Transportation management

Transportation Management

Coverage

• Marine Transportation

• Air Cargo Transportation

• Courier and Cargo Operations

• Application of IT in Logistics and Transportation

MARINE TRANSPORTATION

• THE WORD MARINE OR MARITIME MEANS SOMETHING TO DO WITH SEA AND COMMERCE. IN COMON PARLANCE WHEREVER BOTH SHIPPING AND PORTS ARE INCLUDED THE WORD MARITIME IS USED. WORLD OVER THE WORD MARITIME IS ASSUMING GREATER SIGNIFICANCE AS PORTS, SHIPPING, SHIPYARDS HAVE BECOME CLOSELY LINKED.

• IN THE INDIAN MARITIME SECTOR , THE SEA-BORNE TRADE IS 0F SIZE 8.5 US$ Bn AND EXPECTED GROW 15%. THE TOTAL ACTIVITY ENCOMPASSING PAN-INDIAN MOVEMENT OF CARGO (TOTAL LOGISTICS) IS OF SIZE 60 US$ Bn WHICH IS ALSO EXPECTED GROW 15%.THE NATION'S MARITIME POLICIES, GOVERNMENT AND PRIVATE INVESTMENT ETC ARE NOW GEARED TO ACHIEVE THIS GOAL

TERMS OF SALES

Ex-FactoryFOR Free on RailFOT Free on TruckFAS Free Alongside ShipFOB Free on BoardC&F Cost & FreightCIF Cost, Insurance & Freight

TERMS OF SALES

Risk Transit + Insurance Seller Buyer Seller Buyer Ex-Factory To make the goods

available at the premises To load and arrange transport - Yes

FOR / FOT To load on the carrier and obtain clear transport documents

Cost & risk after loading - Yes

FAS To place the goods alongside the ship on the quay

To clear the goods for export, bear cost & risk from quay onwards

From seller's warehouse till the load port

Yes

FOB To place the goods on board and obtain clean B/L

Bear the risk and costs after loading

From seller's warehouse till goods placed on board

Yes

C&F To pay cost and freight necessary to destination

Bears the risk after the good pass the ship's rail

From seller's warehouse till goods placed on board

Yes

CIF Same as above with cost & to arrange insurance

Same as above plus bears the cost of insurance

To arrange insurance from seller's warehouse till destination

TYPES OF VESSELS• PASSENGER SHIPS

CRUISE SHIPS RO-RO FERRIES

• GENERAL CARGO SHIPS UNIT LOAD CONTAINER SHIPS LIGHTER ABOARD SHIPS

• BREAK BULK T'WEEN DECK SINGLE DECK

• BULK CARRIERS HANDYMAX PANAMAX. CAPE SIZE

• TANKERS CRUDE CARRIERS PRODUCT CARRIERS CHEMICAL CARRIERS

• LIQUIFIED GAS CARRIERS LNG VESSELS LPG CARRIERS

• REFRIGERATED CARGO VESSELS

MARINE TRANSPORTATION - KEY FACTORS

• PORTS

• INFRASTRUCTURE

• SUITABLE VESSELS

• CARGO HANDLING FACILITIES

• SERVICE PROVIDERS

• REGULATIONS

DIFFERENT PLAYERS

• SHIPPER / CONSIGNOR / CONSIGNEE

• SHIPPING LINES / AGENTS

• CHARTERERS / AGENTS

• CHA / FREIGHT FORWARDER / CLEARING AGENTS

• CUSTOMS

• PORT AUTHORITIES / TERMINAL OPERATORS

• CONTAINER FREIGHT STATIONS

• SURVEYORS

• INSURANCE COMPANIES

PORT OPERATION

TRAFFIC DEPT MARINE DEPARTMENT WAREHOUSE / BONDED STORAGE CARGO HANDLING SECURITY

CONTAINERIZATION

FIRST CONTAINER SHIPPING IN US – 1956 INTERNATIONAL CONTAINER TRANSPORT (TRANS ATLANTIC)

– 1966 TRANSPACIFIC CONTAINER TRANSPORT – 1968 (700 – 1000

TEU) 1971 (2000 – 3000 TEU VESSELS) 2002 (7000 TEU VESSELS) 2005 (8000 – 18000 TEU VESSELS)

NEED OF CONTAINERIZATION

• OCEAN CARRIERS OR SUPPLY CHAIN

ENABLERS

• ONE STOP SHOP IN THE SUPPLY CHAIN

• CONTAINER AS SHIPPING UNIT

• REDUCED SHIPPING COST

• RAPID TRANSIT TIME

• FACILITATES "JUST IN TIME" INVENTORIES

ADVANTAGES

• EFFICIENT CARRIAGE (WAREHOUSE TO WAREHOUSE)

• REDUCED HANDLING

• REDUCED RISK OF THEFT / PILFERAGE

• ECONOMY IN INDIVIDUAL PACKING

• PROTECTION AGAINST SEA / FRESH WATER DAMAGE

• PROTECTION AGAINST EXTERNAL CONTACT DAMAGE

• REDUCED RISK OF MISDELIVERY

• BETTER SECURITY

TYPE OF CONTAINERS

• GP DRY FREIGHT CONTAINERS

• HALF HEIGHT CONTAINERS

• TANK CONTAINERS

• FLAT RACKS

• OPEN TOP CONTAINERS

• REFRIGERATED CONTAINERS

• VENTILATED CONTAINERS

TERMINOLOGY APPLICABLE TO CONTAINERS

• STUFFING / DESTUFFING

• HOUSE STUFFING

• FCL – FULL CONTAINER LOAD

• LCL – LESS THAN FULL CONTAINER LOAD

NATURE OF CARGO DAMAGE

• MECHANICAL -BREAKAGE, DEFORMATION

• ORGANIC - DECOMPOSITION

• CHEMICAL - CHANGE OF STATE

• DISAPPEARANCE - PILFERAGE/MISPLACING

• SHORTAGE

EXPORT/IMPORT DOCUMENTATION

• CONCERNERD PARTIES

EXPORTER/SHIPPER/CONSIGNOR CUSTOM HOUSE AGENT CUSTOMS

DOCUMENTATION REQUIREMENT(IMPORT)

• ORIGINAL BILL OF LADING DULY

ENDORSED

• COPY OF BILL OF LADING

• IMPORT LICENCE

• INVOICE

• PACKING LIST

• DECLARATIONS (CUSTOMS/GATT)

• ORDER/INDENT

• ORDER CONFIRMATION/ACCEPTANCE

• PROFORMA INVOICE/QUOTATION

• WRITE-UP

CATALOGUE INSURANCE CERTIFICATE CERTIFICATE OF ORIGIN LETTER OF CREDIT SIGHT DRAFT SSI/DGTD REGISTRATION

CERTIFICATE SALES TAX REGISTRATION

DETAILS (FOR MOVEMENT OF GOODS)

CERTIFICATE FOR LOCAL AGENCY COMMISSION

IMPORTERS/EXPORTERS CODE NUMBER ALLOTTED BY DGFT

SECURITY CONSIDERATIONS (POST 9/11 SCENARIO)

– US

CONTAINER SECURITY INITIATIVE (CSI) IMPLEMENTED BY US CUSTOMS IN

JANUARY 2002

AUTOMATED MANIFEST SYSTEM (AMS) OR 24 HR MANIFEST RULE

IMPLEMENTED FROM 2ND DECEMBER 2002

C-TPAT(CUSTOMS-TRADE PARTNERSHIP AGAINST TERRORISM)

EFFECTIVE FROM 25 MARCH 2005

• INTERNATIONAL ISPS (INTERNATIONAL SHIP & PORT FACILITY SECURITY

CODE IMPLEMENTED FROM 1ST JULY 2004 SHIP SECURITY PLAN PORT FACILITY SECURITY PLAN SHIP SECURITY OFFICER COMPANY SECURITY OFFICER PORT FACILITY SECURITY OFFICER SECURITY LEVEL-1 SECURITY LEVEL-2 SECURITY LEVEL-3

SECURITY CONSIDERATIONS (POST 9/11 SCENARIO)

• Airmail.

• India: pioneer of 1st airmail flight in

Feb 1911.

• Air Cargo: by-product of airline

passenger operations.

• Freighters:

– Increased direct demand.

– Contribution to airline operating

revenues.

– Emergence of Integrators.

Evolution of Air Cargo

Challenges to Air Cargo growth

Source: Boeing

Growth of Air Cargo

Source: Boeing

Growth of Air Cargo

Source: MIT/ICAT Sources: ATA Annual Reports and U.S. Department of Commerce(Bureau of Economic Analysis) via www.bea.gov/bea/dn/gdplev.xls

Demand for Air Transport Has Outpaced the U.S. EconomyAir Travel and Air Cargo vs. Real GDP

Growth of Air Cargo

India: Air Cargo Growth vs. GDP Growth

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Dom

Intl

Dom + Intl

GDP

AIR PORT STATISTICS OF MAJOR METROS AIR PORT STATISTICS OF MAJOR METROS

Export Import Export Import Export Import Export Import Export Import

Apr 12102 6721 1354 778 12369 6924 6218 4732 1637 1855

May 11181 7467 1260 1092 12222 7491 5780 5108 1759 1630

J un 11349 7563 1412 1021 12361 7680 6829 5763 1415 1821

J ul 11466 7424 1622 1134 11687 8228 7205 5684 1541 1854

Aug 12530 7125 1529 1127 10127 8147 6653 4769 1500 1700

Sep 12549 7571 1790 1261 12473 8560 6709 5060 1640 1874

Oct 13321 8048 1863 1188 14036 8774 6829 5637 1633 1974

Nov 11726 8069 1970 876 11954 8383 6421 4876 1601 1759

Dec 11700 8659 1687 1041 12673 10926 6532 5750 1779 2252

J an 12802 7139 1563 890 12211 8413 6897 5275 1775 1808

Feb 10887 6006 1410 875 12259 7989 7718 4814 2092 1772

Mar 14669 7804 1641 1368 12216 8320 8356 6636 2020 2255

TOTAL 146283 89595 19102 12651 146589 99836 82147 64105 20393 22555

2004 - 2005 2004 - 2005

DELHI KOLKATTA MUMBAI CHENNAI BANGALORE

2004 - 20052004 - 2005 2004 - 2005

REPOSITIONING

• Air Cargo as a distribution

and

supply-chain support.

• A mode of transportation to a

critical infrastructure for

business and trade.

Air Cargo Growth: Success Factors

Combination carriers

All- cargo-Air linesShipper

Integrators

Forwarder consigneeForwarder

Postal authorities

Air Cargo Chain

Customers interact at origin and destination

Players in Air cargo transportation

UNDERSTANDING BUSINESS & INDUSTRY NEEDS

GOODS

• Perishables• Just-in-time• High value• High security• Emergency• Project Goods

NEEDS

• Reliability• Speed• Security• Information

COMPATIBLE INDUSTRYSEGMENTS• RMG• Automotive• Computer/IT• Telecom• Consumer Durables• Electronics• Floriculture• Diagnostics

Critical Success Factors

• Infrastructure– Compatible ground feed

• Last-mile transportation: surface

• Network• Customs• Regulatory Expertise• Ground-Handling

– Air service oriented to business needs

• 80% of goods will be manufactured in countries other than where they will be purchased.

• Reliability


• Technology

– Integrated systems across the

value-chain

– Tracking in real-time

– Customer software

– Customer Relationship Management


CHALLENGES

• Capacity: support to build air

infrastructure

– Emergence of the low-cost airline

– Freighter conversions: old aircraft

– Connectivity: production to consumption

• Costs

– High & volatile prices of ATF

• Regulatory support for speedy

distribution

– Ground time

– Charters

Emerging Trends in Air cargo

• Growth rate of air cargo traffic has lately been consistently higher than passenger movement.

• Development of some airports as cargo hubs: example : development of cargo village at Dubai

• Use of secondary airports and multi modal transport: example: development sea-air cargo linkage at Sharjah

• Joint ventures and partnerships example: Jet air with Blue dart

Role of integrators and service providers

Nature of integrators services

• Integrators started principally as express operators• Initially they work through Hub and Spoke

distribution system• Integrators operate a vertically integrated structure• Integrators provide tailor made door-door express

services with guaranteed delivery time• They integrate both forwarder and airline functions

with in the air cargo chain

Specialized Services Offered

• Multi-modal Shipping• International Freight forwarding• Customs handling• Consolidation• Break-bulk and de-consolidation• Letter of credit• Insurance

WHO IS A FREIGHT FORWARDER?

• The freight forwarding professional advises clients on – the best rates, – modes of transporting goods to or from any area in the world.

• The forwarder is the exporter’s agent and provides the traffic and documentation services consistent with routings and

• the exporter’s needs, arranging for carriage with vessel operators, trucking companies and airlines specializing in the consolidation of container-load shipments.

• Using the many resources at their disposal, forwarders find the “right match” of services available so that products are moved by the most timely and cost-effective means.

WHO IS A FREIGHT FORWARDER?

• “”Customized” services to fit the clients’ operational needs are forwarder’s specialty. Forwarders coordinate arrangements for storage, pick-and-pack operations, consolidations or full container movements as well as inland transportation to provide clients with true door-to-door service.

• From assisting with initial quotations or preparation of proforma invoices, to banking clients’ documents for collection, the professional ocean and or air freight forwarder is and essential component in the facilitation of international trade.

WHAT IS THE VALUE ADDITION OF A FREIGHT FORWARDER?

• The sheer volume of shipping space allows the freight forwarder to offer reduced prices while ensuring available space during peak season.

• Access to the on-board infrastructure essential to handling refrigerated cargo, garments on hangers, and other special needs.

• Forwarding experts help ensure that shipment is in compliance with a country's import/export regulations.

• Less-than-container load (LCL) shipments can be consolidated, allowing to piggyback with other clients - and significantly reduce expense.

WHAT IS THE VALUE ADDITION OF A FREIGHT FORWARDER?

• Access scheduled reports, or create them as per needs dictate through a tracking system.

• Long-term relationships with major carriers mean that ability to negotiate contracts

• Milestone notification via e-mail and text pager\

• Electronic Data Interchange (EDI) connectivity with carriers and customers

• Generate customer-specific rates quotes

WHAT IS EXPORT DOCUMENTATION?

• The paperwork that is required for an export sales transaction

• The means by which the shipping process is facilitated and recorded.

• Documentation is essential for moving goods through the channels of distribution, transferring responsibility or possession, clearing goods through customs, and facilitating payment according to the agreed upon terms.

WHAT IS THE PURPOSE OF EXPORT DOCUMENTATION?

• Export documentation provides evidence that the negotiated terms between the buyer and the seller have been complied with.

• Export documentation provides important information that is used by the seller, the freight companies, governments, and the buyer.

THE KEY INFORMATION CONTAINED IN EXPORT DOCUMENTS

• Description of the goods

• Mode of transportation– rail, air, ocean

• Terms of sale– Who pays for what?

• Origin of the goods

• Identity of the seller/shipper

• Identity of the buyer

• Terms of payment

• Shipping instructions

• Evidence of shipment

COMMON EXPORT DOCUMENTS

• Pro forma invoice

• Bill of Lading

• Certificate of Origin

• Packing List

• Commercial Invoice

• Shipper’s export declaration (SED)

• Consular Invoice

• Inspection certificate

• Insurance certificate

• Dock/warehouse receipt

• Letter of credit

• Draft

Hub and Spoke Model

• Derives its name from the Bicycle wheel

• Model of no. of spokes jetting out of a central hub

• Location – Hub, Paths leading to destination from the point of origin are spokes.

Difference between models

• Point to point system

- more routes, less frequency

- Hub and spoke

- Less routes, more frequency

Hub and spoke structure of UPS

Hub and spoke structure of UPS

• The first step is the pickup; specific routes are assigned and regular stops are planned according to a tight schedule. The package will inevitably be send to the hub for consolidation. The hubs are central sorting facilities located throughout the world. All the smaller local operating centers have to take their parcels to the nearest hub which can be considerably far since there are only 6 hubs in the world.

• At the hub, packages are unloaded and sorted according to the geographical location where they are bound to. Consequently, all the parcels are divided to be loaded in the courier leading to the right destination.

• Deliveries are either made on the ground by cars and trucks.

Role of Technology in Logistics

• Purpose: more reliability, accuracy, real time info., quality

• Optimization Systems

• Automatic Identification- Bar coding, RFID

• Location based system

• Voice based Communication

• Smart Containers

• Warehousing System

Leveraging Logistics For Powering Profits

Optimization models for SCM


Supply Chain Network Optimisation• Distribution Center (DC) location analysis

– Which existing DCs should remain open or be expanded? Which existing DCs should be shut

down?

– Which new DCs should be opened and with how much capacity?

– What is the mission of each DC (e.g., which products does it handle and/or store in inventory)?

– What equipment (e.g., flow-through sorters, conveyors, refrigerated storage areas) is needed

at each DC to support its mission?

– Which DC or DCs will serve each customer or market?

– Which plant or supplier will replenish each DC for each product?


Supply Chain Network Optimisation

• Worldwide sourcing of manufactured product

• Tactical supply chain planning

• Production scheduling

• Vehicle routing

• All on Realtime basis


eTracK

Using eTracK watch over your fleet with…

The Third EyeThe Third EyeR

UNIQUE FEATURES OF eTracK

• Access to location data is through 24X 7 hours– Secured internet access

anywhere in the world, on a tabular column

– Toll free number 1-600-44-0550 – or by SMS, fax, Email– Mobile Query SMS – Graphically on a GIS system

without any royalty payments.

• No driver intervention • A fully automatic Real time system.• Location details are sent automatically at pre-

determined intervals from remote locations. • Frequency of reporting can be remotely changed or

even switched off/on.

What RFID can do for youLeveraging Logistics For Powering Profits

• RFID-Steak: where the cow was raised, where it was fed,

where slaughtered

• RFID- product: which country has produced, Is it organic?,

temperature history of the product

• Recovery lost or stolen goods

• Better recycling efforts for better environment

• Self checkout at stores

• Ability to reduce counterfeit drugs

• Better supply chain management

Voice Technology- Distribution Centre


• Market is worth $1.5 billion

• Wal mart, Nabisco Biscuits, VSFood Service, UPS, Saturn,

Timken

• Warehouse picker is informed by headset speech

instructions

• Operator confirms the isle and pick location through 12

digit code

• Quantity to be picked is instructed

• Benefits of speech Technology

• Order accuracy(99.3% to 99.8%) increased

productivity

• Real-Time inventory information

• Support for multilingual operations

Smart Containers


• Required Performance

• Monitor and support –an access to the inside of the

container

• Must report its position throughout the supply chain

• Must send manifest data etc for the container itself

• RFID with satellite communication

• GPS has dead spots and visible antennas

• RFID with satellite communication is a must

• Sea-cure satellite system

TRUCK / DRIVER PRODUCTIVITY

• Tracing and tracking technology linked with ERP ( Through iview in SAP)

• Onboard computer systems

• Alert monitoring systems

• Load plans and transport plans

• Trailers with side loading facility


WAREHOUSING OPERATIONS EFFICIENCY

• Cross Docking opportunities

• Cross Docking opportunities improve with completion of Golden quadrilateral.

• Dynamic blending of physical operations with Information systems

• RFID systems introduction


AUTOMATED DELIVERY SYSTEMS

• Tracking of products everywhere

• Invoice adjustments by drivers

• Less driver time spend on Paperwork

• Communication with mobile Assets made possible

• Electronic Billing

• Wireless technologies in Warehouse, customer, sales ,cab etc.


PERVASIVE COMPUTING

• Building Loads

• Route optimization

• Dynamic routing

• Warehouse Functions– Multiple Pick slips– Inventory checking– Product replacement– Pallet and layer building– Labelling

GIS Based Reporting


• Very user friendly reporting

• Automatic Route planning is possible on PC’s

• No license fee on GIS maps

• Possible to create multiple layers on high consumption

points/ population etc

• Demand and Distribution data can be integrated

AMAZING AMAZON

• Reached first ever profit IV Qtr 2001

• Fewer items were put in wrong locations ( 12% to 4% )

• Reduced inventory through better forecasting ( 18% )

• Consolidation of truck despatches ( 0% to 40% )

Ability to handle complex task of distribution through IT


General Mills

• High empty truck kilometers

• Went for consolidation with Kellogg, Quaker oats etc.

through web enabled transport exchange etc.

HARRY POTTER BOOK

• 1,50,000 copies to be delivered just minutes

before midnight of July 8.

• Yellow corp. No 1 Trucking company could do

through the use of planning, Tracking systems

etc.


Organisation Initiative Benefits

UPS Package tracking via ring scanners Reduced cost

at DCs, handhelds on trucks, wirelessUser efficiency

LAN etc. Data integrity

DELL Use of Ariba Buyer 62% reduction in time

61% reduction in cost

Schneider Tracking trucks and trailers Enhanced utilisation

FORD use of where Net yard management

System

P & G Use barcode, RFID Cut inventory from

65 days to 30 days


Thank You

Transportation management

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