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Introduction

Logistics is necessary to:

Move goods from suppliers to buyers

Move finished goods to the customer

Products have little value to the customer

until they are moved to the customers point

of consumption

Time utility- products are delivered at

the right time. Place utility- products are delivered to

the desired location.

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Introduction (Cont.)

Logistics is:

the process of planning, implementing,

and controlling the efficient, effective flowand storage of goods, services, and relatedinformation from point of origin to point ofconsumption for the purpose of conforming tocustomer requirements.

Council of Supply Chain ManagementProfessionals

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The Fundamentals of

Transportation

The Objective ofTransportation

Maximize value to firm through negotiation

to provide profit contribution

Make sure service is provided effectively

Satisfy customer needs

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LEGAL FORMS OF

TRANSPORTATION

Transportation service companies areclassified legally as either common, contract,exempt, or private carriers.

Common carriers- offer transportationservices to all shippers at publishedrates between designated locationswithout discrimination.

Contract carriers- not bound to serve the

general public. Contract carriers servespecific customers under contractualagreements.

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Exempt carriers- exempt from regulation

of services & rates & if they transport

certain exempt products like produce,

livestock, coal, or newspapers. Private carrier- not subject to economic

regulation & typically transports goods

for the company owning the carrier.

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The Modes ofTransportation

ROAD TRANSPORTATION

Motor Carriers (trucks)- most flexible mode of

transportation. Competes w/rail & air for short-

to-medium hauls. Less-than-truckload (LTL) & truck-load (TL)

carriers. LTL carriers move small shipments &

fees are higher.

General freight carriers carry the majority of

goods shipped & include common carriers. Specialized carriers transport liquid petroleum,

household goods, building materials, & other

specialized items.

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INDIAN ROADNETWORK

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Rail Carriers-

Compete when the distance is long & the

shipments are heavy or bulky.

Rail slow & inflexible, but have begun purchasing

motor carriers & delivery service known as trailer-

on-flatcar(TOFC) service.

Rail companies use each others rail cars.

Keeping track of rail cars & getting them where

needed can be problematic.

Railroad infrastructure & aging equipment are

also problems for the railroads.

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Air Carriers- Expensive relative to other modes

but fast. Air carriers transport about 5 % of

U.S. freight.

Airlines cannot carry extremely heavy or bulky

cargo.

For light, high value goods over long distances

quickly. Most small cities & towns do not have

airports.

Half of the goods transported by air are carried by

freightonly airlines, FedEx.

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Water Carriers- Inexpensive, slow &

inflexible. Includes inland waterway, coastal &

intercoastal, & deep-sea.

Inland waterway transportation is used for

heavy, bulky, low-value materials (e.g., coal,

grain).

Competes with rail & pipeline.

Water carriers are paired with trucks for door-to-

door delivery.

Supertankers are +1,500 ft long & 200 ft wide.

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Pipeline Carriers- Limited in variety they can

carry.

Little maintenance once pipeline is running.

Materials hauled in a liquid or gaseous state.

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Comparison ofTransport

modes

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INTERMODAL

TRANSPORTATION

Combinations of the various transportation

modes, is becoming a popular method.

Trailer-on-flatcar (TOFC), container-on-

flatcar (COFC), piggy-back service. Thesame containers can be placed on board

containerships & airliners.

RO-ROs orroll-on-roll-offcontainerships

truck trailers & containers to be directly

driven on & off the ship, without the use

of cranes.

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TRANSPORTATION PRICING

Cost-of-service pricing- varies based on fixed &

variable costs.

Value-of-Service Pricing- services priced at

market bearing competitive levels.

Terms of Sale- includes transportation FOB(freight on board) destination.

PricingNegotiation- Since deregulation,

negotiating prices has become more common.

Rate Categories- Classified as line haul rates,

class rates, exception rates, commodity rates, &miscellaneous rates.

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France 5.5 cents/km

Japan 3.7 cents/km

Canada 2.0 cents/km

India 7.0 cents/km

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AWorldBank Study conducted recently says that the Indian

logistics cost is one of the highest in the world.

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INDIAN SCENARIO

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Indias logistics infrastructure lags behind global peers

as well as other developing countries

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National highways (NH) along the selected routes account for

less QQ than 25 per cent of the total NH length (i.e., less than

0.5 per cent of the Indian road network) but handle over40 percent of road freight traffic

Rail links comprise 27 per cent of the Indian rail network but

handle over50 per cent of rail freight traffic in the country

Two corridors along the East and West coasts have a

significant share of coastal traffic, which can be increased

even further.

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Freight transport in India is

dominated by roads

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TRANSPORTATION

REGULATION &

DEREGULATION

Pro- Regulation tends to assureadequate transportation service

throughout the country while protectingconsumers from monopoly pricing,safety, & liability.

Con- Deregulation encouragescompetition & allows prices to adjust as

demand & negotiations dictate.

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Impacts ofLogistics on

Supply Chain Management

Third Party Logistics (3PL)

Provide reliable & timely delivery required

by SCM

Used to significant degree byinternational logistics

Favored by small businesses

Some firms outsource all of their logistics

needs to a lead logistics providerorfourth party logistics provider (4PL)

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International Logistics

International Freight Security-

Transportation across national

boundaries introduces added complexity,

particularly security. Since 9/11 there is more conflict between

U.S. govt. & industry toward more

security & restrictions for inbound

shipments.

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International Logistics Intermediaries

Customs Brokers- move through customs

& handle documentation.

International Freight Forwarders- move

goods to foreign destination

Trading Companies- Put buyers & sellerstogether & handle export/import

arrangements.

Non-Vessel-Operating Common Carriers-

operate like freight forwarders but usescheduled ocean liners.

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Foreign Trade Zones- Secure sites in U.S. under supervision of U.S.

Customs.

FTZs offer storage, exporting, manufacturing,assembly, repacking, testing, & repairingservices.

NorthAmerican FreeTradeAgreement (NAFTA)

Created in 1994 & removes most barriers to trade& investment among U.S., Canada & Mexico.

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ReverseLogistics

Backwards flow of goods from customers

in SC when goods are returned by a

customer in the supply chain

R

etail returns range6% to

40% of sales

Often is an unwanted SC activity

Poor reverse logistics can hurt firm

Green reverse logistics programs-

designed to return unneeded products forrecycling. These programs reduce

environmental impact on landfills & deal

with dangerous contaminants.

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Reasons for Outsourcing

Reduce Costs

Focus on core functions

Acquire new skills

Acquire better management Assist a fast growth situation

Avoid labour problems

Focus on strategy

Avoid major investments

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Handle overflow situations

Improve flexibility

Improve ratios

Jump on to the bandwagon

Enhance credibility

Maintain old functions

Improve performance

Begin a strategic initiative

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The Case for

Smarter Transportation

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In a smarter transportation system, travelersand freight customers are empowered with

information and tools to determine for themselves

the best way to move from origin to destination,

throughout all modes of transportation, with dueconsideration to cost, time, convenience and

environmental impact.

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Issues a smart transport system can

address:

Predicting demand and optimizing capacity,assets and infrastructure,

Improving the end-to-end transportation

experience

Improving operational efficiency while reducingenvironmental impact, and

Assuring safety and security.

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Challenges for a smarter sysytem:

Mitigating congestion and Planning capacity.

Ensuring Safety and Security

Empowering Transportation System Users

Eco-Efficiency

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CASE STUDY

GATI

Gati means Speed and Direction

Express distribution and supply chain solutions

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Gati - Vision

Be the leader in Asia-Pacific and a globally preferredprovider of India-centric supply chain services and solutions.

Delight the customers with quality services by setting new

trends through innovation and technology.

Be the most preferred organization for all its stakeholders.

Be a responsible corporate citizen with unwavering

commitment to environmental protection and conservation.

Express distribution and supply chainsolutions

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Born out of vision,

an idea w

ell a

head of its tim

e

Gati revolutionized and redefined the Indian logistics business by

pioneering the concept ofRetail Express Cargo and Express Distribution

and emerged as a leader in this segment.

They have been setting benchmarks in the logistics segment for over 18

years, and today have grown to be one of the most recognized brands

in India.

They have a nation-wide network with a capability to deliver to 594 out

of604 districts in India.

They have the largest fleet of over4000 vehicles on road.


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They have a seamless multi-modal network that encompass road, air,

rail and ocean.

They have mechantronic warehousing facilities of one million sq. ft.

across India.

Gati has established a strong market presence in the Asia Pacific region

which includes China (Shanghai & Beijing), Hong Kong, Singapore,

Sri Lanka, Thailand, Dubai and Nepal.

And now they have delivered another winning stroke with a dedicated

freighter service deploying 5 freighters that wrap India.


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MechantronicWarehousing

The high-technology warehousing provides a great strategic advantage and is coreto Gatis growth strategy.

Gati has a mega mechantronic warehouse in Bangalore and others in Kolkata,Ambala, Pune, Jaipur, Coimbatore, Guwahati, Panvel, and Indore.

More warehousing facilities are likely to come up in the North, East, Central, Westand South Zones of India.


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The Cold Chain Business

Recognizing the emerging need in theFood Processing Industry for

Warehousing and movement of

perishables, Gati acquired Kausar India

Limited.

Has the largest Refrigerated Trucking

capacity in India .


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Wrapping India Freighters

Gati has entered this high-value nichebusiness by partnering with Air India

for running 5 Cargo Freighters on

major routes.

This will further enhance its multi-

modal connectivity, resulting in

seamless distribution solutions.

It will also connect businesses along the

length and breadth of India, and the rest

of the world.


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Zipp

an Air India Gati Initiative

y To tap the benefits of the premium andfast growing courier segment, Gati is re-

launching its courier product inpartnership with Air India with an all newidentity and positioning.


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Connecting China

Gati has signed a Memorandum of Understanding (MOU) with the China Railway

Express International Logistics Company (CREIL) for rail and road cargo package

delivery.

It will also develop freight forwarding, ocean freight, courier and logistics services

in the India-China trade lane.

This will provide importers and exporters a unique opportunity for end to endconnectivity in both the countries and for Gati, a growth strategy, in the two

fastest growing economies.


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Gati Coast to Coast

Gati has 4 vessels providing liner

services between Chennai -

Andaman Islands - Chennai and

Chennai - Yangon Chennai.

It offers the most economical mode

of transportation and the best

multimodal customized solutions.

Gatis reach across seas and Indian

coastlines, make it a complete

solutions provider for the Indianseas.


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Distribution Network

Locations 559

Locations serviced 12557

Delivery capability 594 out of602Districts

Routes 621

GatiAssociates 1041

Vendors 621

Vehicles 953 (Own vehicles-170)

Handlers 1114

Weight Handled (per month) 32500 Ton

Dockets (per month) 0.41 mn

Packages (per month) 2.36 mn

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And the leader continues to

explore new opportunities


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REFERENCES

World Economic Forum; McKinsey; China

Statistic Yearbook; Planning Commission

India; NHAI; Indian Railways; DG Shipping;

Bureau of Transportation Statistics US;

McKinsey

http://www.pianc.org/downloads/oncourse/b

ulletin126b.pdf

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final scm (1)