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8/14/2019 jayant bose
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LOGISTICS INDUSTRY STRUCTURE
Accor ding to The Council of Logistics Management, US A,
Logistics Management is ³that part of supply chain
management that plans, implements, and contr ols the forwar d
and reverse f low and storage of goods, services and related
information between the point of or igin and the point of
consumption in or der to meet the customers' requirements.´
Consider ing Indian logistics industry. It has three pr incipal components:
Inf rastr ucture pr oviders
Key transportation service pr oviders
Support service pr oviders
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INDIAN LOGISTICS INDUSTRY OVERVIEW
The Indian economy has been gr owing at a rate of over 7.5%
since the last three years. The manuf actur ing sector has
registered a gr owth rate of 9.1% in 2006-07
The major logistics functions for the Indian industr ies include
transportation, warehousing, f reight forwar ding and other
value-added operations like Management Information
Systems
Logistics costs in India are estimated to be ar ound 13% of
GDP, which is Rs4,226.21 billion
Basically, the Indian logistics industry is dominated by the
unor ganized mar ket. The major players of the industry can be
br oadly categor ized as local transporters, transporters
pr oviding some kind of value-added services such as
warehousing services, and completely integrated players
pr oviding 3PL services.
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AIR TRANSPORT S YSTEM IN INDIA
The Indian aviation sector can be br oadly divided into following
four categor ies:
Domestic air lines r un scheduled f lights within India besides
servicing select inter national destinations;
Inter national air lines operate scheduled inter national air services
to and f r om India;
Non-scheduled operators includes charter operators and air taxi
operators; and
Air car go service operators, who transport car go and mail
Air transport sector¶s contr ibution¶s to the GDP remains constantover the last couple of years, the sector is emer ging and gaining
signif icance in country¶s overall economic development due to
r ise in economic activities.
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AIR CARGO MARKET Indian aviation industry has been
exper iencing an exceptional gr owth rate over the last f iveyears, dr iven by booming Indian
economy, f lour ishing trade (bothexport and import)
Both domestic and inter national air car go traff ic at all Indian
air po
rts have registered an exponential gr owth rate over thelast 5±6 years. Domestic air car go traff ic has been gr owing at12.57%, whereas inter national
air car g
otra
ff ic
has been mo
ving at of 13%
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OPPORTUNITIES
In view of the present boom in air car go segments in India, several
domestic as well as inter national air carr iers have decided to start air
car go operations in India and some of them have already started f lying
f reighter air craf ts in the country.
Indian the public sector air line operator, which has leased belly space
on Falcon aviation to fulf ill the demand on the Kerala-Gulf and the
India-Germany sectors, is in the pr ocess of converting two of its A310air craf t into f reighter air craf t In addition, the air line is expecting addition
of some new f leet for the quarter This is likely to enhance its car go
capacity.
Last Year, Blue Dart Aviation Ltd (BDAL) added two leased Boeing 757
f reighters to their f leet
Cathay Pacif ic Car go, the Hong Kong-based air line, decided to start six
new f reighter services in India in view of the gr owing Indo-US and Indo-
China trade
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In addition, Indian Air lines is also looking at converting f ive of itsBoeing 737-200 passenger air craf ts into f reighters.
FedEx Express, the lar gest express transportation company in
the wor ld, decided to expand its networ k in India and to operate
17f lights weekly
on M
umbai-
Delhi r
oute.
Jet Airways, India¶s lar gest passenger pr ivate sector air lines,
has plans to start a domestic car go air line. The air liner has
mooted a f easibility study for this pur pose. The company would
initially convert its old passenger air craf t into f reighters to cater
to the booming domestic air car go mar ket.
Another important f eature of ecstatic gr owth of Indian aviation
industry is air craf t
maintenance, repair and overhaul (MRO) industry.
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MAJOR PLAYERS
Majo
r players pr of iled in this se
ction are sele
cted
f r om air transport system of logistics services in India.
List of the major players pr of iled is given below:
Indian (Indian Air lines)
Jet Airways Blue Dart
a f ew multinational companies like AFL, DHL and Fedex are
also operating in India
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INTERMEDIARIES AND SUPPORT SERVICE PROVIDERSREASONS TO OUTSOURCE LOGISTICS FUNCTIONS
The f actors that dr ive the
outsour cing of logistics
function to the 3PLpr ovider can be gr ouped
into three categor ies:
strategic, operational and
f inancial(see box).
The adoption of moder n
manuf actur ing practices
such as just-in-time and
built-to-or der together with
the r ise of global manuf actur ing networ k is
also dr iving demand for
3PL services.
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3PL MARKET SIZE
Realizing the signif icant benef its like cost reductions and just-in-time
delivery gained by these companies the 3PL mar ket is blooming in
India. Along with their multinational counter parts, major domestic
companies also started outsour cing The services of 3PL pr oviders can encompass the entire supply
chain or parts of it. If a company opts for the outsour cing of the
transportation pr ocess, the 3PL pr oviders extend services such
networ k design, carr ier contracting, shipment optimization, shipment
tracking and f reight payments. Services frequently outsourced to 3PLs
Direct Transportation Services
Freight Payment Services
Freight Forwar ding Warehouse Management
Distr ibution Facilities
Shipment Consolidation
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CLEARING & FORWARDING AGENTS
To help companies in fulf illing legal formalities of transportation aseparate class of clear ing agents or f reight forwar ders have emer ged
over the years. The car go clear ing agents or f reight forwar ders also acts
as a consolidator of shipments.
The f reight forwar ders off er a range of logistics services to the shipper.
The Indian companies involved in f reight forwar ding business includePatel Roadways, Balmer Lawr ie, Blue Dart, Saf e Express, DHL, and Gati
Limited.
WAREHOUSING The warehousing dischar ges an important r ole in business. It creates
time utility by br idging the time gap between pr oduction and the
consumption of goods
Warehousing ref ers to the systematic stor ing of goods with the goal of
making them available on demand. In other wor ds, warehousing ref ers to
the stor ing of goods f r om the time of their pur chase or pr oduction to their
actual use or sale.
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TECHNOLOGY AND INNOVATION There has been a rapid impr ovement in technological
development in the country, which has benef ited the Air
Transport System in India to a great extent. Some technological
developments in Indian aviation sector are given below: Air Traff ic Management ( ATM)
Communication/Navigation/Surveillance
Air port Author ity of India has decided for planning, pr ocur ing and commissioning of
all Communication, Navigation and Surveillance (CNS) f acilities and supportsystems for air navigation based on short-term and long-term requirements to
synchr onize the or ganization's plan with Inter national Civil Aviation Or ganization's
Electr onic Data Inter change
Is a standar d format for exchanging business data. It is he inter
or ganizational exchange of business documentation in str uctured,machine pr ocess able form over computer communication networ ks
Advance Passenger Information System ( APIS)
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GROWTH DRIVERS
Economic gr owth Global trade
Cor porate Trend
Impr o
ved inf rastr
uctu
re Emer gence of global manuf actur ing networ ks and
increased FDI
Information technology
Liberalization and Deregulation
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ISSUES AND CHALLENGES
Major Indian Air ports Running Out of Capacity
High Waiting Time and Congestion in Air ports
High Fuel Cost
Taxation
Aviation Secur ity
Lack of Human Power
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GOVERNMENT INITIATIVES, SCHEMES &
REGULATIONS
The Gover nment of India, in a histor ic development, had enacted Air Transportation Act 1953 in or der to boost the India¶s aviation sector
and hence overall economy by allowing the pr ivate players to enter in the domestic mar ket besides the state-owned air line servicepr oviders
Emphasized the signif icance of air port inf rastr ucture in or der to meeting the gr owing demand for better air transportation f acilities
and also
to
co
mplement the increasing e
cono
mic
activity
India has also tr ied to attract Foreign Direct Investment (FDI) in theinf rastr ucture sector especially in r oads, seaports and air ports. Thecountry has reached a situation wherein 100% FDI is now allowed in most of the inf rastr ucture sectors. Signif icantly, in the aviation sector,100% FDI is permissible for existing air ports
Open Sky Policy of the Gover nment and rapid air traff ic gr owth haveresulted in the entry of several new pr ivately-owned air lines and increased f requency/f lights for inter national air lines. There is 100%tax exemption for air port pr o jects for a per iod of ten years.
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AN UN WEIGHTED COMPETITIVE STRENGTH ASSESSMENT
KSF/Strength Measure Indian Jet Airways
(Rival -1)
Blue Dart
(Rival-2)
FedEx
(Rival-3)
Quality/product performance 6 5 7 9
Reputation/image 4 6 5 8
Manufacturing capability
Technological skills 3 5 7 9
Dealer network/distribution 5 4 2 6
New product innovation
Financial resources 1 2 4 6
Relative cost position 6 7 5 3
Customer service capability 4 4 6 9
Overall strength rating 29 33 36 50
Rating Scale: 1 = Very weak; 10 = Very strong
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A WEIGHTED COMPETITIVE STRENGTH ASSESSMENT
KSF/Strength Measure Weight Indian Jet Airways
(Rival -1)
Blue Dart
(Rival-2)
FedEx
(Rival-3)
Quality/product performance 0.10 6/0.60 5/0.50 7/0.70 9/0.90
Reputation/image 0.10 4/0.40 6/0.60 5/0.50 8/0.80
Manufacturing capability 0 0 0 0 0
Technological skills 0.05 3/0.15 5/0.25 7/0.35 9/0.45
Dealer network/distribution 0.20 5/1.00 4/0.80 2/0.40 6/1.20
New product innovation 0 0 0 0 0
Financial resources 0.15 1/0.15 2/0.30 4/0.60 6/0.90
Relative cost position 0.15 6/0.90 7/1.05 5/0.75 3/0.45
Customer service capability 0.25 4/1.00 4/1.00 6/1.50 9/2.25
Overall strength rating 1 4.20 4.50 4.10 6.95
Rating Scale: 1 = Very weak; 10 = Very strong