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 customer’s 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 flow
and storage of goods, services, and related
information from point of origin to point of
consumption for the purpose of conforming to
customer requirements.“

Council of Supply Chain Management

Professionals

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The Fundamentals of
Transportation
The Objective of Transportation
• 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 are
classified legally as either common, contract,
exempt, or private carriers.
– Common carriers- offer transportation
services to all shippers at published
rates between designated locations
without discrimination.
– Contract carriers- not bound to serve the
general public. Contract carriers serve
specific customers under contractual
agreements.

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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 of Transportation

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 ROAD NETWORK

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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 other’s 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
freight–only 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 of Transport
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. The
same containers can be placed on board
containerships & airliners.
– RO-ROs or roll-on-roll-off containerships
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.
– Pricing Negotiation- 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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A World Bank Study conducted recently says that the Indian
logistics cost is one of the highest in the world.

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INDIAN SCENARIO
India’s 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 over 40 per
cent of road freight traffic
 Rail links comprise 27 per cent of the Indian rail network but
handle over 50 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 assure
adequate transportation service
throughout the country while protecting
consumers from monopoly pricing,
safety, & liability.
– Con- Deregulation encourages
competition & allows prices to adjust as
demand & negotiations dictate.

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Impacts of Logistics on Supply
Chain Management
Third Party Logistics (3PL)
– Provide reliable & timely delivery required
by SCM
– Used to significant degree by
international logistics
– Favored by small businesses
– Some firms outsource all of their logistics
needs to a lead logistics provider or
fourth 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 & sellers
together & handle export/import
arrangements.
– Non-Vessel-Operating Common Carriers-
operate like freight forwarders but use
scheduled 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, & repairing
services.
North American Free Trade
Agreement (NAFTA)
– Created in 1994 & removes most barriers to trade
& investment among U.S., Canada & Mexico.

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Reverse Logistics
– Backwards flow of goods from customers
in SC when goods are returned by a
customer in the supply chain
– Retail returns range 6% 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 for
recycling. 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
In a smarter transportation system, travelers
and 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 due
consideration to cost, time, convenience and
environmental impact.
 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 reducing

environmental impact, and

• • Assuring safety and security.

 Challenges for a smarter sysytem:

• Mitigating congestion and Planning capacity.

• Ensuring Safety and Security

• Empowering Transportation System Users

• Eco-Efficiency
 CASE STUDY

GATI

”
Gati means “Speed and Direction””

Express distribution and supply chain solutions

 Gati - Vision
• Be the leader in Asia-Pacific and a globally preferred
provider 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 chain

solutions
 Born out of vision,
an idea well ahead of its time
• Gati revolutionized and redefined the Indian logistics business by
pioneering the concept of Retail 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
of 604 districts in India.
• They have the largest fleet of over 4000 vehicles on road.

Express distribution and supply chain solutions

• 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.

Express distribution and supply chain solutions

 Mechantronic Warehousing

• The high-technology warehousing provides a great strategic advantage and is core

to Gati’s 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, West
and South Zones of India.

Express distribution and supply chain solutions

 The Cold Chain Business
• Recognizing the emerging need in the
Food Processing Industry for
Warehousing and movement of
perishables, Gati acquired Kausar India
Limited.

• Has the largest Refrigerated Trucking

capacity in India .

Express distribution and supply chain

solutions
 Wrapping India – Freighters
• Gati has entered this high-value niche
business 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.

Express distribution and supply chain solutions

 Zipp
an Air India Gati Initiative

 To tap the benefits of the premium and fast

growing courier segment, Gati is re-
launching its courier product in partnership
with Air India with an all new identity and
positioning.

Express distribution and supply chain solutions

 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 end
connectivity in both the countries and for Gati, a growth strategy, in the two fastest
growing economies.

Express distribution and supply chain solutions

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.

• Gati’s reach across seas and Indian

coastlines, make it a complete solutions
provider for the Indian seas.

Express distribution and supply chain

solutions
Distribution Network

Locations 559
Locations serviced 12557
Delivery capability 594 out of 602 Districts
Routes 621
Gati Associates 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
 And the leader continues to
explore new opportunities…

Express distribution and supply chain solutions

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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