies.

Allcargo has also pioneered Multi City Consolidation in India. Multi city consolidation involves movement of cargo under a bond from inland locations particularly (ICD’s) to gateway ports for export cargo and vice-versa for import cargo. Allcargo with its expertise in the business is capable of handling the entire chain in the process right from collecting the cargo from the shipper’s doorstep, aggregating LCL cargo, transportation under bond, re-working at cargo hubs and arranging carriage to final destinations. As for importers, the Company caters to the delivery needs of its clients at various ICD locations through Multi-City Consolidation.

FCL Forwarding In addition to LCL consolidation, Allcargo also offers FCL (Full Container Load) forwarding services to it’s customers. With our leadership position in LCL consolidation and the large volumes of containerized cargo handled, we are also able to offer cost effective FCL forwarding solutions to our customers. Value added services such as ex-works pick-up and door delivery at desitnation, duty paid deliveries in various countries and a strong IT systems based information tracking has led to Allcargo’s growing presence in this segment of the logistics business. Ever since its inception, Allcargo has been a committed player providing services to facilitate international and domestic trade. In a bid to further consolidate its position as an integrated service provider, the Company has also diversified into the dynamic world of air freight business. With air freight being an important element of supply chain management, Allcargo has not been too far behind in entering this fast growth sub-segment of the logistics industry. With an experience of nearly two decades in the freight market the company has developed capabilities of delivering sound services while simultaneously keeping

Logistics & Supply chain industry in India: Current status customer costs on the lower side. ECU Line, the company acquired by Allcargo has a rapidly growing air freight business under the brand name ECU AIR and a global network of agents that facilitates the handling of in bound and out bound Air Cargo. Allcargo acquired the IATA registration in March 2006 enabling the Company to issue it’s own Airway Bill paving the way for rapid growth in this segment

of

the

MTO

business

as

well.

Container Freight Stations are an extension of the port enabling the customs clearance of export and import cargo and the warehousing of cargo without congesting the ports. Though its entry into this segment has been quite recent, Allcargo has made rapid inroads graduating from the operation of just one CFS which commenced in 2003 to implementing two more Container Freight Stations at the ports of Chennai and Mundra. Its first CFS, the Transindia Logistic Park Container Freight Station located 18 KM from the Jawaharlal Nehru Port Trust is a state-of-the-art, ISO certified CFS. Spread over almost 23 acres of land it is fully equipped with a paved yard, warehouse area, reefer plugging point and a parking area for trucks. Having commenced with just 10 acres of land the Transindia Logistic Park has grown to 23 acres in just three years of its operations handling a storage capacity of 4000 TEUs. It can handle more than 10,000 TEUs per month on a continuous basis. The two new projects under implementation will add another 104,000 TEU’s per annum capacity in the first phase of development. The Chennai CFS is one of the closest to the Chennai Container Terminal and is spread over a 16 acre area and the first phase is planned to be commissioned by February 2007. The Mundra CFS spread over a 16 acre area will also be commissioned by January 2007. Land for the third project for an Inland Container Depot is under acquisition and when commissioned by end 2007 will add another 52,000 TEU capacity in its first phase of development.



CHAPTER-3

Logistics & Supply chain industry in India: Current status CHAPTER-3 TRADE PROFILE India: Economy, Industry & Trade A New Era Though agriculture has been the main preoccupation of the bulk of the Indian population, the founding fathers saw India becoming a prosperous and modern State with a good industrial base. Programmes were formulated to build an adequate infrastructure for rapid industrialisation. Since independence, India has achieved a good measure of self-sufficiency in manufacturing a variety of basic and capital goods. The output of the major industries includes aircraft, ships, cars, locomotives, heavy electrical machinery, construction

equipment,

power

generation

and

transmission

equipment,

chemicals, precision instruments, communication equipment and computers. Early planners in free India had to keep in mind two aims: all-round development and generation of large- scale job opportunities. Economic development strategies

were

evolved

with

an

eye

on

these

twin

objectives.

New International Economic Order As a responsible and progressive member of the international community, India is continuing her untiring efforts to bring about a constructive dialogue between the developed and developing countries in their quest for a cooperative approach towards a new international economic order. India is convinced that the establishment of an equitable international economic order involving structural and other changes is the only answer to the various economic ills and problems of development confronting the world today.

New International Economic Order

Logistics & Supply chain industry in India: Current status The international confidence in India's economy has been fully restored. The reforms launched have made India an attractive place for investment. Duties have been lowered, repatriation of profit made liberal and levels of foreign equity raised considerably, 100 percent in case of export oriented industry. While several multinational companies have entered the Indian market, some Indian companies have also begun to gain international recognition. In the field of computer software, India is among the major exporting nations with an overflow of scientists in the field. The fourth WTO Ministerial Conference was held at Doha, Qatar from 9 to 14 November, 2001 to decide upon the future work programme of the WTO. While there were strong pressures to launch a comprehensive round of negotiations including

multilateral

regimes

on

investment,

competition

policy,

trade

facilitation, government procurement and environment, India was opposed to overburdening of the multilateral trading system with non-trade or new issues in the agenda. It felt that WTO already had a sufficiently large agenda consisting of mandated negotiations and mandated reviews and, therefore, India underlined the need for resolving the implementation issues, arising from the current agreements in a time-bound manner before addressing new issues for negotiations. India played a proactive role in the deliberations at the fourth Ministerial Conference at Doha. The outcome of the conference takes into account

a

number

of

concerns

expressed

by

India.

Exports, on the BOP basis, grew by 19.6 per cent in US dollar terms in 2000-01, accelerating sharply from the 9.5 per cent growth in the previous year. Total imports recorded a moderate growth of 7.0 per cent during 2000-01, much lower than the sharp increase of 16.5 per cent in 1999-2000. The moderate growth in imports during 2000-01 was essentially attributable to a 24.1 per cent increase in the oil import bill. Non-oil import growth, on BOP basis, remained subdued at only 2.0 per cent.

NRIs

Logistics & Supply chain industry in India: Current status The government acknowledges the great role that the vast number of Indians living and working abroad, the NRIs, can play in accelerating the pace of development in the country. In the 1980s, the contribution of the NRIs through their remittances was instrumental to a large extent in stabilising the balance of payment situation. Several initiatives have been taken to attract NRI investments in industry, shares and debentures. The NRIs are allowed 100 per cent investment in 34 priority and infrastructure facilities on non-repatriation basis. Approval is given automatically on investment in certain technical collaborations. They can buy Indian Development Bonds and acquire or transfer any property in India without waiting for government approval. The Foreign Exchange Regulation Act has been amended to permit NRIs to deal in foreign currency and they can also bring in five kg of gold. There are programmes to utilise the scientific and technical talents of the NRIs with the help of the Council of Scientific and Industrial Research.

Infrastructure In view of their crucial importance, power, transport and other infrastructure industries are owned by the State. As a result of special attention given to the area in recent years, the infrastructure industries have been growing at the rate of nine to ten per cent annually.

Key Economic Sectors The Indian Economy grew by 5.4 per cent in 2001-02, which is considered one of the highest growth rates in the world for the year. This growth is supported by a growth rate of 5.7 per cent in agriculture and allied sectors, 3.3 per cent in industry and 6.5 per cent in services.

Research and Development

Logistics & Supply chain industry in India: Current status Research and Development activities are supported by the governments at the Centre and the states as well as by public and private sector undertakings. The Department of Scientific and Industrial Research recognises over 1,200 in-house R&D units. About 200 research laboratories exist in government departments and agencies. The benefits of the R&D works are reaching various fields like industry, agriculture and commerce.

Traditional Industry Indian handicrafts have withstood competition from machines over the years. The skills are passed on from one generation to the next. The handicraft and handloom sector is a major source of rural employment and earns substantial foreign exchange. Traditional textiles are as popular abroad as they are within the country. The major export items include hand-knotted carpets, art metalware, handprinted textiles and leather, wood and cane wares.


Logistics Logistics is the art and science of managing and controlling the flow of goods,

energy, information and other resources like products, services, and people, from the source of production to the

marketplace. 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. •

Origins and definition The word of logistics originates from the ancient Greek logos (λόγος), which means “ratio, word, calculation, reason, speech, oration”. Logistics is a concept considered to have evolved from the military's need to supply themselves as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘ Logistikas’ who were responsible for financial and supply distribution matters. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.” Another dictionary definition is: "The time related positioning of

resources." As such, logistics is commonly seen as a branch of engineering which creates " people systems " rather than "machine systems".

Military logistics In military logistics, experts manage how and when to move resources to the places they are needed. In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial—some would say the most crucial— element of military strategy, since an armed force without food, fuel and ammunition is defenseless.

Logistics & Supply chain industry in India: Current status The Iraq war was a dramatic example of the importance of logistics. It had become very necessary for the US and its allies to move huge amounts of men, materials and equipment over great distances. Led by Lieutenant General William Pagonis, Logistics was successfully used for this movement. The defeat of the British in the American War of Independence, and the defeat of Rommel in World War II, have been largely attributed to logistical failure. The historical leaders Hannibal Barca, Alexander the Great and the Duke of Wellington are considered to have been logistical geniuses.

Logistics Management Logistics Management is that part of the supply chain which plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.

Business logistics 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 is the science of process and incorporates all industry

sectors. The goal of logistic work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. In business, logistics may have either internal focus(inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see nsupply chai management). The main

functions

of a

logistics

manager

include Inventory

Management,

purchasing, transport, warehousing, and the organizing and planning of thes

Logistics & Supply chain industry in India: Current status activities. Logistics managers combine a general knowledge of each of these functions so that there is a coordination of resources in an organization. There are two fundamentally different forms of logistics. One optimizes a steady flow of material through a network of transport links and storage nodes. The other coordinates a sequence of resources to carry out some project.

Production logistics The term is used for describing logistic processes within an industry. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time. The issue is not the transportation itself, but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics can be applied in existing as well as new plants. Manufacturing in an existing plant is a constantly changing process. Machines are exchanged and new ones added, which gives the opportunity to improve the production logistics system accordingly. Production logistics provides the means to achieve customer response and capital efficiency.

History of Logistics / Supply Chain Management Logistics has always been a critical part as one of the 4 P’s in Marketing: Product, Place, Price and Promotion. The “Place” component ensures the product is at the right place, at the right time, in the right quantity and the right quality. Read about how the logistics discipline started and where it is headed. •

Military Roots

Logistics received recognition in military operations during World War II. It gained its momentum as it contributed to the effective distribution of machinery and supplies to troops. A service delivery failure here may mean an increase in unnecessary fatalities. Peter Drucker (a business guru in the 1960’s) identified logistics as a growing concern within business. This generated more prominence towards the practice of logistics.


Deregulation

As the economies in North America evolved in the 1970’s and 1980’s, transportation deregulation changed the competitive landscape of business. Carriers were free to charge their customers (Shippers) a competitive rate for their shipments. Warehousing companies that typically acted as surplus inventory storage locations, married up with transportation companies to offer customers full-service solution capabilities. This formed the beginning of the 3rd party logistics business and paved the way for outsourcing logistical activities.


Globalization

With the advent of globalization, firms began to seek ways of cutting their production costs. Thus, multi-national corporations re-located their factors of production to low-wage countries to gain a competitive advantage. Increasingly, more and more countries are joining the World Trade Organization (WTO) and opening their country to foreign capital investment (most recently in China). Retail giants like Wal*Mart exploit these new efficiencies and increase their imports from new emerging economies to reduce product prices in their stores. Thus, the new challenge is how to manage the product and information flows around the world. The increased pressure on managing these operations further underscored the importance of logistics as an area for optimization.

•

Information Technology

Another contributor that led to an increased presence for logistics was the explosion in information technology and use of computers throughout the 1980’s and onwards. The cost of computing has decreased year after year since then and computing power rose exponentially. The use of the Internet and increased bandwidth capacity further enhanced and enabled quick connectivity and collaborative relationships that reduced inventories and created a Just-In-Time operating opportunity for organizations. These efficiencies reduced errors, increased fill-rates and cut overall operating costs for organizations.

•

Supply Chain Management

As the above factors fuelled efficiencies, logistics gained more prominence in organizations. A natural extension was to link the logistical operations from each firm to the entire supply chain. The new paradigm became known as the ‘systems approach’ to supply chain management and introduced the concept of trade-offs. In order to achieve least total supply chain cost, operational integration of the 5 main areas of logistics must be simultaneously optimized: Warehousing, Transportation, Inventory, Order Processing and Lot Quantities.

Logistics & Supply chain industry in India: Current status Optimizing any one of these areas individually will sub-optimize the system as a whole. For example, a single warehouse in a network would achieve the lowest warehousing cost. This would create high transportation costs as suppliers ship over greater distances to ship products into the warehouse and conversely, outbound to its market distribution area. The addition of a second warehouse in the network would reduce transportation costs more than the marginal cost of operating the second warehouse, which would reduce total supply chain costs.

•

Future Challenges

As the business landscape constantly changes with mergers & acquisitions and as globalization grows, there are corresponding changes in the supply chain that need to continuously be optimized to ensure least total supply chain costs. Radio Frequency Identification (RFID) and other technologies will continue to drive down inventories as better information is made available in a timely manner. Since supply chain activities cross over all functional areas in an organization (such as Marketing, Finance and Human Resources), new metrics must be developed to track true supply chain costs and identify the impact on new costs as corporate strategies change. Organizations that measure and benchmark these costs will have a sustainable competitive advantage going forward. mission.

Evolution of Logistics Theory Logistics theory has evolved firstly based on the practical management of logistics, and secondly, based on the ideal ways for managing logistics. Logistics theory has first been developed for special functions such as production, inventories, and transport; later it was necessary to combine these. Also, logistics was first seen in a restricted environment, where own control could be exercised. Nowadays, many logistics functions have been outsourced, business structures have changed,, and logistics has

became a strategic competitive factor.

Logistics & Supply chain industry in India: Current status Management of logistics concerns the whole demand and supply chain across business borders requiring logistical visibility. In addition, enablers such as infrastructure and technology also evolve.

1. Introduction Logistics evolved during planning and exercising crusades and military expeditions, as well as with the development of trade. The practicality of logistics is also seen with its involvement in everyday life. The beginning of logistics theory can be dated to second world war, and in business logistics, to 1950’s. During the Second World War, also the computer age was started, which enabled analysis with the evolving operations research models. The main application areas of operations research in the beginning involved logistics problems such as transportation routes, inventory models. Logistics management as an independent discipline started to evolve under management science. Models geared to minimization of costs were developed. Both modelling and OR methods developed. Since these models often were simplifications, the solutions lacked true applicability. In business world, external situations such as oil crisis, growing competition, and increasing customer demands made logistics a management issue, and in gaining more importance, logistics became eventually the top level issue in management. Integration of production scheduling and materials management was needed, and on the other hand, transports were analysed taking inventories into consideration at the same time. Network models for restructuring the distribution networks were taken into use. Several rounds of streamlining the number of warehouses in distribution networks have been seen. The models initially were facilities location problems, now the analysis is based on costs, availability, and delivery service levels in an environment of many factories, markets, products, and time periods.

Logistics & Supply chain industry in India: Current status OR-models started to become too complex, and the same problems with simplifications remained. Logistics became a management discipline in its own right. Control over own management environment had to widened, especially when materials management was considered. Logistical efficiency became a competitive factor when providing customer service, and obtaining cost efficiency. During structural change, outsourcing of non-core functions became a trend. Most companies outsourced first their transports, then also their inventories and sourcing, so most of the logistical operations were outsourced. Partnerships, alliances, and cooperation became a management strategy as well as a research area. Forecasts

of

demand

have

become

extremely

crucial.

Seasonality,

perishability, risk handling, shorter life cycles, shorter times to market all make more demands on both the accuracy and quickness of forecasts. For all participants in the logistics chain, they have great importance. Visibility will be the main strategic competitive issue in logistics management across company borders. Early references to logistics be located in business literature. Prior to the 1950’s, the typical enterprise performed the work of logistics purely on functional basis.. Logistics management, as a discipline in management science and practice, was defined in US in 1950-60’s when the potential of efficient material distribution to decrease companies’ direct product costs was realized. The physical distribution models were developed because of the following four factors: 1) shifts in consumer demand patterns and attitudes toward more demanding needs for high availability and variety of products, 2) cost pressures on industry, 3) progress in computer technology, and 4) the influences of military experience. The change in logistics practices faced significant opposition. Managers, responsible for specific functions, were not happy with organizational changes that were considered necessary for implementing logistics in broader meaning..

Logistics & Supply chain industry in India: Current status During the oil crisis in 1970’s , both transportation costs and interest rates (thus

also inventory

carrying costs) increased

simultaneously,

and

the

importance of logistics was really understood by top management. Optimization of physical distribution alone was not enough, it was necessary to integrate purchasing and materials handling into it as well. The most significant drivers for integrated logistics during 1980’s and early 1990’s

were

as

1)

significant

regulatory

change,

2)

microprocessor

commercialisation, 3) information revolution, 4) widespread adoption of quality improvements, and 5) the growth of partnerships and strategic alliances. This integration process was leading to an evolution of logistics management that according to the increasing number of logistics literature, Gradually logistics management became cross functional within the whole organization Logistics plays very central role in creating value for the customer, as both inbound and outbound logistics are presented as primary activities in the chain. Logistics increased importance, as it was seen as an activity that enables companies to improve customer value, and not only regarded internally as costefficiency target. An abundance of definitions of logistics have been presented. The term Supply Chain was introduced, and had to be distinguished from logistics. There is a view that logistics is contained in a company’s internal processes, whereas supply chain is a more holistic concept.

The current interpretation is also that the

supply chain creates products and services that are transferred from suppliers to end customers. This interpretation has been complemented with the term demand chain, defined to transfer demand information from end customer markets to suppliers. Combined, demand and supply chain create demand-supply chain, an end-to-end network. It can be noted, that the traditional term logistics chain has also been defined to cover the material flow from raw material end to final customer end, the demand information flow

to the opposite direction, and

transfer of payments as well; the modern view is that in the supply chain,

Logistics & Supply chain industry in India: Current status logistics is a subset . Analytical approaches even in the beginning of 2000’s rely on traditional methods of statistics and operations research.

3. Evolution platforms The evolution of production supply chains depends on the previous platforms of best practice.The stages seen in the supply chains over the past forty years. In the 1960’s, the goal was to secure the stability of production, which was achieved by modelling and optimising the economic batch sizes, safety stocks, and reorder levels. This provided a natural platform for adoption of material requirements planning (MRP) in the 1970’s and early 1980’s. MRP is built on a push system, where materials are ordered against a projected demand. Manufacturing is arranged along ordered schedules. MRP attempts to eliminate safety stock and cycle stock, Flexibility is taken up by varying the demand on the suppliers. Simultaneously, in Japan, just-in-time (JIT) practices were evolving alongside with total quality management (TQM), with the goal to eliminate all waste from manufacturing and inventories. JIT and TQM were business philosophies supported by several interconnected principles, which were defined around the three QCD principles: a continually improving quality assurance system to meet customer requirements, a continually improving cost management system to provide the product at an attractive price to the customer while securing reasonable profits for the company, and a continually improving delivery system to ensure that products arrive on time. Huge improvements were seen. Without integrating all three principles, there would have been the risk of concentrating on trading costs for quality and customer response. JIT production is a pull system. Capacity is matched to the demand. Production patterns are regular, but manufacturing systems are flexible. Batch quantities are economic, supplier lead times are short, sproduct range was narrow, and demand patterns in the market are regular. JIT prevailed in the 1980’s and in the beginning of 1990’s.

Logistics & Supply chain industry in India: Current status JIT was a natural platform for the lean production and lean supply systems emerging in the 1990’s. In lean systems, all waste, also time wastes, were eliminated. Total inventories, for production, in production work in process, and in finished goods inventories, were minimized. Cost transparency in the supply chain was necessary, for production flexibility, multi-skilled workers were needed, work queues were shortened, change-over times were reduced, product variability was great but product volumes were low. During this period, synchronous

manufacturing

was

introduced,

product

modularisation,

postponements and pushing order penetration point upstream. At every stage, continuous improvement was the target. Value stream management and value stream mapping was one of the methods to achieve lean management and excellence in the supply chains. The need for greater flexibility and shorter times to market and customers, brought out the next stage of responsive supply chains. Quick response to customer requirements, supply flexibility, and customized manufacturing are all geared for better customer service. Production schedules were synchronized with final demand, supply processes were controlled, and capability to integrate trading partners, full use of electronic commerce, and concurrent product development were taken into use. In 2000’s, e-business has already brought out a significant change. Improvement in the service level and inventory level could not be achieved simultaneously earlier. Recent developments in information technology and communication technology, together with better understanding of supply chain strategies, have led to innovative approaches so that the firm can improve both objectives simultaneously. From lean manufacturing and supply chains, the next platform to emerge at the end of 1990’s, is the process model and the agile supply chain. These involve goods and products with short life cycles, volatile demand, high product variety, customer service driver is availability, not cost alone. Profit margin is high, and dominant cost factor is marketability cost. Stockout penalties are immediate and volatile, information enrichment is obligatory, and forecasting methods have

Logistics & Supply chain industry in India: Current status become consultative. The need for new customer relation management systems, with better

forecasting capabilities is imminent. Agility means, that capacity and demand variances have to be benefited.

4. Supply chain management Supply chain management has been defined as a management philosophy] having the following characteristics: 1) A systems approach to view the supply chain as a whole, and to managing the total flow of goods from the supplier to the end customer, 2) a strategic orientation toward co-operative efforts to synchronize operational and strategic capabilities, and 3) a customer focus on customer value and customer satisfaction. For better management, different forms of partnerships, alliances and cooperation have evolved.

Value chain concept has become a competitive

strategy. Supply chain management also needs tools, and one of these is a rigorous attention to quality, already introduced by TQM.

Outsourcing has made

subcontracting to play a larger role, and quality considerations concerning both products and services have become an essential, generally accepted practice. Quality measures and performance measures have been collected into strategic performance measurement systems, as presented by e.g. Gattorna and Walters , Hines et al. Hughes et al., Anupindi et al., Frazelle, and Bowersox a nd Closs. The measurement systems are used also in evaluating new partnership and subcontracting relationships. One of the challenges in supply chain management is to effectively manage uncertainty. For new products entering the markets, there are no demand models to be used in forecasts. At the same time, the proliferation of the products makes it increasingly harder to predict demand for a specific model. Moreover, significant price declines are common, reducing the profits of the products with short life cycles.

Logistics & Supply chain industry in India: Current status 5. Processes In many companies, enterprise resource planning (ERP) systems have become the standard backbone of companies’ IT .Their implementation requires that the companies define their operations as processes. Change from functional operations of logistics into the processes changes also the management from functional areas into holistic logistics management, and at the same time, logistics gained

importance in the business.

The change into process model is also a time

consuming process itself. The SCOR-model as well as ERP-systems are also standardizing the processes. Harrison and van Hoek consider that improvement of logistical performance means that the processes have to be improved, and one of the key issues is to regard the management of timeliness in the logistics pipeline. Alignment of processes within the pipeline makes it possible to ensure also JIT and lean thinking, vendor managed inventories, and quick response. This also can be considered as leading to the next supply chain platform: the agile, responsive supply chain.

6. Trends Logistics today is more challenging than ever. Logistics is one of the crucial areas, which make the distinction of business success. Time factor has become more and more important in competition. Product life cycles are becoming shorter. Time to market for new products and versions is a crucial competitive factor. Product Life Cycle Management has become a new issue to make short life cycles longer, more profitable, and better to control. Time is also of essence in making on-time deliveries, and competition is seen also in the delivery times; this is a phenomena reappearing because of global sourcing. Shorter delivery times force the industry to be situated closer to the customers, or to have distribution centres close to customers, or to choose suitable partners and make suitable business acquisitions in order to reach the markets.

Logistics & Supply chain industry in India: Current status Globalization is seen not only in sourcing, but also in new business structures. Mergers of companies have increased the number of global companies. Others also connect via alliances, collaborations, and partnerships into global markets as well into local sourcing networks. This increases the logistical complexity, which is becoming increasingly hard to control. Complexity is formed by the number of suppliers, sourcing chains, product items, product construction, spare part items for maintenance and repairs, factories, warehouses, distribution chains, sales points, participants in the logistics chain, services connected to the products and sales, afters sales services, customers, geographical and national differences, transport

modes, measures,

and

the

time factors.In global companies,

streamlining and unifying processes and , IT is a standard strategy. Large companies also require that their partners and collaborators will align their processes similarly, otherwise logistical effectiveness suffers. Process alignment is a necessary prerequisite in getting into partnerships today. Logistical visibility is difficult to achieve even within a company, especially a multinational environment. Logistical visibility is necessary also externally within companies, otherwise demand forecasting is extremely difficult. Improved visibility makes it possible to obtain more accurate information in real time of the actual demand, without the accumulating Forrester effect or the bull-whip effect in the logistics chain. Even two- tier visibility between two consecutive companies in the supply chain is rare, but as the e-business applications in business-tobusiness cases increase, also the bipolar visibility will become more general. Three- tier visibility is very difficult to achieve. Looking from the customer end backwards, the supplier may consider his sourcing to be strategic information, and vice versa, a company may not be able to obtain the visibility to his customer’s customer, because the first tier customer “owns” them. Very strong incentive is needed, and often this consists of truly strategic relationships in the supply chain. Visibility over company barriers also makes vendor managed inventories (VMI) possible. This requires trust on both sides. The best applications are in the

Logistics & Supply chain industry in India: Current status distribution of heating oil, delivering beverages to shop shelves, and in the basic Kanban process. Logistical chains are not true chains but are actually networks. A company usually likes to have more than one source to supply it, especially in order to avoid risks in sourcing, but also to lower the prices by competition among the suppliers. Similarly, a company is in a much better situation when it has more than one customer. The network problems become very large, because each company in the network has its own personal subnet of suppliers and customers, as well as competing companies. Even internal complexity of a company depends on the number of product and subpart items, suppliers, sites, distribution, and time periods. The simplification of internal networks of companies is a constantly renewed process, until the simplification also reduces competitiveness. Then again, new strategies are needed in order to reach the markets. In restructuring, the fusions and fissions of companies change the internal networks radically, and the networks need to be reanalysed. Even in changing subcontractors, the combined networks needs to be reorganised.

One of the factors adding to complexity is the change of measures within the manufacturing process. Especially in process manufacturing, the measures concerning the materials change while the materials are transformed in the production process into the final sales products. Raw wood is considered as bulk, cellulose and paper are again bulk, but each measured differently. Paper is then cut into rolls and sheets, so the measures become discrete, and the number of paper qualities with customized measures increases the final product variety many times. At each stage, the material is in a different form or constitution, and thus requires different control and quality parameters as well. Glass and textiles are analogous, as well as mining into finished metals. In assembly manufacturing, modularity is a way to decrease the variety of the subparts, as well as to push backwards the point of finalizing (postpone) the product. This is a way to shorten the total production time when an order is

Logistics & Supply chain industry in India: Current status received, and thus decrease also the time to customer. Another reason for modularity is to make repairs, maintenance, and modernization more simplified. Benchmarking has become very popular for companies in assessing their ways of doing business and taking care of logistics. Best practices are derived, and usually the companies with best practices survive best in the chaotic situations [Boyson et al. [5]). SCOR [26] is used in modelling the processes, aligning them, but also in benchmarking. As a benchmarking tool, it is used to provide standard measures for comparing the efficiency of processes. In literature, several measures are presented to measure the efficiency of processes and operations. Nowadays, quality is assumed, time, cost, and service levels are the most important logistical measures. Virtual warehousing came to existence by the use of information technology, products were delivered directly from the producer to the customer. This required the development of large databases, datawarehouses, to have exact information of all product items, versions, suppliers and customers. Typical applications concerned spare parts production and deliveries, as well as electronic product components. One of the trends seen especially in the consumer markets is the existence of brands. Brand names have become so important, that business mergers are made for

the reason of obtaining

brand ownership. When the actual

manufacturing is subcontracted to countries with cheaper production costs, the result is that the customer may not know where and by whom the purchased product was actually made. Another strong brand trend is that big marketing chains are selling products under the market chain brand, and again, the actual producer and product may change unexpectedly, since the producers are chosen periodically by bidding processes. Mobility of production and subcontracting depending on finding cheaper production opportunities has especially been applied in textile industry and in electronics. Market areas also have an affect on the site selection for new

Logistics & Supply chain industry in India: Current status production plants in order to avoid taxes and duties in exports. Now this mobility of production is widening into other manufacturing areas as well.

7. Research Outsourcing was seen as the way to concentrate in core business. If the final customer interface is outsourced, the vital link to customer information on the usability and needs for product development may be lost. Thus, the partnership with the sales organization is vital in order for that information to be available. Outsourcing should be done with great care. Valore “Value Added Logistics Research” project] VALSSI (Value Added Logistics Services) – project is a research project at LUT where outsourcing has been studied in an after sales application. Logistical functions and operations are typically outsourced. Then it is important to know how to obtain these services in the best way. The logistics service operators have also become global, offering a wide range of services. In the VALSSI-project, the services were developed in a modular fashion Many companies also let their service providers choose the actual transport routes, which is seen at key points in the infrastructure as sudden strong changes of transport volumes (f.i. ports, cross-docking terminals), when the service provider for a company is changed. Thus the decision making on actual operations in logistics are outsourced as well, it is required only that the service provider makes the deliveries on time, with required quality, and with agreed cost. Large companies make many requirements to their suppliers, especially on standardizing the company interface operations, and the large companies also want to decrease the number of contacts. This means that these suppliers, in order to stay in business, have to start process alignment, cooperation, and develop into system providers. This means that SME-companies have to form dynamic networks.

Still, the local SME companies face the competition of national and international companies.

Logistics & Supply chain industry in India: Current status 8. Emerging best practice platforms and development needs In modern, fast changing environment, the companie’s survival depends on agility, adaptability, and alignment (AAA). According to Lee [19], the AAA is the present best practice. Increasing product variety proliferation implies need for flexibility driven by uncertainty. Shortening product and technology cycles imply that logistics networks are more and more dynamic. Vertical integration to outsourcing causes that there are multiple players with differentiating interests. Agility helps to respond to uncertainties with speed and effectiveness; adaptability helps to adjust to the shifts in the supply chains and networks, and alignment helps in synchronizing multiple interests and incentives. Agility and adaptability include the aspects of preparedness and readiness in crises situations, design flexibility, supply flexibility, performance management, and tracking and tracing (and acting upon information).

Alignment concerns

alignment of information, identity, and incentive. Information alignment means sharing common knowledge, to achieve visibility for better planning. Identity alignment means that the roles and responsibilities of the partners are clear in order to act efficiently and with flexibility. Incentive alignment means accountability of cost, risk, and gains; all partners should share equitably, and agree on overall performance measures and targets. New technology, long waited for and still not quite there, is RFID. The applications tend to be seen as tracking and tracing, gathering information in lots, without need to touch, of the items in warehouse, vehicle, or delivery consignment. It is obvious, that it also gives opportunities for flexible dynamic control.Also smart materials are being developed. In transportation, also new technologies are under development.For gaining insight to the future, logistics roadmaps have become widely developed. Scenario work is also gaining strength. Both used to be applied in companies internally, now more general and wider application is becoming apparent. The general opinion is that the present day software does not respond to the needs in logistics. Customer relations management systems do not have

Logistics & Supply chain industry in India: Current status analytical capabilities. The same view concerns forecasting methods. Much of the logistics specialized software is still not integrated, and they still analyse constrained problem areas. Traditional methods of operations research do not produce satisfactory results in the more complex and dynamic environment. New modelling techniques and solution methods have to be developed. Some of the theory is developed on an idealistic view, such examples are for instance the economic order quantity, value chain, and logistical visibility. These theoretical ideals have been visionary, and they have become drivers of development in logistics. Both value chain approach and logistical visibility are clearly also trendsetters leading to excellence. Thus logistical theory evolves also on the setting of goals. The third way of development of logistics is the analysis methodology, and the theory involved in the theoretical basis of the methods. There is clearly a need for new methods, with wider range of information access, with ability to work with relationship issues, and ability to be applied in dynamic situations. The methods also need to be able to handle large amount of data and increasing complexity. Assessing the future is also increasingly important. It is seen in the need of better forecasting methods, which are able to handle more data and complexity, so that they simulate expert systems. It is also seen in the increasing popularity of scenario working and technology roadmap-applications, which are used both in company environment and in national level. Identification of weak signals, which may become trend setters, is considered to be extremely important.

Growth in Logistics - An Overview Introduction With the growth of the industries there was the boom in the logistics sector.Open market also open the opportunity for logistics industries to grow and bom itself. Logistics call for an understanding of the total supply chain, the elements of

Logistics & Supply chain industry in India: Current status which include inventories, packing, forwarding, freight, storage and handling. Logistics is responsible for all the movement that takes place within the organization whether it is inbound logistics of incoming, raw materials or movement within the company or the physical distribution of finished goods, logistics

encompasses

all

of

Typical logistics framework mainly consists of Physical Supply,

these. Internal

Operations and Physical Distribution of Goods and Services. To put it more simply, the material supply logistics starts from the base level of “generation of the demand”, through the “process of purchase” and “supply of material from the vendor” right through to “final acceptance” and “payments to the supplier” and “issue to the indenter” and has to be considered as a “one whole activity” with each stage having an impact on price/cost of material supply. Logistics is, in itself, a system; it is a network of related activities with the purpose of managing the orderly flow of material and personnel within the logistics

channel.

DEFINITION : The simplest way to.describe logistics is to say that it is all about ways and means of meeting the demand for materials i.e. satisfying the customer with what he wants, when he wants, where he wants etc. Definition includes outbound, inbound, internal and external movements and returns of material for environmental purposes. The logistics concentrate on dynamic processes, related to the flow of materials and the relationship between the materials and their use at different facilities. The most wide spread definition from council of Logistics Management says that “Logistics is the part of the supply chain process and plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers requirements.”

Logistics & Supply chain industry in India: Current status SCOPE: Logistics is not confined to manufacturing operation alone. It is relevant to all enterprises, including Govt. institutions such as Hospitals and schools and service organization such as retailers, banks and financial service organizations. The study of logistics is especially important for bulk raw materials, where substantial outflow of freight is involved. Management of Logistics is an art which is extremely difficult to perfect in India, JIT ends up being SHIT - some how in time. The study of logistics is important to establish a lean supply chain which would give an advantage of quick product change over, capability, excellent short and long term forecast visibility and JIT capability.

MODES OF TRANSPORTATION IN LOGISTICS : In order to transport material from one place to another Logistics Managers are using Rail, Road, Air, Water & Pipe Line as the modes of Transportation. A logistics expert needs to understand these modes based on priorities, product type. lead time etc. to decide the appropriate mode of Transportation. Rail: Used for delivery of a wide range of goods including coal, iron ore, cement,

food grains, fertilizers, steel, petroleum products and other heavy goods. Road : Used by suppliers to deliver goods in a cost effective manner and best

suited for short distances. Many transport companies have expertise for fast delivery, packaging etc. for making scheduled delivery. Air: Used mostly for delivery of high value and tow volume goods from distant

suppliers, usually not connected by any other mode of Transportation. It is also suitable for emergent item to be imported for some specific requirement. Water : Used by firms for delivery of goods from distant suppliers, mostly

conducted in containers of varied size. This mode is ideal for transportation of heavy and bulky goods and suitable for products with long lead times.

Logistics & Supply chain industry in India: Current status Pipe Line : Used by oil sector companies for mass movement of Petroleum

products including gases. Due to quite low operating cost it is one of the preferred

mode

of

transportation.

THIRD PARTY LOGISTICS : Third Party Logistics (3PL) provider handles all or most of freight of the organizations including the management of information by the third party, freeing the company from day to day interaction with carriers, and having to oversee hundreds or thousands of shipment. New and cheaper information flow resulting from internet enabled solutions, will lead not only achieving immediate cost reductions in operations but also to enormous productivity gains over the next few years. The tracking and control of movement of goods drive freight optimization and asset utilization. The options are : increased trailer utilisation, combining full truckload shipments, consolidation, aggregation of smaller buyers. Purchase asset based transportation is becoming increasingly a commodity. To put simply, 3PL refers to the outsourcing of a logistics function. It could be the use of a transportation carrier, a warehouse, or a third party freight manager to perform

all

or

part

of

a

company’s

production

distribution

functions.

The principle reasons of for this function are as under: • Globalization of sourcing, manufacturing and distribution leading to an increase in the complexity of material movement. • Competition that has forced companies towards more responsiveness and a reduction in inventories. An increased need for small but frequent shipments with 100 percent reliability, requiring core competence in logistics management.

Logistics & Supply chain industry in India: Current status • Resource constraints that require companies to concentrate only on their core manufacturing or new product development activities.

FOURTH PARTY LOGISTICS Fourth Party Logistics (4PL) provider is a supply chain integrator that assembles and manages the resources, capabilities and technology of its own organization with those of complementary service provider to deliver a comprehensive supply chain

solution.

4PL is emerging as a path to achieve more than the one time operating cost reductions and asset transfers of a traditional outsourcing arrangement. Through alliances between best-of-breed third party service providers, technology providers and management consultants. 4PL organizations can create unique and comprehensive supply chain solutions that cannot be achieved by any single provider. According to John Gaftorna, “White oufsourcing third party logistics is now a accepted business practice, Fourth Party Logistics is emerging as a breakthrough solution to modern supply chain challenges... to provide maximum overall benefits.” 4PL can be described as the complete outsourcing of the logistics function including procurement of service providers. 4 PL companies are suppliers which have the expertise to manage resources, value delivery processes and technology for their clients in order to allow their clients to totally outsource their logistics management activity. The 4PLs do not compete with 3PLs as they have superior expertise in their respective fields by virtue of their investment and specialization. 4PL providers do not own assets for transportation or warehousing, but rather leverage the solutions created by 3PL.providers, in order to identify and provide ‘best in class’ services to their clients. There are many variations of the 4PL model that are practiced.

Logistics & Supply chain industry in India: Current status Three different models are summarized as under ; A) Lead logistics provider: The 4PL provider acts as an in house freight management company, it might or might not have a role in the selection of 3 PL partners. It takes care of transport invoicing and the monitoring of the performance

of

the

3

PLs.

B) Solution Integrator: In this variant of the model, the 4PL acts as the integrator of various 3PLS and as a single window for freight negotiations, 3PI selection and freight management on behalf of its client. C) Industry Innovator: Under this model the 4PL uses its expertise and resources to create a solution not for any single client, but for offering 4PL services to a number of clients in an industry. The services provided by a 4PL provider are: • Freight Negotiations with 3PLs • Freight Contract Management • Transport Billing • Continuous Improvement Programs • Management of Service Providers • IT Solutions • Risk Management and Insurance • Cash-flow Management.

Logistics & Supply chain industry in India: Current status RESERVE LOGISTICS : Increasingly, as a strategy, to compete on services, companies offer repair and replacement services for their products under the warranty periods. The defective products are often shipped across international borders to common repair centers to be refurbished and returned to the originating station. Logistics service providers who offer these services have to tackle issues pertaining to duty payment on refurbished products, customs documentation and the establishment of collection points for repair for the customers.

CONCLUSION: Logistics is one of the area of the supply chain i.e. growing at a tremendous case as the Internet and E-Commerce is drastically changing the range, delivery time and the speed of information as well as ordering and payment process. Due to the big boon of information technology, greatly influencing and enhancing the effectiveness of logistics, the time is not far when 5 PLs and 6 PLs may emerge which will probably we doing part of the manufacturing and marketing for the organizations.

Logistics & Supply chain industry in India: Current status Logistics in India India spends about 13.0 percent of its total Gross Domestic Product (GDP) on logistics, as per 2005 estimates. The major logistics functions for the Indian industries include Transportation, Warehousing, Freight Forwarding, and other Value Added Operations including Management of Information Systems (MIS). Of these functions, transportation and freight forwarding have been traditionally outsourced

to

external

service

providers

with

relevant

expertise

and

infrastructure. The warehousing and MIS functions have been mostly managed in-house by industries. But the huge diversity in geographic conditions, consumer habits, and infrastructure conditions across the country make it a major challenge for Indian industries to efficiently manage their supply chain to reach all parts of the country. Additionally, India’s retail network is very vast, estimated at about 3.3 million outlets in 2005. The highest priority of all industries in India is to achieve a consistent presence of their products across maximum possible section of this vast retail network. This could be achieved through a well knit end-to-end logistics process managed efficiently by a professional logistics service provider. Nevertheless, the logistics industry, providing services to fulfill these major logistics needs of the Indian industries is highly fragmented. The transportation service provider segment is completely dominated by small trucking companies and individual truckers. The freight forwarding service provider segment is also represented by thousands of small customs brokers and clearing & forwarding agents. Similarly, there are a huge number of participants in the warehousing service segment and MIS service segment also. Few service providers have the capability to provide more than one service and it is very rare that a single service provider has the capability to provide all the logistics services. Such fragmentation had lead Indian industries to outsource packets of individual logistics functions to different service providers while retaining the overall control of logistics in-house, despite incurring heavy administrative and infrastructural costs.

Logistics & Supply chain industry in India: Current status Third Party Logistics – An Overview Third Party Logistics (3PL), the concept of a single professional logistics service provider managing the entire logistics functions of a company, had originated in the developed economies of Europe and America, to relieve industries from huge logistics costs apart from the hassles of dealing with multiple in-coherent logistics service providers. It proved to be immensely successful in improving logistics efficiency of majority of industries and quickly gained popularity, spreading across the globe. In the process, several professional logistics service providers offering that kind of services have emerged to be leading 3PL providers with operations in multiple continents. In the initial stages, 3PL providers offered only basic logistics services such as warehousing

and

transportation.

But

with

growing

logistics

needs

of

organizations to remain competitive in globalized economies, 3PL providers have evolved to offer several other value added services ranging from packaging to supply chain planning.

Advent and Growth of 3PL Industry in India 3PL industry’s origin in India can be traced back to mid 1990s. The industry was pioneered by global logistics majors as a part of extending these services to the Indian subsidiaries of multinational companies in automobile, electronics and FMCG sectors. Indian subsidiaries of multinational companies in these sectors took cue from their parent companies and began to outsource a share of their logistics functions to these specialist service providers. Though insignificant in the first few years, Indian 3PL industry is experiencing a rapid growth after year 2000. The number of participants in this industry had grown to be more than 400 by year 2005. The Indian 3PL industry can be divided into three distinct tiers - National Major 3PL companies with nationwide presence, Regional 3PL companies with strong presence in one or two regions, and Small Remote 3PL companies.

Logistics & Supply chain industry in India: Current status 3PL Market in India – Poised for a Remarkable Growth The 3PL market in India is still in a relatively nascent stage, with multinational companies in all industries being the predominant users of these services. However, domestic major companies in leading industry sectors have also begun to follow the footsteps of their multinational counterparts, starting with outsourcing their basic logistics functions. Realizing the significant cost reductions and several other benefits gained by these companies, the large numbers of small to medium

companies in all the industries are gearing up to use 3PL services in their logistic functions, resulting in a tremendous potential market for the 3PL market in India. The opportunities for growth of 3PL usage could be varied among different types of companies. The multinational companies that are already using 3PL in basic logistic functions might graduate to outsourcing value-added advanced services such as customer support, inbound logistics, and reverse logistics. Whereas, the domestic major companies might increase their 3PL usage in the basic logistic functions and occasionally experiment with the value-added advanced services. On the contrary, the small and medium companies could just begin to use 3PL services for their basic logistic functions. Nevertheless, considering that the most important logistics functions for Indian industries still are transportation and warehousing, which are likely to be outsourced to 3PL in increasing share, a high level of growth is estimated for the Indian 3PL market in the next 5-7 years. The Indian 3PL market, estimated at about US$890.3 billion in 2005, is expected to grow at a compound annual growth rate of 21.9 percent to reach US$3,556.7 million in 2012. Frost & Sullivan’s research identified that the largest end-user industry for 3PL services as of 2005, is the auto industry. A lot of multinational automobile makers, like Suzuki, Honda, and Ford, have set up manufacturing bases in India, and have been major users of 3PL services. Expansion of manufacturing facilities

Logistics & Supply chain industry in India: Current status by most of these companies indicates huge potential for 3PL services in this industry. Other sectors that have shown substantial contribution to 3PL market and significant growth potential include the information technology (IT) hardware and electronics, Fast Moving Consumer Goods (FMCG), and retail sectors.

A Few Challenges to be addressed for Maintaining the Momentum Geographic diversity of India needing varied logistics expertise for each region is a major challenge to be addressed by 3PL service providers. India has a diverse geographic scenario coupled with a diverse consumer habit scenario in each of its 25 states. Logistics operation in each state requires a suitable model that facilitates the effective storage and transportation of goods mostly sold in that state, making it very difficult for adopting a uniform logistics model. 3PL service companies interested in serving a particular company would have to offer multiple solutions to fulfill the nationwide logistics needs of that company. Infrastructure limitations in India, which limit the scope of logistics services package are another concern for 3PL service providers. The congested roadways and ports resulting in significant delay in movement of goods, affect the performance of 3PL service providers. Similarly, lack of sufficient warehousing and specialized storage facilities beyond major cities of the country result in 3PL service providers to restrain from offering warehousing services across the country, hence resulting in their failure to become the complete logistics service providers for clients. Building own warehousing facilities in strategic geographic locations that would serve as hubs for specific regions, could address this problem.The complicated tax structure, deep-rooted corruption and high bureaucratic control are some other hassles faced by 3PL service providers in providing the best of logistics solutions for their clients. However, despite the existence of challenges, several factors are driving the growth of Indian 3PL market.

Some Factors That are Driving Indian Logistics towards 3PL

Logistics & Supply chain industry in India: Current status Value Added Tax (VAT), the Indian Government’s proposed uniform tax regime, is expected to drive Indian industries towards using more 3PL services. Introduced partially in 2005, a full implementation of this regime is expected to necessitate having centralized large warehouses in regional hub cities, to achieve best efficiency in logistics. Since building such large warehouses requires huge investments, most Indian companies are likely to outsource the warehousing function, creating immense potential market for 3PL service providers. Leading companies in major industries have already started planning for the new scenario and the required warehousing capacity to be outsourced. Others are expected to follow them soon. The government of India’s increased focus on improving logistics infrastructure is expected to have a huge positive impact on 3PL market. The government has invested US $17 billion to upgrade highway networks, with the implementation of two major projects, namely the Golden Quadrilateral network and the North-South-East-West (NSEW) Corridor. Apart from this, in a remarkable infrastructure related decision, the government has opened up rail freight operations to private players, thereby creating opportunities for cheaper and faster movement of goods. Transportation by rail is definitely cheaper than by road, as trains are faster and have lower costs per unit distance traveled. This is expected to enable 3PL service providers in offering more cost-effective services to clients, thereby increasing the 3PL usage by all industries. Apart from these factors, the increasing list of multinational companies starting operations in India is expected to fuel the growth of 3PL market. Entry of giants like BMW, Flextronics, and Wal-Mart are expected to contribute to considerable growth of 3PL usage in their respective industry sectors. The opening up of the Indian economy to foreign investments is expected to attract more companies into the country, thereby adding momentum to 3PL market growth. The widespread information technology awareness and expertise in India is also expected to help 3PL companies in offering several value added services using IT such as

Logistics & Supply chain industry in India: Current status Fleet Management Systems, Warehouse Management Systems, and integrated Supply Chain Management systems.

Conclusion The Indian 3PL market is set to grow tremendously in the next 5-7 years, spearheading the

growth of logistics

market.

Several

factors

including

government’s support are instrumental in this growth. Though certain challenges remain to be addressed, the general trend is highly positive. With scenario highly favorable for them, the onus is now on 3PL service companies to offer quality services at affordable pricing, and delivering consistent results to maintain the momentum. For now, surely 3PL is the way forward for Indian Logistics Market.

LOGISTICS IS NOT A CHAIN Executive Summary This paper will challenge the supposition that “logistics” is a chain, and further reject the notion that it is comprised of two distinct sides, supply and demand. The chain portrays logistics to be stagnant and linear; it also suggests that supply and demand are two separate chains. This view causes rigidity of thought and creates a contrary set of theoretical business rules, forcing those involved to think within those limitations. Logistics is dynamic! It is comprised of many moving components that continually interact, constantly adding substance to an evolving process. The very definition of logistics, “the discipline that manages the flow of raw material through the finishing process and responsible for customer satisfaction”, clearly demonstrates that its current representation as a chain is in direct contravention of the “flow”. It will also be argued that there are no distinct sides, that supply and demand is part of a continuous cycle. This white paper will: Challenge the notion that logistics is a chain


Propose that there are two major components of logistics

2.

Identify macrologistics and a representative sample of the major and sub-

components of micrologistics 3.

Discuss the logistics dichotomy

4.

Discuss evolving logistics concepts

Why Is This Subject Important? In decision making theory, understanding differences and the levels of difference is a mission critical element that must be incorporated and operate pervasively throughout the entire decision process! The complexity of logistics as it relates to today’s and tomorrows worldwide commerce requires a clear understanding of these various differences and a fresh look. The current concept that logistics is best described as the “supply and demand chain” whose links portray the functional elements, incorrectly postures logistics as being linear and unfluent. Logistics is a fluent and dynamic process; the “chain” must be replaced in order to maximize the benefits and to bring this important discipline to the next level! Knowing that there is a difference between micrologistics and macrologistics will allow you to effectively and efficiently: •

Identify weaknesses

•

Identify areas of opportunity

•

Select the most appropriate tools, products and services

•

Achieve successful collaboration

•

Reach in to an enhanced database

•

Affect improved communications

•

Establish new reasoning paths for study and analysis

Limitations of the Chain

Logistics & Supply chain industry in India: Current status Logistics and supply/demand chain are words that are incorrectly used interchangeably and to describe each other.

It therefore follows that the

application and reasoning are circular; so, effective articulation, with resultant success, is impossible. These factors, coupled with the belief that logistics is a chain have made the goal of world class logistics excellence amorphous. If the notion of the chain continues to represent logistics, we will see a continuation of insufficient ROI, underutilization, poor response to tasks and events and a significant misuse of management intelligence, talent and time. Because needs are constantly changing and because there is probably an equal number of solutions occurring, it becomes exceedingly more difficult to efficiently and effectively match a need or needs with the appropriate solution or solutions. The “chain” limits our abilities and capabilities because it is serial and of singular dimension. Further, Navi Radjou, of Forrester Research, in his article (Supply Chain e-Business, July/August 2002), “Exit supply chains; enter adaptive supply networks”, states, “Existing supply-chain apps don’t help manufacturers sense or respond to changes in their operations network because they insulate static plans from dynamic execution reality.” By virtue of these restrictions, our thoughts have been channeled into believing that our only tool is one that is “comprehensive”. If we only have a limited number of needs or just a few needs that must be satisfied today, acquisition of this comprehensive tool is likened to, “squeezing an orange grove for a glass of juice”. Since logistics is responsible for managing, integrating and controlling the flow of information, material and money, it must have the capability of targeting a specific issue and establishing the best method of approach. In order to plan and control these flows, the current view of logistics as a chain has been unable to keep up with the needs analysis and the selection of effective solutions. Logistics professionals recognize and appreciate the importance of, “squeezing only the appropriate oranges, so as to extract the correct amount of juice” and

Logistics & Supply chain industry in India: Current status they clearly understand the importance of a continual harvest.

Logistics

portrayed as a chain continually forces the belief that identifying issues and solving problems must be performed in linear or serial, flat, static and unfluent environment. Most companies throughout the world have embraced logistics and its importance in achieving superior customer service, operations and profit improvement.

There has been a proliferation of logistics software systems,

products, tools and services over the last several years. They are offered by general developers, 3PL’s and by other companies whose initial development purpose was for internal use. Further, there has been a great deal of dialog within and between companies, addressing the subject specifically for the benefit of those business partners. Additionally, the dialog is occurring in many forms such as, seminars, case studies, white papers, webinars, on-line communities, management presentations, lectures at educational institutions and advertisements.

Through this labyrinth, little

consensus has been achieved, therefore diminishing the ability to achieve a higher level of logistics success as well as limiting effective collaboration. It is clear that the logistics discipline and practice needs to evolve.

An Awakening At least, one company recognized that there is a logistics dichotomy and has developed its products, tools, services and systems from a “new” perspective, “simpler is better”. As a Transportation Management Services Provider it focuses on incremental and connectible discrete vertical products and service offerings within the Transportation Management Spectrum.

Consistent with this

perspective, this approach recognizes and appreciates the importance of getting its glass of juice from one orange.

Through this understanding, logistics can

continue to evolve, reaching higher levels of benefit, understanding and acceptance.

Logistics & Supply chain industry in India: Current status Two Major Components of Logistics The notion of this paper is that logistics should be viewed as a set of gears; the gears collectively represent macrologistics, while individually they represent micrologistics.

At the micrologistics level, each of the cogs represents the

discrete logistics functions. The graphic below will symbolize this proposition.

Basis for the Words At the outset, it is important to point out that there are no commonly used definitions of micrologistics and macrologistics. The definitions of these terms that have been reviewed were found to be product oriented, or identify the name of a logistics company or division and therefore are inconsistent and diverse.

In

order to properly understand this topic it is imperative that shared definitions be established. The method of approach that we selected to establish the shared definitions for this paper, was to first consider the pure words, micro and macro, and then to consider analogous terms.

Microeconomics and macroeconomics

have been chosen as the terms that are most analogous to micrologistics and macrologistics.

By substituting appropriate words within the definitions, we

believe that reasonable definitions of micrologistics and macrologistics have been achieved, at least, for this paper.

Shared Definitions for this Paper Logistics is the discipline that manages the flow of raw material through the

finishing process and is ultimately responsible for customer satisfaction. Micro is defined as, Basic or small-scale. Macro is defined as, Large in scope or extent; large-scale Microeconomics is the study of the operations of the components of a national

economy, such as individual firms, households, and consumers.

Logistics & Supply chain industry in India: Current status Macroeconomics is the study of the overall aspects and workings of a national

economy, such as income, output, and the interrelationship among diverse economic sectors.

Micrologistics is the study of the operations of the components of logistics, such as transportation procurement, inventory control, data, freight tracing-audit and payment.

Macrologistics is the study of the overall aspects and workings of logistics. The Logistics Gears Drive Logistics The graphic below identifies an overview of logistics and considers “gears” instead of links in a chain. Essentially, gears demonstrate fluidity, while links in a chain are stagnant. This distinction recognizes the fact that there is a moving force or engine that drives logistics and reinforces the fact that logistics is dynamic. In the operating logistics process, one change causes another change. The application of dynamics enables logistics and transportation professionals to intelligently identify and forecast their needs and assign achievable goals. An inherent advantage is planned response with predicable results.

Separating the Overall from the Components Macrologistics are represented by the gears collectively in the above graphic and as such would be concerned with the overall aspects and workings of logistics management. The individual gears would represent micrologistics and address the components of logistics, such as transportation, inventory, and warehousing. The cogs on the gears represent the respective subcategories. As an example, Transportation as a micrologistics component could have the following subcategories: rating, routing, tracing and tracking, sourcing, auditing and payment, management reports. Warehousing’s cogs could include: receiving, put-away, replenishment, cyclecounting, picking, packing, shipping, kitting, returns.

Logistics & Supply chain industry in India: Current status Inventory’s cogs might include: turns, safety-stock, cycle-stock, transit-stock, strategic-stock, replenishment frequency, consignment-stock.

The Logistics Gears; Driving the Process Benefits Reduce replacement and spare parts inventory Minimize reverse logistics processing costs Improve return and repair cycle times Eliminate unnecessary returns shipping costs Improve utilization of inspection Facilities Maximize service network profitability Improve responsiveness to customers Effectively managing the reverse logistics process is critical to maximizing customer loyalty, meeting service-level agreements and driving highmargin services revenue. In an effort to achieve these objectives, companies build inventory buffers to ensure replacement product availability and use costly manual processes to track return and repair orders.These practices are particularly common among service providers that must coordinate the activities of field technicians, transportation providers, inspection sites, distribution centers and repair vendors. An application within the the Yantra 7x product suite,Yantra Reverse Logistics improves customer responsiveness, reduces inventory levels and minimizes operational costs through real-time control of the return and repair cycle.YantraReverse Logistics offers robust returns management

capabilities specifically built for complex

operations, enabling your organization to more effectively manage the “end-toend” reverse logistics process and obtain integrated control over all orders related to the return.

Manage the Reverse Logistics Process Across Multiple Locations Yantra Reverse Logistics provides maximum flexibility to manage the returns process according to your

organization’s business requirements. Easily

configurable workflows can handle returns according

Logistics & Supply chain industry in India: Current status to any

order

or product-related

attribute. Flexible Return Merchandise

Authorization (RMA) generation rules and return node selection logic let business users dictate the steps for initiating and processing returns.This eliminates the manual process used by many companies to fill gaps in enterprise or legacy applications. Increased flexibility and control results in shorter reverse logistics cycle times, thereby reducing replacement inventory levels.

Leverage Returns as a Source of Supply Many companies are unaware of the amount of inventory tied up in the return and repair process. High-value products and parts may sit in technicians’ vans or inspection centers for weeks before they are sent for repair or returned to stock.Often these parts require no repair and could immediately be resold to another customer. Yantra Reverse Logistics enables companies to effectively track items throughout the return and repair process and automates the procedures that return items to stock. Real-time status updates from service and repair organizations enable your company to truly leverage the reverse logistics cycle as a source of supply.

Improve the Customer Experience Providing a positive post-sales service experience is critical in any industry. However, when companies have entered into service-level agreements with their customers, the cost of failure increases significantly. By providing integrated control over all orders related to the return (i.e. the original sales orders, the replacement order, the repair order, etc.),Yantra Reverse Logistics leverages real-time information to improve the quality of customer service, while eliminating inventory buffer stocks and costly manual processes. Rever

Logistics & Supply chain industry in India: Current status FREIGHT FORWARDING 1. FREIGHT FORWARDER •

No Internationally accepted definition

•

Originally a Commission agent for attending to port, shipping & customs

formalities for and on behalf of the exporter. •

Today, an essential link in trade and transport for and on behalf of exporter

& Importer.

2. FREIGHT FORWADER’S SERVICES FOR EXPORTERS •

Choice of routes.

•

Reservation of shipping space.

•

Inland transportation.

•

Packing.

•

Warehouse

•

Insurance

•

Post, custom and shipping documentation.

•

Overseas transport service.

•

Assistance in filling claims.

•

Monitoring movement of goods to import.

•

General advisory services.

3. FREIGHT FORWADER’S SERVICE FOR IMPORTER •

Monitoring movement of goods.

•

Servicing and checking all relevant documents.

•

Customs and port documentation.

•

Warehousing

Logistics & Supply chain industry in India: Current status Transportation

•

•

Delivering goods to consignee.

•

Assistance in filling claims.

4. FREIGHT FORWARDERS RELATIONSHIP WITH INTERVENING PARTIES •

Custom commissionerate

•

Post trust

•

Banks

•

Consular office

•

Health department

•

Carrier

•

Chamber of commerce

5. FORWADER AS PRINCIPAL •

Containerization / multimodal transport service.

•

Independent contractor with all responsibilities and liabilities.

6. CHOICE OF FREIGHT FORWADER : FACTOR •

Specialization



Product specialization



Country specialization

•

Organization and activities

•

Financial standing

•

Fees 7.

•

RIGHTS / DUTIES / RESPONSIBILITY Legal status varies from country to country


Standard condition in accordance with commercial practice or legal system

in each country. •

Accepts liability for his own / his employees’ fault.

•

Does not accept liability for acts or omission of third party.

PORT AND SHIPPING FORMALITIES Constitutes an important stages in physical distribution management and processing of export orders. Procedural formalities for shipment of export cargo differs from port to port because of different reason e.g. post trust act, Dock Bye Laws, custom of trade etc. Like custom formalities, these are normally attended to by freight forwarders who specialize in handling this part of export transactions. Export cargo can be brought to the port only after the ship has been allotted a berth and cleared for loading. Some port authorities in India require the shippers to pay port charges and have their shipping bills passed by the customs before carting their goods to the docks. At the Mumbai port however shipper have the facility of paying port charges after the shipment. Before bringing the cargo to the shipment shed, the shipper has to obtain the carting permission from the shed superintendent and also the ship’s agent on the document prescribed by the port trust. This document is known differently at different ports e.g. docks challan in Calcutta, port trust copy of the shipping bill at Mumbai and export application at other ports in India. When goods are brought at the dock gates, the shipper has to present the port document and the vehicle ticket (in duplicate) to the gate inspector. All the gate, the documents are compared and checked to ensure that only such goods, which have been permitted, are brought to the docks for shipment. The packages / bundle / cases in each vehicle are counted to see that their number tallies with the number mentioned in the respective vehicle tickets. Vehicles are allowed to move to the concerned shipment shed and particulars of cargo passed through

Logistics & Supply chain industry in India: Current status the gate are recorded in a register maintained at this point. Coinciding with the arrival of the vehi vehicl cles es in the the ship shipme ment nt shed shed,, the the ship shippe perr submi submits ts the the vehi vehicl cle e tick ticket et duly duly endorsed by the gate inspector, export application/ dock challan / port trust copy of shipping bill (duly passed by the customs) and a receipt in lieu of payment of port charges, where necessary to the shed superintendent. As cargo is unloaded in the shipment shed, details of the cargo received are entered in the ‘Shed Export

Cargo Register’, which is maintained shipper-wise and ship-wise. The The shippe shipperr then then approa approache ches s the custom custom apprais appraiser er and custom customs s preven preventiv tive e officer for physical examination of goods and obtains ‘Let export / Let Ship’ endorsement on the shipping bill. The shed superintendent maintains a record of these endorsements in the port trust’s documents also. The cargo is then allowed to shipped. On completion of shipment details of cargo actually shipped are recorded in the ‘ Shed Export Cargo Register’ from the shipping tally sheets’, which are maintained by the port trust, and also the shipping lines. On receipt of cargo onboard, the master of the vessel issues a document called the Mate’s Receipt in respect of every shipment taken on board. At some ports, the issuance of Mate’s Receipt is preceded by another document, which has to be exchanged for the Male’s Receipt. Port authorities collect the Mate’s Receipt from the master or the Chief Officer of the vessel and pass them on to the respective shippers only only after after ensu ensuri ring ng rece receip iptt of all all port port dues dues.. No Claus Claused ed Mate Mate’s ’s Rece Receip iptt are are accepted by the port authorities, unless authorized by the s hipper(s). After collecting the Mate’s Receipt, the shipper(exporter or his agent) prepare the bill of lading on blank forms supplied to him by the shipping company and present 2-3 originals and some non negotiable copies of the document at the shipping company’s office for the signature of the authorized officer along with the Mate’s Receipt. The Mates Receipt is the important document because it is required to be exchanged for Bill of Lading. The shipper must, therefore collect this document because from the Shed Superintended immediately after it has been received by the latter to avoid delays and problems, which might follows if it is not collected in time.Bill of Lading may be marked ‘Freight Paid’ or ‘Freight to

Logistics & Supply chain industry in India: Current status Pay’. If the freight is pre paid, i.e. paid by the exporter, the Bill of Lading is marked or stamped to the effect and where freight is not pre-paid, the bill of Lading is marked ‘ Freight to Pay’ or ‘Freight Collect’. The shipping company retains the Mate’s receipt. Before signing and parting with the Bill of Lading, the shipping company ensures that all the clauses appearing on the Mate’s Receipt are reproduced on the Bill of Lading also.

IMPORTANT STAGES 1. Goods brought to port after vessel declared for loading, shipping Bills (SB) passed by customs, ‘Carting Permission’ obtained from port shed superintended / shipping line’s agent and port charges paid. 2. Payment of port charges document, port trust document (PTD) plus shipping Bill duly passed by customs. 3. Carting of goods to Docks, the following documents are to be presented at Gate. •

Shipping Bill passed by custom

•

Port trust document with ‘Carting Permission’.

•

Evidence of payment of port charges. 4. Docu Docume ment nt chec checke ked d at gate gate and and endo endorse rsed d to Shed Shed Supe Superi rint nten ende ded, d, good goods s checked where possible. 5. Statement of goods sent from gate to Shed Superintendet. 6. Arrival of goods in Shed.

•

Presentation of documents plus goods

•

Entry of particulars in ‘Shed Register’


Unloading of goods in Shed / outside shed

•

Unloading tally (must match with it) 7. Customs Examination of goods in Docks

•

At ICDs / CFS in case of containerized cargo

•

Endorsement o shipping Bill/ port trust document

•

Entry in shed register 8. Supe Superv rvis isio ion n of load loadin ing g by cust custom om prev preven enti tive ve offi office cer, r, afte afterr ‘LET ‘LET SHIP SHIP’’ endorsement on shipping Bill and port trust document.

9. Loading of goods ‘On-Board’ •

Tally by port trust clerk and shipping line’s clerk

•

Exchange of tallies

•

Acknowledgment of goods ‘On-board’ by Master of Vessel on shipping Bill

and port trust document. 10. Issuance of Mate’s Receipt Receipt by Master of vessel to Exporter through port trust 11. Exchange of Mate’s Receipt Receipt for Bill of lading lading at shipping line’s office. office.

CUSTOM CLEARANCE OF EXPORT CARGO 1. Submission of documents at the customs house.

•

Relevant shipping Bill (SB) with declaration

o

Duty free goods(black)

o

Dutiable goods(yellow or lemon yellow)

Logistics & Supply chain industry in India: Current status o

Under claim for duty draw back(green)

o

Goods Ex-Bond(pink)

•

Invoice

•

Packing list

•

Contract / letter of credit

•

Guaranteed remittance forms

•

AR 4 (0) + (D), AR form for central excise

•

Quality control / post inspection certificate

•

Any other like ceiling price certificate, floor price certificate etc.

1.

Checkin king of of do documents an and al allotment of sh shipping Bi Bill nu number

2.

Sorting of of sh shipping Bi Bill: Ac According to to typ type e and and pr product gr group

3.

GR Formalities- cross reference

4.

Duty assessment and collection

5.

Shipping Bill (o (original)-statistics de department

6.

“Let Exp Export sub subject to Ph Physi ysical Ex Examination” end endorsem sement on sh shipping

Bill. 7.

GR (original) with statement to RBI

8.

Movement of goods to docks

9.

Presentation of documents at Dock Gate

•

Shipping Bill duly passed by customs

•

Port trust document bearing carting endorsements and proof of payment of

port charges •

Vehicle ticktet

10.

Endo Endors rsem emen entt of docu docum ment ent to to she shed d sup super eriinte ntenden ndentt (po (port rt))

11. 11.

Reco Record rdin ing g of of inf infor orma mati tion on rega regard rdin ing g good goods s rec recei eive ved d in in Por Portt tru trust st Reco Record rd

12.

Physic sical ex examination of of go goods by by cu custo stom of officer

13.

“Let “L et Expo Export rt” ” end endor orse sem ment ent by by cu custom stom offi office cerr on on shi shipp ppiing bil bill


“Let Ship” endorsement by custom preventive officer (CPO) in charge of

supervisionof loading operation. 15.

Shipment Tal Tally” lo loading of goo goods / con containers on board ard main aintain ained by

ship 16.

Acknowledgment by master of vessel on shipping bill and transport

document 17.

Issuance of Mate’s Receipt by Master of Vessel to port trust;s shed

superintendent 18.

Collection

of

Mate’s

Receipt

by

shipper

from

port

trust’s

shed

superintendent 19. 19.

Exch Exchan ange ge Mat Mate’s e’s Rec Recei eipt pt for for Bil Billl of of Lad Ladin ing g at at shi shipp ppin ing g lin line’ e’s s Off Offic ice. e.

FLOW PROCESS STAEMENT SHOWING THE DIFFERENT STAGES OF CUSTOM CLEARANCE OF EXPORT CARGO FOR DIFFERENT TYPES OF SHIPPING BILLS 1.

Exporter or his agent drops inside the box kept outside the export

department the shipping bill and other related documents.

•

Shipping bill (in duplicate triplicate or quadruplicate) duly filled in and

signed •

Declaration regarding truth of statement made in the shipping bill

•

Invoice copy (required No. of copies)

•

GR from (original+duplicate)

•

Export license (wherever required)

•

Original contract or correspondence leading to contract

•

Contract registration certificate

•

Packing list

•

AR4 from (original, duplicate and sixtuplicate)

Logistics & Supply chain industry in India: Current status Any other

•

2.

Collection of of sh shipping bi bills an and mi ministeria rial ac action th thereon. Ship Shippi ping ng bill bill alon along g with with othe otherr docu docume ment nts s are are coll collec ecte ted d at fixe fixed d

•

intervals every 15 min. or half an hour. They are then stamped with date and time and numbered according to

•

their category e.g. free shipping bills, dutiable, shipping bills, coastal shipping bills, drawback shipping bills. In this process it is also ensured that the shipping bills are in proper

•

form, duly prepared and signed and all the relevant documents are attached. Information given in the documents is also cross-checked. 3.

Disp Dispo osal sal of of shi shipp ppin ing g bi bills rel relatin ating g to to Bag Bagga gage ge,, ReRe-ex expo port rt and and No Non Dut Dutiiabl able

item where no foreign exchange is involved. These shipping bills along with the related documents are sent to the

•

index clerk who checks the GR Waiver’ formalities •

He endorses on the shipping bills “Let Export After Examination”

•

Shipping bills are then sent to the window delivery clerk who detaches

the original copy of the shipping bill for being sent to the statistics department Other copies are given to the party to arrange for movement of goods

•

to dock for examination and shipment

4.

Action

in

appraisement

section

regarding

dutiable

shipping

bills,

drawback shipping bills and all other shipping bills involving foreign exchange. •

Allo Allocat catio ion n of shipp shippin ing g bill bills s amon among g diff differ eren entt grou groups ps for for appr apprai aise seme ment nt

purposes •

Verifi Verificat cation ion of the facts facts specif specified ied in the shippi shipping ng bill bill regardi regarding ng quality quality,,

weight, value etc., with refrence to the invoice and contract. Value is to be verified also with refrence to the price information available with the appraiser. Shipping

Logistics & Supply chain industry in India: Current status bills under claims for duty drawback and under DEEC are properly scrutinized to verify their genuineness •

In case of items subject to export licenses, it is verified whether the export

is in keeping with the licensing formalities and within limits allowed •

Classification number as per harmonized system of menclature(HSN) for

the item and the rate of duty application to it any, are then verified •

Endorsement of examination order is made on the shipping bill indicating

the extent of physical examination at the dock with the initial of the appraiser concerned. The shipping bill are approved by the concerned appraiser •

In case of those shipping bills where the amount of duly drawback or the

values of consignment under DEEC is high, the shipping bills are approved by AC •

5.

Shipping bills are then sent to the GR clerk Action by GR clerk

•

Checking GR from number given in the shipping bill

•

Putting shipping bill number on the GR form

•

Comparing value given in GR from with the value in the shipping bill

•

Detaching GR from original from the shipping bills for being sent to the

Reserve Bank of India 6. •

Delivery of shipping bills to the party for further action

Free shipping bills under claims for drawback are sent to statement clerk for

necessary records •

Shipping bills are then sent to the window delivery clerk for being handed

over to the party to arrange for shipment of goods

•

The original copy of the shipping bill is detached at this stage for being sent

to the statistical department •

The dutiable shipping bills are given to the party for payment of export duty

in the cash and account department

Logistics & Supply chain industry in India: Current status 7. •

Payment of Export duty

Dropping of shipping bills in the box kept in the cash & accounting

department •

Collecting and stamping of shipping bills

•

Checking of calculation of duly by the computist and putting the stamp and

duty amount by him •

Comparing the original and duplicate shipping bills to ensure that duty

amount are correctly entered •

Shipping bills are then given to window delivery clerk to be handed over to

the party concerned •

The party presents the shipping bills with cash / cheque to the shroff who

enters the amount in the shroff rough sheet •

Putting the oval stamp on the shipping bill and export duty receipt which is

attached with the shipping bill •

The shroff enters the amount in the oval stamp and initials

•

The shipping bills are then sent to the cash sheet writer who enters the

amount in the register of Export Duty and Endorses the register number on the shipping bill •

Then the shipping bills are presented to the ‘out of charge clerk’ who

checks the amount in the register and the shipping bills and initials on the shipping bills and the register •

The original shipping bill is then detached to be sent to statistics

department for compilation •

The duplicate shipping bill and export duty receipt are sent to window

delivery clerk to be given to party •

The party after receiving the duplicate shipping bill arranges for the

movement of goods to the dock for shipment.

Logistics & Supply chain industry in India: Current status In case the payment of duty is to be effected through adjustment in deposit

•

account of the party concerned the following steps are involved Shipping bills are handed over to deposit sheet account department

•

The deposit sheet writer enters the export duty in the register of export

•

duty and the register number is endorsed on the shipping bill •

Then the shipping bill are sent to the ledger clerk

•

The ledger clerk debits the amount in ledger. He then detaches the original

for checks with reference to entries in the ledger The duplicate shipping bill is passed on to the window delivery clerk for

•

being handed over to the party 8. Examination by shed appraiser/ examiner at the dock

Clearing and forwarding agent present the shipping bill to the shed

•

appraiser after the export cargo has been brought to the shed by fulfilling various formalities required in connection with movement of export cargo with the port trust authority. Along with shipping the following documents are to be presented: -

•

a.

Invoice

b.

Packing list

c.

AR-4 form or AR-5 form as the case may be

d.

Agmark certificate, quality control certificate etc. whichever is applicable The shed appraiser assigns the shipping bill to one of the examiners. He

specifies the packages to be examined. •

Examiner examines the packages as specified by the appraiser in

accordance with the examination order given by custom house appraiser and records report on duplicate copy of shipping bill and the triplicate copy of the shipping bill. •

The shipping bill with examiner’s report and the sample of goods if

necessary, are brought to the shed appraiser who signs the ‘Let Export’ order on the shipping bills

Logistics & Supply chain industry in India: Current status 9. ‘LET SHIP’ Order by the preventive officer on the shipping bill

After the ‘Let export’ order is given on the shipping bill by the shed

•

appraiser, shipping bill along with all other documents mentioned earlier is presented to the preventive officer in charge of the vessel in which export cargo is to be loaded. P.O. verifies that AR-4 forms, export permit, inspection certificate etc. is

•

duly presented and that the ‘Let Export’ order is specified on the shipping bill. He compares the particulars of AR-4 form with those of shipping bills. If everything is in order he endorses on the duplicate copy of the shipping

•

bill with ‘passed for shipment’ seal and initials. After the ‘Let ship’ order the duplicate copy of the shipping bill is given to

•

the shipper or his agent to be handed over to the shipping company. The in charge of the carrier allows loading on the basis of this proof. 10. Shipment of Export cargo under the Supervision of P.O. The export cargo is loaded on the vessel under overall supervision of the

•

P.O. •

He checks up the loading operation with reference to shipping bills

(duplicate copy) and tallies being prepared by the ship staff and the port trust staff 11. Endorsement on Export promotion copy of shipping bill / AR-4 form etc By the P.O. •

Signature of the master of vessel is obtained the duplicate copy of shipping

bill to indicate receipt of the content. •

The full or part shipment stamp the case may be is put by the P.O. with his

signature on the duplicate copy of the shipping bill. •

After loading is over P.O. verifies shipment with refrence to Mate’s Receipt

given by the steamer agent presented by the shipper’s agent.

Logistics & Supply chain industry in India: Current status Certificate regarding shipment of export cargo in specified column is put by

•

P.O. on original, duplicate and sixtuplicate copy of AR-4 form, on the Export promotion copy of shipping bills, on cervical invoice and any other document as required by the shipper. •

Duplicate copy of AR-4 form is sent directly to the rebate sanctioning

•

authority by P.O. and the other documents along with the Mate Receipt are Handed over to the shipper or his agent. The shipper or his agent presents the Mate Repptto the agent of the carrier

•

and obtains bill of lading.

CUSTOM CLEARANCE OF EXPORT CARGO AT ICDs 7.

Submission of SB with relevant documents at container unit of customs at

ICD plus 2 transference copies of SB. 8.

Noting and security of the documents.

9.

Casting of the goods to ICD/CFS.

10.

Physical examination order

11.

Examination of goods and examination report on SB (D)/(T).

12.

“Let Export” order

13.

Stuffing of containers: endorsement on SB

14.

Shipper showing export promotion copy of SB to MTO who issues MTD

(BL). 15.

Containers sealed and sent to gateway port along with 2

transference

copies of SB through railways. 16.

Container plus SB (T) copies presented to customs at gateway port.

17.

Shipment under preventive supervision of the customs

18.

Endorsement of fact of shipment by CPO on transference copies

19.

Filling of export general manifest (EGM) of ICD originating

customs container unit at gateway port.

of SB.

goods at the


Telexing fact of shipment by the customs at ICD plus date of

entry

outwards of vessel within 24 hrs with SB number an date. 21.

Dispatch of 1 transference copy of SB with endorsement by CPO to ICD’s

customs commissione rate along with statement showing SB number & date, date of filling of EGM, date of dispatch of documents to ICD customs. 22.

ICD customs on receipt of transference copy of SB document are co-

related for the purpose of DBK. Central Excise duty on finished product for export by exporter.

DOCUMENTARY CREDITS

•

A document involving merchandise is a wtitten undertaking by a bank to

pay in accordance with instruction from the buyer (applicant) a certain sum of money to the seller (beneficiary) , within a prescribed time limit and against stipulated documents covering the transport from seller to buyer. •

A document therefore:

•

Is an arrangement by the bank for setting international trading transaction

•

Provide a form of security for the parties involved

•

Ensures payment once it is evident that the terms and condition of the

credit have been fulfilled •

Means that payment is based on documents only and not on merchandise

or services involved •

Seller and buyer enter into the contract

•

Buyer instruct his bank to issue a document in favor of the seller

(beneficiary) •

Issuing bank asks a bank in the exporter’s country to advise / confirm the

credit to the exporter

Logistics & Supply chain industry in India: Current status Exporter on receipt of credit makes shipment and submits the required

•

shipping documents evidencing shipment , as per the terms of credit , to the advising / confirming bank •

The A/C bank checks the documents presented by the exporter in

consonance with the “Doctrine of strict compliance” and, if satisfied, settles the exporters claim either by payment or acceptance or negotiation, as per the terms of credit and then sends the documents to the issuing bank. •

The issuing bank gives the document to the importer on payment for the

goods •

carrier.

Importer takes delivery of the goods on submission of documents to the

Logistics & Supply chain industry in India: Current status ADVANTAGES OF DOCUMENT Document offers both the parties to transaction, maximum possible security combined with facilities for receiving assistance in financing it. The buyer does not normally have to pay until he receives the agreed documentary evidence that the stipulated condition have been compiled with. The seller can be certain of payment by the bank provided the documents on submitted correctly. He can dispatch the goods as soon as he is advised that the credit has been opened by the bank of the buyer and made available at a bank in the country of the seller. All the parties involved are assured of uniform interpretation and application of the terms and provision in documentary credits.

TYPES OF DOCUMENTARY CREDIT

•

Revocable documentary credit : - This can be amended or cancelled at any

time without prior notification and there can be no legal recourse against such an action . involves risks as the credit may be amended or cancelled while the goods are in transit or before the documents are presented. The seller would than face the problem of obtaining payment from a foreign party. But can revoke it without prior notice up to the moment of payment. •

Irrevocable letter of credit or documentary credit: - Such a documentary

credit can be amended or cancelled with agreement of the parties involved. As there are often 2 bank involved i.e. importer bank and the advising bank, the buyer can ask for an irrevocable letter of credit or be confirmed by the advising bank. The irrevocable letter of credit thus becomes confirmed irrevocable letter of credit. This is preferable from many points of view. However, the seller may remain dependent on a foreign bank for payment. This credit is less favorable from the buyers’ point of view as the credit can be amended or revoked if all parties agreed.


Confirmed letter of credit: - This is the best guarantee since a bank in the

sellers country has added its undertaking regarding payment, accepting or negotiation, tothat of the issuing bank.

From the buyer viewpoint the difference between an irrevocable and a confirmed irrevocable credit is that if he is bearing the charges he will have to pay 2 bank charges.

SETTLEMENT UNDER DOCUMENTARY CREDIT There are 2 ways in which settlement takes place under documentary credit •

By payment

•

By acceptance

•

By negotiation

1.By payment

•

•

The seller sends the documents to the A/C bank. After examining the documents the A/C bank makes the payment or

provided the documents are in order •

The bank send the documents to the issuing bank sends the documents to

the issuing bank (importer) and claims reimbursement. 2. Settlement by acceptance •

The seller transmits to the advising or the confirming bank the documents

accompanied by a draft drawn on that bank at the specified tenor. •

After examining the documents the advising /conforming bank on which

draft is drawn accepts the draft.


The bank then sends the document to the issuing bank informing it that at

maturity it will obtain reimbursement as already agreed with the issuing bank. •

A banker’s acceptance is a time bill of exchange or is term or usance draft

drawn on and accepted by a bank. In accepting the draft signifies the face value at maturity to the party presenting it for payment at the appropriate time.

3. Settlement by negotiation •

The seller tranmit to the advising bank the documents accompanied by a

draft at the sight or at tenor depending on the condition of credit drawn on the issuing bank on the buyer. •

The negotiating bank may negotiate the draft subject to deduction of

discount of discount or interest or commission. The credit may also provide for these changes to be born by the applicant (buyer) •

The negotiating bank send the documents and draft to the issuing ban for

payment at sight or at maturity by means of which the negotiating bank is reimbursed. •

A documentary credit, which is available by negotiation, must clearly state

so. The negotiation is carried “with recourse” against the drawer unless the credit has been previously conformed by the negotiating bank.

DOCUMENTARY CREDIT The beneficiary on receipt of the credit should check that: •

The type of credit and the terms and condition with the sales

•

There are no unacceptable conditions

•

The documents cannot be obtained in the form required

•

The description of the merchandise of commodity, and any unit price,

conforms to the sales contract •

The amount of the credit is sufficient to cover all costs permitted by the

terms of the contract


The shipping and expiry dates, and the period of time for presentation of

the documents following the issuance of the transport documents, allow sufficient time for the processing the order, effecting shipment and making presentation of the documents to the bank for payment acceptance or negotiation •

The point of dispatch or taking in charge of the goods, or loading on board,

as the case may be, or of discharge or final. •

The provision for insurance is in accordance with the terms of the sale.

ROLE OF CONSOLIDATOR/NVOCC IN INTERNATIONAL CARGO BUSINESS Consolidation is a highly specialized wing of shipping on the whole offering NVOCC and MTO services as an added advantage. Owing to its inherent benefit such as saving in cost and the safety to cargo, the concept has become very popular

in

international

movement

of

cargo

and

multi-modalism.

The

consolidators play a very vital role in providing services to a segment of the EXIM trade who have requirements like moving small parcels around the world that may be of commercial value or just trade samples or personal effects. It is the intermediary between the shipper on the one hand and the carrier on the other. Shipping line accepts shipment directly from shippers, freight forwarders, consolidators etc. It is of utmost importance that correct procedure is followed if the shipment is to reach its destination expediously and safely. Particular attention must be paid to the accurate completion of documents, packaging and labeling to comply with International Trade practices and norms under the UN charter and at the same time meet specific requirements as per government regulation in different countries. Apart from procuring business in terms of cargo, consolidators offers some additional services to the clients that forms a part of a more comprehensive logistics service. These include:-

Logistics & Supply chain industry in India: Current status (1) Pick up of cargo from the shipper’s warehouse. (2) Storage of such cargo in their warehouse until time when such cargo is ready for customs clearance and ultimately handed over to the carrier. (3) The consolidator does all necessary documentation and customs clearance procedure. (4) Cargo tracing. (5) Feedback information to the shipper regarding the status of the cargo. By handling over the cargo to a consolidator the actual shipper may be relieved from all these procedure and can avail all such services and can yet reach the cargo to the desired destination in a timely and cost effective manner. By taking the entire responsibility of providing a reliable solution provider the shipper / consignee can stay focused in developing their business avoiding the loss of valuable time in managing various vendors to ensure that tendered business is in safe hands. This is the essence of a consolidator / NVOCC business practice and how well they can double up their resources in providing a comprehensive logistic solution. The role of a NVOCC/Consolidator in international business is important due to the Concept of consolidation, NVOCC operation and freight forwarding and the extensive use the consolidators make of it. The process of consolidation or Freight Forwarding which an NVOCC does results in the shipper becoming a customer for the NVOCC while the choice of carrier remains with the NVOCC depending on terms and conditions of the sale/contract. The question is why shipper negotiate Freight with a consolidator and not the carrier directly. There are a few reasons that govern this and some being as follows: •

Offer Single window service option for all activities.

•

Due

to

having

a

large

network

the

volumes

controlled

by

a

NVOCC/Consolidator is substantial and that gives them better bargaining powers. •

Volume contracts with carriers also play an important role in achieving

better freight rates.

Logistics & Supply chain industry in India: Current status Periodic and sustained inducements for the carrier offering port to port calls is of utmost important and this is achieved through the business generated by consolidator or NVOCC due to their local market know how, infrastructure and market coverage.



FREIGHT PAYMENT

Freight Prepaid Freight Collect





The shipper pays the freight at the port of loading.

The consignee pays the freight at the port of destination.

AT ORIGIN SHIPPER ------------------------------------------------------------------ CONSIGNEE 1.

THROUGH BANK

2.

ADVANCE PAYMENT

Through Bank

Shipper (B/L)



Bank (shipper’s)



Bank ( consignee’s )



Consignee

The consignee has to pay to the bank and then the bank will release the B/L to the consignee. After that the consignee with the B/L contacts the agent at destination for Delivery Order.

Advance Payment Shipper



Consignee ( To Order Of Bank in the B/L )

This means that there is some advance payment. In this case the original B/L is endorsed by the shipper (on the back of the B/L).

AT DESTINATION Through Bank

Bank (B/L)



Consignee  C & F Agent



Consolidator  Delivery Order

Logistics & Supply chain industry in India: Current status After bank endorsement on the back of the original B/L, it is handed over to the consignee for further endorsement. Then the C & F agent endorses the B/L and hands it over to the consolidation agent for cargo release order. MARKETING PROCESS: The definition is a useful step in understanding the market process. The first and formidable way of looking at the whole marketing process is the component parts of product, price, place, (or distribution) and promotion. The aim must be to achieve the optimum combination of the 4 P’s. In order to determine the activities to be undertaken by the Forwarder / Consolidator so as to apply the principles of marketing - the service providers begin with a rigorous process of analysis of the customer and the market. No forwarder / consolidator can hope to be successful unless it conducts a parallel process of investigation into its marketing environment, the background against which the marketing activity will take place. Once customers are understood and the marketing environment known, the forwarder / consolidator is in a position to plot a well-defined and properly communicated market strategy, without which no forwarder / consolidator can hope to be successful. Subsequently to the definition of strategy three processes follow logically those of product development, pricing and marketing. These activities define the products, which will be offered to the customer in order to implement the chosen strategy. The final stage of marketing is that of selling. To make the successful application of principles of marketing service provider must be able to sell hard and successfully.

THE PRODUCT Product is anything that can be offered to market for attention, acquisition, use or consumption which include physical objects, services, personalities, places, organization and ideas or anything else that has the capacity to provide the satisfaction, use or perhaps the profit desired by the customers.

Logistics & Supply chain industry in India: Current status Consolidation agents products are services which have been defined as any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. A consolidator acts as a mediator between the exporter and the carrier. The product of a consolidation company is its services.

IDENTIFYING THE CUSTOMER : In any area of marketing, the distinction between the customer and the consumer is fundamental. The consumer is a person who actually uses the product, whereas the customer is the decision-maker with regard to choice of supplier. Customer and consumer may or may not be the same person. In service marketing the interest is in the customer who choose service of a particular forwarder / consolidator.

TARGET CUSTOMERS: International Freight Forwarders



International forwarders provide a lot of

routed cargoes by their counterparts (overseas). (1)

Custom House Agents(Clearing Agents)



Clearing Agents control cargoes

sourced from local and outstation shippers. They also execute the clearing of consignments for international business. (2)

Freight Brokers



Brokers control the traditional export houses.

(3) Shippers directly.

MARKETING STRATEGY FOLLOWED (EXPORT ): Product Sales / Management (1) The customers are appraised of the services e.g. direct consols provided by the company which the customers usually prefers, highlighting the advantages of the services (direct consols) like safe transit, fixed sailing schedule and less handling are features that matter most.

Logistics & Supply chain industry in India: Current status (2) Healthy relationship with the counterparts (overseas) and highlighting the networks strength in terms of performance and presence is of vital importance. Having a network that perform all that is expected of in making a safe and sound delivery is one of the key parameters that need to be met for a service to deliver what is expected in the contract or agreement. The stronger the network and fewer the number of intermediaries only enhances the efficiency and this goes a long way in customer satisfaction. That is why companies with uniform and large networks excel in getting selling their services at the same living up to expectation of the customer. (3) Another important strategy is being neutral service provider where you do not trample on your customer base in the process of targeting business. This is explained if you take an example like Domestic and International Freight Forwarders who happen to be the biggest customer base for Consolidators and NVOCC operators. Their clients are direct shippers and consignee and they rely on Carrier, NVOCC or Consolidators for a part of the logistic they need to provide. If a carrier starts marketing to a the shipper directly eliminating the scope of an NVOCC or Consolidator to participate it will jeopardize the support and effect the business on the whole. So being neutral and targeting a set customer base and mover over to another without harming the interest of the existing customer base is important in strategic sales planning. (4) Competitive rates are offered after negotiation with the clients though the focus is always on the service provided.

SELLING IN THE FREIGHT MARKET Consolidators selling into freight market can be divided into 2 segments:(1) Client Retention and Existing Traffic Management. (2) Generating new traffic.

Logistics & Supply chain industry in India: Current status Client Retention and Existing Traffic Management This is perhaps the most difficult task especially in today’s competitive environment. This necessitates a very effective and strong marketing task force and extensive market coverage and presence. This involves activities like trying to achieve lower rates, Better service levels with by adding new features periodically. Regular Customer follow up a team of Customer Relation Managers. Study the requirements on a per shipment basis and keep clients abreast of the developments on their valuable business moving through the service provider. One of the most important factors is pricing that needs to remain competitive and continues to provide an edge to the customer in closing overseas deal to facilitate his business. This also involves providing the customer a higher level of service. Loyalty is a very important criterion in this trade. Proper feedback to customers and keeping in touch in times of necessity and emergency are all indication of higher service level. After that customers are ready to pay a little more to achieve a higher service level. This is one of the most effective means of marketing.

Traffic Generation: Generating new traffic is significantly possible by approaching producers / exporters with proposals of broadening the basis of their distribution. If any producer switches to using ocean freight he will have a worldwide market open to him. Further more traffic generation is also possible by highlighting the advantages which marine transport can bring to the producers like it can provide the movement of higher volume of cargo at lower rates to remote destinations. Traffic generation is also possible by approaching customers using the services of other consolidators / forwarders or attacking customers of sectors that provide higher volume of business. For this purpose port reports are helpful which provide the list of customers using competitors’ services. Similarly sector wise statistics can provide an overall picture of the volume of business to different sectors of the world highlighting the profitable sectors.

Logistics & Supply chain industry in India: Current status Hence it can be inferred that more customers or more volume of business can be generated by enlarging the range of service and by offering improved quality of service. The present competitive circumstances calls for changing the product profile and engaging in organized sector wise marketing by offering specialized value added services. Therefore it is clear that selling in the freight market involves targeting the potential freight customers and identifying the profitable sectors.

CONCLUSION Over the last few decades there has been a great technological revolution in business environment due to liberalization in the open market scenario. Therefore in order to ensure firm footing in the competitive market, traders are very serious to fulfill the customer’s need and satisfaction. Traders are very much interested to send the desired commodities to the desired destination safely at least possible time at while remaining cost effective in order to survive in today’s competitive environment. The most sensitive part of any organization today is its effective and aggressive marketing. Getting volume business is the order of the day. This can be possible only through

adapting very

aggressive and

intense

marketing

policies

emphasizing the advantages of consolidation business along with focussing on the sectors providing higher volume of trade and margins.

Logistics & Supply chain industry in India: Current status CONTAINER FREIGHTING PRACTICES 1.

Containerization has considerably modified the freighting pattern for

general cargoes. 2.

Introd roduction of co commodity box box rat rates (CB (CBRs) – re reasons : sim simplificati ation of

tari tariff ff stru struct ctur ure e and bene benefi fits ts to ship shippe pers, rs, parti particu cula larl rly y larg large e scal scale. e. CBRs CBRs are are consistent with the concept of "change what the tariff can bear". 3.

Relevant ant con container freighting rules int introd roduced followi owing CBRs. Rates for

FCL/FCL and FCL/LCL cargoes are offered provided freight is paid by one party only. 4.

Som Some con confe fere renc nce es/sh s/shiippi pping line ines gi give opti ption of CBR CBR or or rat rate e ass asse esse ssed on on a

revenue ton basis 5.

Shi Shippin pping g lin line es may may allo allow w stu stuff ffin ing g of of add addit itio iona nall car cargo go in a co contai ntaine nerr sub subjject ect

to CBR, provided extra freight is paid in all such cargo on the basis of revenue tons stow stowed ed in each ach cont contai aine nerr at the the rele releva vant nt tari tariff ff rate rate plus plus othe otherr char charge ges s as applicable. 6.

Discounted CBRs under volume-incentive scheme, offered by some

shipping lines/conferences. 7.

Carg argo of offered by by shi shipper in in BB BB may may be be co contain ainerized by by th the ca carrier at its

own expense, for the convenience of vessel. 8.

Terminal ha handling ch charg arge pe per TE TEU/ FE FEU is is le levied by by th the ca carrier for for bo both

shipper stuffed and carrier stuffed container. 9.

Shipping lines/c s/conferences may pro provid vide multi-modal tran transp spo ort ser services

and issue through bills of lading. 10.

Time-volume rate system under which a shipper become eligible for

specified rates of discount on FCL rates, is applicable if the carrier is of offered more than a specified number of containers with cargo during the contracted period. The rate of discount may increase on a graduated scale. This is beneficial for freight forwarders/consolidates and shippers, particularly large scale.


TEU/FEU

rate ates are base ased

on minimum

utilizati ation

requirement of

containers, differing from tariff to tariff - from as low as 60-70 –75-80 –85-90 (and even 95%) for container weight or measurement capacity. 12.

Merchant

packed goods

on FCL/FCL

or

FCL/LCL

basis:

Unless

specif specifica icall lly y stated stated.. Freigh Freightt charge charges s is be assess assessed ed on the basis basis of the rate appl applic icabl able e to each unit unit,,

piec piece e or package package in in the cont contai aine nerr

merchant. merchant. Where different different articles articles are packed

as list listed ed by the

in one unit piece or package, package,

freight is assessed at the rate yielding the highest return to the carrier in that unit, piece or package. In

the

assessed

absenc absence e of detail detailed ed

declar declarati ation on by the mercha merchant, nt,

freigh freightt

is

on the internal cubic measurement of the container charged at the

rate of freight applicable to the highest freighted unit, piece or package within the container. 13.

Carri arrier er stuf stuffe fed d cont contai aine ners rs -

LCL/L CL/LCL CL

or LCL LCL/FCL /FCL..

Wher Wh ere e diffe differe rent nt

articles articles are contained contained in any one unit, piece piece or package, package, freight freight is charged charged at the 14.

rate yielding the highest return in that unit, piece, etc. Carrier Carrier stuffed containers containers - LCL/LCL LCL/LCL

or LCL/FCL. LCL/FCL. Where Where

different different

articles articles are contained contained in any one unit, piece or package, package, freight freight is charged charged at the rate yielding the highest return in that unit, piece, etc.

Logistics & Supply chain industry in India: Current status SUPPLY CHAIN MANAGEMENT . Supply chain management (SCM) is the process of planning of planning,, implementing, and controlling the the oper operat atio ions ns of the the supply supply chain chain with with the the purp purpos ose e to sati satisf sfy y customer customer requireme requirements nts as effici efficient ently ly as possib possible. le. Supply Supply chain chain management spans all movement and storage of raw of raw materials, materials, work-in-process inventory, and finish finished ed goods goods from from point-o point-of-or f-origi igin n to point-o point-of-c f-cons onsump umptio tion. n. The term term supply supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982. 1982. The definition one America professional association put forward is that Supply Chain Management encompasses the planning and management of all acti activi viti ties es

invo involv lved ed

mana manage geme ment nt

in

acti activi viti ties es..

sour sourci cing ng,,

proc procur urem emen ent, t,

Impo Import rtan antl tly, y,

it

also also

conv conver ersi sion on,, incl includ udes es

and and

logi logist stic ics s

coor coordi dina nati tion on

and and

collaboration with channel partners, which can be suppliers, intermediaries, thirdparty service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. Supply chain event management management (abbreviate (abbreviated d as SCEM) is a considerati consideration on of all possible occurring events and factors that can cause a disruption in a supply chai chain. n. With With SCEM SCEM poss possib ible le scen scenari arios os can can be crea create ted d and and solu soluti tion ons s can can be planned. Some experts distinguish supply chain management and logistics, logistics, while others consider the terms to be interchangeable. Supply chain management is also a category of software products.

Supply chain management problems Supply chain management must address the following problems: •

Distribution Networ Network k Config Configurat uration ion:: Number Number and locati location on of suppli suppliers ers,,

production facilities, distribution centers, warehouses and customers. •

Distribution Strategy: Strategy: Centraliz Centralized ed versus decentrali decentralized, zed, direct direct shipment, shipment,

Cross docking, docking, pull or push strategies, third party logistics. logistics.


Information: Integrate systems and processes through the supply chain to

share valuable informatio information, n, including including demand signals, signals, forecasts, forecasts, inventory and transportation etc. •

Inventory Management: Quantity and location of inventory including raw

materials, work-in-process and finished goods. Supply chain execution is managing and coordinating the movement of materials information and funds across the supply chain. The flow is bi-directional.

Activities/functions Supp Supply ly chai chain n mana manage geme ment nt is a cross cross-f -fun unct ctio iona nall appro approach ach to mana managi ging ng the the movement of raw materials into an organization and the movement of finished goods out of the organization toward the end-consumer. As corporations strive to focus on core competencies competencies and become become more flexible, flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other corporations that can perform the activities better or more cost effectively. The effect has been to increase the number of companies involved in satisfying consumer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purp purpose ose of supp supply ly chai chain n manag managem emen entt is to impr improv ove e trus trustt and and coll collabo abora rati tion on among supply chain partners, thus improving inventory visibility and improving inventory velocity. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR SCOR is a supp supply ly chai chain n mana manage geme ment nt mode modell prom promot oted ed by the the Supp Supply ly-C -Cha hain in Management Council. Another model is the SCM Model proposed by the Global Supp Supply ly Chai Chain n Foru Forum m (GSC (GSCF) F).. Supp Supply ly chai chain n acti activi viti ties es can can be grou groupe ped d into into strategic, tactical, and operational levels of activities.

Strategic •

Strategic network optimization, including the number, location, and size of

warehouses, distribution centers and facilities.

Logistics & Supply chain industry in India: Current status Strategic partnership with suppliers, distributors, and customers, creating

•

communica communication tion channels channels for critical critical informatio information n and operational operational improvemen improvements ts such as cross docking, docking, direct shipping, and third-party logistics. Product Product design design coordination, so that new and existing products can be

•

optimally integrated into the supply chain, load management •

Information Technology infrastructure, to support supply chain operations.

•

Where to make and what to make or buy decisions

•

Align overall organizational strategy with supply strategy

Tactical •

Sourcing contracts and other purchasing decisions.

•

Produc Productio tion n decisi decisions ons,, includ including ing contrac contractin ting, g, locati locations, ons, schedu schedulin ling, g, and

planning process definition. Inventory decisions, including quantity, location, and quality of inventory.

•

Transportation strategy, including frequency, routes, and contracting.

•

Benchmarking of all operations against competitors and implementation of

•

best practices throughout the enterprise. Milestone payments

•

Operational •

Daily production and distribution planning, including all nodes in the supply

chain. •

Production scheduling for each manufacturing facility in the supply chain

(minute by minute). •

Demand planning and forecasting, coordinating the demand forecast of all

customers and sharing the forecast with all suppliers. •

Sourci Sourcing ng planni planning, ng, includ including ing curren currentt invent inventory ory and foreca forecast st demand, demand, in

collaboration with all suppliers. •

Inbound operations, including transportation from suppliers and receiving

inventory.

Logistics & Supply chain industry in India: Current status Production operations, including the consumption of materials and flow of

•

finished goods. Outbound operations, including all fulfillment activities and transportation

•

to customers. Orde Orderr prom promis isin ing, g, acco accoun unti ting ng for for all all cons constr trai aint nts s in the the supp supply ly chai chain, n,

•

including including all suppliers, suppliers, manufacturi manufacturing ng facilitie facilities. s. distributi distribution on centers, centers, and other customers.

Supply chain management Organizations increasingly find that they must rely on effective supply chains, or networks, to successfully compete in the global market and networked economy. [1]

In Peter Peter Drucke Drucker's r's (199 (1998) 8) manage manageme ment' nt's s new paradig paradigms, ms, this this concep conceptt of

busines business s relati relations onship hips s extend extends s beyond beyond tradit tradition ional al enterp enterpris rise e boundar boundaries ies and seeks to organize entire business processes throughout a value chain of multiple companies. During the past decades, globalization, outsourcing and information technology have have enab enable led d many many orga organi niza zati tion ons s such such as Dell and Hewlett Hewlett Packard Packard,, to succ succes essf sful ully ly oper operat ate e

soli solid d

coll collab abor orat ativ ive e

supp supply ly netw networ orks ks in wh whic ich h

each each

specialized business partner focuses on only a few key strategic activities (Scott, 1993). This inter-organizational supply network can be acknowledged as a new form form of organi organizat zation ion.. Howeve However, r, with with the compli complicat cated ed intera interacti ctions ons among among the players, the network structure fits neither "market" nor "hierarchy" categories (Powell, (Powell, 1990). 1990). It is not clear what kind of performance performance impacts impacts different different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a system's point of view, a complex network structure can be decomposed into individual component firms (Zhang and Dilts, 2004). Traditionally, companies in a supply networ network k concen concentrat trate e on the inputs inputs and output outputs s of the proces processes ses,, with with littl little e conc concer ern n for for the the inte interna rnall manag managem emen entt work workin ing g of othe otherr indi indivi vidu dual al playe players rs.. There Therefor fore, e, the choice choice of intern internal al manage managemen mentt contro controll structu structure re is known known to impact local firm performance (Mintzberg, 1979).

Logistics & Supply chain industry in India: Current status In the 21st century, there have been few changes in business environment that have contributed to the development of supply chain networks. First, as an outcome of globalization and proliferation of multi-national companies, joint ventures, strategic alliances and business partnerships were found to be significant

success

factors,

following

the

earlier

" Just-In-Time",

"Lean

Management" and "Agile Manufacturing" practices. Second, technological changes, particularly the dramatic fall in information communication costs, a paramount component of transaction costs, has led to changes in coordination among the members of the supply chain network (Coase, 1998). Many researchers have recognized these kinds of supply network structure as a new organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", Global Production Network", and "Next Generation Manufacturing System".[3] In general, such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans, 2001).

Supply chain business process integration Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. An example scenario: the purchasing department places orders as requirements become appropriate. Marketing, responding to customer demand, communicates with several distributors and retailers, and attempts to satisfy this demand. Shared information between supply chain partners can only be fully leveraged through process integration. Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information. According to Lambert and Cooper (2000) operating an integrated supply chain requires continuous information flows, which in turn assist to achieve the best product flows. However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished

Logistics & Supply chain industry in India: Current status without implementing a process approach to the business. The key supply chain processes stated by Lambert (2004) are: •

Customer relationship management

•

Customer service management

•

Demand management

•

Order fulfillment

•

Manufacturing flow management

•

Supplier relationship management

•

Product development and commercialization

•

Returns management

One

could

suggest

other

key

critical supply business processes

combining these processes stated by Lambert such as: a.

Customer service management

b.

Procurement

c.

Product development and commercialization

d.

Manufacturing flow management/support

e.

Physical distribution

f.

Outsourcing/partnerships

g.

Performance measurement

a) Customer service management process

Customer Relationship Management concerns the relationship between the organization and its customers.Customer service provides the source of customer information. It also provides the customer with real-time information on promising dates and product availability through interfaces with the company's production and distribution operations. Successful organizations use following steps to build customer relationships: •

determine mutually satisfying goals between organization and customers

•

establish and maintain customer rapport

•

produce positive feelings in the organization and the customers b) Procurement process

Logistics & Supply chain industry in India: Current status Strategic plans are developed with suppliers to support the manufacturing flow management process and development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship, where both parties benefit, and reduction times in the design cycle and product development is achieved. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkages to transfer possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers. This requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage and handling and quality assurance. Also, includes the responsibility to coordinate with suppliers in scheduling, supply continuity, hedging, and research to new sources or programmes.

c) Product development and commercialization Here, customers and suppliers must be united into the product development process, thus to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched in ever shorter time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must: 1.

coordinate with customer relationship management to identify customer-

articulated needs; 2.

select materials and suppliers in conjunction with procurement, and

3.

develop production technology in manufacturing flow to manufacture and

integrate into the best supply chain flow for the product/market combination.

d) Manufacturing flow management process The manufacturing process is produced and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes, and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also,

Logistics & Supply chain industry in India: Current status changes in the manufacturing flow process lead to shorter cycle times, meaning improv improved ed respon responsiv sivene eness ss and effici efficienc ency y of demand demand to custom customers ers.. Activi Activitie ties s related to planning, scheduling and supporting manufacturing operations, such as work work-i -in-p n-pro roce cess ss stor storag age, e, hand handli ling ng,, tran transp spor orta tati tion on,, and and time time phasi phasing ng of components, inventory at manufacturing sites and maximum flexibility in the coor coordi dina nati tion on of geog geograp raphi hic c and and final final asse assemb mbli lies es post postpo pone neme ment nt of physi physica call distribution operations.

e) Physical distribution This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g. links manufacturers, wholesalers, retailers).

f) Outsourcing/partn Outsourcing/partnerships erships This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. This movement has been particularly evident in logistics where the provi provisi sion on of tran transp spor ort, t, ware wareho hous usin ing g and and inve invent ntor ory y cont contro roll is incr increa easi sing ngly ly subcontracted to specialists or logistics partners. Also, to manage and control this network of partners and suppliers requires a blend of both central and local involv involveme ement. nt. Hence, Hence, strate strategic gic decisi decisions ons need need to be taken taken centra centrally lly with with the monitoring and contro controll of suppli supplier er perfor performan mance ce and day-today-to-day day liaiso liaison n with with logist logistics ics partne partners rs being best managed at a local level

Logistics & Supply chain industry in India: Current status g) Performance Management Successful SCM Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. By taking advanta advantage ge of suppli supplier er capabi capabili litie ties s and empha emphasiz sizing ing a long-t long-term erm supply supply chain chain pers perspe pect ctiv ive e in cust custom omer er rela relati tion onsh ship ips s can can be both both corr correl elat ated ed with with firm firm performance. As logistics competency becomes a more critical factor in creating and and

main mainta tain inin ing g

incr increa easi sing ngly ly

comp compet etit itiv ive e

impo import rtan antt

advant advantage age,,

beca becaus use e

the the

logi logist stic ics s

diff differ eren ence ce

measu measure reme ment nt beco become mes s betw betwee een n

prof profit itab able le

and and

unprofitable operations becomes more narrow. A.T. Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to experts internal measures are generally collected and analyzed by the firm including 1.

Cost

2.

Customer Service

3.

Produ roduct ctiivit vity measur asures es

4.

Asse sset measur asurem emen entt, and and

5.

Quality.

External performance measurement is examined through customer perception meas measur ure es and and "best best pract practic ice e" benc benchm hmar arki king ng,, and and incl includ udes es 1) cust custom omer er perception measurement, and 2) best practice benchmarking. Components

of

sup supply

chain

mana anagement

are are

1.

Stand andardisation

2.

Postponement 3. Customisation

Supply chain management components integration The management components of SCM The SCM management components are the third element of the four-square circulation framework. The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of comp compon onen ents ts added added to the the link link (Ell (Ellra ram m and and Coop Cooper er,, 1990 1990;; Houl Houlih ihan, an, 1985 1985). ). Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process

Logistics & Supply chain industry in India: Current status link link..

The The

lite litera ratu ture re

on

busi busine ness ss

proc proces ess s

reen reengi gine neer erin ing, g,[4]

buyer-supplier

relationships,[5] and SCM SCM sugg sugges ests ts vario various us possi possibl ble e comp compon onen ents ts that that must must rece receiv ive e manag manager eria iall attent attention ion when when managi managing ng supply supply relati relations onship hips. s. Lamber Lambertt and Cooper Cooper (2000 (2000)) identified the following components which are: •

Planning and control

•

Work structure

•

Organization structure

•

Product flow facility structure

•

Information flow facility structure

•

Management methods

•

Power and leadership structure

•

Risk and reward structure

•

Culture and attitude

However, a more careful examination of the existing literature[] will lead us to a more comprehensive structure of what should be the key critical supply chain compon component ents, s, the "branc "branches hes"" of the previo previous us identi identifie fied d supply supply chain chain busine business ss processes, that is what kind of relationship the components may have that are related with suppliers and customers accordingly. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement (Bowersox and Closs, 1996). A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects financial risk, thus including primary level comp compon onen ents ts (Bow (Bower erso sox x and and Clos Closs, s, 1996 1996). ). A seco second ndar ary y leve levell part partic icip ipan antt (spe (speci cial aliz ized ed), ), is a busi busine ness ss that that part partic icip ipat ates es in chan channe nell rela relati tion onsh ship ips s by performing essential services for primary participants, thus including secondary leve levell comp compon onen ents ts,, wh whic ich h are supp suppor orti ting ng the the prima primary ry ones ones.. Also Also,, thir third d leve levell channe channell partici participant pants s and compon component ents s may be includ included, ed, that that will will suppor supportt the primary level channel participants, and which are the fundamental branches of the secondary level components.

Logistics & Supply chain industry in India: Current status Consequently, Lambert and Cooper's framework of supply chain components, does not lead us to the conclusion about what are the primary or secondary (specialized) level supply chain components ( see Bowersox and Closs, 1996, p.g. 93), 93), that that is wh what at supp supply ly chai chain n comp compon onen ents ts shoul should d be view viewed ed as prima primary ry or secondary, and how should these components be structured in order to have a more comprehensi comprehensive ve supply chain structure structure and to examine the supply chain as an integrative one

COMPONENTS OF SUPPLY CHAIN MANAGEMENT 1.

For

cust custom omer er

comp compon onen entt

serv servic ice e

of cust custom omer er

mana manage geme ment nt:

Includes

rela relati tion onsh ship ip mana manage geme ment nt,,

the

and and

primary

level

seco second ndar ary y

leve levell

components such as benchmarking and order fulfillment. 2.

For product development and commercialization : Includes the primary

leve levell comp compon onen entt of Prod Produc uctt Data Data Mana Manage geme ment nt (PDM (PDM), ), and seco second ndary ary leve levell components such as market share, customer satisfaction, profit margins, and returns to stakeholders. 3.

For physical distribution, Manufacturing support and Procurement :

Includes the primary level component of enterprise resource planning (ERP), with seco second ndar ary y

leve levell

manag anagem eme ent, nt,

comp compon onen ents ts such such as ware wareho hous use e manuf anufac actturin uring g

plan planni ning ng,,

manag anagem emen ent, t, mate materi rial al

pers person onne nell

manag anage ement ment,,

and and

postponement (order management). 4.

For

performa performance nce

measureme measurement nt:

This

includes

t he

primary ary

level

component of logistics performance measurement, which is correlated with the info inform rmat atio ion n flow flow facil facilit ity y stru struct ctur ure e with within in the the orga organi niza zati tion on.. Seco Second ndary ary leve levell components may include four types of measurement such as: variation, direction, decision and policy measurements. More specifically, in accordance with these second secondary ary level level compon component ents s total total cost cost analysi analysis s (TCA) (TCA),, custom customer er profit profitabi abilit lity y analysis (CPA), and Asset management could be concerned as well. In general, information flow facility structure is regarded by two important requirements, which are a) planning and Coordination flows, and b)operational requirements.


For

outsourcing:

This

includes

the

primary

level

component

of

managem management ent method methods s and the compan company's y's cuttin cutting-e g-edge dge strateg strategy y and its vital vital stra strate tegi gic c obje object ctiv ives es that that the the comp compan any y will will iden identi tify fy and adopt adopt for for parti particu cula larr strate strategic gic initia initiativ tives es in key the areas areas of techno technolog logy y inform informati ation, on, operati operations ons,, manufacturing capabilities, and logistics (secondary level components).

LCL (Less-Than-Container Load Optimize

Transit sit

Times

and

Minimize

Costs

with

LCL

Ocean

Freight

When you don't have enough cargo to fill an ocean freight container, UPS Supply Chain Solutions offers LCL service between major ports worldwide. We have an extensive network of capabilities and container freight stations. That means we can offer you space within a container that is shared with other customers’ goods to delive deliverr econom economica icall usage-b usage-base ased d costin costing, g, while while provid providing ing Full-C Full-Cont ontain ainerer-Loa Load d (FCL) frequency, routing and visibility. As one of the world's leading Non-Vessel Operating Common Carriers (NVOCC), we can provide LCL service that features: •

Global network coverage - over 1,000 facilities in over 180 countries

•

Frequent sailings with fast transit times

•

Reliability and adherence to scheduled sailings s ailings

•

Competitive pricing

•

Shipment visibility for multiple freight modes

•

Capability of providing end-to-end solutions LCL keeps goods moving in your supply chain because you can send them as

soon as they are ready rather than waiting until you have a full container. The following services are included: •

Receipt of customer’s cargo at the origin Container Freight Station (CFS)

•

Cons Consol olid idat atio ion n of cust custom omer er’s ’s carg cargo o with with carg cargo o from from simi simila larl rly y situ situat ated ed

merchants •

Issuance of house bill of lading


Ocean shipment

•

Deconsolidation at destination CFS and release to consignee

LCL service can be effectively combined with these service offerings to provide an end-to-end solution: •

Supplier Management, for effective management of vendors and goods prior

to shipment •

Transportation of goods to CFS for consolidation

•

Freight insurance and financing products from UPS Capital

•

Customs Brokerage services for entry and clearance

•

Trans ansportation

of

shi shipment

and

delivery

to

consignee

following

deconsolidation at destination CFS Our LCL service is unique because it adheres to fixed scheduling, operates with UPS economies of scale, and fully integrates with our superior visibility tools and broad portfolio of value-added services.

EXPORT In economics, economics, an export is any any good or commodity, commodity, transported from from one one country to another country in a legitimate fashion, typically for use in trade. trade. Expor Exportt is an impo import rtan antt part part of internatio international nal trade. trade. Its Its coun counte terp rpar artt is import. import. Expo Export rt good goods s or serv servic ices es are are prov provid ided ed to fore foreig ign n consumers by domest domestic ic producers. producers. Expo Export rt of comm comme erci rcial quan quanti titi ties es of good goods s

norm normal allly

requ requir ire es

involvement of the Customs authorities in both the country of export and the country

of

import.

The advent of small trades over the internet such as through Amazon, e-Bay and the like, have largely by-passed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless these small exports are still subject to legal restrictions applied by the country of export, particularly in respect of strategic export limitations.

Logistics & Supply chain industry in India: Current status History . The theory of international trade and commercial policy is one of the oldest

branches of economic thought starting with the ancient Greeks up to the present era. Exporting is a major component of international trade, and thus is argued constantly and consistently throughout the ages. Two dual views concerning trade present themselves. The first, recognizes the benefits of international exchange. The other concerns itself with the possibly that certain domestic industries (or laborers, or culture) could be harmed by foreign competition.

Process Methods of transfer include a product or good or information being mailed, handdelivered, up-loaded to an internet site, or downloaded from an internet site. It can be sent in the form of a facsimile, email or during a telephone conversation.

United States The Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and reexport of most commercial items. Some commodities require certification in order to export. There are different qualifications for what need to be done in order to export a good.

Dependent on the category,the 'item' falls under, the company may need to attain a license as a requisite to exportation. Some restrictions vary from country to country. The most restricted destinations are the embargoed countries and those countries designated as supporting terrorist activities, including Cuba, Libya, North Korea, Sudan, Syria and Iran. Some products obtained worldwide restrictions. An item is considered an export whether or not it is leaving the United States temporarily, if it is leaving the United State but is not for sale (a gift), or if it is going to a wholly owned U.S. subsidiary in a foreign country. A foreign-origin item exported from the United States, transmitted or transhipped through the United

Logistics & Supply chain industry in India: Current status States, or being returned from the United States to its foreign country of origin is considered an export. How an item is transported outside of the United States does not matter in determining export license requirements.

Barriers Trade barriers are generally defined as government laws, regulations, policy, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. While restrictive business practices sometimes have a similar effect, they are not usually regarded as trade barriers. The most common foreign trade barriers are governmentimposed measures and policies that restrict, prevent, or impede the international exchange of goods and services.

Strategic International agreements limit trade in, and the transfer of, certain types of goods and information e.g. goods associated with weapons of mass destruction, arms and torture. Examples are Nuclear Suppliers Group - limiting trade in nuclear weapons and associated goods (currently only 45 countries), The Australia Group - limiting trade in chemical & biological weapons and associated goods (currently only 39 countries), Missile Technology Control Regime - limiting trade in the means of delivering weapons of mass destruction (currently only 34 countries) and The Wassenaar Arrangement - limiting trade in conventional arms and technological developments (currently only 40 countries)

Tariffs A tariff is a tax placed on a specific good or set of goods exported from or imported to a country, creating an economic barrier to trade. Usually the tactic is used when a country's domestic output of the good is falling and imports from foreign competitors are rising, particularly if there exist strategic reasons for retaining a domestic production capability. Some failing industries receive a protection with an effect similar to a subsidies in that by placing the tariff on the industry, the industry is less enticed to produce

Logistics & Supply chain industry in India: Current status goods in a quicker, cheaper, and more productive fashion. The third reason for a tariff involves skirting of what is called dumping. Dumping curtails a country producing highly excessive amounts of goods and dumping the goods on another foreign country, producing the effect of prices that are "too low". Too low can refer to either the price of the good on from the foreign market being lower than the domestic market. The other reference refers to the producer selling the product at a price in which there is no profit or a loss. The purpose (and expected outcome) of the tariff is to encourage spending on domestic goods and services. Protective tariffs protect what are known as infant industries that are in the phase of expansive growth. A tariff is used temporarily to allow the industry to freely grow without the level of competition usually garnered. However, this line of debate is only valid if the resources are more productive in their new use than they would be if the industry had not been started. Also, the industry eventually must incorporate itself into a market without the protection of government subsidies. Tariffs create tension between countries. Examples include the United States steel tariff of 2002 and when China placed a 14% tariff on imported autoparts. Such tariffs usually lead to filing a complaint with the World Trade Organization (WTO) and, if that fails, could eventually head toward the country placing a tariff against the other nation in spite, to impress pressure to remove the tariff.

Subsidies To subsidize an industry or company refers to, in this instance, a governmental providing supplemental financial support to manipulate the price below market value. Subsidies are generally used for failing industries that need a boost in domestic spending. Subsidizing encourages greater demand for a good or service because of the slashed price. The effect of subsidies deters other countries that are able to produce a specific product or service at a faster, cheaper, and more productive rate. With the lowered price, these efficient producers cannot compete. The life of a subsidy is

Logistics & Supply chain industry in India: Current status generally short-lived, but sometimes can be implemented on a more permanent basis. The agricultural industry is commonly subsidized, both in the United States, and in other countries including Japan and nations located in the European Union (EU). Critics argue such subsidies cost developing nations $24 billion annually in lost income according to a study by the International Food Policy Research Institute, a D.C. group funded partly by the World Bank. However, other nations are not the only economic 'losers'. Subsidies in the U.S. heavily depend upon taxpayer dollars. In 2000, the U.S. spent an all-time record $32.3 billion for the agricultural industry. The EU spends about $50 billion annually, nearly half its annual budget on its common agricultural policy and rural development.

Exports and free trade Pros The theory of comparative advantage materialized during the first quarter of the 19th century in the writings of 'classical economists'. While David Ricardo is most credited with the development of the theory

of his Principles of Political

Economy , 1817), James Mills and Robert Torrens produced similar ideas. The idea

stems from a country that is able to produce a commodity at the lowest of all countries, should be encouraged by removing competition. The single commodity with the greatest difference in terms of low prices is encouraged to increase production, while the second and subsequent commodities should either be decreased in levels of production, or removed altogether.

Export Promotion Export

Promotion

is

an

International

Marketing

Strategy

of

Business

Management. Nowadays every Individual and country applying extra ordinary Export Promotion Techniques to increase the volume of Exports. For the process of Export Promotion, Marketing communication is the first and foremost thing. To deliver or Communicating any kind of information, expertise and specialization Media is most important thing. For your product Export promotion first analyze

Logistics & Supply chain industry in India: Current status Cost of promotion and reachability of media. There are a number of medias are available for Export Promotion. Print Media (Export Directories, Journals, Magazines etc.) Electronic Media (TV. Radio, etc.) Internet (Search Engines, Business Directories) Other Media (Trade Fairs) In the above media Internet is cheapest and most reachable media for Export Promotion. For internet promotion Exporters should be Visible on Different Business Directories, B2B Directories, and also on Search Engines. In the U.S., the U.S. Department of Commerce provides U.S. companies the opportunity to promote their products and services for free. The Export Yellow Pages The Export Yellow Pages is published online and in print and is delivered to embassies, trade centers, consulates, and associations worldwide. There are Few Global B2B directories and also Country specific Directories. U.S.AKelly Search India- Tradeget China- Alibaba Mercantilists advocated that government policy directly arrange the flow of commerce to conform to their beliefs. They sought a highly interventionist agenda, using taxes on trade to manipulate the balance of trade or commodity composition of trade in favor of the home country. Mercantilism, the first systematic body of thought devoted to international trade, emerged during the 17th and 18th centuries in Europe. While most views surfacing from this school of thought differed, a commonly argued key objective of trade was to promote a "favorable" balance of trade, referring to a time when the value of domestic goods exported exceeds the value of foreign goods imported. The "favorable" balance in turn created a balance of trade surplus. Mercantilists advocated that government policy directly arrange the flow of commerce to conform to their beliefs. They sought a highly interventionist agenda, using taxes on trade to manipulate the balance of trade or commodity composition of trade in favor of the home country

Processing Of An Export Order Preshipment INTRODUCTION

Logistics & Supply chain industry in India: Current status An export order has to be processed to meet the requirements of materials required by the importers. The export order as expeditiously as possible so that the buyers can receive the materials on time, as per their delivery schedules and also conforming to the specifications stipulated by them. When different traders undertake business, they certainly have good intentions to carry out their trade deals faithfully and smoothly to earn a well-deserved profit. Therefore, it is necessary for carrying on business transactions smoothly and profitably that the area of disputes during performance of contracts is narrowed down and provision is made for amicable and quick settlement of disputes that may still arise. Such details of transaction along with agreed terms and condition are recorded and signed by both exporter and importer, to form a contract. To achieve the above purpose businessmen must devote proper attention at the time of drafting their business contracts, by including comprehensive and precise terms and conditions on all-important aspects of the trade deal in the contract. Firstly the contract should be drawn up in writing. In the absence of written contract the nature and extent of the right and duties of the parties to the trade deal will have to be gathered from circumstances evidence or legal implications which may give rise to a number of uncertainties and difference of option or disputes between the parties, during the performance of the contracts. Secondly the contract should be comprehensive and precise, i.e. should cover all important points and contingencies in clear and unambiguous terms. And last but not least, it must contain arbitration clause law applicable to the contract and jurisdiction in case a dispute arises. There are many Parties, acts and publications Involved The most Important Acts/publications that must be consulted by an exporter in connection with the processing of an export order are •

Customs Act, 1962

•

Foreign Exchange Regulation Act, 1973

•

Schedule of charges of goods in respect of the port of shipment


Handbooks of export Promotion

•

Import-export Policy

•

Vols I & II

•

Handbook of Import-exporter

•

The Foreign Buyer

•

The Negotiating bank

•

The Shipping Company

•

The In insurance company

•

The RBI of India

•

The chief Controller of Import & Export

•

The collector of customs

•

The port commissioners

•

The clearing & forwarding Agents

There are various steps involved under processing of an export order (pre-shipment)

First Stage Entering into an Export contract In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of goods and terms of sale including export price, mode of payment, storage and distribution methods, type of packaging, port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under:

Product, Standards and Specifications Quantity Inspection

Logistics & Supply chain industry in India: Current status Total Value of Contract Terms of Delivery Taxes, Duties and Charges Period of Delivery/Shipment Packing, Labeling and Marking Terms of Payment-- Amount/Mode & Currency Discounts and Commissions Licenses and Permits Insurance Documentary Requirements Guarantee Force Majeure of Excuse for Non-performance of contract

Logistics & Supply chain industry in India: Current status Remedies Arbitration it will not be out of place to mention here the importance of arbitration clause in an export contract Court proceedings do not offer a satisfactory method for settlement of commercial disputes, as they involve inevitable delays, costs and technicalities. On the other hand, arbitration provides an economic, expeditious and informal remedy for settlement of commercial disputes. Arbitration proceedings are conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the subject matter of the dispute. The dates for arbitration meetings are fixed with the convenience of all concerned. Thus, arbitration is the most suitable way for settlements of commercial disputes and it may invariably be used by businessmen in their commercial dealings. Timely and adequate credit facilities, at the pre-shipment as well as postshipment stage, are essential for exporters to realize their full export potential. Exporters may not, however, be able to obtain such facilities from their bankers for several reasons, e.g., the exporter may be relatively new to export business, the extent of facilities needed by him may be out of proportion to the equity of the firms or the value of collateral's offered by the exporter may be inadequate. The exporter should scrutinize the export order with reference to the terms and conditions of the contract. This is the most crucial stage. Therefore, it is necessary for carrying on business transactions smoothly and profitably that the area of disputes during performance of contracts is narrowed down and provision is made for amicable and quick settlement of disputes that may still arise. Such details of transaction along with agreed terms and condition are recorded and signed by both exporter and importer, to form a contract. The most important documents that are usally demanded by the importer bank are •

Bill of Exchange

•

Commercial Invoice

•

On-board Clean Bill Of Lading


Marine Insurance Policy

•

Packing List

•

Certificate of Orgin

•

The exporter should confirm the Export Order only the terms and conditions

of the L/C have been found to be in order. The export purchase order should be examines carefully and its contents scrutinized in terms of the Proforma Invoice/ contract sent to the foreign buyer, on the following aspects. 1.

Items (Product)

2.

Size and Specifications should be same as per offer/ quotation

3.

Preshipment Inspection should be either by exporter himself or an agency

easily available. 4.

Payment conditions are same as stipulated.

5.

Special packaging, labeling and marketing requirements, if any, should be

noted for compliance 6.

Shipment and delivery date is in conformity with the exporters production

plans whether: •

•

•

Part shipment is allowed. Trans-shipment is permissible or not. Port of shipment/ destination is same or changed.

7.

Documents particularly those, which are required with the bill of exchange.

8.

Guarantee /warrantee clause should be same as per quotation/offer.

9.

Force Majeure

10. Arbitration

as per Indian arbitration clause for international contracts or

other acceptable international clauses as agreed between the parties.

Second Stage As soon as the export order has been confirmed, preparations for the dispatch of goods are stated. A ‘delivery note’ (in duplicate) is sent to the work manager or the Factory Manager. This note should contain the description of the goods as

Logistics & Supply chain industry in India: Current status has been given in the export order, along with a copy of the instructions given by the importer. The date by which the goods must be manufactured the date by which the necessary formalities must be completed, the requisite time margins to be given and the shipment must be clearly intimated to the works manager. The specification and instruction to be intimated to the supplier of export goods shall, however, remain the same.

Third Stage As soon as the export order has been confirmed or finalized, preparations are made for the production or procurement of the goods to be exported. The manufacture-exporter has to raise an internal indent on the production department/division, which may also be sent either to the works manager or the factory manager. The indent should contain the description of the goods given in the export order, together with a copy of the instructions given by the importer. The order details, such as the date by which the goods must be manufactured, the date by which necessary formalities must be completed the date of shipment, etc. are also mentioned. A merchant-exporter has either to obtain the required goods from the market or to get them manufactured from other domestic manufactures. As soon as the goods have been manufactured or procured, the following procedures are to be followed. 1.

The clearance of the Excise Authorities has to be obtained. This can be

done in two ways. •

The first way is to make payment of the excise duty at the time of

removing the export consignment from the factory and file a claim for rebate of duty after exportation of goods. •

The second’s way is to secure clearance under bond. This involves

entering into a bond under such terms and conditions as the collector of customs may decide. When the export goods are removed from the factory, a debit entry for excise duty is made in the Bond account of the exporter. This obligation is

Logistics & Supply chain industry in India: Current status discharged after exportation of the goods. The exporter has tp prepare two important documents AR-4 A Form and Gate Pass Form AR-4 A Form is to be prepared in quintuplicate and Form GP-1/GP-2 is to be prepared in triplicate. These are presented to the Range Superintendent, Central Excise, who after Necessary formalities signs all copies. The original and duplicate copies are given back to the exporter, the Triplicate copy is sent to the Maritime Collector; the fourth copy is kept by the office of the Range Superintendent. The original copy of form GP-2 is also given to the exporter. The other authority, which is to be approached immediately at this stage, is the export inspection agency for conducting quality control and pre-shipment inspection. An inspector is deputed by the inspection agency to inspect the export consignment. If the goods conform to the prescribed specifications, an inspection certificate is issued. 2.

The goods are dispatched to the port of shipment and Railway Receipt is

obtained

Fourth Stage After the goods have been dispatched to the port town, the works manager sends a ‘dispatch advice’ to the Export Department. Soon after, an application is sent to the insurance company for marine insurance cover. The insurance policy is obtained in duplicate At this stage all formalities in relation to floor price regulations, Canalization, Certificate of Orgin, ECGC Cover and Consular Invoice wherever necessary, should be completed. Thereafter the export department sends the following documents to its clearing and forwarding agents along with detailed instructions. 1.

Commercial Invoice showing the details and value of goods

2.

Original Export Order

3.

Original Letter Of Credit

4.

GR Form

5.

AR-4 A/ AR-4 Form (Original & Duplicate copies)


Excise Gate Pass (Original)

7.

Packing and weight Lists

8.

Certificate of Inspection

9.

Declaration Form in Triplicate

10.

Consular Invoice

11.

Export License

12.

Endorsements regarding floor Price

13.

Purchase Memo

14.

Railway Receipt

Fifth Stage If the item being exported requires an export license the same s the export purchase order should be examines carefully and its contents scrutinized in terms of the Proforma Invoice/ contract sent to the foreign buyer, on the following aspects. 11. Items (Product) 12. Size and Specifications should be same as per offer/ quotation 13.

Preshipment Inspection should be either by exporter himself or an agency

easily available. 14. Payment conditions are same as stipulated. 15. Special packaging, labeling and marketing requirements, if any, should be noted for compliance 16. Shipment and delivery date is in conformity with the exporters production plans whether: •

•

•

Part shipment is allowed. Trans-shipment is permissible or not. Port of shipment/ destination is same or changed. 17. Documents particularly those, which are required with the bill of exchange. 18. Guarantee /warrantee clause should be same as per quotation/offer. 19. Force Majeure

Logistics & Supply chain industry in India: Current status 20. Arbitration

as per Indian arbitration clause for international contracts or

other acceptable international clauses as agreed between the parties. Should be procured by the exporter from the licensing authority, i.e. chief controller of imports and exports. After the shipping bill has been passed by the customs the clearing and forwarding agents presents the Port Trust Copy of the shipping bill to the shed superintendent of the Port Trust and obtains carting order for bringing the export cargo in the transit shed fro physical examination. Thereafter, in the case of shed cargo, the Dock Challan is prepared. Where the ship loads overside, the dock charges are indicated on the shipping bill itself and therefore, no separate Dock Challan is prepared. The following details are given in the Dock Challan 1.

Consignee’s name and address

2.

Vessel’s name

3.

Port of destination

4.

Exporter’s name

5.

Marks and Number of Packages

6.

Gross weight

7.

Measurement in cubic meters or weight in metric tons

8.

Port charges payable

9.

Other details

The dock challan is processed in the following manner  

Place in receiving box The clerk calculates and checks the port commissioner’s shipping

charges 

Deposit with cash clerk



Sheet writer



Distributing clerk release the Dock Challan to the clearing and

forwarding agent after debiting clerk the exporter’s account with the port commissioners, if maintained or after collection of charge in cash or by Banker’s cheque.

Logistics & Supply chain industry in India: Current status Sixth Stage The clearing and forwarding agents takes delivery of the consignment from the Railways and arranges its storage in the warehouse. Thereafter he prepares the requisite copies of the shipping bill. The most important particulars which are to be filled in the shipping bills are: 1.

Consignee’s name and address

2.

Vessel’s name

3.

Rotation number allotted by the customs to the vessel

4.

Agent’s name

5.

Colors

6.

Port

7.

Final Destination

8.

Exporter’s name and address

9.

Number of the packages

10.

Marks and numbers

11.

Gross, net and rare weight

12.

Description

13.

Real value

14.

F.O.B value

15.

Country of Origin

16.

Code number of the goods

17.

Number and date of the Exchange Control GR Form

18.

AR-4 A/ AR-4 number and date

19.

Export license number

There are three types of shipping bills, namely 

Shipping Bill for free goods



Dutiable shipping Bill and



Drawback Shipping Bill

The shipping bill must be prepared according to the category of the export goods. The shipping bill with requisite number of copies (usually five copies) is

Logistics & Supply chain industry in India: Current status submitted to the Export Department of the customs house along with documents from serial no.1 to serial no 13 specified in the fourth stage.

Seventh stage The passed shipping bill including the dock challan, where submitted, cart Ticket or boat note in case of overside cargo are carried by the authorized licensed sircar accompanying the goods for making the cargo ready for shipment after finally being passed by the port commissioners and the customs shed staff. For shed cargo in dock the following steps are taken: 

Gate warder checks documents, registered and permits entry of cargo into

dock 

Export shed writer accepts dock challan and cart ticket



Receiving clerk issues unloading slip for cargo from lorry after checking its

condition. 

The supercargo arranges unloading cargo from lorry



The writer registered dock challan in manifest and sends it to the customs

preventive officer for endorsement 

The preventive officers examines and checks the contents, weight, e.t.c, of

the goods and if, in order, makes an endorsement. “Let Ship” on the duplicate copy of the shipping bill, and Dock Challan is finally signed by the Customs Divisional Officer 

The port commissioner writes in shed register the details and releases the

dock challan 

The supercargo takes over control of the cargo for shipment, in case of

overside cargo; the cargo is lighted to the cargo for shipment. In case of overside cargo, the cargo is lightered to the slip accompanied by a Boat Note and the shipping bill. The boat note and the shipping bill are then registered with the customs for which a pass is issued.

Eighth stage Pre-shipment inspections are required when mandated by the government of the importing

country. These governments

argue that pre-shipment

inspections are necessary in order to ensure that the price charged by the

Logistics & Supply chain industry in India: Current status exporter reflects the true value of the goods, to prevent substandard goods from entering their country and to deflect attempts to avoid the payment of customs duties. Exporter should apply to EIC for Pre-Shipment inspection. Under the Export (quality control and Inspection) Act 1963, the EIC will depute an inspector for carrying out quality control and inspection exportable products, after carrying out the inspection if the consignment is found to conform to the prescribed specification, each packages in the consignment is sealed by the inspecting officers. For each consignment declared export worthy, a certificate of inspection is issued by the inspection agency, in which the details of each consignments are incorporated. The original copy of the certificate is valid for the customs authorities, who ensure that only the consignment whose details are given on the certificate is permitted for shipment. The goods are then dispatched to the port of shipment and the exporter obtains railway receipt. Pre-Shipment inspection for export houses and large houses stands withdrawn under the New-Exim policy. However, small units are still subjected to it. Government of India has introduced a scheme to recognize and suitably reward manufactures that have acquired the ISO 9000 (series) or any other internationally recognized equivalent certification of quality. Such manufactures will be eligible for grant of special import licenses.

Ninth Stage You should make an application for pre-shipment advance to your banker along with the following documents: Confirmed export order/contract or L/C etc. in original. Where it is not available, an undertaking to the effect that the same will be produced to the bank within a reasonable time for verification and endorsement should be given.

An undertaking that the advance will be utilized for the specific purpose of procuring/manufacturing/shipping etc., of the goods meant for export only, as stated in the relative confirmed export order or the L/C.

Logistics & Supply chain industry in India: Current status Tenth Stage As soon as the goods are ready for export, the exporter has to apply to insurance policy is insisted upon by the importer an insurance cover/policy as the case may be where an insurance policy is insisted upon by the importer, will not do. The policy would be for C.I.F value plus 10 per cent to cover expenses. The exporter should obtain the insurance policy in duplicate. at this stage all formalities in relation to floor price regulations, certificate of Orgin. Export credit and Guarantee cover etc. should be completed

Eleventh Stage Issue Instruction to the clearing and Forwarding Agents A detailed note is prepared for the clearing and forwarding agent, giving instructions regarding the shipment of the consignment (example the shipment may be made under claim drawback). Along with this note a master document and form of bank guarantee should be forwarded to the forwarding agent

Twelfth Stage On receipt of the above documents the clearing and forwarding agent takes delivery of the consignment from the railway/road authorities and arranges for its storage in a warehouse. The clearing and forwarding agent then prepares the shipping bill and presents them along with the above documents to the export department of the customs house.

The customs appraiser examines these documents and appraises the

value of the goods. If everything is in order he endorses the duplicate copy of the shipping bill and indicates the extent of physical examination to be carried out to the docks. All the documents, except GR-1 form the original shipping bill and a copy of the master document are returned to the clearing and forwarding agent for presentation to the dock appraiser. The clearing and forwarding agent presents the port trust copy of the shipping bill to the shed superintendent of the port trust and obtains a carting order. This enables him to cart the cargo to the transit shed for physical examination. If

Logistics & Supply chain industry in India: Current status satisfied the dock appraise makes an “out of charge” endorsement on the duplicate copy of the shipping bill and returns it with the order documents. The duplicate copy of the shipping bill is now presented to the preventive officer of the custom department who endorses it with “Let Ship” order. It is then handed over to the agent of the shipping company in taken of authorization by the customs to accept the cargo on board the vessel. As soon as the goods are loaded on board the ship, the certain issues a receipt, known as the Mate Receipt to the shed superintendent. The clearing and forwarding agent then pays the port charges and takes delivery of the Mate Receipt, which is presented, to the preventive officer, who records the certificate of shipment. This certificate is recorded on all copies of the shipping bill. AR-4/AR-4A form (original & duplicate copies) and railway freight rebate application (triplicate copy) and returned to the clearing and a forwarding agent. He presents the mate receipt to the shipping company for the issue of a bill of lading.

Thirteenth Stage The clearing and forwarding agent return the master document to the exporter at this stage along with. 1.

Shipping Bill

2.

Original L/C (contract) order

3.

AR-4/AR-4A form in duplicate

4.

Full set of clean-on-board bill of lading together with the required number of

non-negotiable copies.

Fourteenth Stage Intimation is sent to the importers indicating the date of dispatch of goods and the name of slip by which they have been sent .The following documents are also enclosed 

A non-negotiable copy of the B/L



Master Document copy

Fifteenth Stage

Logistics & Supply chain industry in India: Current status Presented of documents by the exporter to bank. The following documents

are

now presented by the exporter for negotiation/collection 1.

Master documents

2.

GR-1 Form (duplicate and triplicate)

3.

Full set of clean-on-board bill of lading (all negotiable copies plus one non

negotiable copy) 4.

Original L/C

5.

Bank Certification in prescribed form (in duplicate)

6.

Marine Insurance policy (in duplicate)

7.

Export Contract/order and

8.

B/L

Sixteenth Stage Bank examines the documents with reference to the terms and conditions of the original order and also of the L/C. the exporter’s bank screens the above documents and sends a set of the following documents to the importer’s bank. 1.

Master documents (Original copy)

2.

Marine Insurance policy

3.

Negotiable B/L (Original copy)

4.

Bill of Exchange (Original copy)

The banker sends GR-1 form (duplicate copy) to the exchange control departments of the RBI. The triplicate copy of the form is sent to the RBI on receipt of payment from abroad. The banker returns the following documents to the exporter 

Original copy of the bank Certificate



Attested copies of the master document

The exporter receives payment against the above documents. The banker also sends to the concerned joint chief controller of imports and exports a duplicate copy of the bank certificate.

Seventeenth Stage

Logistics & Supply chain industry in India: Current status Central excise rebate claim is filed by the exporter with the concerned maritime collector of central Excise for rebate on the Central excise duty or for getting credit in his bon account as the case may me.

Eighteenth Stage Advance License /special license The exporter should file an application to the licensing authority for an advance license/special license in accordance with the export-import policy of the country at that point of time.

Cargo ship Container ship A cargo ship or freighter is any sort of ship or vessel that carries cargo, goods, and materials from one port to another. Thousands of cargo carriers ply the world's seas and oceans each year; they handle the bulk of international trade. Cargo ships are usually specially designed for the task, often being equipped with cranes and other mechanisms to load and unload, and come in all sizes. Today, they are almost always built of welded steel, and with some exceptions generally have a life expectancy of 25 to 30 years before being scrapped.

Types Specialized types of cargo vessels include container ships and bulk carriers (technically tankers of all sizes are cargo ships, although they are routinely thought of as a separate category).

History The earliest records of waterborne activity mention the carriage of items for trade; the evidence of history and archaeology shows the practice to be widespread by the beginning of the 1st millennium BC. The desire to operate trade routes over longer distances and at more seasons of the year motivated improvements in ship design during the Middle Ages.

Logistics & Supply chain industry in India: Current status Before the middle of the 19th century, the incidence of piracy resulted in most cargo ships being armed, sometimes quite heavily, as in the case of the Manila galleons and East Indiamen.

Piracy Piracy is still quite common in some waters, particularly around Asia, most notably in the Malacca Straits, a narrow channel between Indonesia and Singapore / Malaysia. In 2004, the governments of those three nations agreed to provide better protection for the ships passing through the Straits. Also piracy prone are the waters off Somalia and Nigeria, while smaller vessels are also in danger along parts of the South American coasts.

Definitions While the definitions have become "cross-pollinated" over the years, "cargo" technically refers to the goods carried aboard the ship for hire, while "freight" refers to the compensation the ship or charterer receives for carrying the cargo. Generally, the modern ocean shipping business is divided into two classes: 1.

Liner business: typically (but not exclusively) container vessels (wherein

"general cargo" is carried in 20 or 40-foot "boxes"), operating as "common carriers", calling a regularly-published schedule of ports. A common carrier refers to a regulated service where any member of the public may book cargo for shipment, according to long-established and internationally agreed rules. 2.

Tramp-tanker business: generally this is private business arranged between

the shipper and receiver and facilitated by the vessel owners or operators, who offer their vessels for hire to carry bulk (dry or liquid) or break bulk (cargoes with individually handled pieces) to any suitable port(s) in the world, according to a specifically drawn contract, called a charter party. Larger cargo ships are generally operated by shipping lines: companies that specialize in the handling of cargo in general. Smaller vessels, such as coasters, are often owned by their operators. Vessel prefixes: Before the vessel's name will be found a category designation. Naval ships, for example, will have "USS" (United States Ship), "HMS" (Her/His

Logistics & Supply chain industry in India: Current status Majesty's Ship), "HTMS" (His Thai Majesty's Ship). Merchant ships may have "RMS (Royal Mail Ship, usually a passenger liner), "MV" (Motor Vessel, (powered by Diesel). "SS" (Steam Ship, now seldom seen, powered by steam). "TS", sometimes found in first position before a merchant ship's prefix, denotes that it has Twin Screws. Famous cargo ships would include the Liberty ships of World War II, partly based on a British design, the sections for which were prefabricated all over the USA and then assembled by shipbuilders in an average of 6 weeks with the record being just over 4 days. These ships allowed the Allies to replace sunken cargo vessels at a rate greater than the Kriegsmarine's U-boats could sink them, and contributed significantly to the war effort, the delivery of supplies, and eventual victory over the Axis powers. Lake freighters built for the Great Lakes in North America differ in design from "salties" because of the difference in wave size and frequency in the lakes. A number of these boats are so large that they cannot leave the lakes because they do not fit into the locks on the Saint Lawrence Seaway.

Sizes of cargo ships Cargo ships are categorized partly by their capacity, partly by their weight, and partly by their dimensions (often with reference to the various canals and canal locks through which they can travel). Some common categories include: 

Small Handy size, carriers of 20,000-28,000 deadweight tonnage



Handy size, carriers of 28,000-40,000 deadweight tonnage



Handymax, carriers of 40,000-50,000 dwt



Seawaymax, the largest size which can traverse the St Lawrence Seaway



Aframax, oil tankers between 75,000 and 115,000 dwt. This is the largest

size defined by the average freight rate assessment (AFRA) scheme. 

Suezmax, the largest size which can traverse the Suez Canal



Panamax, the largest size which can traverse the Panama Canal

(generally: vessels with a width smaller than 32.2 meter)

Logistics & Supply chain industry in India: Current status 

Malaccamax, the largest size which can traverse the Straits of Malacca



Capesize, vessels larger than Panamax and Suezmax, which must

traverse the Cape of Good Hope and Cape Horn in order to travel between oceans 

VLCC (Very Large Crude Carrier), supertankers between 150,000 and

320,000 dwt 

ULCC (Ultra Large Crude Carrier), enormous supertankers between

320,000 and 550,000 dwt

Containerization Containerization Containerization is a system of intermodal freight transport cargo transport

using standard ISO containers (known as Shipping Containers or Isotainers) that can be loaded and sealed intact onto container ships, railroad cars, planes, and trucks. Containerization is also the term given to the process of determining the best

carton, box or pallet to be used to ship a single item or number of items. ISO container dimensions and payloads

There are five common standard lengths, 20-ft (6.1 m), 40-ft (12.2 m), 45-ft (13.7 m), 48-ft (14.6 m), and 53-ft (16.2 m). United States domestic standard containers are generally 48-ft and 53-ft (rail and truck). Container capacity is measured in twenty-foot equivalent units (TEU, or sometimes teu). An equivalent unit is a

measure of containerized cargo capacity equal to one standard 20 ft (length) × 8 ft (width) × 8 ft 6 in (height) container. In metric units this is 6.10 m (length) × 2.44 m (width) × 2.59 m (height), or approximately 38.5 m³. These sell at about US$2,500 in China, the biggest manufacturer.[1] Most containers today are of the 40-ft (12.2 m) variety and are known as 40-foot containers. This is equivalent to 2 TEU. 45-foot (13.7 m) containers are also designated 2 TEU. Two TEU are equivalent to one forty-foot equivalent unit (FEU). High cube containers have a height of 9 ft 6 in (2.9 m), while half-height

containers, used for heavy loads, have a height of 4 ft 3 in (1.3 m). When

Logistics & Supply chain industry in India: Current status converting containers to TEUs, the height of the containers typically is not considered. The use of US measurements (also still used in UK) to describe container size (TEU, FEU) despite the fact that much of the world uses the metric system reflects the fact that US shipping companies played a major part in the development of containers. The overwhelming need to have a standard size for containers, in order that they fit all ships, cranes, and trucks, and the length of time that the current container sizes have been in use, makes changing to an even metric size impractical. The maximum gross mass for a 20-ft dry cargo container is 24,000 kg, and for a 40-ft, (inc. the 2.87 m (9 ft 6 in) high cube container), it is 30,480 kg. Allowing for the tare mass of the container, the maximum payload mass is there reduced to approx. 21,600 kg for 20-ft, and 26,500 kg for 40-ft containers.[2]

Standard containers The 20 foot container is the most common container worldwide, but the 40 foot container is increasingly replacing it. The longer container types are also becoming more common, and are especially common in North America. Shorter containers, e.g. 10 foot containers, also exist, but are rarely used. The following table shows the weights and dimensions of the three most common types of containers worldwide. The weights and dimensions quoted below are averages. Different manufacture series of the same type of container may slightly vary in actual size and weight.

external

lengt

45′

high-cube

20′ container

40′ container

imperi

metri

imperi

metri

imperi

metri

al

c

al

c

al

c

20′ 4″

6.058

40′ 0″

12.19

45′ 0″

13.71

container

Logistics & Supply chain industry in India: Current status m

h dimensio ns

widt h heig ht lengt h

interior dimensio ns

widt h heig ht width

8′ 0″ 8′ 6″ 19′ 4 13/16 ″ 7′ 8 19/32 ″ 7′ 9 57/64 ″ 7′ 8 1/8″

door aperture

heig ht

volume maximum

gross

mass empty weight net load

7′ 5 3/4″

2.438 m 2.591 m 5.898 m 2.352 m 2.385 m 2.343 m 2.280 m

2m 8′ 0″ 8′ 6″ 39′ 5 45/64 ″ 7′ 8 19/32 ″ 7′ 9 57/64 ″ 7′ 8 1/8″

7′ 5 3/4″

2.438 m 2.591 m 12.03 2m 2.352 m 2.385 m 2.343 m 2.280 m

6m 8′ 0″ 9′ 6″

44′ 4″ 7′ 8 19/32 ″ 8′ 9 15/16 ″ 7′ 8 1/8″ 8′ 5 49/64 ″

2.438 m 2.896 m 13.55 6m 2.352 m 2.698 m 2.343 m 2.585 m

1,169

33.1

2,385

67.5

3,040

86.1

ft³

m³

ft³

m³

ft³

m³

52,910

24,00

67,200

30,48

67,200

30,48

lb

0 kg

lb

0 kg

lb

0 kg

5,140

2,330

4,000

10,580

4,800

lb

kg

kg

lb

kg

47,770

21,67

26,48

56,620

25,68

8,820 lb 58,380

lb 0 kg lb 0 kg lb 0 kg 20′ heavy tested containers are available for heavy goods (eg. heavy machinery).

These allow a maximum weight of 67,200 lb (30,480 kg), an empty weight of 5.,290 lb (2,400 kg) and a net load of 61,910 lb (28,080 kg).

Logistics & Supply chain industry in India: Current status Shipping container history Containers produced a huge reduction in port handling costs, contributing significantly to lower freight charges and, in turn, boosting trade flows. Almost every manufactured product humans consume spends some time in a container. Containerization is an important element of the innovations in logistics that revolutionized freight handling in the 20th century. Efforts to ship cargo in containers date to the 19th century. By the 1920s, railroads on several continents were carrying containers that could be transferred to trucks or ships, but these containers were invariably small by today's standards. From 1926 to 1947, the Chicago North Shore and Milwaukee Railway carried motor carrier vehicles and shippers' vehicles loaded on flatcars between Milwaukee, Wisconsin and Chicago, Illinois. Beginning in 1929, Seatrain Lines carried railroad boxcars on its sea vessels to transport goods between New York and Cuba. In the mid-1930s, the Chicago Great Western Railway and then the New Haven Railroad began "piggy-back" service (transporting highway freight trailers on flatcars) limited to their own railroads. By 1953, the CB&Q, the Chicago and Eastern Illinois and the Southern Pacific railroads had joined the innovation. Most cars were surplus flatcars equipped with new decks. By 1955, an additional 25 railroads had begun some form of piggy-back trailer service. The first vessels purpose-built to carry containers began operation in Denmark in 1951. Ships began carrying containers between Seattle and Alaska in 1951. The worlds first truly intermodal container system used purpose-built container ship the Clifford J. Rodgers built in Montreal in 1955 and owned by the White Pass and Yukon Route. Its first trip carried 600 containers between North Vancouver, British Columbia and Skagway, Alaska on November 26, 1955; in Skagway, the containers were unloaded to purpose-built railroad cars for transport north to the Yukon, in the first intermodal service using trucks, ships and railroad cars. Southbound containers were loaded by shippers in the Yukon, moved by rail, ship and truck, to

Logistics & Supply chain industry in India: Current status their consignees, without opening. This first intermodal system operated from November 1955 for many years. The U.S. container shipping industry dates to 1956, when trucking entrepreneur Malcom McLean put 58 containers aboard a refitted tanker ship, the "Ideal-X," and sailed them from Newark to Houston. What was new about McLean's innovation was the idea of using large containers that were never opened in transit between shipper and consignee and that were transferable on an intermodal basis, among trucks, ships and railroad cars. McLean had initially favored the construction of "trailerships" - taking trailers from large trucks and stowing them in a ship’s cargo hold. This method of stowage, referred to as rollon/roll-off , was not adopted because of the large waste in potential cargo space onboard the vessel, known as broken stowage. Instead, he modified his original concept into loading just the containers, not the chassis, onto the ships, hence the desgnation container ship or "box" ship.. During the first twenty years of growth containerization meant using completely different, and incompatible, container sizes and corner fittings from one country to another. There were dozens of incompatible container systems in the U.S. alone. Among the biggest operators, the Matson Navigation Company had a fleet of 24-foot containers while Sea-Land Service, Inc used 35-foot containers. The standard sizes and fitting and reinforcement norms that exist now evolved out of a series of compromises between international shipping companies, European railroads, U.S. railroads, and U.S. trucking companies. The bulk of the discussions occurred in the late 1960s and the first draft of the resulting ISO standards were prepared for publication in 1970. A social cost arises as a result of the high cost of transporting the empty containers back to the original shipping point by agents. This cost, often greater than that of containers themselves, results in large areas in ports and warehouses to be occupied by empty containers left when at the destination. In 2004 in the US this has ironically generated a contest addressed to those that present the best project for alternative use of these abandoned containers.

Logistics & Supply chain industry in India: Current status In the United States, at first, containerization grew despite the unfavorable regulatory structure of the 1960s. But the United States' present fully integrated systems became possible only after the Interstate Commerce Commission's regulatory oversight was cut back (and later abolished in 1995), trucking and rail were deregulated in the 1970s and maritime rates were deregulated in 1984. Containerization has revolutionized cargo shipping. Today, approximately 90% of non-bulk cargo worldwide moves by containers stacked on transport ships; 26% of all containers originate from China.

As of 2005, some 18 million total

containers make over 200 million trips per year. There are ships that can carry over 14,500 TEU ("Emma Mærsk", 396 m long, launched August 2006). It has even been predicted that, at some point, container ships will be constrained in size only by the Straits of Malacca—one of the world's busiest shipping lanes— linking the Indian Ocean to the Pacific Ocean. This so-called Malaccamax size constrains a ship to dimensions of 470 m in length and 60 m wide (1542 feet * 197 feet). However, few initially foresaw the extent of the influence containerization would bring to the shipping industry. In the 1950s, Harvard University economist Benjamin Chinitz predicted that containerization would benefit New York by allowing it to ship industrial goods produced there more cheaply to the Southern United States than other areas, but did not anticipate that containerization might make it cheaper to import such goods from abroad. Most economic studies of containerization merely assumed that shipping companies would begin to replace older forms of transportation with containerization, but did not predict that the process of containerization itself would have some influence on producers and the extent of trading. A converted container used as an office at a building site. The widespread use of ISO standard containers has driven modifications in other freight-moving standards, gradually forcing removable truck bodies or swap bodies into the standard sizes and shapes (though without the strength needed to be stacked), and changing completely the worldwide use of freight pallets that fit into ISO containers or into commercial vehicles.

Logistics & Supply chain industry in India: Current status Improved cargo security is also an important benefit of containerization. The cargo is not visible to the casual viewer and thus is less likely to be stolen and the doors of the containers are generally sealed so that tampering is more evident. This has reduced the "falling off the truck" syndrome that long plagued the shipping industry. Use of the same basic sizes of containers across the globe has lessened the problems caused by incompatible rail gauge sizes in different countries. The majority of the rail networks in the world operate on a 1,435 mm (4 ft 8½ in) gauge track known as standard gauge but many countries like Russia, Finland and Spain use broader gauges while other many countries in Africa and South America use narrower gauges on their networks. The use of container trains in all these countries makes trans-shipment between different gauge trains easier, with automatic or semi-automatic equipment. Some of the largest global companies containerizing containers today are Patrick Global Shipping, Bowen Exports and Theiler & Sons Goods, LLC.

Loss at sea Containers occasionally fall from the ships that carry them, something that occurs an estimated 2,000 to 10,000 times each year. For instance, on November 30, 2006, a container washed ashore on the Outer Banks of North Carolina, along with thousands of bags of its cargo of tortilla chips. Containers lost at sea do not necessarily sink, but seldom float very high out of the water, making them a shipping hazard that is difficult to detect. Freight from lost containers has provided oceanographers with unexpected opportunities to track global ocean currents, notably a cargo of Friendly Floatees.

Double-stack containerization A railroad car with a 20' tank container and a conventional 20' container. Most flatcars cannot carry more than one standard 40 foot container, but if the rail line has been built with sufficient vertical clearance, a well car can accept a

Logistics & Supply chain industry in India: Current status container and still leave enough clearance for another container on top. This usually precludes operation of double-stacked wagons on lines with overhead electric wiring (exception: Betuweroute). Double stacking has been used in North America since American President Lines introduced this "double stack" principle under the name of "Stacktrain" rail service in 1984. It saved shippers money and now accounts for almost 70 percent of intermodal freight transport shipments in the United States, in part due to the generous vertical clearances used by US railroads.

ISO container types Various container types are available for different needs: •

General purpose dry van for boxes, cartons, cases, sacks, bales, pallets,

drums in standard, high or half height •

•

High cube palletwide containers for europallet compatibility Temperature controlled from −25 °C to +25 °C reefer

•

Open top bulktainers for bulk minerals, heavy machinery

•

Open side for loading oversize pallet

•

Flushfolding flat-rack containers for heavy and bulky semi-finished goods,

out of gauge cargo •

Platform or bolster for barrels and drums, crates, cable drums, out of gauge

cargo, machinery, and processed timber •

•

Ventilated containers for organic products requiring ventilation Tank containers for bulk liquids and dangerous goods

•

Rolling floor for difficult to handle cargo

•

Gas bottle

•

Generator

•

Collapsible ISO

•

Swapbody

Biggest ISO container companies Top 10 container shipping companies in order of TEU capacity, first January 2006

Logistics & Supply chain industry in India: Current status TEU

Market

Number

capacity [7]

Share

ships

1,665,272

18.2%

549

865,890

8.6%

299

CMA CGM

507,954

5.6%

256

Evergreen Marine Corporation

477,911

5.2%

153

Hapag-Lloyd

412,344

4.5%

140

China Shipping Container Lines

346,493

3.8%

111

American President Lines

331,437

3.6%

99

Hanjin-Senator

328,794

3.6%

145

COSCO

322,326

3.5%

118

NYK Line

302,213

3.3%

105

Company

A.P. Moller-Maersk Group Mediterranean

Shipping

Company S.A.

of

Other container systems •

Haus-zu-Haus (Germany)

•

RACE (container) (Australia)

Determining the best carton, box or pallet

While the creation of the best container for shipping of newly created product is called "Containerization", the term also applies to determining the right box and the best placement inside that box in order fulfillment. This may be planned by software modules in a warehouse management system. This optimization software calculates the best spatial position of each item within such constraints as their ability to stack and crush resistance TRENDS IN CONTAINERIZATION INTRODUCTION

Before containerization, cargo handling practices had not changed for over 100 years. Building pallets and loading them into the holds of ships was a slow and labour-intensive process, and the cargoes were vulnerable to damage and theft. Therefore, the invention of containerization is regarded by some as the most significant shipping innovation of the 20th century. Domestic container shipping emerged in the United States in the late 1950s and international flows commenced roughly a decade later.

Logistics & Supply chain industry in India: Current status Using a sealed steel “box” of standardized dimensions (measured in twenty-foot equivalent units or TEUs) to transport cargo has a number of advantages. Most importantly, total shipping time has been reduced because the containers may be transferred from ship to rail to truck, and back again, very quickly. As the box is secure and protects the cargo inside, theft and damage have been greatly reduced. Furthermore, the development of climate-controlled containers has made it possible to ship temperature-sensitive products over great distances by sea, rail and truck. The introduction of containers has lowered the cost of marine shipping to the extent that surface transport services are usually the more expensive components of a total import or export container movement, even though the surface transport is usually over a shorter distance. The lower costs of containerized trade have stimulated global trade, and the use of containers has been credited for double-digit growth in trade with emerging economies. The shift to containerization was made possible through significant investments on the part of ports, railways and trucking companies. Moving containers required modifications to ships, rail cars and truck chassis so that the boxes could be locked down and, usually, stacked. In addition, investment was required in specialized equipment and infrastructure at marine terminals for transferring containers back and forth from ship to railcar and truck. This paper provides a description of the historic and expected future growth in containerization. It then explains the capacity constraints that threaten to limit the growth in North America’s container trade. Finally, it provides projections of growth in container traffic in Canada and some information about capacity at Canada’s container ports. GROWTH IN CONTAINERIZATION

Containers can carry anything, but they are particularly well suited for transporting perishable and manufactured goods. Economic trends such as the globalization of the supply chain and trade liberalization have greatly stimulated the demand for containerized transport. Growth in North American container volumes outstripped the pace of economic growth between 1990 and 2004. As shown in Figure 1, North American TEUs

Logistics & Supply chain industry in India: Current status grew at about 7% per year over this period. That rate is expected to continue, leading to a doubling of North American container volumes in 10 years. Growth rates would vary from port to port, however, depending on their ability to accommodate increases in traffic. Figure 1: Container Volume History and Forecast: Continental United States and Canada

World container growth appears to have been even more impressive than in North America alone. One major independent shipping consultancy estimates that growth in container volumes has exceeded 10% annually over the last 15 years. It predicts that container demand worldwide will nearly double by 2015, as shown in Table 1. Table 1:

Forecast of Container Port Demand by Region to 2015 (Million

Logistics & Supply chain industry in India: Current status TEUs) Region

2004

2010

2015

Asia

159.1

240.5

303.4

Americas

62.2

90.7

118.8

41.1

56.9

71.6

74.1

105.8

139.5

Others

36.8

58.2

85.6

Total

332.2

495.1

647.3

North America Europe/Mediterranea n

*

Totals

may

not

add

due

to

rounding.

Source: Ocean Shipping Consultants Limited, Press Release, January 2005. As can be seen in Table 1, Asia is by far the largest market for containers in the world and is expected to continue to grow rapidly. Through 2015, exceptional growth in container demand is expected in the sub-regions of Southeast Asia, Central and South America, South Europe and the Mediterranean as well as the Middle East and the Indian subcontinent. The source of the figures in Table 1 is less bullish about the North American market than the forecast in Figure 1, predicting approximately 75% growth in container demand through 2015. As container demand has grown, the size of container vessels has also increased impressively. The world’s largest container ship in the early 1980scarried some 3,400 TEUs, compared to the largest container ships in recent years which can carry about 9,200. The rapid evolution of container ships is due to the significant efficiency gains and cost savings associated with operating larger ships. Today, the vessels calling at ports commonly carry between 6,000 and 8,000 TEUs, but the evolution continues as 9,600-TEU vessels are currently under construction. Some predict that the next jump in ship size will be to 12,000 TEUs but that it will require advances in propulsion technology to be economically viable. Ultimately, the depth of the Malacca Strait between Indonesia and Malaysia is expected to be the constraint on future ship capacity, limiting it to around 18,000 TEUs.

Logistics & Supply chain industry in India: Current status CONSTRAINTS ON CONTAINERIZATION GROWTH It is estimated that over 40% of major North American container ports already experience congestion during peak periods of the year. The deployment of everlarger ships is expected to cause an even greater strain on facilities during peak periods. Perhaps for this reason, more than half (65%) of major North American container port operators expect congestion to worsen in the next five years. Shortages in capacity at marine terminals and in surface distribution networks are viewed as the main constraints to current and future growth in containerized trade. To maximize container-handling capacity, marine terminals need deep channels to provide larger ships with access, and efficient and sufficient equipment (e.g., gantry cranes and forklifts) on the dock to load and unload them rapidly. It is also an advantage if terminals have abundant space to stack and store the containers, can offer electrical outlets to plug in refrigerated (“reefer”) containers and are equipped with a computerized system for tracking container locations and movements. Furthermore, port managers need to have the flexibility to adopt efficiency-enhancing processes. Unfortunately, the reality at many ports is that financing channel deepening and container-handling and -tracking equipment is a challenge, they have limited space to expand, and the labour unions representing port workers typically oppose changes that increase efficiency because they can threaten jobs. There are also capacity issues with inland transportation by rail and truck. Ideally, rail companies would have abundant track linking dockside operations into an extensive, preferably transcontinental, network and have sufficient equipment to transport all of the boxes without delay.

Similarly, trucking

companies should possess sufficient power units (cabs) to transport boxes and sophisticated scheduling processes that can efficiently match their own equipment with that of the ocean carriers or leasing companies (boxes and chassis). Given the periodic congestion existing today at North American ports, it would seem that capacities both at container terminals and in surface

Logistics & Supply chain industry in India: Current status transportation networks have not expanded fast enough and/or are not consistently coordinated. Government and port community stakeholders may present additional obstacles to capacity enhancement. For example, the government may not make a priority of building or improving road infrastructure so that it can accommodate high levels of container traffic by truck. Also, the risk that the government will make regulation increasingly stringent in the areas of security, environmental protection and safety creates disincentives for new trucking firms to enter the industry and for incumbents to invest further. For their part, communities located close to ports often oppose port expansion projects for environmental and other reasons. Interestingly, a recent survey that asked the top North American ports to rank 25 capacity factors (e.g., conditions at the terminal, labour issues and surface transport services) revealed that port managers’ greatest concern is with the capacity constraints imposed by local roads. Second and third most important capacity factors, according to the ports surveyed, were capacity constraints in rail and truck services. None of these three areas is under the ports’ control; they depend on decisions by government and private industry.

Logistics & Supply chain industry in India: Current status SUGGESTED FORM OF EXPORT SALES CONTRACT

1.

NAME and ADDRESS of the PARTIES Sellers …………………………. ………………………….. …………………………. Buyers ………………………… …………………………. .………………………… ………………………….

2.

We the above named parties, hereafter known as ‘Sellers’ and ‘Buyers’

respectively, have entered into this contract for sale of …………………….. on at …………………………… subject to the following conditions: (A)

GOODS (Description) ……………………

(i)

QUALITY …………………………….

(ii)

QUALITY (Specification) ……………

(iii)

PACKING

(i)

Customary

OR

(ii) Any Special Requirement (if any) Note: Trick the box

against the desired specification

B) INSPECTION Describe the goods, their quality and specifications as per the agreement. The agency for inspection / certification of quality

and/or quality may also be

stipulated). (B)

PRICE

(i)

Currently …………………..

(ii)

Basis of Price

EXW CPT

: FCA : CIP

: FOB

: CIF

: CFR

:

: Any other (specify)

(iii)

Price per unit ………………………………

(iv)

Total amount ……………………………….

Logistics & Supply chain industry in India: Current status Commission / Discount will become payable only after realization of total proceeds.

Prices are subject to Escalation

on account of increase(s) in freight charges,

taxes / duties etc. due to reasons beyond the control of Sellers. (C) (i)

MODE OF PAYMENT: Cash in Advance

OR Bill of Exchange : Sight Draft

____________ days after Sight

(ii)

Documentary LC : Irrevoable

OR Confirmed

Documents against Payment

(iii)

Documents against Acceptance

(iv)

Any other (specify)

(D)

SHIPMENT

* (i) Basis of Shipment EXW

: FOB

: CFR

: DES

: DEQ

Any other (specify) (ii)

Period of shipment Not earlier than ………….. Not later than …………….

(iii) Sea

Mode of shipment : Air

: Multimodal Transport

: Rail

(a)

Place of Pre-carriage …………………

(b)

Name of Pre-carriage …………………

(c) Placing Port of Shipment ……………… (d) Placed Port of Discharge ………………. (e) Place Port of two Destination ………. Indicate specifically whether place or port

etc.

Or Usance Draft

Logistics & Supply chain industry in India: Current status Note : (E)

Tick the box

against the designed specification

DOCUMENTS

Documents is normally tendered: (i)

Commercial Invoice

(ii)

Packing List

(iii)

Bill of Lading

/ Air

: Railway Receipt : (iv)

Waybill

/ Multimodal Transport Document

: LWB

Bill of Exchange : Sight Draft

OR Usance Draft __________

days

After Sight (v)

Insurance Policy

(vi)

Certificate of Origin

(vii)

Insurance Certificate

in case of CIF Sales) as

Certificate of Inspection (Where Required)

(viii) Shipment Advice (ix)

Any other (specify)

(G) INSURANCE (i) Seller (ii)

Party Responsible : OR Buyer Insurance Coverage :

Insurance Cargo Clause : ‘A’ AND /OR War Risks Coverage Note : Trick the box (H)

OR ‘B’

OR ‘C’

Indicate if ‘SRCC’

required.

against the desired specification.

PASSING OF PROPERTY AND RISK

The risk shall finally pass from the severs Buyers when the good are delivered at the Seller’s and are

place of work

covered

OR

when the

goods pass the

ship’s

rail

by insurance as per the terms. But, the property in the

goods shall finally pass to the Buyers only after payment has been made. (I)

FORCE MAJEURE

Sellers shall not be

responsible for any

delay in the performance

of this

contract due to any of the causes or circumstances beyond their control such as Act of God, War, Riots, Strikes, Civil Commotion, Lockouts, Act of State,

Logistics & Supply chain industry in India: Current status Industrial

Disputes,

Fire,

Damage or Accident

to the Mill/Factory

or

its

machinery cancellation or suspension of inland/overseas transport services by concerned

Transport

Services

Operators

or such like causes or

circumstances, subject to notice of the possibility of delay in performance of this contract being given by the Sellers to the Buyers. Sellers shall

be entitled to extension of

time for the performance

of this

contract for a period corresponding to the period of delay caused by or as a consequence of any of the causes and / or

consequences

mentioned above

and the Buyers shall accept the goods so affected without allowance as soon as they are ready and freight can be secured. (J)

ARBITRATION

All

disputes arising under, out of or in connection with this contrct shall be

finally

settled

by

ARBITRATION

by

……………………

(name

of

Arbitration(s) / Arbitral institution). 2.

Any

other special

conditions,

prevalent in or

relevant to the

particular line of trade or trade transaction may be specified.

INSTITUTIONAL

ARRANGEMENTS FOR

RESOLVING SHIPPER’S PROBLEMS 1.

In ocean trade

logistics, shippers have to end outer

a wide

range of

problems. These may be in the realm of freight rates, surcharges, adequacy of

shipping services and terms

and conditions of carriage.

Seeking solution,

or even expecting adequate response from shipping lines, to these problems may well be beyond the capacity of the import for the

shippers to organise

individual shipper. It is, therefore,

themselves in the form

Associations or Councils so that they can resources and

combined strengths

representatives concerned parties.

of

in

shipping lines or

of

Shippers

have the advantage of greater

negotiating

meaningfully with

the

shipping conferences and other


Shippers associations/Councils

Trade/Commodity

are organisations with

Associations and individual

membership

companies,

with

of

shared

objectives, at the regional/national level for the purpose of taking collective decisions

with a unified

approach

shipping lines, port authorities

in negotiations with representatives of

and other concerned interests. The objective

and effectiveness of a ‘Shippers’

Association or a Council

will depend largely

on the extent of commitment of its members to common objectives and on the frame work

of Government

Policy

and legislation within which it has

operate. In a de-regulated shipping environment it is all the more for the shippers to maximize their combined negotiating

necessary

strength to get a fair

deal from shipping conferences or representatives of independent lives and other concerned interests in

maritime

transport. In

successful in negotiation with Shipping Lines / Conferences Shippers Association/ Council to be adequately, if not

to

shipping

order to be

it is important for

fully, representative of

the shippers’ interests. The representative character of

a Shippers’

Association implies

a broad-based

membership, covering as many products / commodity interests as possible, so as to command recognition and respect from the more organised shipowners’ organisations and concerned Government bodies. 3.

With

Councils

a

must

professional problems

view to serving

its objectives

the Shippers’

Associations or

have independent secretariat with permanent staff of

competent

people for an objective analysis of

the Shippers’

and offering advice to Trade Associations and individual shippers in

solving their difficulties, whether individual or general, in trade logistics. Apart from attending to day-to-day problems of the shippers, the other the Shippers’ Association/

Council may include publicity and education of

shippers via organisation of workshops, seminars, study of information bulletins or programmes in trade

activities of

tours, publication

periodicals, short-term management development

logistics

and or

providing Technical

support

of the

centralized cargo booking scheme by independent agencies in the interest of

more

efficient

management and utilization of

port

and

shipping

Logistics & Supply chain industry in India: Current status services, to the satisfaction of both the users and providers of

trade related

maritime transport services. 4.

It is also important for the Shippers’ Associations to be financially strong so

as to be able support an independent secretariat for the purpose of collection, analysis and dissemination of information among member organisations and companies and for

strengthening

the negotiating

equitable solutions to their problems. for the

skills and abilities for

Strong financial resources are required

creation of requisite infrastructure for

generating the necessary

awareness among existing and potential members on the importance and role of transport,

in

general,

and ocean

transport

in

particular,

in overseas

physical distribution

management. Strong shippers, organisations are also

instrumental in giving

quality inputs for

shaping the maritime policy of a

country. Shippers’

organisations can also enlist

respective countries for their activities.

support

of Governments

in their

The UN Convention of Code for Liner

Conferences provides for an positive role which Governments may play in the consultation arrangements between conferences and Shippers’ Councils. 5.

The

rationale of

a shippers’

Association

/ Council

exists

in finding

satisfactory solutions to the problems facing the users of maritime transport services in particular and trade logistics in equal concern of Shippers’

general. These problems are of

to the providers of maritime transport

services. The success

Association of Council, therefore, depends upon its ability

to

emphasize and strike mutuality of interest among shippers and ship-owners in resolving the problems

in ocean transport logistics. This

paramount need for consultation Association / Councils with Conferences, Association

Port of

Underwriters and other

in an abiding basis on the part of Shippers’

representatives independent Shipping Lines /

Authorities,

Multi-Modal

underscores the

Railways,

Transport

Road

Operators,

concerned Government

banks

Associations,

and

Insurance

Sponsored Bodies. The UN

Convention of Code for Liner Conferences provides, for meaningful consultation between shippers

Transport

inter alia, the guidelines

organisations

and Shipping

Logistics & Supply chain industry in India: Current status Conferences. This could as well, be emulated as the

model for Consultation

with other concerned interests/ bodies in the trade logistics sector.


CHAPTER-4

Logistics & Supply chain industry in India: Current status CHAPTER-4 MARKETING STRATEGY MARKETING STRATEGY OF THE COMPANY Introduction Central to any successful marketing strategy is an understanding of our customers and their needs. The ability to satisfy our customers' needs better than our competitors are able to help our build customer loyalty and increase sales. However, both customer needs and the business environment in which we operate are constantly changing. Our marketing strategy needs to consider what changes are taking place, and the opportunities and threats that are emerging. A marketing strategy will also help to assess how successful we are at meeting our customers' needs, as well as how successful our competitors are. It may also help us to identify new markets that we can successfully target. This guide helps you to identify which customers to focus on and your key objectives in reaching them. It explains what to include in our marketing strategy and how it can be used as the basis for effective action.

Key elements of a successful marketing strategy One of the key elements of a successful marketing strategy is a thorough understanding of who our customers are and what "needs" they are looking to satisfy. Customer groups or segments can be identified and each targeted with marketing activity that specifically addresses their particular needs. In order to meet customer needs and remain competitive, it is important to identify and respond to any changes in customer needs and attitudes in our industry and in the broader economic climate. It is therefore vital that we assess our business environment when developing your marketing strategy.

Logistics & Supply chain industry in India: Current status We then create a marketing strategy that makes the most of our strengths and matches them to the needs of the customers we want to target. For example, if a particular group of customers is looking for quality first and foremost, then our marketing activity aimed at them should draw attention to the high quality service we can provide. It is important to think through the consequences of our marketing strategy to make sure it's realistic. For example, there is no point in basing a strategy on rapid growth if we won't be able to produce enough goods. The best strategy will reflect our own strengths and weaknesses.. A key element often overlooked is that of monitoring and evaluating how effective our strategy has been. This control element not only helps us to see how the strategy is performing in practice, it also help us to inform our future marketing strategy. Our marketing plan needs to be constantly reviewed and updated or replaced when necessary - just like our products or services.

SWOT Analysis Our strategy must take account of how our business' strengths and weaknesses will affect your marketing. Begin our marketing strategy document with an honest and rigorous SWOT analysis, looking at your strengths, weaknesses, opportunities and threats.

Strengths could include : personal and flexible customer service special features or benefits that our product offers specialist skills

Weaknesses could include: lack of an established reputation newly formed company.

Opportunities could include: increased demand from a particular market sector

Logistics & Supply chain industry in India: Current status using the Internet to reach new markets new technologies that allow you to improve product quality

Threats could include: the emergence of a new competitor more sophisticated, attractive or cheaper versions of our service new legislation increasing our costs a downturn in the economy, reducing overall demand

Having done our analysis, we can then measure the potential effects each element may have on our marketing strategy. For example, if new regulations will increase the cost of competing in a market where we are already weak, we might want to look for other opportunities. On the other hand, if we have a good reputation and our key competitor is struggling, the regulations might present the opportunity to push aggressively for new customers.

Developing our marketing strategy With an understanding of our business' internal strengths and weaknesses and the external opportunities and threats, we can develop a strategy that plays to our own strengths and matches them to the emerging opportunities. We can also identify your weaknesses and try to minimise them.The next step is to draw up a detailed marketing plan that sets out the specific actions to put that strategy into practice. Basically, Global logistics generally focus on the niche market. It focus on customer like CHA and Forwarder and they are the target market. Reason behind to target this segment of the market is explore GLS more business. For eg- if GLS go to 1 exporter they can get say 10 shipment and if they approach to 1 cha / forwarder then 1 cha/ forwader may have 10 exporter and from each exporter they have 10 shipment so in that case from 1 cha / forwader they can get 100 shipment so this is the reason why they target this particular segment of the

Logistics & Supply chain industry in India: Current status market. Beside this GLS also assure the client not to approach their customer it’s a sense of faith we develop in our client. GLS develop their marketing strategy based on the theory of market positoning it implies to develop a position in the mind of the customer by providing services according to them.

.What GLS did Identify strengths and weaknesses "In 2006 the company born and doing well, but our approach to marketing was hit-and-miss. We went through the business from top to bottom and pinpointed our strengths and weaknesses. "On the plus side, customer research showed that we are known for quality service and most of by the staff of the company involved in this trade for a long period. On the minus side, brand awareness was low . We also used published academic research to find out more about our target customers' mindset and what they want. We used all the information to create a marketing strategy with clear objectives. These included developing our network of partnerships, raising brand awareness, positioning ourselves as strategic thinkers in our market, and getting more business through referrals."

Work to a plan "With clear objectives in mind, writing and implementing a marketing plan was easier. We changed our marketing mix and our approach: Our printed newsletter, our main direct marketing method, our advertising and customer research was made more customer-focused by including market briefings. Feedback has improved and we've had several approaches from new clients who've received it. Beside cold calling, we stepped up marketing via our network of partners. We provided them with clear information so that they could promote all our services

Logistics & Supply chain industry in India: Current status to their clients. Now, about 20 per cent of what we bill is to partners rather than end users. To establish ourselves as strategic thinkers in our markets we began getting articles published in relevant trade journals. This raised brand awareness and enhanced our reputation. We also use re-prints of the articles as a direct marketing tool. We also re-designed our website and launched an Interview Guide on CD-Rom to show the flexibility of our services. "We now review our marketing strategy and update the plan every six months. As a result of one review, we decided to attend a big trade conference, which worked extremely well for us and generated a lot of new leads."

Clean up the database "Marketing to existing customers is easier and cheaper than starting from scratch with new ones, because existing customers are aware of our service and employes. However, to market effectively to this group required a better customer database than we had. As a result we decided to update our customer database. It's just as well we did, because as we updated it we found that approximately 40 per cent of the entries contained errors, duplications or were completely irrelevant. "We now have a proper database management strategy. We nominated one person internally to take responsibility and now it's kept up to date meticulously. We also use bought-in contact databases to help us target new customers." Before looking at new markets, we think about how we can get the most out of your existing customer base - it's usually more economical and quicker than finding new customers.

Focus on the market Your marketing strategy document should:

Logistics & Supply chain industry in India: Current status analyse the different needs of different groups of customers focus on a market niche where we can be the best aim to put most of our efforts into the 20 per cent of customers who provide 80 per cent of profits Don't forget the follow-up Put our marketing strategy into effect with a marketing plan tha t sets out actions, dates, costs, resources

and effective selling programmes. Measure the

effectiveness of what we do. Be prepared to change things that aren't working. Pitfalls to avoid Making assumptions about what customers want. Ignoring the competition. Trying to compete on price alone. Relying on too few customers. Trying to grow too quickly. Becoming complacent about what you offer and failing to innovate.


CHAPTER-5


Board Regional Director

Regional Director (SI)

(NI and EI) Exports Mgr

Sales

Docs

Imports Mgr

Ops

Service

Sales

Ops

Docs

Svc

Finance, Admin & HR

Domescti c A/c

Branch Mgr

Internatio nal A/c

Regional Director (WI)

Branch Mgr


CHAPTER - 6

Logistics & Supply chain industry in India: Current status CHAPTER-6 GOVERNMENT POLICIES Export Import (EXIM) Policy Export Related Schemes : Duty reimbursement to exporters, duty free licence/facilities to exporters & procedures 1. Duty Drawback Scheme Exporters are eligible for reimbursement of all custom duty paid on imported inputs of an export product. In a few cases, adhoc quantum of duty drawback is fixed to facilitate quick reimbursement. In other cases, the exporter has to submit his claims for re-imbursement with supporting evidence to the Commissioner (Duty Drawback) in the Department of Revenue, Ministry of Finance. So far Duty Drawback Rates for 77 electronic items have been fixed to facilitate the exporters. All Industry Drawback Rate (based on average worked out from data submitted by the concerned industry sector) and Brand Rate of Drawback (based on company specific data) are currently prevalent. 2. Duty Exemption Schemes The schemes consist of Duty Free Licence, Advance Licence and Duty Entitlement Pass Book ( DEPB ). Duty Free License

Duty Free License includes Advance Licence, Advance Intermediate License and Special Imprest License. Imports of inputs, which are physically incorporated in the exported product (making normal allowance for wastage), are permitted against a duty free licence. Application for duty exemption has to be filed in the prescribed proforma with the Office of the Licensing Authority of Directorate General of Foreign Trade (DGFT) under whose jurisdiction the applicant falls. Exporters are eligible for the Customs Duty Free Licenses against specific order or on production programme on the basis of up to 100% of the average FOB value of their exports in the preceding three licensing years. Such licence is issued in accordance with the policy and procedure in force on the date of issue

Logistics & Supply chain industry in India: Current status of the licence and is subject to the fulfillment of time bound export obligation and value addition as may be specified. A Duty Free license needs to specify the following: •

•

The name and description of the items to be imported and exported. Quantity of each item to be imported or if the quantity can’t be indicated,

the value of the item. •

The CIF value of imports.

•

The FOB value and quantity of export product.

Advance Licence

An Advance Licence is granted to a merchant-exporter or manufacturer-exporter for the import of inputs required for the manufacture of goods without payment of basic customs duty. However, such inputs shall be subject to the payment of additional customs duty equal to the excise duty at the time of import, which shall be adjusted as specified in the policy. Manufacturer-exporters as well as merchant-exporters are also exempt advance licence and/or material imported thereunder is not transferred even after completion of export obligation. Standard input/output norms for 227 electronic items have been fixed. The eligible exporters of Electronic products also have an option to avail the Special Advance Licensing Scheme for export of electronic products. The revised EXIM policy from April 1, 1999, introduced Annual Advance Licence to reduce avoidable interface between the exporter and the DGFT. This facility allows necessary flexibility in the import of duty free inputs. The exporter may import any prescribed input as per input-output norms throughout the year without approaching DGFT. Licences are issued without stipulation of minimum value addition. In such cases of self-declaration, the exporter will not wait for the decision of Regional Advance Licensing Committee (RALC)/Zonal Advance Licensing Committee (ZALC) for fixation of adhoc norms. The items and quantities permitted against such licences would be subject to subsequent fixation of norms by the Headquarters Special Advance Licensing Committee (SALC). In addition, Advance Intermediate Licence is granted to a manufacturerexporter for the import of inputs required in the manufacture of goods to be

Logistics & Supply chain industry in India: Current status supplied to the ultimate exporter holding an Advance licence/Special Imprest Licence. Whereas, Special Imprest Licence is granted to a main contractor for the import of inputs required for the manufacture of goods to be supplied to the specified categories of "Deemed exports" as covered in the EXIM Policy. DEPB Scheme

Another popular scheme for exporters is the DEPB, which may be phased out or modified in the next financial year. Under DEPB (Duty Entitlement Pass Book) Scheme, exporters are eligible to claim customs duty credit as a specified percentage of FOB value of exports made in freely convertible currency. The credit shall be available against such export products and at such rates as specified by the DGFT. So far, credit rates for 93 electronic items have been notified under DEPB Scheme. The Pass Book would be issued with one year validity period on post-export basis at single port of registration. The scheme covers both manufacturer and merchant exporters. Any item except those in the negative list shall be allowed for import. Third party exports are also admissible for credit under DEPB Scheme . The DEPB on post-export basis and/or the items imported against it is fully transferable. Some additional facilities as listed below have been provided for better implementation of the Scheme: DEPB rates rationalised to adjust for changes in Customs duties with caps fixed on some items A number of ports have been added for availing facilities under the Duty Exemption Scheme, including DEPB The threshold limit of Rs 200 million for fixing new DEPB rates removed Deemed Exports

Following categories of supply of goods from India by main/sub-contractors are regarded as 'Deemed Export' under the EXIM Policy: (a) against duty free licences/DFRC under the Duty Exemption/Remission Scheme (b) to EOUs or units located in EPZs, EHTPs, SEZs and STPs (c) for projects financed by the multilateral or bilateral agencies/Funds as notified by the Department of Economic Affairs, Ministry of Finance under international competitive bidding in accordance with the procedures of those Agencies/Funds

Logistics & Supply chain industry in India: Current status where the legal agreement provided for tender evaluations without including the custom duty (d) for Capital Goods to holders of licences under the Export Promotion Capital Goods (EPCG) Scheme and those including in unassembled/disassembled condition as well as plants, machinery, tools, dies and such goods which are used for installation purposes till the stage of commercial production and spares to the extent of 10% of the FOR value to fertilizer plants (e) to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the Import of such goods at Zero custom duty coupled with the extension of deemed export benefits to domestic supplies

(f) to the power refineries not covered above and coal, hydrocarbon, rail, road, port, civil aviation, bridges and other infrastructure projects provided minimum specific investment is Rs 1000 million or more (g) marine freight containers supplied by 100% EOU (Domestic freight containers-manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the Customs (h) to projects funded by UN agencies


CHAPTER-7

Logistics & Supply chain industry in India: Current status CHAPTER-7 TAX ASPECTS SALES TAX IN RELATION TO EXPORT AND IMPORT Article 286(1) of the Constitution of India states that no law of a State shall impose, or authorize importation of, a tax on the sale or purchase of goods where such sale or purchase takes place: 

Outside the state, or



In the course of the import of the goods into, or export of goods out of the

territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Clause (1). This article is infact a restriction as to imposition of tax to sale or purchase of goods. State legislation has been empowered to frame such instructions but within some restrictions. “In the course of export or import”: when a transaction is considered in the course of export or in the course of import is decided by certain principles. When a transaction relates to two states i.e. inter-state trade or transaction, state government of the two states can’t impose sales tax. Provisions are available in the Constitution of other countries like U.K., as the government wants to encourage export and import. If the tax is imposed on export then cost price of goods in international market will increase, and it will be difficult to compete. Therefore no tax is imposed. Tax is not under the control of state government for import or export. To have a unified policy, Central Government has power to frame laws and to consider a transaction in course of export or import. An exporter can be a manufacturer or a trader. Both are prevalent and the purchase made by exporter from local market and export to foreign countries: Both these are constituted “in course of Exports”. Traders who purchase goods from local market and sell to importer of foreign countries. There are two

Logistics & Supply chain industry in India: Current status different transactions and no sales tax to be paid on local purchases as well as on exports made by the trader. Section 5 of Central Sales Tax Act exempts the paying of sales tax on these two transactions. In 286(2) Parliament exercises its authority to frame

the Central Sales Tax law and Sec 5 of CST defines “in course of Export” and “in course of Import”. Section 5 of CST:

When a sale or purchase of goods said to take place “in course of Import or Export”. Clause 1: A sale or purchase of goods shall be deemed to take place “in course of Export” of the goods out of the territory of India only if the sale / purchase

either occasions such export or is affected by a transfer of documents of title to the goods after the goods have crossed the customs frontier of India. The two conditions are: 

When sales / purchase occasions the export i.e. a contract is signed

between Indian exporter and Foreign importer. 

When goods have been loaded and crossed the customs frontier of India

and document of title (B/L) is endorsed in favour of buyer. Clause 2: A sale / purchase of goods shall be deemed to take place “in the course of Import” of the goods into the territory of India only if a sale /

purchase either occasions such import is affected by the transfer of documents of title to the goods before the goods have crossed the customs frontiers of India i.e. 12 nautical miles. Sales Tax Authority thought that they were not able to collect adequate tax so case came to Supreme Court

“Sirajuddin case”. He was an iron ore mine

owner and exporting goods not directly but there a PSU i.e. STC, STC purchased it from him and then exported. This local purchase and export were exempted from

Logistics & Supply chain industry in India: Current status sales tax. This was challenged and matter went to Supreme Court Sirajuddin said that he had no role in exports, STC was shown as exporter in all documents. He was only loading the material on the vessels under directions of STC. STC had contract with Importer and a Back-to-Back Letter of Credit between STC and Sirajuddin. He took another plea that I am doing nothing. Supreme Court did not accept it and his case was pronounced and said that only the contract with for party is exempted from tax. Local sales not exempted and are liable to sales tax in terms of local sales tax Act. This judgement brought difficulty to Exporters as they had to pay tax on local purchases, which led to price increase, and difficult to compete so practice developed that purchases were made when prices were low in local market. These were stored by him and exported when demand arose. PSU and all exporters felt this problem so representatives made and GOI found that state showed decline in exports. Relief given was in way of amendment of the CST Act 1976. A plea was taken before Supreme Court that a term “in course of export / import” has been used on constitution i.e. the intention of Parliament is to involve many transactions (local, export/import) but Supreme Court did not accept it and said that intention of Parliament was frustrated. In 1976, a sub section was added to Section 5 of CST Act: Clause 3: not withstanding anything contained in sub-section1, the last sale or

purchase of any goods preceding the sale / purchase occasioning the export of those goods out of the territory of India, shall be deemed to be in the course of such export, if such last sale or purchase took place after and was for the purpose of complying with the agreement or order for in relation to such export. A link is to be established between the export order or export and local purchase. But this is not a correct stand. For example, we make a contract with local seller on 9.9.85 and you get an export order on 10.10.86. A view can be taken that since we have to link the two, then local sales not will be exempted. But this is not so as we have to link the actual purchase with export order i.e. actual local

Logistics & Supply chain industry in India: Current status purchases have to be done after we receive order even though a contract may be signed before. How to link the actual local purchase with export order ? Government has formulated H-Form in two parts supplied to the exporter by the Sales Tax Authority. The exporter gives this H-Form to local seller. This form contains details of order procured by him, and all details of actual exports done. Part-I: Purchases shown to Sales Tax Authority Part-II: Exports For example: If an exporter has to export iron ore with some specifications and

contents demanded by importer. But exporter does not possess such iron ore. So he makes purchase of two different specifications and mixes them upto achieve the required specification. Thus Sales Tax is not imposed on the two local sales if the exporter proves that he has mixed the two to get the required specification for exports. Also exporter need not purchase full quantity from one supplier but

purchases can be done from the local suppliers and all such purchases will be exempted from Sales Tax. CLAUSES TO PROTECT AN IMPORTER:

1.

Submission of Performance Guarantee Bond by the exporter to ensure timely

shipment of the goods. 2.

Material to be strictly supplied according to the specification agreed to in the

contract. 3.

Tolerance or variance in the quality of the goods to the minimum extent.

4.

Trial shipment clause: It is in the interest of an importer to provide in the

contract that the exporter shall first ship the material on trial basis i.e. the other shipments to be agreed only if the trial shipment goods are arrived by the importer.


Payment of the value of the material to be exported should be made only

through a Letter of Credit strictly on the basis of agreed documents. 6.

If the goods are to be inspected at various stages for example at the

manufacturing place i.e. before the goods are packed or when the goods are placed on board the vessel or when the goods are discharged at the place of destination it is always in the interest of the importer to provide in the contract that discharge port results shall be final and accepted by both the parties. 7.

To provide in the contract that if there is lapse or default in supply of that

material or if there is delay in the supply or if the goods are not supplied at all, the buyer shall have an option either to cancel the quantity defaulted or the contract or claim liquidated damages. 8.

The proper law of contract is the law, which determines or governs the rights

and obligations of the parties to the contract. The importer should insist that proper law of the contract should be the law of the importing country. IMPORTANT CLAUSES FROM THE POINT OF VIEW OF AN EXPORTER:

1.

Payment of the price of the goods being exported should be through a

Confirmed Letter of Credit. 2.

Property or title to the goods should pass from an exporter to an importer

only after payment has been released to the exporter. Efforts should be made to provide that lien of the exporter shall be retained in the goods till the payment is received by the exporter. 3.

A provision should be made for escalation of the price of the goods under

certain circumstances. Such contingencies should be specifically provided in the contract. 4.

In order to protect himself from the delay or non-supply of the material due

to causes beyond his control, there should be a Force Majeure Clause. 5.

In order to resolve any dispute or difference that may arise under the

contract, that matter should be referred to arbitration in the exporting country.

Logistics & Supply chain industry in India: Current status Foreign exchange management Bill The object of the bill is to consolidate and amend the law relating to forex with the objectives of facilitating external trade and payments and for promoting the orderly development and maintenance of forex market in India. It will be known as the Foreign Exchange Management Act, it shall extent to the whole of India and it should also apply to all branches, offices and agencies outside India owned or controlled by a person resident in India. Securities means shares, stocks, bonds, debentures, government securities,

saving certificates under Government Saving Certificates Act applies, units of UTI or any other mutual funds etc. it however does not includes the Bill of Exchange or promissory notes other then Government Promissory Notes. Regulation and management of forex: except as provided in the Act no person shall in any manner deal in or transfer any forex or foreign securities to any person not being an authorized person except as provided in this Act. No person resident in India can acquire, hold, own, possess or transfer any foreign exchange, foreign securities or any immovable property situated outside India. The RBI may by regulation prohibit, restrict or regulate the following: 

Transfer or issue of any foreign securities by a person resident in India.



Transfer or issue of any security by a person resident outside India.



Transfer or issue of any security or foreign security by any branch office or

an agency in India of a person resident outside India. 

Any borrowing or lending in Rupees, in whatever form or by whatever name

called between a person resident in India and a person resident outside India. 

Any borrowing or lending in forex in whatever form or by whatever name

called. 

Deposits between persons resident in India any persons outside India.



Export / Import or holding of company.



Transfer of immoveable property outside India other than a lease not

exceeding five years by a person resident outside India.

Logistics & Supply chain industry in India: Current status 

Giving of a guarantee or security in respect of any debt obligation or other

liability incurred by a person resident in India and owned to a person resident outside India or by a person resident outside India.

EXPORTS OF GOODS AND SERVICES Every exporter of goods shall furnish to the RBI or to such other authority a declaration in such form and in such manner as may be specified containing true and correct material particulars including the amount representing the full export value or if the full export value of the goods is not ascertainable at the time of export the value which the exporter having regard to the prevailing market conditions expects to receive on the sale of the goods in market conditions expects to receive on the sale of the goods in a market outside India. The exporter shall also furnish to RBI such other information as may be required by RBI for the purpose of insuring the realization of he export sales proceeds by such exporter. Every exporter of services shall furnish to RBI or to such other authorities a declaration containing the true and correct material particulars in relation to payment for such services where any amount of forex is due or has accrued to any person resident in India such person shall take all reasonable steps to realize and repatriate to India such forex within the specified period.

AUTHORISED PERSON RBI may on an application authorize any person to be known as authorized person to deal in forex or in foreign securities. The authority given to an authorized person may be revoked by RBI at any time if it is in public interest to do so or if the authorized person failed to comply with the conditions prescribed for the authorized person or if he contravenes any of the provisions of the Act, or any rule, regulation, notifications, directions or orders. RBI may at any time order for an inspection to be made by any officer of the RBI.

Penalties

Logistics & Supply chain industry in India: Current status If any person contravenes any provisions of the Act, rules, regulation, notification, directions and orders issued under the authority of the Act, he shall upon adjudication be liable to a penalty upto twice the amount involved in such contraventions or upto Rs. 1,00,000 where the amount is not quantifiable and where such contravention is continuing one. Further penalty may be extended to Rs. 5,000 for everyday after the day during which the contravention continues. A defaulter of the punishment may be kept in civil law for a particular period.

APPOINTMENT / ADJUDICATION AND APPEAL Or the purpose of adjudication the Central Government may appoint as many officers of the Central Government as it may deem fit as he adjudicating authorities for holding an equity after giving the accused, a reasonable opportunity of being heard for the purpose of imposing any penalties. The Central Government is also authorized to establish an appellate tribunal for foreign exchange to hear appeals against the order of the adjudicating authorities. Every appeal shall be filed within a period of 45 days from the date on which he receives a copy of the order made by the adjudicating authority. The appellate tribunal shall consist of a chairperson and members holding office for a period of 5 years or upto the age of 65 years in case of chairperson and 62 years in case of the members. The staff and salary is determined by the central Government. The appellate tribunal can summon and enforce the attendance of any person for his examination. It can order the discovery and production of documents; the tribunal can issue commissions for the examination of the witness or documents. The tribunal can review his decision; there are other powers, which are given to the tribunal. All the decisions in the tribunal are taken by majority. The concerned person or a lawyer or an advocate can appear before the tribunal. The government can appoint presiding officer to appear before the tribunal on behalf of department. Any person aggrieved by any decision or order of the appellate tribunal may file an appeal before the date of communication of the decision or the order. The Central Government shall establish a Directorate of Enforcement

Logistics & Supply chain industry in India: Current status for the purpose of this Act. The Directorate exercises various powers under the Income Tax Act. The Foreign Exchange Regulation Act 1973 shall be repealed by this Act.

AVOIDANCE OF DOUBLE TAXATION NEED OF TAX TREATIES The pattern of taxation of income is almost similar all over the world. Income is to be charged to tax in the hands of person who ha derived it at the place where he has derived it or where he resides. With the growth of international trade the problem increases in size and complexity. It is in the common interest of all countries to arrive at the tax agreements which will not merely insure that the same income is not taxed twice over in the country of origin of the income i.e. the source country as well as he country of its destination or the country of residence of the tax payer and thus promote the development of commerce and minimize the scope for tax evasion and facilitate the recovery of tax dues. This is the background, the aim and rationale of the bilateral tax treaties. The conflict of interest between the resident and source countries remained unresolved for a long time. League of Nations organized a model bilateral Convention which drafted a Model Treaty. Efforts were made by the organization for European Economic Organization for Economic Co-operation and Development to draft a Model tax avoidance treaty. After World War-II many countries in Asia and Africa got independence and started improving their economies. The desirability of promoting greater inflows for foreign investment to developing countries on condition, which are politically acceptable besides being economically and socially beneficial, has been frequently affirmed in resolutions of the General Assembly, the UN Economic & Social Council and UN Conference on Trade & Development. India being a developing country has necessarily had to look to the developed nations for better technology larger capital and expertise at the same time it has also to strengthen its economic co-operation with other developing

Logistics & Supply chain industry in India: Current status countries with these ends in view India has entered into several bilateral tax treaties. In 1968 Secretary General of United Nations setup the ad-hoc group of experts on tax treaties between the developed and developing countries. This group consisted of tax officials and experts from various countries including India. This group of experts drafted the final Model Convention, which has been published by UN in 1980. The Model Convention of UN of the UN draft has now become the standard format for the tax treaties, which are being concluded between the developed and developing nations.

HIGHLIGHTS OF THE UN MODEL The UN Model represents a compromise between the source principle and the resident principle although it gives more weight to the source principle then does the OECD Model. The provisions in the draft UN Model are based on the recognition by the source country that taxation income from foreign capital would take into account expenses allocable to the earning of the income so that such income would be taxed or a net basis and the taxation would not be so high as to discourage investment and it would take into account the appropriation of sharing of revenue with the country providing the capital revenue with the country providing the capital. It also embodies the idea that the resident country may extent a measure of relief from double taxation through either the foreign tax credit or exemption method. The Sub-section 1 of Section 90 of the Income Tax Act enables the Central Government to enter into an agreement with the government of the other country not merely for avoidance of double taxation of income but also on the ground of relief in respect of income on which income tax has been paid in both countries. It also helps in exchange of information for counter acting tax avoidance and evasion. A person is resident in India if he spends 182 days in India and in the year previous to any assessment year i.e. the year income of which is the subject matter of assessment. Anyone whether or not he is Indian citizen who has been found resident on this basis during nine out of ten years

Logistics & Supply chain industry in India: Current status preceding the year in which any income was derived by him or who has been in India for a period amounting in all to two years during the seven years preceding that year is treated as ordinarily resident for the purposes. The tax treaties become relevant only where any income accruing or deemed to accrue or rise to any resident in India during any particular year is charged to tax in his hand in India and also in some other country or any income is derived in any other country by any person who is ordinarily resident of India and who is therefore liable to the tax or his world income and that income is taxed in both the countries. A person who is ordinarily resident in India is entitled to fall back on provisions of Section 90 and 91 of the Income Tax Act. Permanent resident of other countries with which India has tax treaties, who have suffered tax on their income both in India and in the home countries will have to seek the necessary remedy where they are assessed for tax. But there tax eligibility in India will also be subject to the restrictions imposed by relevant tax treaties. The grater merit of the tax treaties where ever practicable they incorporate unequivocal provisions for avoidance of double taxation of income accruing or arising in the treaty countries instead of leaving any scope of discretion of the tax authorities.

MONEY LAUNDERING BILL The Bill was earlier introduced in the Lok Sabha on 4th August 1999. But it was referred to Standing Committee, as the Lok Sabha, which was dissolved due to fall of the government, could not pass it. The main purpose of this legislation was to setup an adjudicating authority to deal with cases of laundering and also an appellate tribunal where individuals and corporates could appeal on the ruling of the authority. Acquisition, possession or owing of money, moveable and immoveable asset for criminal activities especially drug and narcotics transaction would amount to money laundering. Money laundering has

been considered a cognizable offence. Even concealing information on proceeds or gains of the crime may, within India or abroad is regarded as laundering.

Logistics & Supply chain industry in India: Current status According to the proposed legislation those committing offence of money laundering are punishable with rigorous imprisonment ranging from 3-7 years, which could be extended to 10 years. In addition to the punishment a fine of up to Rs. 5,00,000 can also be imposed. Apart from corporates and individuals, banking and non-banking financial companies have also been covered under the provisions of the Bill. The adjudicating authority headed by a Chairperson has been given the right to confiscate property of those who resorting to money laundering. The Chairperson shall not be below the rank of joint secretary of the GOI. An administrator could be appointed by the authority to manage the assets and properties that have been confiscated. Banking companies, financial institutions and intermediaries are expected to furnish transaction records to the authority and not to the Income Tax Commissioner. Failure to maintain or submit such transaction records would attract a fine ranging from Rs. 2,000 – 1,00,000. As per the Bill the RBI in consultation with the Ministry of Finance (MoF) would decide on the manner in which the financial data is to be stored or retained. Since the authority has been given a quasi-judicial status, none of the orders or its rulings can be contested or challenged in the local courts. Individuals or corporates can approach the three member appellate tribunal that is being setup specifically to deal with such cases of laundering. An appeal could be filed within 45 days of the authorities ruling. Local courts have no jurisdiction on the rulings of the tribunal but High Courts and Supreme Court are competent to hear cases against the rulings and orders of the Appellate Tribunal. The GOI proposes to setup special courts to deal with specialized cases. The authority has been given to the money laundering agencies to search and seize properties and funds collected through laundering. It can arrest persons involved in the money laundering. By bringing the Money Laundering Bill the GOI has sought to curb illegal monetary transactions dealing in moveable and immoveable properties. The Bill seems to be in consonance with the commitment made by India at the UN Convention against the illicit traffic in Narcotics and Drugs. The Basely Statement to which India is a party seeks to prevent laundering of money.



CHAPTER-8

Logistics & Supply chain industry in India: Current status CHAPTER-8 OBJECTIVES 

To study the reasons causing mushrooming of logistics in India.



To study the contribution of exporter and importer in the growth of logistics in India.



To study the factor which affect the growth of NVOCC and freight

forwarder. 

To find the strength and weaknesses of NVOCC in India.



To study the marketing strategy followed by NVOCC and freight forwarders.



To know the factor which affect freight forwarder and MNCs to choose their service provider.


CHAPTER-9

Logistics & Supply chain industry in India: Current status Chapter-9

RESEARCH METHODOLOGY Methodology is the key to any kind research. It helps to maintain a track of what to do and not to do. It has various approaches to it. A good methodology works as a strong plan for collecting both primary and secondary data. There are different ways of adopting good methodology. There are two main ways to collect data, which is, primary and secondary. In fact, both are necessary to provide a balanced study on any kind of research.

STATEMENT OF OBJECTIVES 

To find the possibility growth of logistics in India.



To find the strength and weaknesses of NVOCC in India.



To study the marketing strategy followed by NVOCC and freight forwarders.



To know the factor which affect freight forwarder and MNCs to choose their Service provider.

Secondary Research The data collected through this research is that data, which has already been collected by someone for a different purpose. In other words, the secondary data is someone else's work, which is shared by other people as a view to their perceptions and research work. Most research requires the collection of primary data to be supported with the secondary data. In other words, it is always a good idea to use other people's point of view as it can contribute to support the findings considerably. Initially, the author undertook the secondary research in order to cover literature review for his dissertation. Through secondary research author was also able to

Logistics & Supply chain industry in India: Current status support the ideas of other writers who have written about the subject of 'empowerment'. The author took 'paper based sources', such as, books, journals, periodicals, newspapers and magazines for collecting data. Various books

Primary Research This research follows the procedure of collecting the data through interviews, questionnaires, observation, Case studies, diaries, portfolios, etc. In fact this research is called primary because it is the initial step which the author has to take in order to begin the research. Two techniques has been used by the author for this research namely questionnaires and interviews. This technique help in generating qualitative data. The reason why author has chosen questionnaire as one of the method of collecting primary data is that it is relatively cheap and can be accessible through post e-mail, fax, etc. Also it is an effective means through which one can explore the others mind. (Module Study Guide]. The author took interviews with employees of the four hotels and the managers in order to give the qualitative feedback. This method of qualitative data is most useful as it gives insight into how individuals or groups think about their surroundings. It helps in identifying and assessing emotions, values and attitude of interviewer. This also helps to get the accurate information from the primary research. Special efforts were made to seek out different areas to gain a better perspective of the distributors.

RESEARCH DESIGN There exist two types of research. These types can broadly be classified as follows: 1. Exploratory, and 2. Conclusive Exploratory research seeks to discover new relationship and establish hypothesis. While conclusive research is designed to help choose among various possible courses of action that is to make decisions.


CHAPTER-10

Logistics & Supply chain industry in India: Current status CHAPTER-10 LITERATURE REVIEW MARKETING Marketing is a societal process by which individual and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with or other wise it is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods. Services to create exchanges that satisfy individual and organizational goals.

MARKETING STRATEGY Marketing strategy is a set of objective polices and rules that leas the company's marketing efforts. It is the marketing approach to accomplish the bread objective of the marketing plan. The various of marketing strategy are given below. 1. Selecting largest markets segmentation. 2. Positioning 3. Product 4. Price 5. Place 6. Promotion 7. Research and Development 8. Marketing research

1. Marketing Segmentation and selecting target market : - It is an effort to increases a company's precision marketing. The starting of any segmentation discussion is mass marketing. In mass marketing the seller engages in the mass promotion of one product for all buyers. Market segment consist of a large identifiable group within a market with similar wants, purchasing power geographical location, buying attitudes or buying habit. It is an approach midway between mass marketing and individual marketing. Through INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status this, the choice of distribution channels, and communication channels become much easier. The researcher try to form segment by looking at consumer characteristics; geographic, and psychographics. After segmenting the market then target market selected.

2. Positioning: - The positioning is a creative exercise done with an existing product. The well known products generally hold a distinctive position in consumers' minds. The positioning requires that every tangible aspect of pr oduct, price, place and promotion must support the chosen positioning strategy. Company should develop a unique selling proposition strategy. Company s should develop a unique selling proposition (USP) for each brand and stick to it. Price, PPL consistently promotes its DAP fertilizer by higher yield at lower cost. As companies increase the number of claims for their brand, they risk disbelief and a loss of clear positioning. In general a company must avoid four major positioning errors. Those under positioning over positioning confused positioning and doubt positioning.

3. Product: - A product is any offering that can satisfy a need or want. The major types of basic offering are goods services, experiences, events, places, properties, organization, information and ideas. The company gives more importance in- quality, packaging, services etc to satisfy the customers. The product has its life cycle. The product strategic is modified in different stages of product life cycle.

4. Price: - It is the most importance aspect in company's point of view. Price of the product will be decided by the company according to the competitor's price.

INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status 5. Place: - This plays a major role in the entire marketing system. The company emphasis on its distribution network. Proper distribution network gives proper availability of the product.

6. Promotion: - Promotion is the one of the major aspects in marketing strategy. By adopting various promotional activities the company create strong brand image. It is also helps in increasing the brand awareness. It includes advertising sales promotion and public relation etc.

7. Research and Development: - After testing, the new product manager must develop a preliminary marketing strategy plan for in trod using the new product in to the market. The plan consists of three parts. The first part describes the target market's size, structure and behavior. The second part our line s the planned price, distribution strategy and marketing budget for the first year. The third part of the development describes the long run sales and profit goals and marketing - mix strategy over come.



CHAPTER-11


Logistics & Supply chain industry in India: Current status CHAPTER-11 SYNOPSIS

Title of the Project: ASSESSING CUSTOMER POTENTIAL AND PREFERENCES FOR NVOCC IN LOGISTICS INDUSTRY.

Name of the Researcher Name of the Guide

: Nisha Singh : Ms. Sona Handa .

Designation

: Manager

Area of Study

: NCR

Types of research

: Conclusive

Sample size

: 65

Sample type

: QUOTA SAMPLING



CHAPTER-12


Logistics & Supply chain industry in India: Current status CHAPTER-12 RESEARCH WORK AND DATA ANALYSIS This part of the chapter consists of research work which work which has been undertaken by the researcher before discussing in detail let us have the clear view of some basic concept, Marketing, Marketing Research, Questionnaire, Meaning of Survey & its Methods, Meaning of Feedback how it is important.

Marketing Marketing is getting right goods and services to the right people and to the right place at the right time at the right price using the right promotional technique. According to famous marketing guru ‘Philip Kotler’ “Marketing is a human activity directed at satisfying needs and wants through exchange process”

Marketing Research The American Marketing Association has defined Marketing Research as “The Systematic gathering, Recording, and Analyzing of the data about problems relating to the marketing of goods and services” Market Research is only a part of the marketing research and covers only a few aspects of marketing; it is only a sub-function of marketing research. Marketing Research is only research in to market. It cover the aspects regarding size and nature of the market including export market, dividing the customer in term of age, sex, income (Market Segmentation) economic aspect of marketing etc. Therefore Marketing Research may be defined as the systematic investigation of the facts relevant to various aspect in marketing. The basic purpose of decision making process.

Scope of Marketing Research


Logistics & Supply chain industry in India: Current status (i)

Product and Service Research

(ii)

Market Research

(iii)

Promotion Research

(iv)

Distribution Research

(v)

Corporate Responsibility Research

Steps in Marketing Research (i)

Problems Definition

(ii)

Decision on Fact Gathering Procedure

(iii)

Data Collection

(iv)

Data Evaluation

(v)

Interpreting Data

(vi)

Research Design

(vii)

Field Work

(viii)

Data Analysis and Interpretation

(ix)

Report Presentation

Method of Marketing Research (A)

Survey Method

(B)

Experimental Method

Questionnaire Questionnaire in this case means a set of organized question which is prepared in accordance with the particular case, in other words it refer to the selfadministered process where by the respondent himself/herself read the questions and record his/her answer without assistance of an interviewer. Here in this project work questionnaire method practice along with the personal interview. Questionnaire is more highly structured and standardized.

Survey Method


Logistics & Supply chain industry in India: Current status The Survey method is complex operations which require some technical knowledge. Usually three general methods are used for conducting this survey method they are as follows, 1.

Personal Interview/Questionnaire

2.

Mail Survey

3.

Telephonic Survey

Here in this research work survey method has been widely executed the three phase of this survey method i.e., personal interview/questionnaire, mail survey, telephonic survey.

Experimental Method This method is more related to the production aspects of an organization. The quality of the ultimate result of continuous research and experiments.

Sources of Data Data’s are the useful information or any forms of document designed in a systematic

and

standardize

manner

which are

used for

some

further

proceedings. One of the important tools for conducting marketing research is the availability of necessary and useful data. Some time the data are available readily in one form or the other and some time the data are collected afresh. The sources of information fall under two categories, Internal Sources and External Sources. In this particular project the major sources were as follows:-

Internal Sources A business organization has definitely to keep certain records such as financial accounting records, sales records, and other information relating to the business process, these records provides ample information, good use can be made of the various information which an organization usually keeps for its own purposes in the future. Here in this case we have got lot many information from inside the organization

Major Statistical Tools Used in This Project

Sampling Type: Here the type of Sampling was Quota Sampling INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status Sampling Size: We tried to maximize the sampling size. In this process we sought an appointment with the key personnel and get a response from them. Most of the respondents were the key decision makers in the filed of Human Resources Department. This care was taken just to ensure that in the process of administering the questionnaire they could know about the services that could be offered. Collation of the data post which each and every data question was analyzed Objective and subjective analysis of the results as fallout of the responses from the respondents. Analysis of the variance in the whole exercise nullifying some extreme responses, which do not fit into the system. FEEDBACK FROM THE RESPONDANTS AND GRAPHS FEEDBACK

■■The term ‘Feedback’ means responds from the respondent, here in this case a set of questionnaire is paced before the respondent at the end of the meeting put a request to fill up the questionnaire; the filled questionnaire is the feedback in this case based on the feedback of the questionnaire the particular chart is to be prepared. ■■With this background in mind a questionnaire was administered to the corporate and the responses were collated. Each question was analyzed and results were recorded.



CHAPTER-13


Logistics & Supply chain industry in India: Current status Q1: Kindly tick the logitics solution you are presently providing to your Customers? a) Exports Export 16

b) Imports Import 6

c) Both Both 43

T



As per the graph about 66% of the respondent provide both Export & Import

logistics solution to the customer.


Logistics & Supply chain industry in India: Current status Q2: Which mode of freight solution you are presently using? a) AIR AIR 4



b) SEA SEA 13

c) BOTH BOTH 48

As per the graph is concern it shows that 74% of the customer use both Air

& Sea as the mode of freight solution. 

20% of the customer use Sea as the mode of freight solution.



And very less % use Air as mode of freight solution.



So from the above point it is being concluded that maximum of customer use

both mode of the freight solution.


Logistics & Supply chain industry in India: Current status Q4: Please rate the following parameters on a scale of 10 that influence the decision making while choosing a service provider / consolidater? Particulars

Less priority( 0-3)

Medium

High priority(7-10)

priority(4a) Ex. BL release b)Imp. DO release c) Ex. Freight rate d) Imp. Freight rate e) Imp. Destination

15 25 16 27 24

6) 7 8 3 3 7

charges f) Relationship Mgt. g) Personalised

11 22

13 6

37 36

services h) Problem solving i) Online services &

37 21

4 11

37 32

28

13

23

IT j)

Office

location

42 31 45 33 34

distance

70


Logistics & Supply chain industry in India: Current status From the above graph it is being concluded that while choosing their service provider customer preferred 1st Export freight rate 2nd Export BL release

3rd

Relationship Mgt. 4th problem solving 5th personalized service 6th online sevice & IT 7th Imp. Freight rate 8th Imp. Destination charge 9th Imp. DO release & 10th Off. Location distance. 

Ex. Freight rate & BL release play important role while choosing their

service provider 

Beside this management relationship between the service provider &

customer are also preferred to choose the service provider by the customer.


Logistics & Supply chain industry in India: Current status Q5: Have you heared about GLS if yes please confirm the medium?

•

a) Advertisement in Exim

b) Sales person

c) Social events

d) Coverages in journals

e) Bronchures

f) any others

As per the graph is concerned 33 respondent suggested that awareness

s e s n

about the GLS is due to the frequent visits of the sales persons in market. •

21 respondents suggested that awareness about the GLS is due to the

Advertisement in Exim. •

Awareness about GLS is also made through other medium like knowing the

staff members, knowing the management and so on.



And very less responses is for social events, coverage in journals &

bronchures. 

So from the above points it is being concluded that GLS is having an

active sales force and continuous follow-up which trap the market. 

Beside this advertisement in Exim is also important for the GLS.


Logistics & Supply chain industry in India: Current status Q6: For a new service provider pricing/rating should be? a) Skimmed

b) Mixed

e) Cost plus

f) any other

c) Margimal

d) penetrating

ANALYSIS: -

•

o

As per as the graph is concern it shows that 45% of the customer Suggest to have a Marginal pricing for a new service provider.

•

17% suggested to have Mixed prcing.

•

11% suggest to have penetrating pricing

•

Very less percentage say 5% suggested to have skimmed pricing



So based upon the percentage of customer opinion for a

new

NVOCC/service provider pricing/rating should be Marginal due to growing competition of this trade in the market.


Logistics & Supply chain industry in India: Current status Q8: Would you be interested to change your preferences to a new service provider with experienced people if they meet your requirement? a) Definitely yes

b) Definitely No

c) Cant say

d) Probably yes

Probably No Definitely yes 27

Definitly No

Cant

Probably

Probably

11

say 8

yes 19

No 0

ANALYSIS: -

•

As per as the graph is concern it shows that 43% of the customer

•

are.ready to change their service provider.

•

28% of the customer may or may not change their service provider.


e)


17% of the customer will not change their service provider.

•

12% of the customer have neutral opinion i.e. they cant say that whether

they will change or not change their service provider. 

So based upon the percentage of customer opinion it is being

concluded that 43% are the target customer of GLS and where as 40% of the target customer need to be cracked to change their service provider.



CHAPTER-14


Logistics & Supply chain industry in India: Current status CHAPTER-14 SWOT ANALYSIS STRENGTH 

Competitive price



Service Maintenance



Experienced Management



High market potential



Tapped network distribution



personal and flexible customer service



specialist skills

WEAKNESS 

lack of an established reputation



newly formed company

.

Opportunities:



increased demand from a particular market sector



using the Internet to reach new markets



new technologies that allow you to improve product quality

Threats 

the emergence of a new competitor



more sophisticated, attractive or cheaper versions of our service



new legislation increasing our costs



a downturn in the economy, reducing overall demand

.



CHAPTER-15


Logistics & Supply chain industry in India: Current status CHAPTER-15 LIMITATIONS Throughout the study utmost care has been taken to avoid biases, errors so as to ensure authenticity and accuracy. But there is possibility for some discrepancies to come in between due to following limitations: 

Respondents may give their biased opinion, as they know the identity of

interviewer. 

Assumption is made that views and suggestion given by the respondent are

his own perception and idea. 

The study is not free from sampling error



Seasonal changes in sales figures may affect the quantitative data. ,



A person tends to lie if he is being noticed and since the questionnaire was

targeted on mature persons the veracity of the answer cannot be granted. 

Last but not the least and the most deciding factor paucity of time.



CHAPTER-16


Logistics & Supply chain industry in India: Current status CHAPTER-16

MAJOR PROBLEM Over the past decade, India has been one of the fastest-growing economies in the world – only second after China. India has witnessed tremendous growth not only in the domestic front but also on the export front. For Indian industry, the f u ture is expected to be even better than the recent past and as per most projections. India will be the fastest growing of the world's major economies. Unfortunately, this growth has not been facilitated by the Logistics industry, but has happened largely despite it. This impressive growth story would not be sustainable if the Logistics industry does not improve its performance and provide credible support to the Indian industry. Beyond all this hype and euphoria about the India growth story, given the realities of the Indian Logistics industry, we need to critically examine the capability of Indian Logistics industry to support demand placed on it in the future. Though direct logistics cost in India is not very high but if one includes indirect, hidden and opportunity costs paid by the industry because of poor service, logistics is likely to become the biggest bottleneck for India’s growth. The major hurdles faced by India’s Logistics industry are: lack of standards and processes within the industry,





inadequate infrastructure,



ineffective usage of information technology, and



lack of skilled manpower.

Improving efficiency and effectiveness of Indian logistics is going to be a Herculean task and would require concerted efforts on the part of all the stakeholders including government and industry bodies. Though on the whole, the Logistics industry suffers from poor image, there have been several success stories where it has performed well by adopting good practices and industries.


Logistics & Supply chain industry in India: Current status The auto components and automobile industry have managed to provide high quality service to domestic as well as international customers at moderate cost. Organised retailing is straining at the leash, leveraging good logistics practices to source from the agriculture sector. In addition, a growing India would mean agricultural growth, a construction boom and the need for infrastructure based connectivity. Apart from learning from the best practices around the globe, Indian logistics can study the innovative practices followed by some of the leading sectors in Indian industry so as to improve efficiency and effectiveness of logistics operations. In this journey towards excellence, the Logistics industry can also leverage Indian leadership in the IT industry. World over, IT has played an enabling role in improving logistics services, and to some extent effective use of IT can neutralize some of the constraints posed by poor infrastructure. This journey towards excellence can be facilitated by industry by diffusing better logistics processes and standards by shippers as well as service providers. The government has to play a key role by working on hard and soft infrastructure. Hard infrastructure would mean investments in rail, road, ports and waterways, pipelines and airports. Soft infrastructure would require enabling policy structure and support for human resource development for the Logistics industry. One of the major problems faced by the Logistics Industry is that, despite being a major link in the system, it does not enjoy industry status. Consequently, logistics service providers do not have access to low-interest funds and other incentives available to other industry players. The government should provide industry status to the Logistics sector.



CHAPTER-17



FUTURE ASPECTS India is already a heavyweight globally in the services sector. Manufacturing still makes up only a relatively small proportion of GDP—about 20 per cent compared to China’s 45 per cent—but it is growing, both in terms of domestic focus and exports. India’s container trade has been growing at around 15 per cent over the past five years. That means the logistics services business will be growing at a multiple of the box trade, probably around 20 per cent and more per year. The growth in demand presents significant opportunities for the logistics industry, as also challenges. India’s current trade profile provides important clues about the development of logistics industry.The US is the biggest origin and destination market for both import and export and China is rapidly rising on both fronts. But the key fact is that a big chunk of India’s trade remains confined to textile products and appar el, low-end manufacturing, with imports naturally dominated by raw materials. A big part of the manufacturing sector has been focused on the domestic market. In some areas, notably, apparel exports, there is vital emphasis on logistics and speed to market for the delivery of time-dependent ‘perishable’ goods. For the bulk of trade into and out of India, it is not the case; relatively inefficient, individual transport services can be cobbled together to get goods to the market. This will change. As the trade profile changes, so will the need for more reliable, seamless supply chain solutions that offer real-time visibility along the pipeline. We have seen in other locations globally that the key driver of demand for worldclass logistics services is a critical mass of MNCs whose bottomline success requires low-cost manufacturing locations, connected to highly efficient supply lines. Secondly, some pieces of hardware are either missing or not up to the global standards. Ports, for example, are for the most part choked up or not set up for increased container transportation. Road and rail connectivity is patchy INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status and waterways, while exciting, are not yet big on the radar screen as far as volumes are concerned. Add to that a lack of capabilities or competition in some segments of the supply chain, absence of common standards for equipment and technology, and intra-provincial barriers. These are the key factors playing on the minds of MNCs looking for alternative lower-cost sourcing locations or wanting to reduce their dependence on China and other Asian countries. Broadly, the elements of integrated supply chain include: Supply chain management design

•

•

International ocean/air transportation

•

Consolidation/distribution

•

Document delivery

•

Deconsolidation distribution

•

Multimodal transportation

•

Warehousing and DCs

•

Delivery to point-of-sale An effective logistics provider should have the expertise and global connectivity to manage cargo through an integrated network from the time it leaves the warehouse to delivery at destination to customer locations and distribution centres. Expertise in freight analysis, audit and payment, plus service-level reporting is the customer’s weapon in the everyday battle to move freight more efficiently. .



CHAPTER-18


Logistics & Supply chain industry in India: Current status CHAPTER-18 CONCLUSION: Logistics is one of the area of the supply chain i.e. growing at a tremendous case as the Internet and E-Commerce is drastically changing the range, delivery time and the speed of information as well as ordering and payment process. Due to the big boon of information technology, greatly influencing and enhancing the effectiveness of logistics, the time is not far when 5 PLs and 6 PLs may emerge which will probably we doing part of the manufacturing and marketing for the organizations. The Indian 3PL market is set to grow tremendously in the next 5-7 years, spearheading the

growth of logistics

market.

Several

factors

including

government’s support are instrumental in this growth. Though certain challenges remain to be addressed, the general trend is highly positive. With scenario highly favorable for them, the onus is now on 3PL service companies to offer quality services at affordable pricing, and delivering consistent results to maintain the momentum. For now, surely 3PL is the way forward for Indian Logistics Market. Over the last few decades there has been a great technological revolution in business environment due to liberalization in the open market scenario. Therefore in order to ensure firm footing in the competitive market, traders are very serious to fulfill the customer’s need and satisfaction. Traders are very much interested to send the desired commodities to the desired destination safely at least possible time at while remaining cost effective in order to survive in today’s competitive environment. The most sensitive part of any organization today is its effective and aggressive marketing. Getting volume business is the order of the day. This can be possible only through

adapting very

aggressive and

intense

marketing

policies

emphasizing the advantages of consolidation business along with focussing on the sectors providing higher volume of trade and margins.





CHAPTER-19


Logistics & Supply chain industry in India: Current status CHAPTER-19 BIBLIOGRAPHY

BOOK’S TITLE

:

CARGO TALK EXIM WORLD LOGISTICS & SUPPLY CHAIN MANAGEMENT

ABOUT THE ORGANITION ABOUT THE PRODUCTS COMPETITORS



CHAPTER-20



WORD OF THANKS I pay my heartly regards to the regards to the chairman Dr. D.K.Garg , IIMT,Greater Noida , our Dean Mr. M.K.Verma and the Placement coordinator Mr.Gyanesh Sinha for lending me their kind support for completion

of my Project. I would like to give thanks to all those who financially , morally support me during the project work. I am very much thankful to the Management of “GLOBAL LOGISTICS SOLUTION”. Especially to Mr. AJIT BISWAS & Ms. SONA HANDA

whose cooperation and guidance was a milestone in completion of the project work. I am also thankful to all the staff of GLOBAL LOGISTICS SOLUTION who helped me lot in preparing the summer project. Though I have tried my level best in doing such kind of project even then I can not done any mistake that would have occurred during any project work. I would like to welcome any type of suggestion from the side of readers , so that I may correct anomalies , if any.

NISHA SINGH



CHAPTER-21


Logistics & Supply chain industry in India: Current status CHAPTER-21 ANNEXURE

THE UN CONVENTION

OF CODE OF CONDUCT

FOR

LINER

CONFERENCES, 1974 1.

The

UN

Code

came into force

from

October 8,

1983,

when the

conditions stipulated in the Convention were satisfied. 2.

The Code applied solely to Liner

Conferences, and not to lines operating

outside the Conferences as outsiders. 3.

The Code is aimed at establishing an internationally accepted system of

self-regulation in liner shipping and is the first international initiative towards shippers’ interests being included in an international convention. 4.

The

Code specifies

the right

of national shipping

Conference, Conferences may take into account

lines to join a

the views of the Shippers’

Councils on an application to join a Conference. 5.

The Code provides for self policing of Conferences.

6.

The Code

provides for the entitlement of Conferences to co-operation

from shippers and shippers’ organisations to combat mal-practices. 7.

The Code

requires the shippers to organise themselves into National

Shippers’ Organisations. 8.

The Code provides for supply of information by shippers concerning the

expected volume and nature of their cargoes to shipping conferences. 9.

The code recognize the

share of the trade

right of National Shipping Lines to carry a fair

originating

from

and

terminating

in their countries.

National Shipping Lines to have equal rights to participate in the freight and volume carried by the Conferences

on each route,

with their flag carriers


Logistics & Supply chain industry in India: Current status having the right to

40 percent

of such traffic (popularly

known

as the

40:40:20 Principle). 10. Settlement of disputes via international conciliation. 1.

“Mattero of Common

consultatins between

Interest” identified

Shipping

under the Code and requiring

Conferences and Shippers

Organisations

include, inter-alia. (a) General Rate Increase (GRI) : to

be subject to Conferences

notice of not less than 150 days in advance or any other Consultations with Failing

shippers to start within 30

days

period agreed.

after announcement.

agreement, the issue may be submitted to international

mandatory

conciliation. GRI proposals to be supported by audited cost data. Time proposals to be supported by audited cost data. (b) ‘Promotional’ and / or

‘Special’

freight

rates from the standpoint of

developing countries wishing to open up new markets, inter alia, supported by low transport cost. (c) Imposition of, and related changes in, surcharges. (d) Loyalty agreements - their introduction /

changes in their form and

general conditions. (e) Changes in tariff classification of ports, i.e. down grading a main port to an out-port rank which may make carriage to/from such a port costlier. (f)

Effect of new technologies

in transport – conventional cargo that can no

longer be carried. (g)

Adequacy and quality of service.

(h) Rules and Procedures for

consultation between

Shippers’ Councils and

Conferences. (i)

Participation by Governments in consultation, but with

or power in the consultation procedure.


no decisive role

Logistics & Supply chain industry in India: Current status THE MULTIMODAL TRANSPORTATION OF GOODS ACT, 1993 No. 28 OF 1993 [2nd April, 1993] An Act to provide for the regulation of the multimodal

transportation of

goods, from any

on the

amultimodal

place in India

transport

to a place outside India,

contract and for

matters

connected

basis

of

therewith or

incidental thereto. Be it enacted by Parliament in the Forty-fourth Year of the Republic of India as follows:-

CHAPTER-I PRELIMINARY 1.

(1)This Act may be called the Multimodal Transportation of Goods Act,

1993. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall be deemed to have come into force on the 16th

day of

October,

1992. 2. •

In this Act, unless the context otherwise requires–– ‘carrier’

means a person who is

engaged in the business of

transporting for hire goods by road, rail, inland waterways or sea; •

‘competent authority’ means any person or authority

by the Central Government, by notification

in the Official

authorised

Gazetee, to perform

the functions of the competent authority under this Act; •

‘consignee’

means the person

named as consignee

in

the

multimodal transport contract; •

“consignment’

means the goods

entrusted to a multimodal

transport operator for multimodal transportation; •

‘consignor’ means the person, named in the multimodal transport

contract as consignor, by whom or on whose

behalf the goods covered by such


Logistics & Supply chain industry in India: Current status contract are entrusted

to a multimodal

transport

operator

for multimodal

transportation; “delivery” means ––

•

(i)

in the case of a negotiable multimodal

transport

document,

delivering of the consignment to, or placing the consignment at the disposal of, the consignee or any other person entitled to receive it; (ii)

in the

case of a non-negotiable

multimodal transport

document, delivering of the consignment to, or placing the consignment at the disposal of the consignee or any person authorised by the consignee to accept delivery of the consignment on his behalf; (b)

“endorsee’ means the person in whose favour an endorsement is

made, and in the case of successive endorsement, the person in whose favour the last endorsement is made; (c)

“endorsement’ means the signing by the consignee or the endorsee

after adding a direction on a negotiable multimodal transport

document to pass

the property in the goods mentioned in such document to a specified person; (d)

“goods” includes –– containers, pallets or similar articles of transport used to consolidate goods; and animals;

(i)

(e)

“mode of transport”

means carriage of goods by road,

rail, inland

waterways or sea; (f)

“multimodal

transportation’

means carriage of goods by two,

more modes of transport from the place of acceptance of the goods

or

in India to

a place of delivery of the goods outside India; (g)

“multimodal transport contract” means a contract entered into by the

consignor and the

multimodal

transport

operator

for

multimodal

transportation; (h) •

“multimodal transport operator” means any person who ––

concludes a multimodal transport contract on his own behalf or through

another person acting on his behalf;


Logistics & Supply chain industry in India: Current status acts

•

as principal, and not as an agent either of the consignor or of the

carrier participating in the multimodal

transportation, and who assumes

responsibility for the performance of the said contract; and is registered under sub-section (3) of section 4;

•

“negotiable multimodal transport document” means a multi-modal transport document which is – (ii) made out to order or to bearer; or

made out order and is transferable by endorsement; or

(iii)

(iv) (i)

made out to bearer and is transferable without endorsement; “non-negotiable

multimodal

trasnport document”

means

a

multimodal transport document which indicates only one named consignee; (j)

“prescribed” means prescribed by rules made under this Act;

(k)

“registration’ means registration of multimodal transport operator

under sub-section (3) of section 4.

CHAPTER-II REGULATION OF MULTIMODAL TRANSPORTATION 3.

No person

shall carry on or

commence the business of

multimodal

transportation unless he is registered under this Act: Provided that a person carrying on the business of multimodal transportation immediately before the commencement of this Act. may continue to do so far a period of three months from such commencement; and if he has made an application for registration within the said period,

till the disposal of such

application. 4. (1)Any person may apply for registration to the competent authority to carry on or commence the business of multimodal transportation. (2)An application under sub-section (i) shall be made in such form as may be prescribed and shall be accompanied by a fee of ten thousand rupees. (3)On receipt of the application, the competent authority shall satisfy that the applicant fulfils the following conditions, namely:-


Logistics & Supply chain industry in India: Current status (a) (i)that the applicant is a shipping company or a company engaged in the business

of freight

forwarding

in India or abroad with a minimum annual

turnover of fifty lakh rupees during the immediate preceding financial year or an average annual turnover of fifty lakh rupees during the preceding three financial years as certified by a

chartered accountant within the meaning

of the

Chartered Accountants Act, 1949; (ii) That if the applicant is a company other than a company specified in subclause (i) the subscribed share

capital of such company is not less than fifty

lakh rupees. (b) That the applicant has offices than two other a multimodal

or agents or representatives

in not less

countries, and on being so satisfied, register the applicant as transport operator and grant a certificate to it to carry on or

commence the business of multimodal transportation: Provided that the competent authority may, for reasons to be recorded in writing, refuse to grand registration it is satisfied that the applicant does not fulfill the said conditions. (4) A certificate granted under sub-section (3) shall be valid for a period of one year and may be renewed from time to time for a further

period of one

year at a time. (5)

An application

for renewal shall be made

in such form as may be

prescribed and shall be accompanied by a fee of two thousand rupees. 5.

The

competent

authority may,

if it is

satisfied at

any time

after

registration that:(a) any statement in, or in relation to, any

application under sub-section (2)

of section 4 or its renewal under sub-section (5) of that section, is

incorrect

or false in any material particular, or (b) any of the provision of this Act or the rules made there-under has been contravened by the multimodal transport operator; or


Logistics & Supply chain industry in India: Current status (c) the multimodal

transport operator has not entered into any multimodal

transport contract during the preceding two years after his registration, cancel by order the certificate of registration: Provided

that no such registration shall be cancelled unless the multimodal

transport operator

has been given a

reasonable opportunity of showing

cause against the proposed action. 6.

(1)Any person aggrieved by an order made by the competent authority

under-section 5 may prefer an appeal to the Central Government within such period as may be prescribed. (2) No appeal shall be

admitted

if it is preferred after the expiry

of the

prescribed period: Provided that an appeal may be admitted after the expiry of the prescribed period if the appellant satisfied the Central Government that he had sufficient cause for not preferring the appeal within the prescribed period. (3) Every appeal made under this section shall be made in such form and on payment of such fees as may be prescribed and shall be accompanied by a copy of the order appealed against. (4) On receipt of any such appeal, the Central Government shall, after giving the parties a reasonable opportunity of being heard and after making such inquiry as it deems proper, make such order as it thinks fit.

CHAPTER III MULTIMODAL TRANSPORT DOCUMENT 7.

(1)

Where the consignor and

the multimodal transport operator have

entered into a contract for the multimodal transportation and the multimodel transport operator has taken charge of the goods, he shall, at the option of the consignor, issue

a negotiable or non-negotiable

multimodal transport

document. (2) The multimodal transport document shall be

signed by the multimodal

transport operator or by a person duly authorised by him.



(1) Every

consignee named

in the negotiable or non-negotiable

multimodal transport document and every endorsee of such document as the case may be to whom the property in the goods mentioned therein shall pass, upon or by reason of such consignment or endorsement, shall have all the rights and liabilities of the consignor. (2) Nothing contained in sub-section (1) shall prejudice or affect the right of the multimodal

trasnport

operator

to claim freight from the consignor

or

enforce any liability of the consignee or endorsee by reason of his being such consignee or endorsee. 9.

The multimodal transport document shall contain the following particulars,

namely:(a) the general

nature of the goods, the leading marks

necessary for

identification of the goods, the character of the goods (including dangerous goods), number of packages or units and the gross weight and quantity of the goods; (b) apparent condition of the goods: (c) the name

and

principal

place of business of the multimedia

transport

operator; (d)the name of the consignor: (e)the name of the consignee, if specified by the consignor: (f)

the place and date of taking charge of the goods by the multimodal

transport operator; (g)

the place of delivery of the goods;

(h)

the date or the period of delivery

of the goods

at the place of

delivery; (i) whether it is negotiable or non-negotiable; (j) the place and date of its issue; (k) freight payable by the consignor or the consignee, as the case may be; (l) the

signature of the multimodal

transport operator or of a person duly

authorised by him; INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status (m)

the intended journey route,

modes of transport and

places of

transshipment, if known at the time of its issue; (n)terms of shipment and a statement that the document has been issued subject to and in accordance with this Act; and (o)any other particular if

which the parties may agree to insert in the document;

any such particular is not inconsistent with any law for the time being in

force. 10. (1)

Where the multimodal transport operator or a person acting on his

behalf knows, or has

reasonable grounds to suspect, that the ‘particulars’

furnished by the consignor in the multimodal transport document do not accurately

represent the goods actually taken in charge, or if he has no

reasonable

means of checking such particulars, the multimedal transport

operator or a person acting on his behalf shall insert in the multimodal transport document

a reservation specifying the inaccuracies, if any,

the grounds of

suspicion or the absence of reasonable means of checking the particulars. (2) Where the multimodal transport operator or a person acting on his behalf fails to insert the reservation in the multimodal transport document relating to the apparent condition of the goods, he shall be deemed to have accepted the goods in apparent good condition. 11. Save as provided in section 10. –– (a)

the multimodal transport

document shall be prima facie evidence of the

fact that the multimodal transport operator has taken charge of the goods as described in the document; and (b) no proof to the contrary by the multimodal transport operator

shall be

admissible if the multimodal transport document is issued in negotiable form and has been transmitted to the consignee or transferred by the consignee to a third party, if the consignee or the third party has acted in good faith relying on the description of the goods in the document. 12.

(1)

The consignor shall be

deemed

to

multimodal transport operator the adequancy and

have guaranteed to the acuracy, at the time the


Logistics & Supply chain industry in India: Current status multimodal

transport operator takes charge of the goods, of the particulars

referred to in clauses (a)

and (b)

of section 9 as furnished by the consignor

for insertion in the multimodal trasnport document. (2)

The consignor shall indemnify the multimodal transport operator against

loss resulting from inadequacy or inaccuracy of the particulars

referred to in

sub-section (1). (3) (2)

The right of the multimodal

transport operator

shall in no way limit his liability under the

under sub-section

multimodal transport contract

to any person other than the consigner.


Logistics & Supply chain industry in India: Current status CHAPTER IV RESPONSIBILITIES AND LIABILITIES OF THE MULTIMODAL TRANSPORT OPERATOR 13.

(1)The multimodal transport operator shall be liable for loss resulting

from–– (a) any loss, of, or damage to, the consignment; (b) delay in delivery of the consignment and any consequential loss or damage arising from such delay, where such loss, damage or delay in delivery took place while the consignment was in his charge; Provided that the multimodal transport operator shall not be liable if he proves that no fault or neglect on his part or that of his servants or agents had caused or contributed to such loss, damage or delay in delivery; Provided further that the multimodal transport operator shall not be liable for loss or damage arising out of delay in delivery unless the consignor had made a declaration of interest in timely

delivery

which has been accepted

by the

multimodal transport operator. Explanation –– for the purposes of this sub-section, “delay in delivery” shall be deemed to occur when the consignment has not been delivered within the time expressly agreed upon or, in the absence of such reasonable time required by a diligent multimodel

agreement, within a

transport operator, having

regard to the circumstances of the case to effect the delivery

of the

consignment. (2) If the consignment has not bee delivered within ninety consecutive days following the date of delivery expressly agreed upon or their reasonable time referred to in the Explanation to sub-section (1) the claimant may treat the consignment as lost. 14.

(1) Where a multimodal transport operator becomes liable for any loss

of, or damage to, any consignment, the nature and value whereof have not been declared by the consigner before such consignment has been taken in charge


Logistics & Supply chain industry in India: Current status by the multimodal transport operator and the stage of transport at which such loss

damage occurred is not known

then the liability of the multimodal

transport operation to pay compensation shall not exceed two special Drawing Rights per kilogram of the gross weight of the consignment 666.67

Special

Drawing

Rights

per

lost or damaged or

package or unit lost

or damaged,

whichever is higher. Explanation –– for the purposes of this subsection; where a container, pallet or similar article of transport is loaded with more than one package or unit, the packages or units enumerated in the

multimodal

packed in such container, pallet or similar

transport document,

as

article of transport shall be deemed

as packages or units. (2)

Notwithstanding anything contained in subsection (1), if the multimodal

transportation does not according to the multimodal transport contract, include carriage of goods by sea or by inland waterways, the liability of the multimodal transport operator shall be limited to an amount not exceeding 838 Special Drawing Rights per kilogram of the gross weight of the goods lost or damaged. 15. Where a multimodal transport operator become liable, for any loss of, or damage to, any consignment, the nature and value whereof have not been declared by the consigner before such consignment has been

taken

in charge

by the multimodal transport operator and the stage of transport at which such loss or damage occurred

is known, then the limit

of

the liability of the

multimodal transport operator for such loss or damage shall be

determined in

accordance with the provisions of the relevant law applicable in relation to the mode of transport during the course of which the loss or damage occurred and any stipulation in the multimodal transport contract to the contrary shall be void and unenforceable. 16. Where delay in delivery of the consignment occurs under any of the circumstances mentioned in the Explanation to sub-section (1) of section 13, or any consequential loss or damage arises from such delay, the liability of the


Logistics & Supply chain industry in India: Current status multimodal transport operator shall be limited to the freight

payable

for the

consignment so delayed. 17. (1)

Assessment

of

compensation for loss of or damage to, the

consignment shall be made with reference to the value of such consignment at the place where, and the time at which, such consignment is delivered to the consignee or at the place and time when, in accordance with the multimodal transport contract, it should have been delivered. (2) The value of the

consignment

shall be

determined according

to

the

current commodity exchange price, or, if there is no such price, according to the current market price, or if the current

market price is not ascertainable,

with reference to the normal value of a consignment of the same kind and quality. 18. The multimodal transport operator shall not be entitled to the benefit of limitation of liability under any of the provisions of this Chapter

it is proved

that the loss, damage or delay in delivery of consignment resulted from an act or omission of the multimodal transport operator loss, damage or delay

or

recklessly

and with

with intent to cause such knowledge

that such loss,

damage or delay would probably result. 19. The multimodal transport operator shall not in any case, be liable for an amount greater than the liability for total loss of goods for which a person will be entitled to make a claim against him under the provisions of this Act. 20. (1)

The

delivery of

the

consignment to the

multimodal transport operator shall be

consignee by the

treated as prime facie evidence of

delivery of the goods as described in the multimodal transport document unless notice of the general nature of loss of, or damage to, the goods is given, in wring, by the consignee to the multimodal transport operator at the

time of

handing over of the goods to the consignee. (2) Where the loss or damage is not apparent, the provisions of sub-section (1) shall apply unless notice in writing is given by the consignee of the loss of, or


Logistics & Supply chain industry in India: Current status damage to the goods within six consecutive days after the day when the goods were handed over to the consignee.


Logistics & Supply chain industry in India: Current status CHAPTER V MISCELLANEOUS

21. (1)

Where the consignor hands over the prescribed dangerous

goods

to a multimodal transport operator or any person acting on behalf of such operator, the consignor shall inform him of the nature of the dangerous goods and, if necessary, the precautions to be taken while transporting such goods. (2) Where the consignor fails to inform the multimodal transport operator or the other person acting on behalf of such operator of the nature of the danagerous goods and such operator or person does not otherwise have knowledge of the dangerous goods–– (a) the

consignor shall be liable to the multimodal transport operator or the

other person acting on behalf

of such operator for all loss resulting from the

multimodal transportation of such goods; and (b) the goods may at any time be unloaded, destroyed or rendered innocuous as the circumstances may require, without payment of compensation. 22. (1)

The

multimodal

transport operator who

has not been paid the

amount of consideration stipulated in the multimodal transport contract shall have a lien on the consignment and on the documents in his possession. (2) Notwithstanding anything period during

contained

in

sections

13, 16 and 18,

the

which the goods are in possession of the multimodal transport

operator in exercise of his right of lien referred to in sub-section (1) shall not be included for the purposes of calculating the time of delay under any of those sections. 23. Notwithstanding anything

contained in any other provision of this Act, it

shall be lawful for the parties to the multimodal transport contract to include in the multimodal document any provision relating to general average. Explanation –– For the purposes of this section, “general average” means loss, damage or expense reasonably incurred in order to avert danager to property in


Logistics & Supply chain industry in India: Current status common peril and in the common interest involved in the multimodal transportation. 24. The multimodal transport operator

shall not be

liable under any of the

provisions of this Act unless action against him is brought within nine months of : –– (a) the date of delivery of the goods, or (b) the date when the goods should have been delivered, or (c)

the date on and from which the party entitled to receive delivery of the

goods has the right to treat the goods as lost under subsection

(2)

of section 13. 25. Any party to the multimodal transport contract may institute an action in a court which is competent and within the jurisdiction of which is situated one of the following places, namely:(a) the

principal place of business, or, in the

absence thereof, the habitual

residence of the defendant; or (b) the place

where the multimodal transport contract was made, provided

that the defendant has a place of business, branch or agency at such place; or (c)

the place of taking charge of the goods for multimodal transportation

or the place of delivery thereof; or (d)

any other place specified in the multimodal transport contract and

evidenced in the multimodal transport document. 26. (1)

The parties to a multimodal transport may provide therein that any

dispute which may

arise in relation to multimodal transportation under the

provisions of this Act shall be referred to arbitration. (2) The

arbitration proceeding may be instituted at such place

with such procedure as may be

specified in the

accordance

multimodal

transport

document. 27. The Central

Government may,

by

notification in the Official

Gazette,

direct that any power exercisable by it under this Act, except the power under INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status section 30,

shall, in such circumstances and subject to such conditions. If any,

as may be specified therein, be exercisable also by such or authority as may be specified in the notification. 28. No person registered as a multimodal transport any contract for multimodal

operator shall enter into

transportation except in accordance with the

provisions of this Act and any contract, to the extent it is inconsistent with the said provisions, shall be void and unenforceable. 29. The provisions inconsistent

of this Act

shall have

effect notwithstanding

anything

therewith contained in any other law for the time being in force or

in any instrument having effect by virtue of any law other than this Act. 30. (1)

The Central Government may by notification in the Official Gazette,

make rules for carrying out the provisions of this Act. (2) In particular, and provisions, such

without

prejudice to the generality of the

rules may provide for all or any of the following

foregoing matters,

namely:–– (a) the forms in which applications shall be made under section 4; (b) the period within which appeal

shall be preferred under subsection (1) of

section 6; (c) the form in which an

appeal shall be preferred under section 6 and the

amount of fee payable in respect of such appeal; (d) dangerous goods for the purpose of section 21; (e) any other matter which is to be, or may be, prescribed. (3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in

session or in two or more successive

sessions, and if, before the expiry of the session immediate following the session or the successive sessions aforesaid, both Houses agree in modicication

‘making

in the rule or both Houses agree that the rule should

made, the rule shall thereafter have effect only in such

any

not be

modified form or be of


Logistics & Supply chain industry in India: Current status no effect, as the case may be;

so, however that any such modiciation or shall

be without prejudice to the 31.

On and from the date of the commi

of this

Act, the enactments specified in Parts I, II and III of the Schedule shall be the manner specified therein. 32. (1)

The

Multimodal Transportion

(2) Notwithstanding such repeal, anything

done the said Ordinance, shall be

deemed to have been done or takes under the corresponding provisions of this Act.

SCHEDULE RULES RELATING TO BILLS OF LADING ARTICLE - 1In

DEFINITIONS

these Rules

the following

expressions have

the

meaning hereby

assigned to them respectively, that is to say: a)

“Carrier” includes the owner or the character who enters into a contract of

carriage with a shipper. b)

“Contract of Carriage” applies only to contract carriage covered by a bill of

lading or any similar document of title, in so far as such document relates to the carriage of goods by sea including charter party from the moment

any aforesaid issued under or pursuant to a at which such

bill

of lading

or similar

document of title regulates the relations between a carrier and a holder of the same. c)

“Goods” includes goods, wares, merchandises and articles of every kind

whatsoever, except live animals and cargo which by the contract of carriage is stated as being on dock and is so carried. d) e)

“Ship” means any vessel used for the carriage of goods by sea;

“Carriage of goods” covers the period from the time when the goods are

loaded on to the time when they are discharged from the ship.


Logistics & Supply chain industry in India: Current status ARTICLE – II - RISKS Subject to the provisions of Article VI, under every contract of carriage of goods by sea the carrier, 1 in relation to the loading, handling, stowage, custody, care and discharge of such goods, shall be subject responsibilities

and

carriage, to the

liabilities, and entitled to the right stand immunities

hereinafter set forth.

ARTICLE – III - RESPONSIBILITIES AND LIABILITIES 1.

The carrier shall be bound, before and at the beginning of the voyage, to

exercise due diligence to: a) Make the ship seaworthy b) Properly man, equip and supply the ships c) Make the holds, refrigerating and cool chambers, and all other parts of the

ship in which goods are carried, fit and safe for their reception, carriage

and preservation. 2.

Subject

to the provisions

carefully load, handle,

of

Article-IV,

the

carrier shall properly and

stow, carry, keep, care for and discharge the goods

carried. 3.

After receiving the goods

into his charge, the carrier, or the master or

agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things: a)

The loading marks necessary for identification of the goods as the same are

furnished in writing by the

shipper before the loading of such goods starts,

provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a

manner

as should ordinarily remain legible until the end of the

voyage; b)

Either the number of packages or pieces, or the quantity, or weight, as the

case may be, as urnished in writing by the shippers; c)

The apparent order and condition of the goods


Logistics & Supply chain industry in India: Current status Provided that no carrier, master or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, has reasonable ground for suspecting not

accurately

or weight which he

to represent the goods

actually received, or which he has had no reasonable means of checking. 4.

Such a bill of lading shall be prima facie evidence of the receipt by the

carrier of the goods

as therein described in

accordance with

paragraph

(3 (a), (b) and (c). 5.

The shipper shall be deemed to have guaranteed to the carrier the accuracy

at the time of shipment of the marks,

number,

quantity, and weight, as

furnished by him, and the shipper shall indemnify the carrier against all loss, damages, and expenses arising or

resulting from inaccuracies in such

particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper. 6.

Unless notice of loss or damage and the general nature of such loss or

damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the damage be not

contract of carriage, or if the loss or

apparent, within three days, such removal

shall be prima

facie evidence of the delivery by the carrier of the goods as described in the bill of lading. The Notice in writing need not be given if the state of the goods has not the time of their receipt been the subject of joint survey or finspection. In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of goods or the date when the goods should have been delivered. In the case of any actual

or apprehended loss damage, the carrier and the

receiver shall give all reasonable

facilities to each

other for inspecting and

tallying the goods. INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT


After the goods are loaded the bill of lading to be issued by the carrier,

master or agent of the carrier, to the shipper shall, if the shipper so demands, be a “shipped” bill of lading, provided that, if the shipper shall have previously taken up any document of title to such goods, he shall surrender the same as against the issue of the “shipped” bill of lading, but at the option of the carrier such document of title may be noted at the port of shipment by the carrier, master, or agent with the name or names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted the same shall for the purpose

of this

article be deemed to constitute a

“shipped” bill of lading. 8.

Any clause, covenant or agreement in contract of carriage relieving the

carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such

liability otherwise than as provided in

these Rules, shall be null and void and of no effect. or similar clause

shall be

A benefit or insurance

deemed to be a clause relieving the carrier from

liability.

ARTICLE - IV- RIGHTS AND IMMUNITIES 1.

Neither the carrier nor the ship shall be liable for loss or damage arising or

resulting from unseaworthiness unless caused by want of due diligence on the part

of the carrier to make the ship seaworthy, and to secure that the ship is

properly manned, equipped and supplied, and to make the holds, refrigerating and cooling chambers and all other parts of the ship in which goods are carriedfit and safe for their receiption, carriage and preservation in accordance with the provisions of paragraph-I of Article-III. Wherever loss or damage has resulted from unseaworthiness, the burden of preving the exercise of due diligence shall be on the carrier or other person claiming exemption under this section.



Neither the carrier nor the ship shall be responsible for loss or damage

arising or resulting from: a)

Act, neglect, or default of the master, mariner, pilot, or the servants of the

carrier in the nevigation or in the management of the ship; b)

Fire, unless caused by the actual fault or privity of the

carrier; c)

Perils, dangers and accidents of the sea or other navigable

waters; d)

Act of God;

e)

Act of war;

f)

Act of public enemies;

g)

Arrest or restraint of princes, rulers or people, or seizure

under legal procedures; h) i)

Quarantine restriction; Act or omission of the shipper or owner of the goods,

his agent, or

representative; j)

Strikes

or lock-outs or stoppage or restraint

of labour

from whatever cause, whether partial or general; k)

Riots and civil commotions;

l)

Saving or attempting to save life or property at sea;

m)

Wastage in bulk or weight or any other loss or damage

arising from inherent defect, quality, or vice of the goods; n)

Insufficiency of packing:

o)

Insufficiency or inadequacy of markets;

p)

Latent defects not discoverable buy due diligence;

q)

Any other cause arising without the actual fault or privity

of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the this exception to show that neither the actual fault or

benefit of

privity of the carrier nor


Logistics & Supply chain industry in India: Current status the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. 3.

The shipper shall not be responsible for loss or damage sustained by the

carrier or the ship arising or resulting from any cause without the act,

fault or

neglect of the shipper, his agents or his servants. 4.

Any deviation in saving or attempting to save

life or property at sea, or

any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom. 5.

Neither the carrier nor the ship small in any event be or become liable for

any loss or damage to or in connection with goods in an amount exceeding 100 * per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared

by the shipper before

shipment and inserted in the bill of lading. This declaration if embodied in the bill of lading shall be prima facie evidence but shall not be binding or conclusive on the carrier. By agreement between the carrier,

master or agent of the carrier and the

shipper another maximum amount than that mentioned in this paragraph may be fixed, provided that such maximum shall not be loss than the figure above named. Neither the carrier not the ship shall be responsible in any event for loss or damage to or in connection with goods if the nature or value thereof has been knowingly mis-stated by the shipper in the bill of lading. 6.

Goods of an inflammable, explosive or dangerous nature to the shipment

where of the carrier, master or agents f the carrier, has not consented, with knowledge of their nature and character, may at any time before-discharge be landed at any place or destroyed or rendered innocuous by the carrier without


Logistics & Supply chain industry in India: Current status compensation, and

the shipper of such goods shall be liable for all damages

and expenses directly or indirectly arising out of resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner

be landed at any place

or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.

ARTICLE – V

:

SURRENDER OF

AND OF RESPONSIBILITIES AND

RIGHTS AND

IMMUNITIES,

LIABILITIES

A carrier shall be at liberty to surrender in whole or in the part all or any of has rights and immunities or to increase any of his response shall be embodied in the bill of lading issued to the shipper. The provision of these Rules

shall not be applicable to charter-parties, but if

bills of lading are issued in the case of comply

a ship under a charter party they shall

with the terms of these Rules. Nothing in these shall be held to

prevent the insertion in a bill of lading of any lawful provision regarding general average.

ARTICLE-VI : SPECIAL CONDITION Notwithstanding the provisions of the proceeding Articles, a carrier, master or agent of the carrier and a shipper shall in regard to any particular goods be at liberty to enter into any agreement in any terms

as to the responsibility and

liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods or his obligation as to seaworthiness, so-far-as this stipulation is not contrary to public policy, or the diligence of his servants or agents in regard to the loading, handling, stowage carriage, custody,

care, and

discharge of the goods carried by sea, provided that in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a non-negotiable document and shall be marked as such. Any agreement so entered into shall have full legal effect:


Logistics & Supply chain industry in India: Current status “Provided that the Article shall not apply to ordinary commercial shipments made in the ordinary course of trade, but only to other shipment where the charter or condition of the property to be carrier or the circumstances, and conditions under

which the carriage is to be performed, are

terms such as

reasonably to justify a special agreement.

ARTICLE - VII :

LIMITATIONS ON THE APPLICATION OF

THE RULES Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement,

stipulation, condition, reservation or exemption as to the

responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on the subsequent to the

discharge from the ship on which the goods

are carried by sea.

ARTICLE - VIII : LIMITATION OF LIABILITY The provisions of these Rules shall not affect the rights and obligations of the carrier under any Statue or the time being in force relating to the limitation of the liability of owners of sea-going vessels.

ARTICLE – IX The monetaryfd units mentioned in

these

Rules are to be taken to be gold

value.


Logistics & Supply chain industry in India: Current status MARITIME CASES I.

Under a c.i.f. contract the bill of lading tendered by the seller must protect

the buyer from the port of shipment to the port of destination. The sellers sold to the buyers a quantity of cod guano to be

shipped from

Norway c.i.f. Kobe or Yokohama. It was shipped on board the Kiev from Braatvag (in Norway)

to Hamburg under a bill of lading dated 22nd

April, 1920, and

thence transshipped in the Atlas Maru for delivery in Japan. At

Hamburg the

agent of the Atlas Maru issued a through bill of lading 5th May, 1920, stating that the goods had been “shipped from Braatvag according to bill of lading on 22nd April, 1920. Shipped in apparent good order and condition by (the seller) on board the Kiev, laying in or

off the Port of Braatvag and bound to Hamburg for

transhipment into the …… Atlas Maru”. The buyers refused to accept the bill of lading when tendered to them. Held by the House of Lords, that they were entitled to do so. The through bill of lading only contained the contract with the owners of the Atlas Maru and in no way bound the owners of the Kiev, for the statement the facts and not words of contract. Under a c.i.f.

in it was only a recital of contract the bill of lading

tendered must protect the buyer from shipment to destination. In any event, the bill of lading should be procured is shipment, and this bill was issued 13 days after shipment in another port in another country. II.

In the case of c.i.f. contract the bill of lading tendered by the seller must,

as regards the quantity of goods shipped, correspond exactly with the amount specified in the contract of sale. The sellers shipped, 3,800 tons of wheat at Bombay and stated that they had appropriate 3,000 tons to the contract made with the buyers. There were two bills of lading representing 1,750 tons each and two for 250 tons each and the sellers offered to delivery to the buyers either all the bills of lading or two for 1,750 tons each. The buyers refused to accept the offer or pay any part of the price.


Logistics & Supply chain industry in India: Current status Held, by the Court of Appeal, that the buyers were justified in doing, so, for they were entitled to a bill of lading representing the amount specified in the contract.

TERMS USED IN LOGISTICS Additional services An extra service such as professional cleaners or handyman, or specialist equipment such as a ladderlift, which is outside the scope of a standard quotation and incurs additional charges.

Agent In countries where we do not have a service centre, we may require assistance from one of our trusted partner agents for the purpose of performing origin, freight/transport, or destination services on our behalf.

Bill of lading Document giving proof of particular goods having been loaded on a ship. The bill of lading is normally required in order to obtain the release of the goods at arrival. For air freight, there is an airway bill.

Carrier The company providing the freight and transport for your household goods.

Crew foreman One person in each team will have overall responsibility for managing the crew during the packing/loading, or unloading/unpacking of the customer’s belongings.

Customs clearance Customs formalities to be completed at origin, in transit and at destination. INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status Demurrage Cost imposed at port for storage.


Logistics & Supply chain industry in India: Current status Destination agent In countries where we do not have a service centre, we may require assistance from one of our trusted partner agents for the purpose of performing destination, freight/transport services on our behalf.

Estimate One of the main purposes of the pre-move survey is to estimate the shipment volume/weight, this will then provide the basis for our quotation/proposal.

FCL (Full container load) FCL provides you with sole use of a sea freight-shipping container.

FIDI The moving industry association of international moving companies, responsible for providing a forum for the advancement of integrity, quality and mutual cooperation for those companies focused on the intercontinental movement of household effects.

FAIM FAIM is an independent quality assurance standard dedicated to international moving. The standard has been developed under the title of FIDI-FAIM (FIDI Accredited International Mover) and covers two levels: FIDI-FAIM (the standard level of certification) and FIDIFAIMISO (which requires a higher pass mark).

Gross volumetric weight The chargeable weight of an individual package is the gross or volumetric weight rounded up to the nearest pound/kilo.

High value items INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP DEVELOPMENT

Logistics & Supply chain industry in India: Current status All high value items should be disclosed/individually listed on your insurance documentation. Your mover/insurer may require you to provide proof of your valuation. NB: most insurers will not cover jewellery and you should therefore hand carry such items.

Inventory If your household goods and personal effects are insured through your mover, you should receive documentation including the insurance terms and conditions. These will detail exactly what is covered by the insurance policy. You will also be required to provide a list of the items to be insured

Insurance If your household goods and personal effects are insured through your mover, you should receive documentation including the insurance terms and conditions. These will detail exactly what is covered by the insurance policy. You will also be required to provide a list of the items to be insured(see Valuation).

Ladder lift A ladder lift is a piece of specialist machinery sometimes required to load heavy goods from high places such as a high window.

LCL (Less than container load) If the volume of your sea freight shipment does not justify a full container load, your goods can be transported in a sealed wooden case within a shared container. This is then known as LCL.

Long carry This is an additional charge payable for carrying articles longer distances between the mover’s vehicle and your residence.


Logistics & Supply chain industry in India: Current status Measurement The industry standard uses: Cft – cubic feet, Cbm – cubic metres, Lbs – pounds and Kgs – kilograms.

Order/tracking number The number used to identify and track your shipment.

Origin agent In countries where we do not have a service centre, we may require assistance from one of our trusted partner agents for the purpose of performing origin and freight/transport services on our behalf.

Packing inventory A detailed list of your household goods that will be compiled by the packing crew prior to loading your shipment and which shows the condition of each item.

Pre-move survey The visit to your home, which enables us to discuss and assess your requirements and to estimate the volume/weight of goods to be shipped.

Quotation/proposal The document in which we outline our services and charges to move your household goods.

Quotation/proposal acceptance Your written agreement accepting our quotation/proposal.


Logistics & Supply chain industry in India: Current status Shuttle service Use of a smaller vehicle may sometimes be required to shuttle goods from residence to the warehouse or ultimate carrier. This can occur where a residence is inaccessible to the mover’s European vehicle or shipping container.

Stair carry An extra charge for carrying items up or down more than one flight of stairs.

SIT (Storage in transit) Temporary warehouse storage of your shipment pending further transportation, for example, while an air freight shipment is being cased in our warehouse and then awaits collection by the airline.

Transit time The estimated time that your move will take from door to door, in working days (eg Monday to Friday).

Valuation Generally provided for insurance, this would be your estimated value of household goods and personal effects to be transported and/or stored.

Warehouse handling An additional charge applicable when goods are received into storage. This charge compensates the mover for the additional handling and physical placement of items within the warehouse.


Logistics & Supply chain industry in India: Current status Custom clearance is the custom formalities for the freight subjected to the

procedure for authorization of free circulation of the freight when it is released from the custom control and enters in full disposal of the importer provided all required charges, tariffs and other duties paid.






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