A project report on domestic transportation in india at expeditor’s benglore

A study on Domestic Transportation in India at Expeditor’s

EXECUTIVE SUMMARY
INDUSTRY PROFILE

India is being touted as the land of opportunity for logistics service providers all over the world.
The Indian logistics market represents $ 50billion and is growing at a rate of 7 percent annually.
Transportation costs account for nearly 40% of production costs, logistics costs around 13% of
GDP, compared to 8% in the US. Growth in Indian economy is the major driving factor for the
demand in logistics industry.
Automobile and engineering goods, chemicals, FMCG, cement and textiles have been identified
as the top five contributors to logistics revenues.

India has the second highest largest road network-3.3 million km. Road Network carry nearly
65% of freight The Indian Railways boasts of being the world’s 2nd largest rail network spread
over 81,511 km and covering 6896 stations. The freight segment accounts for roughly two thirds
of railway’s revenues. It has 12 major and 184 minor / intermediate ports spread across the vast
coastline of 7517km. The 12 major ports handle about 76 per cent of the traffic. Port traffic to
grow to a level of 950 MillionTonnes per Annum by 2009- Ministry of Shipping. Aviation holds
a small share of India’s freight market. Air Freight is very expensive in India in comparison to
road and rail. The size of the world air cargo market is estimated at 27 million tonnes valued at
$200 billion. India accounts for meager 3% of the global air cargo market. As per an expert
estimate, Indian air cargo industry is going to be double by the year 2010.

COMPANY PROFILE

Expeditors international India pvt ltd is a global logistics company which was established in the
year 1979 by Peter.J.Rose and his partners in Washington. Expeditors is much more than getting
a piece of freight from one point to another. The Council of Logistics Management defines
logistics as that part of the supply chain process that plans, implements, and controls the
efficient, effective flow and storage of goods, services, and related information from the point of
origin to the point of consumption in order to meet customers' requirements.

Babasabpatilfreepptmba.com Page 1


Expeditors job is to make sure that from raw material to finished goods sitting on the retail shelf,
they provide the critical services and information necessary to give their clients a competitive
advantage in the management of their supply chains.

Need for the study:

To study about the domestic transportation of goods its current status, challenges and

requirements.

OBJECTIVES

• To know the current status of domestic transportation.

• To know the problems facing by the customers with transporters, challenges taken to
overcome them.

• To know the modern technology used in transportation of goods.

SCOPE OF THE STUDY

 The study will help us to know the present status of the Indian logistics.

 It helps to know the problems facing by the customers with transporters.

 To know the modern technologies used in transportation of goods

METHODOLOGY

Method of collecting primary data was through questionnaire and personnel interview and
secondary data has been collected through Internet, observation, company manual etc. For the
purpose of study logistics executives of manufacturing companies have been chosen as a sample
size of 50 through convenient random sampling. Data collected was tabulated and simple
percentage method was used to derive conclusion. Depending on this I have made my own
suggestions & given my own idea to improve transportation of goods.



FINDINGS

• Majority of the customers are facing the problem of shipment tracking facility in
transporting vehicles.

• Majority of the manufactured goods are damaged due transportation through open
trucks.

SUGGESTION AND RECOMMENDATIONS

• Since majority of the customers are facing the problem of shipment tracking hence a
tracking tool called GPRS system should be adopted to measure, record and transmit
parameters like date, time, speed and location to the command centre using the local
GSM/GPRS network. The system automatically switches over to SMS wherever GPRS
coverage is not available.

• In India major transportation is through open trucks hence there is increase in
damage/loss. So closed trucks like canters and container transportation will be a better
alternative.

CONCLUSION

• Modern technological device called GPRS should be used in transporting vehicles, so
that customers can track the vehicle.

• Canters and containerized transportation is adopted, so that damage/loss can be
minimized.



INTRODUCTION OF THE STUDY

Logistics and supply chain practices are a set of activities undertaken to promote effective and
efficient management of supply chains. These include supplier partnership, physical movement
of goods (logistics) and information sharing throughout the supply chain in order to meet
customer requirements. Some of the key logistics and supply chain practices that impact
performance are related to estimation of customers order, efficient and effective delivery,
integration and collaboration throughout the supply chain, sharing of vision and information
using formal and informal methods, as well as use information and communication
technology(ICT) and various specialist for performing specific jobs across the supply chain. All
of these practices impact logistics the supply chain performance.

Title of the project

“A study on Domestic transportation in India”

It is virtually inconceivable in today's economy for a firm to function without the aid of
transportation. Transportation is an essential and a major sub-function of logistics that creates
time and place utility in goods. In fact, the backbone of the entire supply chain is the
transportation management that makes it possible to achieve the well known seven Rs- the right
product in the right quantity and the right condition, at the right place, at the right time, for the
right customer at the right cost.

The importance of transportation should also be seen by looking at the impact of transportation
on a country's economy. Studies reveal that in India the total logistics costs constitute nearly 10
percent of the GNP out of which nearly 40 percent is because of transportation alone. The major
infrastructure required for moving goods from one place to another in India involve the active
roles of Roads, Road Freight Industry, Railways, Ports and Shipping, and Pipelines, all of which
are either managed or regulated by the government in accordance with the private.



Transportation and logistics services are generally outsourced to third parties. Transportation is
mainly by road and the lead-time of these supply chains is still as high as nine to twelve weeks.
This is quite understandable, given the size of India and the state of its infrastructural facilities.

Transportation and logistics is generally through their own fleet. In some cases, it is outsourced.
Routing and scheduling software are increasingly being used for these activities. Five out of six
firms use standard ERP software. There is high focus on tracking of customer orders and
customer care and technologies like bar codes and GPS are being employed.

In our on site observation of 50 firms, we find that the primary focus is on quality, cost and
service. Recently, responsiveness (delivery speed, safety, volume flexibility, shipment weight
and innovation) is also catching up management attention. Correspondingly, the major concern
in all these firms and their supply chains are related to cost, clarity of demand, reliability of
partners, shortening of delivery cycle, production and logistics flexibility and innovation in
supply chain practices. Sharing of benefits within the supply chains has not yet gained much
attention. Firm especially in the automotive, retail, manufacturing and FMCG sectors are
increasingly opting to outsource their logistics requirements to specialized service providers, the
positive business atmosphere and a burgeoning consumer market are making the shipper
community push the logistic service propositions.



Logistics

Origin and Definition of Logistics:

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word,
calculation, reason, speech, oration"). Logistics is considered to have originated in the military's
need to supply themselves with arms, ammunition and rations as they moved from their base to a
forward position. In ancient Greek, Roman and Byzantine empires, there were military officers
with the title ‘Logistikas’ who were responsible for financial and distribution of supplies.

The Oxford English dictionary defines logistics as: “The branch of military science having to do
with procuring, maintaining and transporting material, personnel and facilities”. Another
dictionary definition is: "The time related positioning of resources." As such, logistics is
commonly seen as a branch of engineering which creates "people systems" rather than "machine
systems"....

Prospects of Growth in the Industry

In years gone by, the traditional warehousing and logistics facility was located by railroad tracks,
a water port, and/or freeways, usually in the least desirable parts of cities or large towns. This
stereotype then faded as gigantic, state-of-the-art facilities began to sprout in more rural areas on
the outskirts of transportation and population hubs. The World started beginning to see such
facilities showing up in even less "traditional" areas. Modern warehouses now are being located
in carefully manicured industrial parks that are sprouting as fast as the corn and wheat once did
in these open spaces-often in out-of-the-way places. Why the emphasis on such locations for
logistics companies?

Much of it is due to the great flux that the logistics industry has been undergoing in the first three
years of the 21st century. Most of these changes are being driven by a growing trend in the
manufacturing and retail sectors to form partnerships with companies to which they can
outsource non-core logistics competencies-3PL providers.



In turn, 3PL providers are continually looking to provide innovative supply chain solutions to
customers by focusing on value-added capabilities, differentiating themselves from the
competition. They focus on key objectives, such as implementing information technologies,
instituting effective management processes, integrating services and technologies globally, and
delivering comprehensive solutions that create value for 3PL users and their supply chains. This
need to partner with customers and become more integrated into their supply chain processes has
created the ancillary need to locate close to these customers.

That isn't to say the need for easy access to transportation hubs and different modes of
transportation won't continue to be important. But the above shift in business strategy, along with
the advances in technology and enhanced communication, has opened the door for logistics
facilities to operate effortlessly in a myriad of location.

Profit warnings, share price pressures, mergers, reorganizations, relocations, disposals, painful
layoffs and great geopolitical uncertainties can sweep away even the most comprehensive
logistics strategies – and that’s despite outstanding management over many years. These are
exceptionally difficult times and it has never been more important to connect logistics and freight
planning to executive board thinking than now. It’s easy to lose sight of the bigger picture in the
rush to cut infrastructure cost and conserve cash. Hopefully organization succeed in protecting
the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale
and momentum?

To be a logistics winner in the coming years organizations need to use the downturn to reshape
for growth, propelled by an unshakeable conviction that the mission is still important, that more
prosperous times lie ahead, and that in some way the company infrastructure is helping to build a
better kind of world.

Own passion for running the race matters most of all in a downturn, when people are insecure,
see only savage cost savings, and loyalty is tested. The corporation’s future will be dominated by
six factors, or faces of a cube, spelling F U T U R E.



Logistics is inevitable in the future and essentially the management policy also has a significant
role in the future of world. Generally the study is being featured with all aspects of management
in Logistics and Freight areas. (Logistics include Transportation, Warehousing, Network Design,
Cross docking, and Value Adding).



INDUSTRY PROFILE

Logistics can be defined as providing the right type of products and/or services at the right price,
at place, time and in the right condition. A quick look back at some logistics history may prove
very enlightening. Logistics can be classified as an enterprise planning framework for material
management, information, service and capital flows. Logistics when seen in the context of the
modern day prevalent work environment also includes information that is complex in nature
besides giving importance to all the communication and control system that are essential for
efficient working of the organization.

The birth of Logistics can be traced back to ancient war times of Greek and Roman empires
when military officers titled as 'Logistikas' were assigned the duties of providing services related
to supply and distribution of resources. This was done to enable the soldiers to move from their
base position to a new forward position efficiently, which could be a crucial factor in
determining the outcome of wars. This also involved inflicting damage to the supply locations of
the enemy and safeguarding one's own supply locations. Thus, this lead to the development of a
system which can be related to the current day system of logistics management.

During the Second World War (1939-1945), logistics evolved greatly. The army logistics of
United States and counterparts proved to be more than the German army could handle. The
supply locations of German armed forces were inflicted with serious damages and Germany was
not able to wreak the same havoc on its enemy. The United States military ensured that the
services and supplies were provided at the right time and at the right place. It also tried to
provide these services when and wherever required, in the most optimal and economical manner.
The best available options to do the task were developed. This also gave birth to several military
logistics techniques which are still in use, albeit in a more advanced form.

Logistics has now evolved itself as an art and science. However, it cannot be termed as an exact
science. Logistics does not follow a defined set of tables nor is it based on skills inherited from
birth. A logistics manager performs his duties and responsibilities based on his educational
experiences, skills, past experiences and intuition. These skills are nourished by a constant



application of the same by him for the betterment of his organization. The logistics manager
ensures that the company is benefited by an effective and efficient system of logistical
management. He also needs to ensure that the right kind of products and services are provided at
the right time and for a right price, whether inside the organization's premises or delivery of
shipments outside the premises of the organization.

Logistics has come to be a kind of relief for many organizations that formerly looked upon it as a
burden. Companies nowadays are hiring people with the requisite knowledge to deliver
sustainable enhancements in the field of supply chain management. As has been the case
throughout most of logistics history, the task of a logistics manager involves a clear vision and a
drive within to deliver results under strict deadlines in addition to his usual responsibilities.

Logistics in India

Logistics in India don't differ too markedly from logistics anywhere else in the world. It's the the
art and science of managing and controlling the flow of goods, products, services, energy,
information and people from the origin point to the destination point. It includes the proper
combination of several activities such as material handling, warehousing, and information, for
the purpose of ensuring supply of the right product, at the right time, at the right place, for a right
cost in the right condition.

In the past, India has been the student rather than the expert when it comes to the field of
logistics. But with its current expertise, valuable human resources and positive plans, it surely is
walking on the path of being a service provider of class. There are several factors that benefit the
Indian economy for reaching success in the field of logistics, namely:

1. India is the fourth largest economy in the world.

2. It is believed that about one-quarter of the youth population of the world resides in India.

3. India has human resources that are high in knowledge and abilities.

4. It is the second-largest English speaking workforce.



5. It has the 2nd largest pool of qualified technical workforce.

India spends 13 percent of its Gross Domestic Product (GDP) on logistics as opposed to the
usual practice of 10 percent by other developing nations. The Indian economy is striving for
improvements in the field of logistics and supply chain management to gain the competitive edge
in today's worldwide economy. The Indian government has favored the logistics market of India
by making some helpful plans and policies to assist in its growth.

There are several events organized for the promotion of logistics in India which are focused in
their approach and relevant to the business solutions besides providing a solid platform for
allowing people from a wide industry spectrum to meet and provide business within them from
all over the country. This has been an emphatic source of providing business solutions and their
development.

Several global third party logistics providers (3PLs) have already started developing their
operations and service networks in India with a purpose to explore the rampant Indian economy.

This has resulted in the creation of the need for a vast range of supply chain management (SCM)
and logistics solutions which cover several factors such as supply chain, logistics, material
handling, storage, Information technology (IT), warehousing and inventory management. This
has benefited the efficiency and productivity of the complete value chain in several dimensions
of profits, speed and customer service.

The Confederation of Indian Industry (CII) is the premier business organization with a known
commitment towards the development of logistics in India. It has established the CII Institute of
Logistics which is a specialized state-of-the-art institute of excellence with its focus on SCM and
logistics. It is brought up to satisfy the latest industry needs for specialized SCM and logistics.

India is being treated as the destination of the future in the field of logistical service providers all
over the globe. Indian logistical market players have started to gear up and position themselves
in the global scenario. The true potential of these service providers is yet to be realized. India is
keen to offer transportation and logistical service to grow itself as an emerging marketplace. The



key sectors include fashion, gems, jewelry, pharmaceuticals, precision tools and engineering
goods, all of which need special shipping provisions.

Size of the Indian logistics industry

The annual logistics cost in India is estimated to be 14% of the GDP, which translates into USD
140 billion assuming the GDP of India to be slightly over USD 1 trillion. Out of this USD 140
billion logistics cost, almost 99% is accounted for by the unorganized sector (such as owners of
less than 5 trucks, affiliated to a broker or a transport company, small warehouse operators,
customs brokers, freight forwarders, etc.), and slightly more than 1%, i.e. approximately USD
1.5 billion, is contributed by the organized sector. So, one can see that the logistics industry in
India is in a nascent stage. However, the industry is growing at a fast pace and if India can bring
down its logistics cost from 14% to 9% of the GDP (level in the US), savings to the tune of USD
50 billion will be realized at the current GDP level, making Indian goods more competitive in the
global market. Moreover, growth in the logistics sector would imply improved service delivery
and customer satisfaction leading to growth of export of Indian goods and potential for creation
of job opportunities.

Logistics Management and Logistics Management Software

Logistics management is that part of the supply chain which plans, implements and controls the
efficient, effective forward and reverse flow and storage of goods, services and related
information between the point of origin and the point of consumption in order to meet customers'
requirements. A professional working in the field of logistics management is called a logistician.

Software is used for automating logistics activities which helps the supply chain industry in
automating the work flow as well as management of the system. Very few generalized software
are only available in the new market in the said topology. This is because there is no common
rule to generalize the system as well as work flow even though the practice is more or less the
same. Most of the commercial companies do use one or the other custom solution. There are
various software that are being used within the departments of logistics.

The software’s that are used in these departments are,



Conventional Department: CVT software / CTMS software

Container Trucking: CTMS software

Business Logistics

Logistics as a business concept evolved only in the 1950s. This was mainly due to the increasing
complexity of supplying one's business with materials and shipping out products in an
increasingly globalize supply chain, calling for experts in the field who are called Supply Chain
Logisticians. This can be defined as having the right item in the right quantity at the right time at
the right place for the right price and it is the science of process having its presence in all sectors
of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply
chains and resultant efficiencies.

In business, logistics may have either internal focus (inbound logistics), or external focus
(outbound logistics) covering the flow and storage of materials from point of origin to point of
consumption. The main functions of a qualified logistician include inventory management,
purchasing, transportation, warehousing, consultation and the organizing and planning of these
activities. Logisticians combine the professional knowledge of each of these functions so that
there is a coordination of resources in an organization.

There are two fundamentally different forms of logistics. One optimizes a steady flow of
material through a network of transport links and storage nodes. The other coordinates a
sequence of resources to carry out some project.

b. Production Logistics

The term is used for describing logistic processes within an industry. The purpose of production
logistics is to ensure that each machine and workstation is being fed with the right product in the
right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow through the value
adding processes and eliminates non-value adding ones. Production logistics can be applied in
existing as well as new plants. Manufacturing in an existing plant is a constantly changing



process. Machines are exchanged and new ones added, which gives the opportunity to improve
the production logistics system accordingly. Production logistics provides the means to achieve
customer response and capital efficiency. Production logistics is getting more and more
important with the decreasing batch sizes. Even a single customer demand can be fulfilled in an
efficient way. Track and tracing, which is an essential part of production logistics - due to
product safety and product reliability issues - is also gaining importance especially in the
automotive and the medical industry.

Features of Indian Logistics Industry
•A number of small-integrated players.
•Transportation costs account for nearly 40% of production costs.
•Logistics costs around 13% of GDP, compared to 8% in the US.
•Growth in Indian economy is the major driving factor for the demand in logistics industry.
•Chemicals, metals, FMCG, cement and textiles have been identified as the top five contributors
to logistics revenues.



Growth Drivers for Logistics in India

•General growth of the Indian economy.

•Manufacturing boom-for exports as well as for domestic
market.

•Expected rise in International trade from India.

•MNC’s setting up manufacturing in India-Nokia, Flextronics.

•Government’s thrust on Infrastructure --US$17 billion to upgrade highway networks.

•Implementation of VAT will lead to growth in warehousing business.



•Opening of organized retail sector -attracting retail chains like Wal-Mart and Carrefour into
Indian players like Pantaloon and Reliance.

Government Support

The Indian government is making great efforts by

•Privatizing ports and airports.

•Increasing the number of gateway ports

•Investing in highway projects

•Streamlining customs and excise procedures

•Implementing EDI systems

•Improving the rail network .

•The government plans to invest $17 billion in transport infrastructure between 2006-2010.

Some of the projects are

• Amend in the National Highway Act to expedite land acquisition, permit private
financing and allow tolling.

• Improvement in rural access by launch of the Prime Minister’s Rural Roads
Program.

• Reduction of congestion on rail corridors and improvement of port connectivity by
launch of National Railway Development Program.

• Upgradation of infrastructure and connectivity in the country's twelve major ports by
initiating the National Maritime Development Program.

• Establishment of Tariff Authority for Major Ports to regulate tariffs.



•

• On a per-annum basis, United States invests 5 percent of its annual logistics spend on
infrastructure, India is investing 23 percent or over four times as much.

Industry Growth=Logistics Growth
• “Engineering goods, chemicals and gems & jewelry are the fastest-growing
sectors; manufacturing in India is expected to grow by 9.4 percent in
coming years.” says Jacques Green, Managing Director FedEx-India,
Middle East &Africa.
Auto

• Outsourcing in Auto sector could be worth $375 billion by 2015 and India could
capture up to $25 billion of this amount. [source:McKinsey]

Chemicals

• India’s chemical exports could reach $15 billion by 2015. [Source: McKinsey].

Electrical and Electronic Products

• India’s export in electrical and electronic products could reach upto $18 billion a year by
2015[source: McKinsey].
Retail

• Opening up of the organized retail sector is attracting big retail chains like Wal-Mart and
Carrefour in addition to big Indian retailers like Pantaloon and Reliance.
• All this would require the presence of professional logistics players in the market to carry
out supply chain activities.

Thus demand for logistics services would be largely driven by the growth of the Indian
economy.



Logistics is a mixture of several professional disciplines, such as:

1. Planning

2. Controlling

3. Directing

4. Coordination

5. Forecasting

6. Warehousing and transportation

7. Facility location

8. Inventory management

All activities that are involved in the movement of goods and services from the point of origin to
the point of final consumption are grouped under the term 'logistics'. The art of managing or
supervising all these activities when grouped together as a collective unit, are placed under
'logistics management'. People who are authorized or given the task of managing the aspect of
logistics management are referred to as 'distribution managers' or 'logistics managers'.

Importance of logistics

1. Logistics is the bed rock of trade and business.
• Without selling and or buying there can be no trade and business. Buying and or selling
takes place only when goods are physically moved into and or away from the market.
• Take away logistical support trade and business will collapse
2. Leads to customer satisfaction through superior customer service.
• Organizational objectives of P [Productivity],Q [Quality],C [Cost],D [Delivery],E
[Employee Morale],F [Flexibility],S [Safety],H [Health],E [Environment] are set to
meet customer expectations of Q,C,D,Q, C, S, H, E are parts of must be quality that a



customer expects. Logistics addresses D, F objectives which lead to customer
satisfaction through superior customer service

3.Integrates logistical activities
• In conventional management environment, various activities of logistics work in isolation
under different management functions. Each pocket trying to sub optimize its objectives
at the cost of overall organizational objectives. Purchasing trying to purchase at minimum
price at the cost of what is needed by operations. Operations produce large quantities at
minimum production cost ignoring demand leading to doom inventory. Logistics function
of management brings all such functions under one umbrella pulling down inter
departmental barriers.

4.Competitive edge
• In the fiercely competitive environment logistics provides the edge. Due to technological
revolution most of the products are moving into commodity markets. In a commodity
market where price is controlled by competition, where there is no product differentiation
in terms of quality parameters like performance & reliability, where brands are almost
irrelevant, competitive edge is that of availability of product and service in terms of time,
place and quantity.

5.Logistics wins or loses wars
• British lost American war of independence due to poor logistics
• Rommel was beaten in the desert by superior logistics of Allies

6.Supports critical functions like operations and marketing

Strong logistics support enables a company to move towards JUST IN TIME production
system for survival in a highly competitive market



a) Interface with marketing
These days marketing a product is increasingly on the strength of availability and flexibility
as we discussed earlier. Stronger emphasis is on the last of four Ps of marketing [product,
price, promotion and place]. Logistics provides the interface between production function and

marketing function. Marketing is trying to sell the product in the market place. Logistics
makes the product accessible to marketing by acting as interface between the function that
produces it and the function that makes the consumer buy it.
This interface is gaining importance due to following changes that are sweeping the market
making many companies adopt JUST IN TIME production system.

a. Change in the customer: demanding, knowledgeable, conscious of rights, lacking in brand
loyalty, changes preferences very fast, expects very high degree of service
b. Many products are moving towards commodities market: product differentiation in terms of
quality of performance is vanishing and brands are losing their magic.
As a result of above we find that availability is an important determinant of purchasing decision.

7. Logistical costs: For individual businesses logistics expenditures are 5% to 35% of sales
depending on type of business, geographical areas of operation, weight/value ratios of products
and materials. This is an expensive operation. Improvement in the efficiency of logistics function
yields savings as well as customer satisfaction

Importance of logistics management in India

I. Liberalization and opening our door to competition
II. Global business has long supply & distribution lines
III. Changing Indian customer, aware, demanding and less brand loyal
IV. Competition ensures that product differentiation in terms of quality is difficult
V. Product life cycles are shrinking
VI. Our markets are shifting from sellers’ to buyers’
VII. Many consumer products are moving into commodities market



VIII. India is a large country. Large distances separate production and consumption centers.
Essential commodities have to travel from Food Corporation warehouses to consumers
through PDS.
IX. Logistics performance has not been impressive.

OPERATIONAL OBJECTIVES OF LOGISTICS

1. Rapid response
F-flexibility objective of an organization: Some companies measure this as response time to
customer’s order. On an average how much time do we need to fulfill one particular type of
customer’s order in a year? This is a measure of Rapid response.

Logistics should ensure that the supplier is able to respond to the change in the demand very
fast. Entire production should change from traditional push system to pull system to facilitate
rapid response. Instead of stocking the goods and supplying on demand, orders are executed
on shipment-to-shipment basis. Information Technology plays an important role here as an
enabler. IT helps management in producing and delivering goods when the consumer needs
them. This results into reduction of inventory and exposes all operational deficiencies. Now
the management resolves these deficiencies and slashes down costs. [Concept of SMED and
KANBAN as practiced by JIT companies in Japan or elsewhere]

2. Minimum variance
D-delivery objective of an organization, this can be measured as ‘On Time Delivery’ or OTD.
If 100 deliveries are made in a month/quarter/year how many reached as per the commitment
made to the customer? This percentage is OTD.

Any event that disrupts a system is variance. Logistics operations are disrupted by events like
delays due to obstacles in information flow, traffic snarls, acts of god, wrong dispatches,
damage in transit. Traditional approach is to keep safety stocks and transport the goods by
high cost mode. The cost of this approach is huge. Logistics is expected to minimize these
events, thereby minimize and improve on OTD

3. Minimum inventory



This is component of cost objective of a company. Inventory is associated with a huge
baggage of costs. It is termed as a necessary evil. Objective of minimum inventory is
measured as Inventory Turns or Inventory Turnover Ratio. Americans call this measure as
turn velocity. Logistics management increases these turns without sacrificing customer
satisfaction. Higher turns ensure effective utilization of assets devoted to stock. [Concept of

single piece flow as practiced by JIT companies in Japan or elsewhere]. Logistical
management should keep the overall well being of a company in view and fix a minimum
inventory level without trying to minimize the inventory level as an isolated objective

4. Movement consolidation
Transportation is the biggest contributor to logistics cost. Transportation cost depends on
product type, size, weight, distance to be transported etc. for transporting small shipments just
in time [reduction in inventory costs] expensive transport modes are used which again tend to
hike the costs. Movement consolidation is planning several such small shipments together [of
different types of shipments] by integrating interests of several players in the supply chain.
Generally, large shipment size and long distances reduce transportation cost per unit.
Movement consolidation shall result into reduction in transportation costs.

5. Quality
If the quality of product fails logistics will have to ship the product out of customer’s
premises and repeat the logistics operation again. This adds to costs and customer
dissatisfaction. Hence logistics should contribute to TQM initiative of management. In fact,
commitment to TQM has made the management’s world over wake up to the significance of
logistics function. Logistics can play a significant role in total quality improvement by
improving the quality of logistics performance continuously and continually.

6. Life cycle support [cradle to cradle logistical support- produce, pack (cradle) and repack
(cradle)]
Logistics function is expected to provide life cycle support to the product after sale. This
includes



a. After sales service: the service support needed by the product once it is sold during its life
cycle
b. Reverse logistics [concept Oct’03] or Product recall as a result of
-Rigid quality standards [critical in case of contaminated products which can cause
environmental hazard]
-Transit damage [leaking containers containing hazardous material]
-Product expiration dating

-Rigid laws prohibiting unscientific disposal of items associated with product [packaging]
-Rigid laws making recycling mandatory
-Erroneous order processing by supplier
-Reverse logistics is an important component of logistics planning.

Logistics functions
1. Information management
Management is appreciating importance of information as an element of logistics of late, now.
The role of information is vital in order processing. Quality of information is critical as error
in composition of information requirement creates potential disturbance in the supply chain.
Incorrect order processing due to erroneous information will result into product recall and
reshipment if the sales opportunity still exists.

Faster and quality information flow from customer to processor results into cost effective
logistics. Forecasting and order management are two areas of logistical work dependent on
information.
Forecasting is an effort to estimate future requirements to position inventory or assets devoted
to inventory. As forecasting becomes unreliable in a fast changing environment, control
strategies like JIT, Quick Response and Continuous Replenishment came into being. Now it is
the task of the logistics function to use information technology to strengthen operation control
and forecasting to the best advantage of the organization.
Leading firms typically have information systems capable of monitoring logistical
performance on a real time basis giving them the capability to identify potential operational


breakdowns and take corrective actions prior to customer service failure. In situations where
timely corrective action is not possible, customers can be notified in advance and thereby
taking the surprise out of forthcoming service failures

2. Inventory control
Keeping the stock levels in such a position, so that neither stock out nor stock piling takes
place is Inventory control. While formulating inventory policies find out 20% of the products
marketed that account for 80% of the profit.

3. Transportation
Transportation is the most visible of all elements of logistics and high contributor to logistics
expenditure. Costs of transportation are mainly as follows

a. Movement costs: money paid for moving material across geographical terrain

b. Preservation costs: money spent on preserving the material during transit
c. Cost of idle asset: inventory is unavailable for conversion during transit. This results into
costs for organization
d. Administration costs: money spent on administration

Transportation is accomplished in three ways

a. One’s own fleet – private carriage
b. Contract with specialists on long term basis – contract carriage
c. Contract on individual shipment basis – common carriage

Expectations from transportation service are

a. Minimum cost – transportation costs are explained earlier
b. Speed: speed of transport means the speed with which goods reach the destination.
c. Consistency: consistency in speed is achieving the same speed over a long period of time.
Consistency reflects on the reliability of carrier. Any unexpected variance can play havoc
with logistics. Modern information technology has made continuous tracking of consignments
possible. This takes the element of surprise out. IT has helped logistics managers to seek out



ways and means to improve speed and consistency. What is becoming important is a
combination of speed and consistency.
Requirement of speed depends on type of industry. In some situations speed may not be
important. Then transportation service offering high speed increases cost. So logistics
managers have to strike a balance between service and cost. Three important aspects of
transportation are facility location, transportation cost and consistency.
Design of logistics system should consider total costs rather than elemental cost of
transportation

4. Warehousing
Warehousing is holding material before dispatch after it is produced. Although warehousing is
conventionally considered to be a storage facility, it plays a much higher role from logistics
viewpoint. It is perceived to be a switching facility rather than a storage facility. Warehouse
ownership can be private, public or third party contract. Warehouse provides economic and
service benefits to the logistical system.

Economic benefits are Movement Consolidation, Break-bulk, Cross-dock,
Processing/Postponement & stock piling.

Service benefits are spot stocking, assortment, mixing & production support

5. Material handling
Material handling covers receiving, moving, storing, dispatching activities. It has an impact on
cost [capital as well as running], quality and safety. One of the principles of material handling
is minimum movement. Commonly used material handling equipment are forklifts, EOT
Cranes, hoists, pulley blocks, trolleys, railroad cars,
Conveyors, ropes and slings etc.
6. Packaging

Packaging is done to make handling and transporting cost effective. It protects the product in
transit and handling. Packing is expected to facilitate lifting and moving by providing easy
access to forks or hooks. Packing is also expected to display universal symbols and other
instructions for handling.E.g. Pallets and containers, wooden boxes, wrapping etc.



Future prospects

Despite problems, The Indian logistics industry is growing at 20% vis-à-vis the average world
logistics industry growth of 10%. Since the organized sector accounts for merely 1% of the
annual logistics cost, there is immense potential for growth of the sector. The major opportunities
are highlighted below.

• Many large Indian corporate such as Tata and Reliance Industries have been attracted by
the potential of this sector and have established logistics divisions. They started providing

in-house logistics services, and soon sensing the growth of the market, have started
providing services to other corporate as well.
• Large express cargo and courier companies such as Transport Corporation of India (TCI)
and Blue Dart have also started logistics operations. These companies enjoy the
advantage of already having a large asset base and an all-India distribution network.
Some large distributors have also forayed into the logistics business for their clients.
• Since logistics service can be provided without assets, there is growing interest among
entrepreneurs to venture into this business.
• Indian shippers are gradually becoming more aware of the benefits of logistics
outsourcing. They are now realizing that customer service and delivery performance are
equally important as cost to remain competitive in this global economy.
• The Indian economy is growing at over 9% for the last couple of years (compared to the
world GDP growth rate of 3%), which implies more outputs and more demand for
specialized logistics services.
• The Indian government has focused on infrastructure development. Examples include the
golden quadrilateral project, east-west and north-south corridors (connecting four major
metros), Free Trade and Warehousing Zones (FTWZ) in line with Special Economic
Zones (SEZ) with 100% Foreign Direct Investment (FDI) limit and public-private
partnerships (PPP) in infrastructure development. It is expected that infrastructure
development would boost investments in the logistics sector.
• In India, 100% FDI is allowed in logistics whereas in China, until recently, foreign
investment was not allowed in domestic logistics. Almost all large global logistics


companies have their presence in India, mainly involved in freight forwarding. For
domestic transportation and warehousing, they have tie-ups with Indian companies. As
the Indian logistics scenario looks promising, these MNCs are expected to play a bigger
role, probably forming wholly-owned subsidiaries or taking the acquisition route. The
latter may be the preferred route of investment since the target company is readily
acquired with its asset base and distribution network, and the need for building
everything from scratch can thus be avoided. The benefits for the acquired company
include the patronage of an MNC and access to the MNC’s global network. As an

Example, DHL Danzas, the biggest logistics company in the world, has taken over Blue Dart.

Managerial Implications

Studies on logistics indicate that in this highly competitive and high-cost, low-margin business,
logistics managers have to not only focus on differentiating the services rendered by their
companies, but market the differentiating factors of their services appropriately to the clients.
They also need to make their cost structures transparent, and convince clients to foot the bill
towards investments in quality assets and new technologies such as RFID and GPS (Global
Positioning System) leading to improved, and differentiated, delivery of service. Since clients
usually prefer a single-point solution to all their logistical problems, managers need to broaden
the range of their service offerings, internationalize operations and cover as many industry
verticals as possible. They may focus on key customer accounts gradually moving away from
accounts generating low, even negative, profitability. However, small-to-medium-sized
companies that seem to have high growth potential should not be ignored in the process. In order
to become a single point of contact for clients, logistics companies may pursue acquisitions or
alliances, which, however, pose the challenge of integration of diverse cultures. Attracting,
recruiting, training, motivating and retaining management talent are also a great challenge that
logistics managers need to take on (Lieb and Butner, 2007).

A survey of North American LSPs (Bagchi and Mitra, 2006) found that logistics managers
perceived internationalization of operations, industry focus or specialization, investment in



information systems, availability of skilled logistics professionals, integration of supply chains,
customer focus and breadth of service offerings as the most important factors for success as a
LSP. However, the survey identified significant gaps between expectations and actual
achievements of LSPs with respect to internationalization of operations, skilled logistics
professionals and integration of supply chains, which should be seriously looked into by
managers. The survey also established relationships among a set of performance metrics and key
success factors to identify significant predictor and criterion variables. One of the most important
observations was that collaborative relationships with clients and investments in assets are

necessary but not sufficient conditions for success in logistics. The findings of the survey may
provide a useful guideline to logistics managers for allocation of scarce resources.

As far as the Indian logistics industry is concerned, logistics managers of user firms need to
realize that, with supply chains getting more and more complex, outsourcing part or all of their
logistical activities to experienced LSPs will help reduce their overheads, streamline supply
chains, reduce costs and improve service delivery. The organizational interests should be put
above vested interests, if any. They need to realize that organized LSPs are professionals, who
will maintain confidentiality of sensitive client information.

The Indian government should also focus on developing infrastructure and encourage public-
private partnerships in investments in infrastructure. Highway projects such as golden
quadrilateral and east-west, north-south corridors connecting all four metros are already
underway. Private investments in inland containerized transportation by railroad, which was a
monopoly of Container Corporation of India Limited (CONCOR), a subsidiary of Indian
Railways, until recently, have been allowed. 100% FDI is also allowed in Free Trade and
Warehousing Zones (FTWZ) to create necessary trade-related infrastructure to facilitate import
and export of goods and services. The government may create logistics SEZs (Special Economic
Zones) or logistics hubs with concessions in land and tax rates. Incentive schemes may also be
extended for construction of modern automated warehouses and cold chains. Access to cheap
capital should be made available to LSPs for investments in infrastructure, enabling them to
extend longer credit periods to their clients and supplementing their working capital. The



government may create a uniform tax structure and do away with multiple check points and
documentation requirements, which would lead to speedier delivery of cargo. To generate
awareness, the government may organize seminars, workshops, exhibitions and meetings to
bring in representatives of logistics users, service providers and government under one roof, and
also sponsor courses in leading Indian institutes to attract talent. Growth of the logistics industry
in India will not only contribute to the GDP, but also generate employment (Mitra, 2006).

Road freight industry: The industry is highly fragmented and largely unorganized. The
unorganized sector accounts for nearly 80% of the market share. However, changing policies
with regards to tax structure are likely to give a competitive edge to the organized sector. Road
transport comprises of freight and passenger traffic. It accounts for over 60% of goods traffic and
over 80% of passenger traffic.

Railways sector:

Indian Railways has one of the largest and busiest rail networks in the world, transporting over
18 million passengers and more than 2 million tonnes of freight daily. It is the world's largest
commercial or utility employer, with more than 1.4 million employees. The railways traverse the
length and breadth of the country, covering 6,909 stations over a total route length of more than
63,327 kilometers (39,350 mi). As to rolling stock, IR owns over 200,000 (freight) wagons,
50,000 coaches and 8,000 locomotives. IR carries a huge variety of goods ranging from mineral
ores, fertilizers and petrochemicals, agricultural produce, iron & steel, multimodal traffic and
others. Ports and major urban areas have their own dedicated freight lines and yards. Indian
Railways makes 70% of its revenues and most of its profits from the freight sector, and uses
these profits to cross-subsidies the loss-making passenger sector. However, competition from
trucks which offer cheaper rates has seen a decrease in freight traffic in recent years. Since the
1990s, Indian Railways has switched from small consignments to larger container movement
which has helped speed up its operations. Most of its freight earnings come from such rakes
carrying bulk goods such as coal, cement, food grains and iron ore.



Water Transportation
Water transport can be broadly divided into two groups - Inland water transport and Shipping.
Shipping, in turn, can again be divided into two categories Coastal shipping and Overseas
shipping.

Inland Water Transportation:

Inland water transport includes natural modes as navigable rivers and artificial modes such
as canals. The Inland waterways have played an important role in the Indian transport system
since ancient times. However, in recent times the importance of this mode of transport has
declined considerably with the expansion of road and rail transport. In addition, diversion of
river water for irrigation has also reduced the importance of inland water transport. The
decline is also due to deforestation of hill ranges leading to erosion, accumulation of silt in
rivers and failure to modernize the fleet to suit local conditions. The transportation of goods
in an organized form is confined to West Bengal, Assam, parts of North Eastern region and
Goa.

Development of inland water transport commenced from the Second Five Year Plan and up
to the end of Fifth Plan the total expenditure on this sector was Rs. 34 crores. It was only in
the Sixth Plan that this sector was given priority and specific schemes of inter-State and
national importance for development of inland water transport were taken up. The Seventh
Plan was an important landmark in the development of inland water transport. The
expenditure on this sector in the Plan (at Rs. 131.85 crores) was more than the expenditure
incurred right up to the end of the Sixth Plan. Three objectives were laid down in the
Seventh Plan for the development of inland water transport

Development of inland water transport in the regions where it enjoys natural advantage.



Modernizations of vessels and country crafts to suit local conditions- and

Improvement in the productivity of assets. The Inland Waterway Authority has been set up
which is a big step forward and should help in the accelerated development of inland water
transport.

Coastal Shipping:

India has a long coastline of 7,516.6 kms, a number of ports (11 major and 139 minor
working ports) and a vast hinterland. Therefore coastal shipping holds a great promise more
so because it is the most energy efficient and cheapest mode of transport for carriage of
bulky goods like iron and steel, iron ore, coal, timber, etc. over long distances. However,
despite this fact (and despite the fact that coastal shipping was reserved exclusively for
Indian ships after Independence), there has been a sharp decline in coastal shipping
operations. For instance, the number of ships fell from 97 in 1961 to only 56 in 1980 while
Gross Registered Tonnage (GRT) fell from 3.1 lakhs to 2.5 lakhs over the same period.
However, at the end of 1994 the fleet strength was 438 vessels of 6.3 million GRT. The main
factors affecting the growth of coastal shipping adversely have been “High transportation
costs especially for movement other than those between a pair of water front locations, port
delays, poor turnaround time of coastal ships on account of overaged vessels, lack of
mechanical handling, facilities etc.” The coastal fleet is ageing fast; about 52 per cent of the
tonnage is already overdue for replacement. Also, there is imbalance in coastal traffic
movement as traffic is not equally available in both directions. This makes it necessary for
coastal ships to sail in ballast, at times, on return journey. Moreover, slow handling of the
cargo at port and undue port delays inflict heavy losses on shipping, companies. It is
estimated that at present 70 per cent of ship time is spent at ports and only 30 per cent on
voyage.



Overseas Shipping:

Because of the importance of overseas shipping in international trade, considerable attention
has been paid to increase the shipping tonnage in the planning period. As a result, the share
of Indian shipping in the transportation of India's overseas trade has slowly and consistently
increased in the planning period. From around 5 per cent in the first Plan, it increased to
around 34.0 per cent at the end of 1993-94. as compared to 1.92 lakh GRT (Gross Registered

Tonnage) at the time of Independence, shipping tonnage increased to 6.30 lakhs GRT in
1994.

In the First Plan Rs. 18.7 crores were spent on shipping while the expenditure in Second Plan
stood at Rs. 52.7 crores. An important step taken during the Second Plan was the
establishment of a non-lapsing shipping development fund for grant of loans to shipping
companies for the acquisition of tonnage. The Third Plan made a provision of Rs. 55 crores
for shipping which rose to Rs. 135 crores in the Fourth Plan. The Sixth Plan envisaged the
augmentation of shipping tonnage for meeting increased requirements of India’s foreign
trade and also to replace the overaged tonnage especially the coastal vehicles. ‘The outlay in
this plan was kept at Rs. 720 crores while actual expenditure was only Rs. 432.94 crores.
The resources constraint had forced the Seventh Plan to keep the outlay at Rs. 693.42 crores
and the actual expenditure was only Rs. 670.05 crores. The broad objectives for development
of shipping in this plan were kept as follows:

Modernization of fleet on the basis of improved ship designed and fuel efficiency in
engines.

Replacement of over aged fleet on a selective basis.

Drivers fixation of fleet by acquisition of cellular container ships and specialized product
carriers.



Addition to fleet on a selective basis, keeping in view the long-term objective of achieving-
self-sufficiency in tanker fleet.

Ports
India’s coastline of about 6,000 km is dotted with 11 major, 11 intermediate and 168 minor
ports. Nearly 95 per cent of the country’s foreign cargo (by volume) moves by sea and,
therefore, ports/and their development assume an important place in policy making.

Development and maintenance of India’s major ports are the responsibility of the Central
Government, while Other Ports are in the Concurrent list.

Major Ports:

India’s major ports are governed by the Indian ports Act 1908 and the Major Port Trusts Act
1963. The former allow the Statutory to declare any port a major port, define port limit, levy
charges etc. while the formation of Port trust Boards and vests the administration control and
management of major ports in these Boards.

At the time of independence, India had five major Ports, viz. Mumbai, Calcutta,
Vishakhapatnam, Chennai, and Cochin. With the Karachi Port going to Pakistan after
Partition, there were four major ports on the western coast. A new port was developed at
Kandla, which was declared a major port in 1955. The Marmugao Port, developed by the
Portuguese, joined the ranks of major ports in 1964 after the liberation of Goa in 1962. Para
deep, on the eastern coast, was declared a major port in 1966. Eight years later, New
Mangalore and Tuticoin were added to the list of major ports. The inclusion of the
Jawaharlal Nehru Port at Nhava Sheva on the western coast took the number of major ports
to Development of port after the independence, the development of major ports was taken up
in a planned manner. Mechanization and modernizations of cargo-handling facilities at Ports
have been a thrust area in recent years, with emphasis on development of dedicated



infrastructure. Deepening of ports to receive lager vessels has been another priority area.
Vishakhapatnam and Chennai ports have already been deepened.

Minor and intermediate ports:

Minor and intermediate ports fall in the Concurrent list and their administration is the
responsibility of the respective coastal states. Their number as well as their categorization
into minor or intermediate Ports has varied from time to time, depending upon the volume of
cargo and the number of passenger they handle. There were 11 intermediate and 168 minor
ports and state wise distribution was: Orissa-2, AndhraPradesh-12, TamilNadu-10,

Pondicherry-1, Andaman and Nicobar-22, Lakshadweep-10, Kerala-13, Karnataka-9, Goa-5,
Maharashtra-53,Daman and Diu-2 and Gujarat-40.

Name of the 11 major ports, Calcutta, Haidia, Paradeep, Mumbai, Chennai Cochin,
Tuticorin, JNPR, Kandla Vishakhapatnam, New Mangalore and Marmugao.

Aviation Sector

India's rapid economic expansion, commerce and the fast growing food processing sector has
led to a strong and secular growth in air cargo traffic. Domestic cargo movement of airlines
has shot up by about 34 per cent in 2008, while international cargo movement has grown by 15
per cent.

Cargo growth in aviation over the last three years has overtaken the railways and shipping, and is
set to grab part of their share of freight traffic, says the Associated Chambers of Commerce and
Industry of India (ASSOCHAM), which sponsored the ASSOCHAM-Eco Pulse (AEP) study.

The AEP study on Changing Pattern of Cargo Traffic in India from 2000 to 2008 analyzed three
major modes of transportation - aviation, railways and shipping. It found that cargo business in



the aviation sector grew by around 19 per cent, against 10.3 per cent and 9.2 per cent in shipping
and railways during the last three years.

The burgeoning domestic traffic has reduced the proportion of international airfreight to inland
traffic from 200 per cent in 2000 to 164 per cent in 2008, mainly because of the rise of low-cost
domestic airlines.

Along with logistic companies and retail majors, domestic airlines are launching dedicated
freight aircraft to boost goods traffic within the country.

The government is laying emphasis on the food-processing sector and horticulture, giving rise to
and need for greater capacity in low-cost domestic airfreight. Dedicated freight aircraft flying

national and international routes would give a boost to industry, ASSOCHAM President
Venugopal Dhoot said.

In spite of a reduction in freight rates, railways goods traffic saw a downward trend. Revenue
generated from freight has declined to 8.7 per cent in 2008 from 11 per cent in 2007. The
proposed dedicated freight corridor (DFC) is likely to sharply increase railways goods traffic, but
the extreme long-term nature of the project gives air cargo the advantage, the report says.

Ports and shipping saw a gradual decline in annual growth rates from 11.3 per cent in 2005-06 to
10.4 per cent in 2006-07 to 9.5 per cent in 2007-08. In contrast, total air cargo traffic has
increased from 15.6 per cent in 2005-06 to 21.5 per cent in 2006-07, clocking a compound
annual growth rate (CAGR) of 9.5 per cent for the last six years.

International air cargo traffic increased from 9.75 lakh tonnes in 2006-07 to 11.20 lakh tonnes in
2007-08. Domestic air cargo traffic swelled from 14.81 tonnes to 17.99 tonnes in the same
period, registering a CAGR of 12 per cent for the past six years, compared to 7.7 per cent for
international cargo traffic.



The total cargo traffic of all major ports increased from 4.23 lakh tonnes in 2005-06 to 4.64 lakh
tonnes in 2007-08, registering a CAGR of 7 per cent. But this lagged behind overall goods
traffic, which grew by an average 10.3 per cent during the same period.

Cargo growth in the railways was the lowest of the three, with a CAGR of 6.6 per cent over the
last six years. Railways freight traffic has increased from 6.68 lakh tonnes in 2006-07 to 7.26
lakh tonnes in 2007-08, but the growth rate has declined from 10.9 per cent to 8.68 per cent over
the same period.

Company profile

Expeditors is much more than getting a piece of freight from one point to another. The Council
of Logistics Management defines logistics as that part of the supply chain process that plans,
implements, and controls the efficient, effective flow and storage of goods, services, and related
information from the point of origin to the point of consumption in order to meet customers'
requirements.

Our job is to make sure that from raw material to finished goods sitting on the retail shelf, we
provide the critical services and information necessary to give our clients a competitive
advantage in the management of their supply chains

1979 -- 1 location

We register as a single office ocean forwarder in Seattle, Washington as Expeditors International
of Washington, Inc.

1981 -- 9 locations



Expeditors become a global logistics company in July, when Peter J. Rose, James L.K. Wang
and Glenn M. Alger join the company and open seven offices around the world. The initial focus
is on U.S. inbound freight from the Far East, primarily Taiwan, Singapore, and Hong Kong. Our
combination of transportation services and customhouse brokerage quickly makes us one of the
largest U.S.-based air freight forwarder of goods from the Far East.

1983 -- 11 locations

We expand our U.S. export market by hiring senior export executives to lead branch offices in
the U.S. and key foreign markets. We add export capabilities to Chicago, Seattle, New York, San
Francisco and Los Angeles Offices, and we open our Atlanta office.


Expeditors become a public corporation with stock traded over the counter on NASDAQ
(symbol: EXPD). During our first year as a public company, we report more than $50 million in
gross revenues and $2.1 million in net earnings. We open our Toronto office this year, and we
now have 161 employees.


Our first move into the ocean business with the acquisition of Pac Bridge, a major non-vessel
ocean common carrier (NVOCC) and expansion of less than container load (LCL) and full
container ocean services. We also open a new office in Boston this year.


We top $100 million in gross revenues ($108,774,000). We enter the European market by
acquiring a small export company and opening our London office.




We open our first office in Malaysia.


We substantially expand export volume through a series of planned expansion in the Far East,
Europe, Australia, and the U.S. Peter J. Rose, one of the founders, assumes the title of President
and CEO.


We complete the development of a computerized air export program.


Our Brussels office becomes our first in continental Europe. We also open offices in Kuala
Lumpur, Jakarta and Cleveland (U.S.).


Our net earnings top $10 million ($10,196,000). We formalize an internal quality program called
EXCEL (Expeditors Commitment to Excellence and Leadership), built on a goal of 100%
customer satisfaction 100% of the time.


The number of worldwide employees tops 1,000 (1,100). We open five offices in Germany and
our first Middle East office in Saudi Arabia, bringing our number of offices worldwide to 48.




We establish a new division called Expeditors' Cargo Management Systems (e.cms), an ocean
consolidation program with an automated electronic data interface. We open our first office in
China and Beijing grants Expeditors a rare class "A" license.


The number of our employees doubles in two years to 2,000. We open distribution centers in
Seattle, Chicago, Los Angeles, Miami, Newark, London, Rotterdam, Brussels, Hong Kong,
Taipei, and Singapore.


This is the first year with more than $500 million in gross revenues ($584,691,000). We enter
Central and South America with six offices and 10 agents, and expand in the Middle East.

Expeditor launches a Cargo Insurance division. We also gain a new address, on the internet:
http://www.expeditors.com.


Expeditors name a Director of Quality and formalize its global pursuit of ISO 9002 certification.
A total of 27 offices are ISO 9002-certified as five more offices achieve the accreditation in Asia
and Europe. The number of employees tops 3,000 (3,250). We open our first offices in India,
Pakistan, and Bangladesh. The class "A" license we hold in Beijing is extended to four more
major Chinese trading points, bringing our total offices in China to eight. While its employees
are recognized as the best trained in the industry, Expeditors raises its minimum annual training
requirement for employees from 30 hours to 52 hours, in recognition of the increasingly
sophisticated needs of its customers.




We add more than 1,000 employees in one year, for a total of 4,500. We continue networking
offices on the northern and southern borders of the United States. The arrangement of offices on
both sides of the U.S. - Mexico border is unique among customs brokers, and this offers
unprecedented efficiency and speed in processing customs entries. The four new offices in
France will soon be joined by other new locations in Europe, as Expeditors continues to
selectively expand its global network.


ISO 9002 certification is achieved in 38 offices throughout the United States, Canada and
Mexico, bringing the total number of Expeditors offices certified in this standard to 65 in 17
countries. Gross revenues top $1 billion for the first time ($1,189,044,000) and the number of
employees tops 5,000 (5,300).


We celebrate our 20th year, continuing our reputation as a full service global logistics provider.
The number of employees grows to 6,480. Expeditors services include Air and Ocean Freight
Forwarding, Vendor Consolidation, NVOCC, Customs Clearance, Marine Insurance,
Distribution, and other value added global logistics services. Recognition from our customers
(Cisco Systems and British Airways Catering name us as Supplier of the Year) helps reinforce
the mission at Expeditors.


This year the number of employees tops 7,000 (7,611), and offices are opened in Phnom Penh
and Saigon. Expeditors places emphasis on reducing employee turnover and increasing
productivity. Improvements are made on a globally consistent Management Trainee Program and
Document Imaging.



Holding strongly to the belief that you can't buy excellence but have to create and nurture it has
resulted in continued success for our company. It was confirmed when Expeditors attained the
goal of excellence and was given the "Best Companies to Work For" award by Washington CEO
Magazine. But the greatest vote of confidence Expeditors can receive is to have good customers
willing to trust Expeditors with their important business.


This year Expeditors was ranked third by Fortune for America's Most Admired companies in the
Freight Delivery industry, and the Journal of Commerce awarded Expeditors with the Best
Intermediary award. Forbes named the company to the list of America's top 400 companies. Our
employees made all of this possible by servicing our customers, one shipment at a time.


First year with more than $2 billion in gross revenues ($2,296,903,000). First year with more
than $100 million in net earnings ($112,529,000). Number of employees tops 8,000. Named to
the NASDAQ 100.

Expeditors views its role in the future of international trade as the preferred global logistics
solutions company. The company will continue to satisfy its customers' needs through a
responsive, highly-trained work force, integrated information systems and a global network.


Expeditors continues to thrive in a competitive and challenging industry and world economy.
While other logistics companies fail to control costs and stay afloat, Expeditors continues to
grow the number of offices, employees and total revenue, all while staying profitable. Air Cargo



World ranks the company as the second overall freight forwarder and second in the trans-
Atlantic region. In 2003, Expeditors adds full service offices to San Jose (Costa Rica), Orlando
(Florida), Austin (Texas) and Tampa (Florida). Our first year with more than $1 billion in assets
($1,044,078,000).


A number of milestones mark our 25th year: it's the first year with more than $3 billion in gross
revenues ($3,317,499,000); the number of employees tops 9,000 (9,445); and net earnings of
$156,126,000.

$1,000 invested in Expeditors at the IPO price of $9.00 a unit (share and a warrant) is worth
$233,600 on December 31, 2004, (assuming warrant exercise) for a compound annual rate of
return of 28%.


In a year of more mergers among other logistics providers and carriers, Expeditors stays true to
its vision of organic growth, with five new locations in Asia, six in Europe, two in Latin
America, and one each in North America and the Middle East.

The number of employees worldwide now exceeds 10,000 and total revenues approach four
billion ($3.9 billion). Expeditor is noted by Forbes as the Best Managed Transportation
Company and receives two Quests for Quality awards by the Logistics Management publication.
The Wall Street Journal lists Expeditors as #1 in their shareholder scorecard for Delivery
Services, above both UPS and FedEx.




Meeting key strategic goals in Asia, EMAIR, South Pacific and the Americas, Expeditors
focused on delivering a consistent level of customer service and productivity around the world.
Entering onto the Fortune 500 list for the first time with $4.6 billion in revenue, Expeditors also
stood out as Fortune's #1 Most Admired Company in its industry.


Expeditors continued to focus on delivering a consistent level of customer service and
productivity around the world. New as a Fortune 500 company with $5.2 billion in revenue,
Expeditors stood out as one of Fortune's Most Admired companies in their industry for 2007.


Good consistent customer service has always been our goal here at Expeditors and 2008 was no
different. Expeditors continued to open new offices and made capital expenditures for two
beautiful new offices in Hong Kong and Shanghai. Peter Rose was named one of Barron’s top 30
CEOs for 2008 and Business Week ranked Expeditors No. 32 on their Top 50 Best Performing

Companies. 2009 is our 30th anniversary and we look forward to the coming year and to all the
surprises it will bring.

Awards 1993

• Licensed Class "A" Freight Forwarder
o Beijing approved a rare Class "A" license for Expeditors.

Awards 1999

• Dutch Association of General Cargo Sales Agents
o Received award for reservation integrity, communication, know-how and
handling

• South Africa Logistics Council



o Recipient of the annual Logistics achiever award for providing the best integrated
logistics service

Awards 2000

• Kent, Washington Chamber of Commerce
o Ranked #1 for the In Pursuit of Excellence award program

• Hong Kong Labour Department

o Recipient of the Good People Management Award for outstanding performance in
people management

• Industry Association of Sao Paulo

o Ranked #3 for best international cargo agent based on customer satisfaction

• International Freighting Weekly

o Best International Logistics Company of the Year

• U.S. Customs Broker National Permit

o Affords greater flexibility in structuring import operations to allow the conduct of
certain customs business that is otherwise restricted.

• Washington CEO Magazine
o One of the best places to work in Washington

• Logistics Management & Distribution Report

o Chosen as recipient for the Quest for Quality award

• Shipping Digest

o One of the most e-capable carriers



• Journal of Commerce

o Leader in International Trade and awarded best intermediary of the year

Awards 2001

• Forbes
o One of Americas top 400 companies

• Fortune

o Ranked #3 in the transport industry

Awards 2002

• Trofeu Fenix of Efficiency Award
o In Brazil awarded third place as best Cargo Agent of the year

• The NASDAQ-100 Index

o Expeditors is added to the NASDAQ 100

• Selling Power

o Expeditors awarded #1 Best Service Company to Sell For

Awards 2003

• Logistics Management & Distribution Report
o Chosen as recipient for the Quest for Quality award

• Air Cargo World

o

o Named the second overall freight forwarder and second in the trans-atlantic
region



• Transportes & Negócios

o Portuguese newspaper names Expeditors best in class for both Air and Ocean
Freight Forwarding

• Forbes Platinum List

o Fifth straight year on the best big companies list

Awards 2004

• Global Logistics & Supply Chain Strategies Magazine
o Includes Expeditors in its global top 25 third party logistics providers ranking.

• Fortune

o Ranked #2 Most Admired company in Transportation and Logistics.

• Wall Street Journal

o Expeditors ranked #1 in the air freight category for the shareholder scorecard.

• Puget Sound Business Journal

o Peter J. Rose, CEO, is named Executive of the Year.

• British Airways

o Awards Expeditors for outstanding service.

• Philips

o Carrier Recognition Award for Global Airfreight for the third year in a row.

• Samsung

o Logistics Supplier of the Year Award.

• International Rectifier



o Service Provider of the Year Award.

Awards 2005

• Forbes
o Named Best Managed Transportation Company

• Institutional Investor
o Names Peter Rose as one of the top CEOs for the Airfreight & Surface
Transportation Industry

• Logistics Management

o Expeditors receives a Quest for Quality award in both the Freight Forwarders and
Third-Party Logistics categories.

• The Wall Street Journal

o Expeditors ranked #1 in the air freight category for the shareholder scorecard for
second straight year.

• Samsung

o Expeditors China receives the Samsung Best Partner awards for the second year
in a row.

Awards 2006

• Global Logistics and Supply Chain Strategies
o Ranked #9 in the Third Party Logistics Industry

o Ranked #8 in Global Ocean TEU Volume, #1 in the Asia to US lanes and #2 in
the China to US lanes




o Lists Expeditors at #3 company in their 3PL Report, by North American Revenue

o Best Fast Moving Consumer Logistics Service Provider in Thailand

• Johnson & Johnson

o Awarded Expeditors, Campinas, Brazil for excellency in innovative logistics
services

• Eaton Corporation

o CIESP Award: Best run supply chain, Campinas, Brazil

• Trofeu Fenix

o Third place in freight forwarder category, Campinas, Brazil

• Fortune's Most Admired Companies

o Ranked #1 in the Transportation and Logistics Category
• Visteon

o Named Expeditors as one of the 15 outstanding suppliers

• Pfizer

o Awarded Expeditors, Indianapolis, Broker of the Quarter

Awards 2007

• Global Logistics and Supply Chain Strategies
o Named Top Supply Chain Partner

o Ranked #9 on the Top 25 Global Third-Party Logistics Providers in their May
2007 Issue




o Earned #1 in both Freight Forwarding and Third-Party Logistics categories for the
Logistics Management 2007 Quest for Quality Awards

• Forbes

o Included on the Best Managed Companies List for Transportation Industry

• Eaton Corporation

o Recipient of the "Premier Supplier" award

• Fortune's Most Admired Companies

o One of the top ranked companies in the Transportation and Logistics Category

• Barron's Online

o Peter Rose was named to the top 30 Global CEOs list.

• British Airways

o Recognized with the annual award for "Best Support to Commercial Planning,"
Istanbul, Turkey

• LAN Cargo

o Awarded Expeditors, Argentina, as one of their top five freight forwarders

• Samsung
o Expeditors, China, received the third party logistics provider "Best Partner
Award" for 2007

• Wal-Mart

o Awarded the Global Air Freight Forwarder of the Year Award



Awards 2008

• Transporte & Negocios
o Best Ocean Freight Forwarder

• Fenix Award of Efficiency

o Best Logistic Provider

• Covidien

o Customs Broker of the Year


o Quest for Quality Award in both Third Party Logistics and Freight Forwarding
categories

• GE Healthcare

o Productivity Award

• Hewlett Packard

o Outstanding Achievement Award

• Samsung

o Best Partner Award

Mission Statement

To set the standard for excellence in global logistics through total commitment to quality in
people and customer service, with superior financial results.



Goals

To be the recognized industry leader, through total commitment to customer service, by
maintaining our uncompromising integrity, in the support and development of our People,
Communications and Systems in sustained growth and profitability.

Strategy

As a non-asset based company, we are able to give our clients several options for freight
management. Our investments are made in people and systems. Through organic growth, not
acquisition, we give our clients and employees’ peace of mind knowing their day to day business
won't be disrupted by merger pains; our systems integrity is kept intact, not disrupted by
companies whose business was founded on a different platform. Our customers are most
interested in the quality and consistency of service we provide regardless of the country in which
we're doing business.

Culture

Appearance

• Professionalism is at the core of our identity.

Attitude

• A passionate, caring and winning attitude is focused on the basics of teamwork.

Confidence

• We must believe to achieve, not only in ourselves, but also in our co-workers.

Curiosity

• Be the type of person who wants to learn more about something.



Excellence

• Doing not just what's expected, but doing the best that's physically possible.

Integrity

• Fairness, honesty, and dignity.

Pride

• It's the personal commitment we make.

Resolute

• Say what you do and do what you say!

Sense of Humor

• Life's too short not to enjoy the work we do and the people we work with.

Visionary

• A perceptive insight to the changing needs of our clients, vendors and organization.

LITERATURE REVIEW


Literature portrays logistics and supply chain practices from a variety of different perspectives
with a common goal of ultimately improving performance and competitiveness. Studies show
that modern manufacturing practices such as Just-in-Time (Green and Inman, 2005), Quality
Management (Flynn and Flynn, 2005) and Information Technology (Dyapur and Patnaik, 2005)
affect overall supply chain performance. While there is plenty of published literature that
explains or espouses Supply Chain Management (SCM), there is a dearth of empirical studies
examining logistics and SCM practices. How widely are these concepts implemented in practice?
What are some of the major issues and concerns?

Galt and Dale (1991) study ten organizations in UK and find that these are working to reduce
their supplier base and to improve their communications with the suppliers. Fernie (1995) carries
out an international comparison of SCM in the grocery retailing industry He finds significant
differences in inventory held in the supply chain by the US and European grocery retailers,
which could be explained by difference in degrees of their SCM adoption. Tan and Wisner
(2000) compare SCM in the US and Europe. Tan (2002) relates SCM practices and concerns to
firm’s performance based on data from US companies. He lists nine important supply chain
concerns such as lack of sophisticated ICT infrastructure, insufficient integration due to lack of
trust and collaboration among the supply chain stakeholders and thereby lack of supply chain
effectiveness and efficiencies. Basnet et. al., (2003) report the current status of SCM in New
Zealand, while Sahay et. al., (2003) discuss supply chain strategies and structures in India. These
surveys rank the perceived importance of some SCM activities, types of hindrances and
management tools on the success of SCM using representative samples, mostly from
manufacturing. Quayle (2003) surveys SCM practices in UK industrial SMEs (Small
Manufacturing Enterprises) while Kemppainen and Vepsalainen (2003) probe current SCM
practices in Finnish industrial supply chains through interviews of managers in six supply chains.
They analyze the change of SCM both in terms of operational practices and organizational
capabilities. Chin et. al., (2004) conduct a survey that examines the success factors in developing



and implementing SCM strategies for Hong Kong manufacturers. Feldmann and Muller (2003)
examine the problem of establishing an incentive scheme to furnish reliable and truthful
information in supply chains.

Kwan (1999) investigates the use of ICT in SCM in Singaporean electronics and chemical
industries and finds that the top barrier to the use of ICT is the lack of education and training. Li
et. al., (2006) find that higher levels of SCM practice have a direct, positive impact on firm’s
performance leading to enhanced competitive advantage. They note that these practices may be
influenced by contextual factors such as the type of industry, firm size, its position in the supply
chain, supply chain length and the type of supply chain. Other researchers focus on how conflict
and power affect the performance of supply chains (Bradford et. al., 2004, Krajewski et. al.,
2005).

Olhager and Selldin (2004) study the supply chain strategies of 128 Swedish firms and conclude
that the main objectives for the design of supply chains are resource utilization and cost
minimization. They specifically study issues related to the supply chain design, integration,
planning and control and ICT tools for managing supply chains. Their findings indicate that the
firms are starting to appreciate the importance of the supply chains in which they operate.
Quality is the primary priority for the selection of supply chain partners. In addition, delivery
dependability, cost efficiency, volume flexibility and delivery speed are also considered to be
important inputs to the supply chain partner selection process. Companies show relatively high
awareness of modern supply chain planning and control tools. However, the utilization of such
tools is still at a relatively low level. Forecasting is the prime area for collaborative efforts.
However, most firms have a long way to go to take full advantage of the promises of supply
chain integration.

Need for the study:

A project report on domestic transportation in india at expeditor’s benglore

A project report on domestic transportation in india at expeditor’s benglore

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