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29 September 2008

LOGISTICS : AN UNSUNG HERO

Ever been to South Delhi's INA Market? If not, I recommend a trip. Besides the wonderous malayalee food in ramshackle 10'x10' restaurants, it boasts a magnificent display of fruit, fish and other culinary ingredients. Pears from New Zealand, australian apples, fish whose names I cannot pronounce and with shapes which can be described as exotic, to say the least.

That got me thinking - how could a small, apparently disorganised place like the INA Market come up with such wonders. I have a one word answer - LOGISTICS.

SECTOR OVERVIEW
The logistics sector like all other organised businesses has a heirarchy as shown by the graphic below.


Axiomatically, it also has a heirarchy of 'returns'.

Vertically it may be divided into :-

Services to include freight forwarders, shipping, labelling and packing, logistics park, fleet operators, warehousing, ports and terminals.

Hardware to include forklift, stacker, racking system and dock leveler.

Technology to include telematics, auto data capture, barcoding and ERP.

There are four means available for implementation of logistics :-

Shipping
95% of all indian exports are by shipping and that accts for 1 % and 5% of the world and asian cargos respectively. Cargos are of two types bulk and containerised and they are growing at 6% and 19% respectively.

Aviation
This segment caters essentially for the low volume, time sensitive sectors like Telecom, IT/ITES/BPO, electronics and fashion. It is more sensitive to the price of oil as fuel forms a larger component of the overall cost. Air Cargo movement is increasing at 14.7% per annum. The basic model followed is the hub and spoke model. Blue Dart a major player in this sector has 6 -Air Hubs.

Trucking
70 % of all transportation in India is by trucks and it accounts for 60% of all logistics costs.

Railways
The Indian Railways is a near monopoly with 2 Million Tonnes of freight transport every day which accounts for 70% of its revenues and almost all of the profits. Though it is moving towards containerisation, it still earns most of the revenue from blk transport. A recent wave of privatisation has resulted in private companies like Gateway Distriparks and ConCor being permitted to run their own container trains. Also a 11000 KM long dedicated freight corridor linking major cities is also on the anvil.

A NOTE ABOUT CONTAINERISATION

Containers are of standard sizes - 10, 20 30, 40 and 45 feet. Twenty and Forty feet are the benchmark sizes used in the industry with Twenty Feet Equivalent Units(TEUs) as the favoured size.Containerised cargo accounts for 30% of indian export-import and 70 % of all world trade. Though we are growing at 15 % per annum, we have a lot of catching up to do.

India has 12 major and 185 minor ports but JNPT and Nava Sheva together handle 58% of indian container traffic i.e. 4 Million TEUs. Chennai Port handles about 1 Mn TEUs.
Shipping Containers are berthed at Container Freight Stations(CFS) located at the Ports from where they are carried by freight forwarders (either rail or truck) to Inland Container Depots(ICDs).

4 comments:

MindBender said...

Truly enlightened. Will be following more of your articles closely.
How about your opinion on the the companies which would benifit from the Nuclear Deal and the fallout of the US Financial Crisis? Although these topics have been much spoken off by one and all, what about ur verssion?

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