A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS …icmrr.org/global/pdffiles/IJFRR/f201703009.pdf · A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS

A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND

CONTAINER DEPOTS (ICDs) WITH SPECIAL REFERENCE TO

COIMBATORE DISTRICT

B.SHENBAGAPRIYA1 N.BHUVANESH KUMAR

2

1 Student of PG Department of Commerce with International Business, NGM College Pollachi

2 Assistant Professor of PG Department of Commerce with International Business,NGM College Pollachi

ABSTRACT

Inland Container Depots (ICDs), otherwise known as „dry ports‟, are equipped for handling

and temporary storage of containerised cargo as well as empties. This means that hinterland customers

can receive the port services more conveniently closer to their production premises. The research

mainly discuss to measure the levels of satisfaction and to cull out the various problems encountered

by logistics service providers on Inland Container Depots and selected loading ports. Sample of 100

people were taken into study, and their data were collected. Samples for the purpose of the study are

selected systematically. The study makes use of statistical techniques such as Percentage analysis and

Chi- square test in analyzing the data for finding the result. It could be concluded that an optimized

allocation of cargo from the various ICDs in Coimbatore district to different loading ports will

definitely lead any logistics firm in to increased profitability of the firm. The logistics firm may select

CWC as the point of shipment and Cochin port as the point of loading to minimize the overall

logistics costs. It may be a worthy consideration for the logistics firms to recruit personnel with post

graduate qualifications and great experience in this field which would help them to save over there

logistics expense.

Keywords: Logistics, Port, Satisfaction and Costs

INTRODUCTION

In India, logistics industry is spread over Roadways, Airways, Railways, Seaways and

Pipelines. India is known as, the land of opportunities for logistics service providers all over the world

and the Indian logistics marketing is represent `500 billion and is growing at a rate of 7 percent

annually. Logistics originated from the Greek word „logististike‟ which means „the art of calculating‟.

In the distant past the word was used only in the military to describe the functions involved in

sourcing, procuring, transporting, storing and making available arms, ammunition, supplies, uniforms,

food, men and all other materials required for a military campaign. Slowly over the years, the word

came into use in non-military parlance, as well denote a wide range of activities involved in making

available goods to the consumer.

The meaning of Logistics denotes the physical movement of goods and services from the

place of manufacturer to the people who really need it. In other words, it is the moving process of

supplying materials like purchasing, checking, warehousing, storing, loading and unloading.

Generally speaking, logistics does not mean transportation alone but also it involves the value added

services such as materials handling, tracking, placement of orders, packaging, information processes

and the documentation. Logistics and Warehousing are important part of controlling and managing

flow of goods and services. This refers to not just transportation itself, but to streamline and control

the flow through the value adding processes. Logistics industry is also closely linked to other related

sectors namely containers, Inland Container Depots, Seaports, Airports and Shipping Industry.

INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEWISSN:2321-0354 - ONLINE ISSN:2347-1654 - PRINT - IMPACT FACTOR:4.236VOLUME 5, ISSUE 3, MARCH 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 75 [email protected]

STATEMENT OF THE PROBLEM

A continuous trend of recession around the world created a greater pressure for cost reduction

to maintain at the least nominal profit margins. In this competitive world, there is an emerging need,

to examine the various logistics costs to lead overall economic competitiveness in the trade.

The previous research studies might not have made a detailed analysis in this direction and an

attempt in this direction has been made in this study. Therefore, the focus needs to fall not only on

cost minimisation, but also relying upon logistical costs specifically within the total supply chain.

This is an area that has not received much attention in the previous research and therefore, it has a

larger opportunity for cost optimisation. This study is not only concerned with various costs

associated in the shipment of cargo but also concerned with the total cost of shipment in all the three

ICDs in Coimbatore District namely, CONCOR, CWC and CLPL.

OBJECTIVES OF THE STUDY

The study is designed with the following specific objectives:

To analyse the relationship between four aspects of the respondent‟s profile and the overall

logistics costs from ICDs to select loading ports.

To measure the levels of satisfaction and to cull out the various problems encountered by

logistics service providers on Inland Container Depots and selected loading ports.

SCOPE OF THE STUDY

The main focus of the present study is to ascertain the components of logistics cost incurred

in the ICD shipments and to find out the ways and means to determine the optimal logistics

cost for different sizes of containers.

This type of analytical study on costs will enable the logistics service providers to develop a

standard logistics model, route charts, optimal cost plans and to evolve suitable logistics

costing practices.

RESEARCH METHODOLOGY

The validity of any research depends on the systematic method of collecting the data and

analyzing the same in a logical and sequential order. In the present study, an extensive use of both

primary and secondary data was made.

RESEARCH DESIGN

Research design is generally a pure and simplified framework and certain plan for a study that

will guide the collection and analysis of data where information needed. The function of the research

design is to ensure that the required data is obtained and collected accurately and economically.

Research design is basic framework, which provides guideline for the best of research purpose.

SAMPLING METHOD

The sampling technique involved is Convenient Sampling. The study depends on primary

data. A pilot study is conducted to validate the questionnaire and to confirm the feasibility of the

study. Based on the pilot study, the questionnaire is modified suitably to elicit response from the

sample group.



SAMPLING SIZE

Sample of 100 respondents were taken into study, and their data were collected. Samples for

the purpose of the study are selected systematically.

METHOD OF DATA COLLECTION

The data for this study are of two types: -

Primary data

Secondary data

PRIMARY DATA

Primary data is the data is collected from the respondent for the first time, it is original in

nature. For the purpose of collection of primary data, a well structured questionnaire was framed and

filled by the respondents. The questionnaire comprises of close ended as well as open ended

questions. In close ended questions, checklist questions and multiple choice questions are used.

SECONDARY DATA

Secondary data are collected from books, magazines, web sites etc, and both open ended &

close-ended questions are incorporated in the questionnaire for the collection of data.

STATISTICAL TOOLS

The following statistical tools are used in the study

Percentage Analysis

Chi – square test

PERIOD OF THE STUDY

The period of the study is 4 months (from December 2016 to March 2017).

LIMITATIONS OF THE STUDY

Though it is an in depth analysis, it is not free from the limitations. The following are the

limitations of this study:

Accuracy of the cost details given by the logistics service providers has not been checked.

The sample size was limited to 100.

There may be personal bias of the respondents, which affect the results of the study.

REVIEW OF RELATED LITERATURE

Hrusecka Denisa, Macurova Lucie, Junckova Eva, Kozakova Leona (2015), “The Analysis of the

Use of Outsourcing Services in Logistics by Czech Manufacturing Companies”. The main goal is to

show how intensively various logistics outsourcing services are used by Czech manufacturing

companies in comparison with other world regions, and which areas of logistics outsourcing should be

considered more seriously in order to increase logistic efficiency. 137 companies have been used

analysed the data. The study is based on a quantitative and qualitative investigation of Czech

manufacturing companies. Firstly, the brief overview of the present situation in the Czech market is

presented. It is based on survey data. The results of a survey based investigation were compared with

global trends.



Qi Dianwei (2015), “The Research on Logistics Cost Accounting and Management in China”.

Logistics management called the third profit source is the most important for corporation. Logistics

cost management is the core of enterprise's logistics management course, which plays the vital role in

promoting the efficiency of the logistics management and ascertaining the logistics service level. The

sample size was 150 respondents. Logistics cost is one of the core concepts in logistics. Logistics cost

occupies a great proportion in the enterprise total cost. It can strengthen the core competition of the

corporation to calculate and control logistics cost correctly. To reduce logistic costs and to promote

modern logistic industry in China, we have to find clues from the differences and chaos domestically

and abroad and to explore scientific and practical macro and micro analytical framework and

accounting method of logistics cost.

Nurul Izzah Mohd Shah , Liu Yao and Damhuji Rifai (2015), “A review of challenges of logistics

management and, barriers of e-business: how Malaysia‟s efficiency logistics service providers can

develop services for e-business”. This study focus on logistics service providers‟ (LSPs) strategy and

operations. According by Rudolf et al., (2011) shows that logistics service providers should adapt

their systems and procedures to customers‟ specific requirements, to ensure highrelationship

performance. Satisfied customers especially from e-business partners should promote the providers‟

adaptations, because these adaptations enhance the probability of contract renewal and reduce the risk

of providers‟ unexpected termination of the contract, because of the growth in online shopping has

presented challenges for physical distribution service quality provided by retailers and sellers

including both multi-channel and pure players, and logistics service providers.

Zhou Chaoyang and Jiang Ying (2014), “Research on Controlling Supply Chain Logistics Costs

Based on Acivity-Based Costing”. This study examines the meaning and composing of supply chain

logistics costs, analyzes the basis of controlling supply chain logistics costs using ABC, and proposes

a few measures to control supply chain logistics costs using ABC, such as activity elimination,

activity selection, activity reduction and activity sharing and so on. The sample size was 120

respondents. This study concluded that ABC is an effective method to control and reduce logistics

costs by strengthening the strategic cooperation and collaborative management among member

enterprises of supply chain. But Supply chain logistics costs control involves many factors, and

accurate and complete cost information is important and necessary.

Robert Boute, Werner Bruggeman and Ann Vereecke (2014), “Cost Management in the Supply

Chain: an integrated approach”. The objective of this study is to explore how effective management

accounting systems can provide managers with the relevant information for their supply chain design

and planning, and more specifically, how time-driven ABC provides the information needed for the

optimization of the supply chain design. The sample size is 75 respondents. This study concluded that

management accounting systems, in particular ABC and its time-driven version, offer insights to the

manager who wants to control and reduce costs in the supply chain. These systems can thus trigger

cost improvements in the routes to the market. However, the real strength of such systems lies in their

potential to be integrated with the supply chain planning system.



ANALYSIS AND INTERPRETATIONS

I) PERCENTAGE ANALYSIS

TABLE - 1

DEMOGRAPHIC PROFILE

S.No Determinants No of Respondents (N=100) Percentage (%)

1

Age

Below 25 years

25 - 40 years

48

52

48.0

52.0

2

Gender

Male

Female

39

61

39.0

61.0

3

Place of Residence

Rural

Urban

Semi-urban

31

62

7

31.0

62.0

7.0

4

Educational Qualification

School level

Graduate or Diploma level

PG level

Professionals

12

38

39

11

12.0

38.0

39.0

11.0

5

Type of the family

Nuclear

Joint

56

44

56.0

44.0

6

Monthly income

Less than Rs.10,000

Rs.10,001 - Rs.15,000

Rs.15,001 - Rs.20,000

Above Rs.20,000

10

55

26

9

10.0

55.0

26.0

9.0

7

Size of the family

Less than 3 members

3 - 4 members

5-6 members

28

46

26

28.0

46.0

26.0

8 Earning members in the family

Upto 1 members

2 to 3 members

58

42

58.0

42.0



9

Nature of establishment

Steamer Agent

Shipping Agent

Freight Forwarder

Cargo Consolidator

8

38

19

35

8.0

38.0

19.0

35.0

10

Type of Logistics service

Individual

Proprietorship Firm

Small Scale Industry

42

9

49

42.0

9.0

49.0

11

Frequency of Logistics service

Once in a while

Once in month

Once in a week

3

60

37

3.0

60.0

37.0

12

Experience

Up to 2 years

2 to 5 years

5 to 8 years

37

52

11

37.0

52.0

11.0

13

Kind of Cargo Handled

Agriculture

Engineering

Textile

Others

16

19

46

19

16.0

19.0

46.0

19.0

Total 100 100%

INTERPRETATION

From the above table shows that out of 100 respondents, Majority 52 (52.0%) of the online

shoppers belong to the age group between 25-40 years. Most of the respondents are female. The

majority 62 (62.0%) of the respondents are residing in urban area. Most of the respondents are Post

graduates. The majority 56 (56.0%) of the respondents are belongs to nuclear family. Majority 55

(55.0%) of the respondents monthly income level between Rs.10,001-Rs.15,000. The majority 46

(46.0%) of the respondents have 3-4 members in their family. The majority 58 (58.0%) of the

respondents said that below 1 members are earning in their family. The majority 38 (38.0%) of the

respondents are shipping agents. 49 (49.0%) of the respondents are use small scale industry service.

The most 60 (60.0%) of the respondents are once in a month have using logistics service. 52 (52.0%)

of the respondents have 2 to 5 years working in this field and the majority 46 (46.0%) of the

respondents are mostly export textile products.



CHI – SQUARE

TABLE – 2 -AGE AND LEVEL OF SATISFACTION

H0 = There is no significant association between Age of the respondents and their level of satisfaction

with logistic facilities.

Age Level of Satisfaction

Total High Moderate Low

Below 25 years 23 8 17 48

25 - 40 years 38 3 11 52

Total 61 11 28 100

Calculated χ2 Value: 7.098 Degree of freedom: 2 Table Value: Five per cent level: 5.991

INTERPRETATION

Since the calculated χ2 value (7.098) is greater than the table value (5.991).Therefore it is

concluded that there is a significant association between age of the respondents and their level of

satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

TABLE – 3- GENDER AND LEVEL OF SATISFACTION

H0 = There is no significant association between gender of the respondents and their level of

satisfaction with logistic facilities.

Gender Level of Satisfaction


Male 30 0 9 39

Female 31 11 19 61

Total 61 11 28 100


INTERPRETATION


concluded that there is a significant association between gender of the respondents and their level of


TABLE – 4-PLACE OF RESIDENCE AND LEVEL OF SATISFACTION

H0 = There is no significant association between place of residence of the respondents and their level

of satisfaction with logistic facilities.

Place of Residence Level of Satisfaction


Rural 22 0 9 31

Urban 35 11 16 62

Semi-urban 4 0 3 7

Total 61 11 28 100




INTERPRETATION

Since the calculated χ2 value (8.144) is less than the table value (9.488).Therefore it is

concluded that there is no significant association between place of residence of the respondents and

their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.

TABLE – 5

EDUCATIONAL QUALIFICATION AND LEVEL OF SATISFACTION

H0 = There is no significant association between educational qualification of the respondents and

their level of satisfaction with logistic facilities.

Educational Qualification Level of Satisfaction


School level 12 0 0 12

Graduate or Diploma level 26 3 9 38

PG level 15 8 16 39

Professionals 8 0 3 11

Total 61 11 28 100


INTERPRETATION


concluded that there is a significant association between educational qualification of the respondents

and their level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

TABLE – 6

TYPE OF THE FAMILY AND LEVEL OF SATISFACTION

H0 = There is no significant association between type of family of the respondents and their level of


Type of the family Level of Satisfaction


Nuclear 23 8 25 56

Joint 38 3 3 44

Total 61 11 28 100


INTERPRETATION


concluded that there is no significant association between type of family of the respondents and their

level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.



TABLE – 7 -MONTHLY INCOME AND LEVEL OF SATISFACTION

H0 = There is no significant association between monthly income of the respondents and their level of


Monthly income Level of Satisfaction


Less than Rs.10,000 4 3 3 10

Rs.10,001 - Rs.15,000 31 8 16 55

Rs.15,001 - Rs.20,000 26 0 0 26

Above Rs.20,000 0 0 9 9

Total 61 11 28 100


INTERPRETATION


concluded that there is a significant association between monthly income of the respondents and their

level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

TABLE – 8 -SIZE OF THE FAMILY AND LEVEL OF SATISFACTION

H0 = There is no significant association between size of family of the respondents and their level of


Size of the family Level of Satisfaction


Less than 3 members 20 0 8 28

3 - 4 members 15 11 20 46

5-6 members 26 0 0 26

Total 61 11 28 100


INTERPRETATION


concluded that there is a significant association between size of family of the respondents and their

level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

TABLE – 9-EARNING MEMBERS IN THE FAMILY AND LEVEL OF SATISFACTION

H0 = There is no significant association between earning members in the family of the respondents

and their level of satisfaction with logistic facilities.

Earning members in the

family

Level of Satisfaction Total

High Moderate Low

Upto 1 members 31 8 19 58

2 to 3 members 30 3 9 42

Total 61 11 28 100




INTERPRETATION


concluded that there is no significant association between earning members in the family of the

respondents and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.

TABLE – 10

TYPE OF LOGISTICS SERVICE AND LEVEL OF SATISFACTION

H0 = There is no significant association between type of logistics service and their level of satisfaction

with logistic facilities.

Type of Logistics service Level of Satisfaction


Individual 31 11 0 42

Proprietorship Firm 0 0 9 9

Small Scale Industry 34 11 4 49

Total 65 22 13 100


INTERPRETATION


concluded that there is a significant association between type of logistics service and their level of


TABLE – 11

FREQUENCY OF LOGISTICS SERVICE AND LEVEL OF SATISFACTION

H0 = There is no significant association between frequency of logistics service and their level of


Frequency of Logistics

service

Level of Satisfaction Total

High Moderate Low

Once in a while 0 3 0 3

Once in month 32 19 9 60

Once in a week 33 0 4 37

Total 65 22 13 100


INTERPRETATION


concluded that there is a significant association between frequency of logistics service and their level

of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.



TABLE – 12

EXPORT SHIPMENTS AND LEVEL OF SATISFACTION

H0 = There is no significant association between export shipments and their level of satisfaction with

logistic facilities.

Export Shipments Level of Satisfaction


Agriculture 12 0 4 16

Engineering 16 3 0 19

Textile 26 11 9 46

Others 11 8 0 19

Total 65 22 13 100


INTERPRETATION


concluded that there is a significant association between export shipments and their level of


FINDINGS

Percentage Analysis

Majority 52 (52.0%) of the online shoppers belong to the age group between 25-40 years.

Most of the respondents are female.

The majority 62 (62.0%) of the respondents are residing in urban area.

Most of the respondents are Post graduates.

The majority 56 (56.0%) of the respondents are belongs to nuclear family.

Majority 55 (55.0%) of the respondents monthly income level between Rs.10,001-Rs.15,000.

The majority 46 (46.0%) of the respondents have 3-4 members in their family.

The majority 58 (58.0%) of the respondents said that below 1 members are earning in their

family.

The majority 38 (38.0%) of the respondents are shipping agents.

49 (49.0%) of the respondents are use small scale industry service.

The most 60 (60.0%) of the respondents are once in a month have using logistics service.

52 (52.0%) of the respondents have 2 to 5 years working in this field.

The majority 46 (46.0%) of the respondents are mostly export textile products.

Chi-Square test

There is a significant association between age of the respondents and their level of satisfaction

with logistic facilities. Hence, Null hypothesis is rejected.

There is a significant association between gender of the respondents and their level of


There is no significant association between place of residence of the respondents and their

level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.



There is a significant association between educational qualification of the respondents and

their level of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

There is no significant association between type of family of the respondents and their level

of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.

There is a significant association between monthly income of the respondents and their level

of satisfaction with logistic facilities. Hence, Null hypothesis is rejected.

There is a significant association between size of family of the respondents and their level of


There is no significant association between earning members in the family of the respondents

and their level of satisfaction with logistic facilities. Hence, Null hypothesis is accepted.

There is a significant association between type of logistics service and their level of


There is a significant association between frequency of logistics service and their level of


There is a significant association between export shipments and their level of satisfaction with

logistic facilities. Hence, Null hypothesis is rejected.

SUGGESTION

The logistics firms may give priority to the experience holders rather than the fresher or less

experience holders. Because the experience holders are identified as cost leaders.

The logistics firms may recruit post graduate employees for various logistics divisions to lead

the overall logistics cost advantages. Because they are identified as cost leaders.

The Central Warehouse Corporation (CWC) may increase the space of ICD and also the

customs officials cooperation is to be enhanced.

The Tuticorin port management may redress the traffic problem and the support of customs

officials are to be enhanced.

CONCLUSION

Logistics costs are important factors that affect the competitiveness of firms and the firms

may enhance its market competitiveness by reducing logistics costs. A profound knowledge of the

logistics concepts and cost analysis are important for day to day life and there is no doubt that this will

save the firms better from the financial risks. Therefore, it is the tool analysis for the cost analysis of

logistics management and thus, firms must develop suitable cost policies in the light of their business

risks.

It could be concluded that an optimized allocation of cargo from the various ICDs in

Coimbatore district to different loading ports will definitely lead any logistics firm in to increased

profitability of the firm. The logistics firm may select CWC as the point of shipment and Cochin port

as the point of loading to minimize the overall logistics costs. It may be a worthy consideration for the

logistics firms to recruit personnel with post graduate qualifications and great experience in this field

which would help them to save over there logistics expense.

REFERENCE

Hrusecka Denisa, Macurova Lucie, Juncková Eva, Kozakova Leona (2015), “The

Analysis of the Use of Outsourcing Services in Logistics by Czech Manufacturing

Companies”, Journal of Competitiveness, Vol. 7, Issue 3, pp. 50-61.



Qi Dianwei (2015), “The Research on Logistics Cost Accounting and Management in

China”, Advanced Management Accounting, Vol 3, Issue 1, pp.591-594.

Nurul Izzah Mohd Shah , Liu Yao and Damhuji Rifai (2015), “A review of challenges of

logistics management and, barriers of e-business: how Malaysia‟s efficiency logistics service

providers can develop services for e-business”, Journal of Scientific Research and

Development, Vol 2, Issue 3, pp.100-111.

Zhou Chaoyang and Jiang Ying (2014), “Research on Controlling Supply Chain Logistics

Costs Based on Acivity-Based Costing”, International Conference on Innovation &

Management, Vol 4, Issue 1, pp.1678-1682.

Robert Boute, Werner Bruggeman and Ann Vereecke (2014), “Cost Management in the

Supply Chain: an integrated approach”, Production and Inventory Management, Vol 4, Issue

1, pp.01-15.



Documents

A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS …icmrr.org/global/pdffiles/IJFRR/f201703009.pdf · A STUDY ON LOGISTICS COST MANAGEMENT IN INLAND CONTAINER DEPOTS