Current sitution of logistics in india


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Current sitution of logistics in india

  1. 1. CURRENT SITUTION OF LOGISTICS IN INDIA The word “logistics “is of French origin.origanally a military term, it referred to art of transport, supply and quartering of troops .recent decades:-efficient and effective logistics management has become an important determinants of business success.indian logistics business is growing in India and has been growningat a cargo of 7 to 8 %.logistics cost represents 13 to 14 % of the country gdp. A world bank conducted recently and says that in India logistic cost is more than other country. The economy is expected to grow around 10 % over the next 10 year and sector like chemicals, petrochemicals (especially distribution), pharmaceuticals, metals and metal processing, fmcg, textile retail and automobile are projected to grow the fastest. New business model are emerging as new firms, both domestic and foreign, enter the market. As a result of the ensuing competion, linkages with global supply chains and domestic market growth promise to change the face of logistics industry beyond recognition. The liberalizing Indian economy is experiencing entry of large domestic and global firms in new business as well as enlargement of distribution network of many regional Indian firms. The announcement of large retail projects by reliance and barite (in collaboration with wall-mart) will bring new technology, add additional warehouse capacity and will require fast and reliable movement of goods across the country. Reliance is thinking of establishing large warehouse in Thailand to take advantage of low cost sourcing from south-east Asia once the free trade agreement with Thailand (as well as Asian) gets finalized. Similarly, regional food and grocery retail leaders like subhiksha who are present very extensively in the south Indian market are now entering the rest of the country with more than 600 new retail stores in 2007.their logistics strategy and needs are transforming very significantly with this nationwide expansion. New retail chains are entering the non-metro towns and non state capitals. The entry of large third party logistics (3pl) carriers like federal express and DHL the expansion of domestic networks of Indian firms like gait and shreyas shipping is also transforming the nature of service and the business practices across the sector. VARIOUS ACTIVITIES RELATED TO LOGISTICS ARE AS FOLLOWS:- Movement of raw material Manufacturing activity
  2. 2. Primary movement of goods to distribution center Secondary movement of goods Business to business (b2b) Business to consumer (b2c)distribution Export-import (exim )activities After sales service Warehouse Inventory As we all know logistics cost in India is higher than other country. Logistics cost play an important role in logistics management. Components of logistics costs for India is broadly classified into the categories of:-transportation costs, inventory carrying cost (comprising of inventories, handling, warehousing, and packaging) and other costs, which comprise primarily of administrative cost. COUNTRY LOGISTICS COSTS AS %OF GDP CHINA 14.5 INDIA 14.0 SINGAPORE 12.5 UNITED KINGDOME 12.2 FRANCE 11.7 JAPAN 10.5 UNITED STATES 8.7 The factors that have an impact on logistics performance can be categorized into indicators of time, cost , complexity and risk. INDICATOR OF TIME:- Total time for trade – related procedure
  3. 3. Customs inspection clearance time Technical control clearance time Time for trade documents procedures Inland transport time Additional time due to container security initiative Vessel turnaround time Time to resolve customs appeals Vessel waiting time to obtain berth INDICATOR OF COST:- Total cost for trade related procedure Port and terminal related charges Total costs for trade documents procedure Borders control costs Inland transport costs Additional cost due to container security initiative INDICATOR OF COMPLEXITY AND RISK FACTORS:- Total number of documents per trade transaction Criteria for customs inspection Percent of container inspected Level of customs inspection Damage or pilferage as percentage of value of container Shut down of port due to natural disaster and labor dispute Speed (inland transport by trucks)kilometer per day) Frequency of vessel calls at port Number of agencies that have the power to inspect goods Number of time consignment are typically inspected Percentage of container electronically scanned Percent of containers physically inspected At present, India‘s manufacturing competitiveness is seriously affected by critical bottlenecks in the transport infrastructure and by poor logistics managemnt, leading to line delays and high transaction cost.
  4. 4. The performance of the railway is improving but it is still not possible to have assured transportation of a consignment within a given time frame. The World Bank’s+ international logistics performance index global ranking pegged India at the 46th position among the 155 countries featured. The ranking measures logistics competitiveness of a country across 6 parameters:- Customs Infrastructure International shipment Logistics competence Tracking and training Timeliness The growth prospects of the logistics industry are linked to the macro-economic indicators of the country such as GDP, domestic consumption, export and import. Transportation i s an essential and a major sub-function of logistics that create time and place utility in goods .in facts ,the back bone of the entire supply chain is the transportation management that makes it possible to achieve the well known seven r :- Right product Right quantity Right condition Right place Right time Right customer Right cost Port in India handle 90 % of foreign trade in our country. There are 14 major ports that managed by the port trust of India under central government jurisdiction and 187 non-major ports along the 7517 km long coastline of the country. THE 12 MAJOR PORTS:- 1. Kolkata/Haldia 2. Mumbai
  5. 5. 3. Jawaharlal Nehru port at Nava Seva 4. Chennai 5. Cochin 6. Visakhapatnam 7. Kandla 8. Mormugao 9. Paradip 10. New mangalore 11. Tuticorin 12. Ennore Together with 259 berths handle around 73% of the all India port traffic. Inland waterways:- India has 15,544km of navigable waterways, including river, back water, canal, etc. 5200 km of river and 485 km of canals are suitable for such transportation. 10 major airports:- 1. Ahmadabad 2. Bangalore 3. Chennai 4. Delhi 5. Mumbai 6. Kolkata 7. Hyderabad 8. Goa 9. Cochin 10. Thrievuananthrapuram INDIA ROAD NETWORK:- India has one of the largest road networks in the world, aggregating 3.32 million km at present consistency km of expressways 66754 km of national highways 470,000km of major district roads and about 2,650,000km of other district and rural roads. Railways:- The Indian railways are the principal mode of transportation for bulk freight and long distance passenger traffic. It is the world’s second largest rail network under a single management,and has been
  6. 6. contributing to the industrial and economic landscape of the country for over 150 years of the main two segment freight and passenger of ,the freight segment accounts for roughly two –third of revenue. CURERENT LOGISTICS SERVICES AND CHALLENGES:- Unorganized players Government policies Infrastructure Improving level of supply chain expertise