Logistics & Shipping Management

Prof: S.B.Choughule EMIB-IIFT-New Delhi Member of Port & Logistics Committee

Maharashtra Chambers Of Commerce & Industry

Importance of Logistics
Indias logistics sector is in the tremendous growth path. Logistics activities are expanding due to, Globalization Expansion of manufacturing base in India Geographical location -Logistics hub Fast growing retail sector According to Logistics expert , even company save 1 % of its logistics cost, India will save INR 25,000 crore per year

Elements of Logistics Activities included in Logistics Management

Procurement- Sourcing & purchasing Warehousing & Storage of finish product

Material Handling at warehouses ports & ICD
Transportation of goods with various mode of transport

Inventory Control Minimization at given point Physical Distribution of finish product from factory to buyer Information & Communication

Packaging

Defination of Logistics
The management of the storage and flows of goods, services and information throughout from origin of supplier to the end user of finish products

3 R in Logistics
1) Right time

2) Right quantity
3) Right place
Mumbais Dabewala is best logistics service provider

Types of Logistics
Inbound From procurement of raw material at origin to the factory (production centre ) with various mode of transport Outbound Supply of finish product from factory to distribution centeres and end user customer ESSAR steel Ltd is best example in India

Inbound & Out Bound logistics

India Inbound Logistics

Factory

Out bound logistics

Transport
Supplier

Wholesaler Retailer End user

Import of Raw material

Export of Finish product

Importance of Sea Transport

Used by firms for delivery of goods from distant suppliers, mostly conducted in containers of varied size. This mode is ideal for transportation of heavy and bulky goods and suitable for products with long lead times.
Liner shipping & Tramp shipping Iron ore export to China Container export to Europe Sea transport is cheapest mode of transport

3rd Party Logistics

Third Party Logistics (3PL) provider handles all or most of freight of the organizations including the management of information by the third party, freeing the company from day to day interaction with carriers, and having to oversee hundreds or thousands of shipment.

Logistics cost
Break up of cost Transport -40% Inventory 24% Order processing and Administration -10% Warehousing 10 % other cost Documentation Taxation etc 16% -----------------------------------------Total 100% --------------------------------------------Which cost can be saved?

Logistics Cost
India INC increasingly looking to cut their logistics costs in a bid to improve their profit margins, Thus role of Logistics is important for profit maximization According to Logistics expert , even company save 1 % of logistics cost India will save INR 25,000 crore per year

Logistics cost % of GDP

USA -8% North America -10.77 Europe -11.79 Asia pacific -11.64 Remaining 11.74 India -13 -14 %

Freight broker
A freight broker falls into the category of transportation intermediary, which is a company that is neither a shipper nor carrier, but plays a role in the movement of cargo He guides to shipper His service is free to shipper Bombay Freight Broker Association

Freight Forwarder
A person whose business is to act as an agent on behalf of the shipper. A International freight forwarder moving cargo from one country to other country From seller to buyer Example INCOTERM Ex works Freight Forwarder Association of India

CHA
A Custom House Agent is somebody entitled to act upon a companys behalf on actions involving the import and export of goods. There such agents must be licensed under section 146 of the Customs Act.1962
Bombay Customs House Agents Association

CHA-Customs House Agents

Export

CHA files shipping bill in Customs House Passing shipping bill Arrangement of Customs Examination Obtain Let export Order from Customs Co ordination with shipping line Obtaining Bill of Lading from shipping company Insurance policy from Insurance company E.P copy from Customs after export Liasoning with Customs-port-shipping line

Shipping Agents
Shipping agents represent charterers, receivers or ship owners. Their main role is to liaise between their clients and the various entities that service vessels in port including Arrival Departure Formalities with port & customs authorities Bunkering-Supply of fuel Marketing for cargo Collect Freight and remittance to ship owner Issue Bill of Lading MANSA Mumbai Nhava Sheva Shipping Agents Association of India

Carrier
Any person or entity who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes

INSA Indian National Ship owner Association of India

container terminal Operator

A container terminal is a facility where cargo containers are transshipped between different transport vehicles, for onward transportation. The transshipment may be between ships and land vehicles, for example trains or trucks, in which case the terminal is described as a maritime container terminal
NSICT JNPCT GTICT

CFS operator
CFS operator brings container from Terminal to his CFS on behalf shipping line. He provides customs examination service. He collects his dues and gives physically delivery to CHA/importer There are 23 CFS attached to JNPT port

Charterer
Chartering is an activity within the shipping industry. In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, called freight rate. Example Essar Steel Freight rates may be on a per-ton basis over a certain route (e.g. for iron ore between Hazira (Gujarat ) or alternatively may be expressed in terms of a total sum - normally in U.S. dollars - per day for the agreed duration of the charter

Ocean Bill of Lading

Issued by: Steamship line Purpose: Each carrier has its own bill of lading form. Serves as contract of carriage between carrier and shipper, spelling out legal responsibilities and liability limits for all parties to the shipment. The B/L also can be used to transfer title to the goods to a party named in the document. Specifics shipment details, such as number of pieces, weight, destination, etc. Usually three signed originals issued.

NVOCC
Non-vessel operating common carrier. A firm that offers the same services as an ocean carrier, but which does not own or operate a vessel. NVOCCs usually act as consolidators, accepting small shipments (LCL) and consolidating them into full container loads. They then act as a shipper, tendering the containers to ocean common carriers. In India, their service is available at ICD NVOCC has to register with D G shipping

Charterer
Chartering is an activity within the shipping industry. In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, called freight rate. Example Essar Steel Freight rates may be on a per-ton basis over a certain route (e.g. for iron ore between Hazira (Gujarat ) or alternatively may be expressed in terms of a total sum - normally in U.S. dollars - per day for the agreed duration of the charter

voyage chartering
A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lumpsum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs.

Time chartering
A time charter is the hiring of a vessel for a specific period of time; the owner still manages the vessel but the charterer selects the ports and directs the vessel where to go. The charterer pays for all fuel the vessel consumes, port charges, and a daily 'hire' to the owner of the vessel

bareboat charter
A bareboat charter is an arrangement for the hiring of a vessel whereby no administration or technical maintenance is included as part of the agreement. The charterer pays for all operating expenses, including fuel, crew, port expenses and hull insurance. Usually, the charter period (normally years) ends with the charterer obtaining title (ownership) in the hull

Ocean freight
The freight is the remuneration payable for the carriage of goods in a ship from port of loading to port of discharge (JNPT to Colombo) Freight Pre paid Freight paid by the shipper to the carrier when merchandise is tendered for shipment. Not refundable if the merchandise does not arrive at the intended destination Freight Payable at Destination When the ocean freight of a shipment is paid at the time of delivery at the foreign port.

Types of freight
Break Bulk 1) Lump Sump freight 2) Advance freight 3) Pro Rata Freight 4) Dead Freight Types of Freight in containerization Commodity Box Rate FAK Freight All kinds Tariff Rate

Terminal Handling charges

The terminal handling charges is in nature a component of international container transport freight. It is a practice in the main trading countries (regions) that the liner companies collect terminal handling charges at the port of loading from the consignors and collect terminal handling charges at the port of discharge from the consignees. This covers loading unloading charges of container

Surcharge
BAF or Bunker Adjustment Factor - Fuel surcharge. It reflects changes of price of oil on the world market. In sea freight contracts typically changes quarterly. CAF-Currency adjustment Factor This is related to exchange rate fluctuation with domestic currency USD V/s INR Covering risk

Port Congestion Surcharges

Shipping line imposing this surcharge when there is delay to ship in particular port

Thanks

20 August 2010 Prof: S.B. Choughule [email protected]