Logi(sti)cally Speaking

Association of Multimodal Transport Operators of India (AMTOI)

AMTOI & Ernst and Young White Paper Page 2
Foreword
From a Logistics perspective, India is in an interesting
space. Logistics is an important driver of world economic
growth. Globally, market pressures are challenging
current approaches to both international and domestic
logistics activities.
New innovations are the need of the hour to allow trade
globally to move beyond its current state. If actions are
not taken by all parties in a timely manner the window of
opportunity may narrow.

With this food for thought, questions were asked and
ideas were exchanged between the AMTOI members and
the team at E&Y to conclude the recommendations
provided at the end of this report.

The historical statistical analysis was conducted on data
available from the secondary domain to deduce the
dependencies between macro factors of a given nation
with its Logistics Performance Index guided by the World
Bank.

We hope that through this White Paper, we can continue
conversations and collaborations to enable the sector to
reach its fullest potential.
AMTOI - President
Biren Parekh
Partner
Advisory Services
Ernst & Young Pvt. Ltd.
AMTOI & Ernst and Young White Paper Page 3

Table of Contents
! Overview of Logistics
! Industry overview
! Value Chain
! Drivers
! The India Advantage
! Global statistical correlation between a countrys economy and its
impact on Logistics
! Way forward
! Future Drivers/ Outlook
! Industry growth characterized by: Inorganic Growth
! Suggested future operating models
! Success stories: Case studies
! Conclusion
AMTOI & Ernst and Young White Paper Page 4
Moving products to market is vital
There is no debate on the notion that Logistics is an important facilitator of world economic growth. Supply
chain demands globally are growing every day with rising need to trade finished goods, raw materials etc. from
one location to another.
Thus, companies seeking to lower production costs by sourcing from and supplying to far-away markets are
constantly seeking ways to:
! Reduce shipping costs
! Find reliable, well managed logistics services provider
! Move freight as per their planned schedule rather than that of the carrier's schedule
! Find quality staff for effective control of their logistics services needs
Several organizations are now turning to service providers who can maximize the supply chain efficiency while
reducing supply chain costs while they can continue to focus on their core competencies such as
manufacturing, production, processing, trading etc.
This has given rise to the concept of multi modal transport. Multimodal transport (also known as combined
transport) is the transportation of goods under a single contract, but performed with at least two different means
of transport; the carrier is liable (in a legal sense) for the entire carriage, even though it is performed by several
different modes of transport (by rail, sea and road, for example).
The carrier does not have to possess all the means of transport, and in practice usually does not; the carriage is
often performed by sub-carriers (referred to in legal language as "actual carriers"). The carrier responsible for
the entire carriage is referred to as a multimodal transport operator, or MTO

AMTOI & Ernst and Young White Paper Page 5
however, there exist challenges and risks
common to the Logistics sector
Poor port productivity, port and inland bottlenecks are
making it increasingly difficult to meet customers
demands for reliability at low prices while optimizing use of
assets
Integration across multi-modes of transport is not yet
seamless
Infrastructure
constraints
Inefficient asset utilization owing to trade mismatches and
poor planning
Lack of connectivity to port or origin/ destination to door
adds to these costs
Imbalanced trade flows
MNC players with an end-to-end (integrated supply chain)
proposition pose the risk of domestic market share
New entrants in the market who challenge the current
business models by either offering low-cost or premium
services continue to pose threats to the way traditional
family-run businesses operate
New entrants
As suppliers cater to the needs of a global customer, the
need for reliable service persists
Real-time visibility of shipment needs to be accurate and
timely, while shipping processes more streamlined
Customer demands
Globally, freight forwarding largely unregulated
MTOs not recognized as SSI (Small Scale Industry)
Lack of clarity on what kind of changes will be brought about
on regulations which are not conducive for industry growth
License granted under Served from India Scheme (SFIS ) is
not tradable
Lack of regulatory
support
AMTOI & Ernst and Young White Paper Page 6
Industry value chain
*Shipping origination,
routing and capacity
procurement
Facilitate
transport
Provide and
operate
Load and unload
shipments
Inland delivery
Customer sales
Shipment
routing
Capacity
procurement
Customer
service
Billing
Tracking
Ownership of
asset (ULD,
Containers,
Reefers, etc.)
Storage and
maintenance
Repositioning
Ownership &
operation of
facility/ asset

Terminal / Port/
Airport control
(ownership or
lease)
Terminal operation
Handling and
clearance
Storage
Control of trucks
(specialized
services)
Ownership of
railroad
Container handling

Key Activities across the value chain
Container carriers,
Airlines,
Transportation
companies, Rail
Forwarders/
NVOCCs
Container / ULD
carriers
Container / ULD
leasing companies
Reefer operators
Container carriers
Outsourced/ Third
party

Container carriers
Captive terminal
operators
Third party terminal
operators
FF
Agents
Customs
CFA
Railroads
TL trucks
Drayage truckers
Container carriers
(limited)
Competitor types / Flow of Info
A closer look at the operating models of leading logistics players indicates that market leaders (especially
global players) are gradually playing a larger role across the value chain through various means to add value
through diversification and enhancement. Many, have sought seamless intermodal services, extending their
operations to include inland haulage and offering door-to-door transportation. Some have developed other
elements of the logistics chain, expanding into warehousing and related activities. On the other hand, few
have formulated the strategy of transforming from a global shipping carrier to a global logistics provider. With
the expansion of the value chain, players are lifting the competition platform from low level price competition
to the total logistics services value competition. The logistics supply chain has expanded from mere
transportation to include custom clearance, billing & Tracking, warehousing and container handling.
Booking Waybill Invoice Manifest Delivery Instruction Release of Cargo
AMTOI & Ernst and Young White Paper Page 7
..leading to evolving role of logistics facilitators

Standard 3PL
provider
1. Pick & Pack
2. Warehousing
3. Distribution


Service Developer

1. Freight Forwarding
2. Tracking & tracing
3. Cross Docking
4. Packaging
Customer Adapter
& Developer

1. Handle all the end to
end logistical functions
Thus, the world of Logistics has evolved to include various functions and is set to get more complex as
globalization has opened up new markets and created a wealth of opportunities. A closer look at Indias
Logistics market throws light on the dynamics of this segment and its future growth trajectory based on the
global comparatives we have looked at in the subsequent sections.
According to the Council of Supply Chain Management Professionals, 3PL is defined as "a firm [that] provides
multiple logistics services for use by customers. Preferably, these services are integrated, or bundled together,
by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory
management, packaging, and freight forwarding. The evolution of 3PL providers can be depicted as follows:
AMTOI & Ernst and Young White Paper Page 8
So what is driving the domestic market?
India
Advantage
R&D
capabilities
Proximity to
emerging
markets
Rising
domestic
demand
Shift in
consumption
patterns

Export
potential
Rising
consumption
from tier 2/3
cities
Availability
of manpower
pool
Continued
interest from
MNCs/ Investors
! Investment in logistics infrastructure
! Indian government scaling up investment in core infrastructure
! Public private partnership (PPP) expected to play key role
! Integrated services: Expected to reduce costs and facilitate movement of goods
! Change in tax laws : VAT/ CST
! Change in Supply Chain Orchestration; Industry moving towards outsourcing Logistics function
! Macroeconomic:
! Continued economic liberalization and relaxation in FDI norms
! Cost for talent in India, lower than global benchmarks
Supply drivers
! Economy and trade growth
! Changing demographics, rising disposable incomes, increased domestic consumption for goods from global markets
! Due to proximity to emerging markets; shipments from India, cost-effective
! Opportunity to reduce logistics costs with increasing Infrastructure spend
! Increased liberalization leading to rise in Logistics outsourcing
! Growth across diversified industries with marked entry of foreign players leading to investment in logistics: Retail,
Agri, Pharma, Automobile, FMCG, etc.
! Gradual phase out of central sales tax (CST)
! CST phase out likely to boost movement of goods
Demand drivers
AMTOI & Ernst and Young White Paper Page 9
..and how have players tapped on this opportunity?
Successful logistics companies have adopted new management resources and technologies to successfully
ride the wave of globalization. The cross-border flow of goods, more than 80 percent of which is carried by sea,
has been packaged into standard-dimension steel container boxes that have enabled the integration of ocean
freight, rail, and trucking.
Further, customer preferences have brought about buoyancy in the way logistics players are doing their
business. While some of the global market leaders being family-owned businesses (Kuehne Nagel) have been
prompt in adopting new business strategies, others have used a wait-and-watch approach to mitigate business
risks. Several have achieved inorganic growth through mergers with players either operating in a similar model
or spread across the value chain, on the other hand, some have been entirely organic. Whatever the strategy
adopted, the objectives are all the same; one for cost competitiveness, two for higher service quality to meet the
customers' global requirements, thus to support the desired growth. While infrastructure constraints and threat
from new agile entrants continue to challenge the way industry players approach their business conduct,
demand for efficient logistics will only rise with globalization; as greater number of firms continue to source,
manufacture, and distribute on a global scale, making their supply chains very complex to manage. Below is an
overview of the opportunity landscape:
Segment
dynamics &
competitive
scenario
Major growth
driver: EXIM
trade
Manpower:
Ability to
retain
Entry
barriers:
Low
Differentiator
End-to-end
& Value
added
Service
Competitive
differentiator:
Global
networks
AMTOI & Ernst and Young White Paper Page 10
With an intent to facilitate trade at greater speed,
lower costs
It has therefore become all the more imperative for Multi Modal Transport Operators to leverage
the window of opportunity global trade has presented given the positive spillover effects of
efficient logistics, especially on productivity of trade and industry:

! Minimize time-loss at trans-shipment points
! Multimodal transport, which is planned and co-ordinated as a single operation, minimizes the loss of
time and the risk of loss, pilferage and damage to cargo at trans-shipment points
! MTOs maintain their own communication links and coordinate interchange and onward carriage
smoothly at trans-shipment points.
! Faster transit of goods
! The faster transit of goods made possible under multimodal transport reduces the disadvantages of
distance from markets and the tying-up of capital
! In an era of globalization, the distance between origin or source materials and consumer is
increasing thanks to the development of multimodal transport
! Reduce burden of documentation and formalities
! The burden of issuing multiple documentation and other formalities connected with each segmented
of the transport chain is reduced
! Cost savings
! The savings in costs resulting from these advantages are usually reflected through freight rates
charged by the multimodal transport operator and also in the cost of cargo insurance
! As savings are passed onto the consumer, demand increases
! Single point of contact
! The consignor has to deal with only the multimodal transport operator in all matters relating to the
transportation of his goods, including the settlement of claims for loss of goods, or damage to them,
or delay in delivery at destination
! Reduce cost of exports
! The inherent advantages of multimodal transport system has helped reduce the cost of exports and
improve their competitive position in the international market
AMTOI & Ernst and Young White Paper Page 11
Regulations also moving towards business-friendly
approach..
! The Multimodal Transportation of Goods Act, 1993 was introduced to facilitate the exporters and give
them a sense of security in transporting their goods. As per the MMTG Act, three categories of
companies are eligible to be registered as MTO's. They are (1) Shipping Companies (2) Freight
Forwarding Companies (3) Companies which do not fall in either of the above two categories.
Unlike other contracts MTO acts as the principal and not the agent of
the shipper, in containerized transport it is often difficult to determine
the point at which the cargo was damaged , while in case of multi
modal transport cargo owner will have no difficulty because he is
bound by just one contract, and is liable for the same, while in case of
other transport contracts, cargo owner will have to determine the
stage at which the goods were damaged, this is particularly important
when customer wants to put up a claim damage from the carrier. In
instances where he is not able to determine the stage of journey at
which goods were damaged, then he might be forced to claim against
all carriers involved and this shall lead to additional expenses
How is Multi-
Modal Transport
Contract different
from other
contracts
A Multi-Modal Law was needed for reducing costs and delays& for
improving upon the quality of transportation services.
For determining liabilities & responsibilities of multi-modal transport
operator for loss or damage to goods
To reduce and eliminate interruption in continuous movement of
goods from their place of origin to that of ultimate destination
Multi-Modal law was also necessary to enhance trade and commerce
Purpose and
objective behind
enactment of
Multi Modal
Transportation
law
AMTOI & Ernst and Young White Paper Page 12
With special Government impetus to upgrade
infrastructure
Key Government Strategies for improving transport infrastructure facilities:
Indias Eleventh Five Year Plan identifies various deficits in the transport sector. Hence the Government has
made substantial efforts to tackle the sectors shortcomings and to reform its transport institutions which
Include:
National Highway Development
Program to improve connectivity
Increasing public funding for
transportation in its Five Year
Plan
Accelerated Road Development
Program for the North East
Region to provide road
connectivity to all State capitals
and district headquarters in the
region
Financing the development and
maintenance of roads by
creating a Central Road Fund
(CRF) through an earmarked tax
on diesel and petrol
Operationalising the National
Highway Authority of India
(NHAI) to act as an
infrastructure procurer and not
just provider
Improving rural access by
launching the Pradhan Mantri
Gram Sadak Yojana (Prime
Ministers Rural Roads Program)
Reducing the congestion on rail
corridors along the highly
trafficked Golden Quadrilateral
and improving port connectivity
by launching the National Rail
Vikas Yojana (National Railway
Development Program)
The development of two
Dedicated Freight Corridors from
Mumbai to Delhi and Ludhiana
to Dankuni
Improving urban transport under
Jawaharlal Nehru National
Urban Renewal Mission
(JNNURM)
Upgrading infrastructure and
connectivity in the country's
twelve major ports by initiating
the National Maritime
Development Program (NMDP).
Privatization and expansion of
the Mumbai and New Delhi
Airports and development of
new international airports at
Hyderabad and Bangalore.
Enhancing sector capacity and
improving efficiencies through
clear policy directive for greater
private sector participation. Large
parts of the NHDP and NMDP are
to be executed through public
private partnerships (PPP)
The Ministry of Roads, Transport
and Highways (MoRTH)
envisages up gradation of
national highways to a minimum
two-lane standard by December
2014
Minister of Railways Vision 2020
Upgradation of existing cargo
terminal and construction of
greenfield cargo terminal was
undertaken at the Indira Gandhi
International Airport (IGIA), Delhi
AMTOI & Ernst and Young White Paper Page 13
Future Industry Drivers
! Boost in rail transportation
! The railway freight traffic has grown by 8 to 11%, which is projected to cross 1100 million tonnes
by the end of 11th Five Year Plan
! In mid-2006, the foundation stone was laid at Ludhiana in Punjab for the Dedicated Freight
Corridor (DFC) and the Indian Railways embarked on a multi-crore project to set up a direct freight
link from the manufacturing bases in the northern hinterland of the country to ports on the west
coast and with the coal fields and steel plants in the east coast ports. DFC will cover approximately
3300 route kilometres on two corridors Eastern and Western corridors- and will greatly improve
the freight transportation.
! Salient features of the DFC are:
Exclusively for running freight trains at speeds upto 100 km/h
Parallel to existing Indian Railways Corridors and connection at important junction points
This corridor will bypass populated cities/towns to minimise social and environmental impacts
Facilitate running of longer and heavier trains
Reduce unit cost of transportation
Ensure guaranteed transit time thus providing quicker and reliable service
Accelerated industrial development in the region
AMTOI & Ernst and Young White Paper Page 14
Future Industry Drivers
Road
The road freight volume is projected to grow to 1,200 billion tonne kilometer (BTKM) and goods vehicles
requirement will increase to six million by 2012
Rail
A growth in volume with an increase of 5.66% to 583,061 mn tonne/km in FY12 is expected
Rake capacity in the Indian rail freight industry is bound to grow from the present 300 rakes to 500 rakes by
2013.


Air
Air freight tonnage growth forecast is expected to average 7.95% by 2015
Projections for growth in freight volumes:
Source-Companies & Market 2011 freight transport report
AMTOI & Ernst and Young White Paper Page 15
Future Industry Drivers
! Retail boom in India
! Retail is amongst the fastest growing sectors in the country. India ranks 1st, ahead of Russia, in
terms of emerging markets potential in retail and is deemed a 'Priority 1' market for international
retail
! Total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015,
according to the Business Monitor International (BMI) India Retail Report for the second-quarter of
2011.
! Indias underlying economic growth, population expansion, and the increasing wealth of individuals
will boost the rapid construction of organized retail infrastructure, which in turn will help the
transportation sector in increasing volumes
! There is also considerable investment in the cold chain industry by Multinational Corporations and
PE firms which is poised to be the next growth mantra for the Logistics industry in India
! India, at present does not have a comprehensive cold chain network, and is estimated to grow to
INR 32,000 cr by 2015.
! With phenomenal growth in production of horticulture produce, dairy products, and meat products,
there has been tremendous pressure on improving supply chain and reducing losses during
produce handling and movement. Most of the new cold storages in the last decade have been
constructed as multipurpose facilities focusing on all fruits and vegetables, poultry, dairy and
FMCG product categories
! The Indian cold chain market is highly fragmented with over 3,500 companies in the whole value
system
! Cold storage solutions form about 85 percent of the Indian cold chain market by value while the
balance 15 percent is contributed by transportation. There are various standalone, integrated
companies and 3PL service providers offering cold storage and transportation solutions to various
food companies. However, these are not enough to cater to the growing food demand
! High growth prospects for the food processing sector along with attractive government incentives
(including 51 per cent FDI) make cold chain business a lucrative proposition for foreign investors
as well
AMTOI & Ernst and Young White Paper Page 16
Future Industry Drivers
! Multimodal Logistics Hubs in India
! The demand for logistics has increased with increased share of manufacturing in the national
GDP. The essential components of a logistics park are suitable location, rail terminal, air cargo
complex, intermediate container terminal, warehousing (temperature controlled and ambient),
value-added logistics services, food processing zones, open stocking yards, ancillary production
etc. Logistics parks also create community and economic benefits, such as, reduced pollution,
single window clearances, greater industrialisation, focused environment management, and
greater use of environment-friendly rail systems.
! Some recent developments on the Multimodal parks in India:
1. The Dedicated Freight Corridor Corporation of India (DFCCIL) is in the process of setting up
three parks along the Eastern corridor from Ludhiana to Dankuni in West Bengal. One of
these will be at Kanpur apart from other two at Ludhiana and Durgapur. Around 32 per cent
(1,002 km) of the corridor passes through the state while Kanpur has been proposed
because of its industrial significance and its central location, being well connected by rail
and road to all parts of the country.
2. The Container Corporation of India Ltd (CONCOR) is setting up a multimodal logistics park
at the hi-tech special economic zone (SEZ) in Sriperumbudur. Industries situated in the SEZ
will be able to utilize the facility to transport goods. Initially, goods from Sriperumbudur
would be moved to the railway station by road and a rail link would later directly extend to
the SEZ, he added.
3. MP State Agricultural Marketing Board plans to set up Multi-Modal Composite Logistics Hub
in Madhya Pradesh .As of March 2011, work on the project is under planning stage.
Expression of Interest/ Request for Qualification were invited for setting up Multi Modal
Logistics Hub near Itarsi on PPP mode, last date of submission: 31st March 2011.
4. State-owned diversified conglomerate Balmer Lawrie is setting up four multi-modal logistics
hub in India in four zones -- east, west, north and south
5. After West Bengal, the second multi-modal aerotropolis will come up at Rajasthan's Jaipur
city as the government has given 'in principle' approval for the setting up of a new greenfield
airport there.

AMTOI & Ernst and Young White Paper Page 17
Future Industry Outlook
Inorganic growth
According to experts, the Indian logistics industry is likely to continue its growth momentum in 2011 as in
the previous year and the sector is forecast to witness a consolidation wave in the coming months in view
of the reviving fortunes of the sector with booming end-user industries. Companies have been actively
looking to expand their size in India through the inorganic way.
! Allcargo Global Logistics acquisition plans
! Allcargo is looking at various acquisition opportunities and it is confident of finalising it in this
calendar year. They are looking across the three verticals they are operating in, the less than
container load (LCL) space, the project and engineering solutions and also in the container freight
stations (CFS) vertical.
! Logistics Corporation of India
! From early 2011,there is a proposal for a `Logistics Corporation of India' to be created jointly by
three public sector undertakings. Shipping Corporation of India, Concor and Central Warehousing
Corporation of India will be the equity partners in the multi-modal joint venture logistics company,
according to the proposal made by an expert group headed by the Director-General of Shipping,
Mr S.B. Agnihotri.
! The proposed corporation will provide integrated transport services.
! Such an entity should be able to resolve the problems in ensuring seamless movement of cargo.
The idea is to provide an "end-to-end transport solution
! Concor and the Warehousing Corporation can take care of the rail and road segments of the chain
and Shipping Corporation can provide the shipping link.
! FedEx acquired AFL
! In 2010, the worlds largest package delivery company, FedEx, completed the acquisition of
Mumbai-based integrated logistics services provider AFL through its subsidiary, FedEx Express
! The acquisition of the AFL and UFL businesses has enhanced the leadership position of FedEx in
the Indian express market and offers our customers access to a range of service options, including
air express, domestic ground and value added-services,
! With this transaction, FedEx Express will now provide all international services for AFL and UFL
customers, who will have direct access to the FedEx international air and ground network in more
than 220 countries and territories worldwide


AMTOI & Ernst and Young White Paper Page 18
Leading to changing dynamics of the sector
Transport Express Shipping Supply
Chain
Industry Growth
Curve
Entry Dynamics
Mature
Fragmented
Low barriers
to entry
Growth
niche
High entry
barriers
Growth
High entry
barriers
Nascent
Knowledge
based
High entry
barriers
Industry Growth 5 - 10 % 15 20% 10 15% 50% +
Customer
Requirements
Low-cost
Non-time
sensitive
Cost
efficiency
High time
sensitive
Scheduled
services
Cost
optimization
Value driven
Single
window
Single point
of contact
(end-to-end)
AMTOI & Ernst and Young White Paper Page 19
Dynamics of Multimodal Transport Industry

AMTOI & Ernst and Young White Paper Page 20
What do the statistics say?
Across country analysis of Logistics Performance Index (LPI):
! The World Banks LPI as of 2010, is a comprehensive index created to help countries identify the
challenges and opportunities they face in trade logistics performance.
! The LPI assesses the performance of countries in the six areas identified below and is an equally
weighted average of the following six components :
! Customs: Efficiency of the customs clearance process
! Infrastructure: Quality of trade and transport-related infrastructure
! International Shipments: Ease of arranging competitively priced shipments
! Logistics Competence: Competence and quality of logistics services
! Tracking & Tracing: Ability to track and trace consignments
! Timeliness: Frequency with which shipments reach consignee within the scheduled or expected
time
! The index ranges from 1 to 5, with a higher score representing better performance. Data is from Logistics
Performance Index surveys conducted by the World Bank in partnership with academic and international
institutions and private companies and individuals engaged in international logistics.
! Ernst &Young analysis:
To understand the correlation and regression between LPI and various other relevant macro-economic
indicators, we analyzed the regression of LPI against Imports, Exports, Merchandise Trade, Gross
Domestic Product (GDP), Industry (%GDP), Services (%GDP) and Gross National Income (GNI).

Regression analysis has been used in this paper for 2 purposes:
! To establish the dependence of the Logistics Performance Index on certain macroeconomic
factors for a data set of 55 countries as of 2009. This regression gives the trend of how the
logistics performance of an economy is related to its general economic condition.
! To establish the trend of the revenue generated by the logistics sector of India and to find its
dependence on various growth drivers. This is a time-series analysis, meaning the trend is
checked from 2004-2010 based on annual data.

AMTOI & Ernst and Young White Paper Page 21
Country LPI Exports
(%GDP)
Imports
(%GDP)
GDP growth
(annual %)
GNI per
capita
(current US$)
Industry, value
added (%GDP)
Services,
value added
(%GDP)
Germany 4.11 47.4718 41.0455 0.988 42670 29.6436 69.4593
Singapore 4.09 220.5319 202.583 1.7825 37650 25.9362 73.9951
Sweden 4.08 53.2558 46.4015 -0.4088 52440 27.4969 70.7446
Netherlands 4.07 76.5986 68.4423 1.9958 48520 25.5883 72.6033
Switzerland 3.97 56.497 45.1088 1.8972 56770 27.6857 71.0468
United Kingdom 3.95 29.1982 31.8053 0.5479 45760 22.5594 76.6584
Belgium 3.94 85.6927 84.8336 1.0042 44720 23.2019 76.1255
Norway 3.93 48.1225 29.2066 1.8151 84840 45.0713 53.7316
Finland 3.89 46.955 42.9545 0.9221 48100 32.2531 64.8733
Ireland 3.89 82.6004 73.6331 -3.0358 49810 31.078 67.6359
India* 3.12 23.4809 28.912 28.217 1080 28.217 54.1964
Macroeconomic factors of top 10 countries with highest LPI and India*

Source-World Bank data 2010
*India does not feature in the list of top 10 countries with highest LPI. It is mentioned here for the purpose of comparison with
the top performing countries
Implications from cross-country analysis of the Logistics Performance Index:











What do the statistics say: a comparison of LPI
with countrys economic growth
Parameter Impact
Trade
variables
Trade variables (Imports and Exports as a % of GDP) have a positive impact on the LPI.
Countries with a higher contribution of trade to the GDP will have better logistics performance
Gross
National
Income (GNI)
Logistics performance is directly related to the GNI per capita
Services
sector
Services sector performance has a positive impact on the LPI. Countries where the services
sector is dominant show better logistics performance
Industrial
sector
Industrial sector performance has a negative impact on the LPI. Countries where the industrial
sector is dominant show poorer logistics performance possibly due to:
1.Cheap availability of labour and raw materials promotes industrial production without
improvement of the infrastructure required for better logistics
2.Inefficiency of customs facilities, clearance processes which are not necessary for industrial
production
3. Nascent stage of technology usage inability to track consignments, inefficient supply chain
management
AMTOI & Ernst and Young White Paper Page 22
What do the statistics say: In terms of Trade
Based on the implications of the macroeconomic indicators on the Logistics
Performance Index (LPI), the key drivers for the logistics sector in India can be
concluded to be:

Taking the analysis forward, all of the above variables are taken as regressors. The regressand for the analysis
is the total revenue generated by the logistics sector (total revenues of 20 companies selected by the ISI
Emerging Markets* as an overall indicator of companies comprising of all sizes present in the sector). A time-
series analysis is performed on the variables and the dependency of the revenues generated by the logistics
sector is measured against each of the above mentioned drivers.


*List of 20 companies selected by ISI Emerging market, ISI, EMIS, CEIC: ABC India Ltd. Aegis Logistics Ltd. Agarwal Industrial
Corporation Ltd. Allcargo Global Logistics Ltd. Aqua Logistics Ltd. Arshiya International Ltd. Asian Logistics Ltd Balurghat
Technologies Ltd. Chartered Carriers Ltd. Coastal Roadways Ltd. Container Corpn. Of India Ltd. Frontline Corporation Ltd. Gateway
Distriparks Ltd. Inter State Oil Carrier Ltd. NR International Ltd. Patel Integrated Logistics Ltd. SER Industries Ltd. Sical Logistics Ltd.
Transport Corporation Of India Ltd. VRL Logistics Ltd

The result of time-series analysis is mentioned in the subsequent pages














Trade- import and export
Extent of containerization
Total spending on infrastructure road, rail, ports
Services sector performance of the country
AMTOI & Ernst and Young White Paper Page 23
What do the statistics say: In terms of trade
1. Trade

Trade primarily consists of imports and exports. Indian imports and exports have risen in
volume over the years. An increase in trade also leads to increased need for peripheral
industries.
! The growth in export
volumes since January 2009
to January 2012 has been
around 52%. With rising trade
volumes the need for
transporting them within time
and at minimal cost also rises
! The growth in import
volumes has been 52.63%
form January 2009 to January
2012. The import trade
specifically needs services that
have the capability of reaching
to the remote areas of India
AMTOI & Ernst and Young White Paper Page 24
What do the statistics say: In terms of trade
Trade Portfolio
From being a largely agricultural- traded economy, India has emerged as a nation dealing with multiple
products. The major export items include agricultural products, gems and jewelery, leather products,
textile and handicrafts, whereas the major import items include capital goods, fuel, iron and steel, food
grains and equipments. The export pie chart is represented below:















Source: Handbook of Statistics on the Indian Economy, RBI 2010

! With increasing trade volumes, the scope for logistical providers also increases. The trade gateways
open the potential for logistic players. Since the trade volumes are high the capacity utilization can
optimized, thereby reducing the idle time cost.
! A diverse product portfolio requires the logistics service providers to specialize the services based on the
product handled. This specialization could act a key differentiator in the market. With products like fuel,
gems and jewelery & agricultural products being the major trade components, they require special
handling during transportation. Such specialized handling also claims higher margins. For example DHL
provides logistical services to different industries like cold chain transport, Warehousing and Order
Fulfillment Services for the Chemical industry whereas reverse logistics and distribution to stores for the
retail industry

















8.74
2.87
38.15
1.11
7.57
12.73
6.57
9.58
0.07
0.53
9.26
2.84
Primary Products
Ores and Minerals
Manufactured Goods
Leather and Manufactures
Chemicals and Related Products
Engineering Goods
Textile and Textile Products
Gems and Jewellery
Handicrafts (excluding
Handmade Carpets)
Other Manufactured Goods
Petroleum Products
AMTOI & Ernst and Young White Paper Page 25
What do the statistics say: Growth of
containerization
! On account of encouraged trade between emerging countries the flow of goods is expected to increase.
The multi modal service providers will have to cater to the demands arising from these markets as well.
Underlying Opportunity
! Logistical service providers can use this opportunity of distinguished needs of different industries to as a
selling proposition. These service providers can work back with the various supply chain players like
warehouse agents, movers and packers etc. to provide an end to end package to the customers. Due to
the need for specialized services increasing LPI can afford to invest in trainings provided to staff for
sensitive handling.
2. Containerization
! Containerization incorporates supply, transportation, packaging, storage, and security together with
visibility of container and its contents into a distribution system from source to user. The containers make
the entire goods handling process very standardized thereby reducing stoppages at every stage of the
shipment.
! Containerization in India, which is at 68%, is expected to see significant growth since the current level is
well below international levels of around 80%.
! Container traffic at major ports has almost doubled in the last 5-6 years and shows growth at an average
rate of 13.27 percent per year
! Even though movement is small as compared to some of the largest ports and shippers in the world, it
has shown stable growth and is likely to be an increasingly important mode of transport in India and the
South Asian region in the coming years. Also, the size of the country and the hinterland region from the
ports makes for a variety of choices for land movement

Source: Ministry of Shipping
AMTOI & Ernst and Young White Paper Page 26
What do the statistics say: Proportionate demand
for Logistics with growth in Services
3. Service sector performance

! The graph above draws a relationship between the Logistic Performance Index and the contribution of
service sector to the GDP of the economy. The term R^2 depicts the extent of dependence of LPI and
Service contribution.
! Countries like Hong Kong, China, Singapore and the USA share a highly positive relation between
Service sector contribution and LPI. These countries have a good score (above 3.5 out of 5) on the LI as
per the World Bank statistics.
! This phenomenon can be substantiated as follows:
Czech
France
Germany
Hong Kong
Italy
Singapore
South Korea
UK
USA
Brazil
Russia
India
China
Malaysia
Mexico
Phillipines
South Africa
Thailand Turkey
Poland
Saudi Arabia
Cuba
Pakistan
R" = 0.22797
1.5
2
2.5
3
3.5
4
4.5
20 30 40 50 60 70 80 90 100
L
P
I

Services, value added (%GDP)
Services, value added (%GDP) Line Fit Plot
Source: World Bank for the year 2010
COUNTRY HONG KONG CHINA SINGAPORE UNITED STATES
LPI 3.88 4.09 3.86
Export (% GDP) 212.57 220.53 12.82
Import (% GDP) 202.38 202.58 17.77
Industry, value added %( GDP) 7.98 25.93 21.29
GDP Growth 2.16 1.78 -0.0008
AMTOI & Ernst and Young White Paper Page 27
What do the statistics say: Investments in
Infrastructure to facilitate Logistics
4. Infrastructure
Infrastructure is one of the biggest enablers for the Logistics sector. As mentioned in the earlier part of the
report, India faces typical infrastructural challenges such as poor hinterland connectivity, gateway productivity,
utility constraints, etc.
The time-series analysis carried out between three important constituents of infrastructure (i.e. Indian
Government expenditure on transportation, Gross Fixed Capital Formation in roads, railways, ports and
storage, FDI in construction (includes roads and highways) Planning Commission 2011 data) reveal the
following results on impact of the above parameters on the revenue of logistics players.




Also, statistics released by the World Bank, reveals the following cross-country comparative analysis on the
overall operational excellence (for the year 2010):

Parameter Impact on revenue
Government expenditure on
transportation
A 1% increase in the government spending on transport will lead to
a 0.759% increase in the revenues generated by the logistics
sector
Gross Fixed Capital Formation in
roads, railways, ports and storage
a 1% increase in the GFCF in roads, railways, ports and storage
will lead to a 0.739% increase in the revenues generated by the
logistics sector
FDI in construction (includes roads
and highways)
a 1% increase in the FDI in construction sector will lead to a
0.172% increase in the revenues generated by the logistics sector
Parameter India China US UK
Exports (% GDP) 23.4809 34.9795 12.8289 29.1982
Imports (% GDP) 28.912 27.2643 17.7729 31.8053
Cost to export (US$ per container) 1055 500 1050 950
Cost to import(US$ per container) 1025 545 1315 1045
Time to export (days) 17 21 6 7
Time to import (days) 20 24 5 6
Burden of customs procedure, WEF (1=extremely inefficient
to 7=extremely efficient)
4.0382 4.5344 4.4798 4.842
Quality of port infrastructure, WEF (1=extremely
underdeveloped to 7=well developed and efficient by
international standards)
3.8603 4.3215 5.5372 5.4887
AMTOI & Ernst and Young White Paper Page 28
2
8
So how do we get there
Consolidation
Service-driven
strategy
Talent Management
IT Capability
& Value Added Services
Current
State
Time & Growth in Market Share
Future State
Global Networks
The need to efficiently meet a countrys demand for Logistics services requires a relook at the organizations
operating model from various dimensions such that it is able to cater to the dynamic changes in the external
environment through a robust internal operating mechanics. Some of these areas of focus have been
highlighted below:
AMTOI & Ernst and Young White Paper Page 29
Proposed Operating Model Dimensions

Organization:
Cultures
Structure/ Ownership
Asset base
Employees
Geog presence

Customers:
Types, services
Services offered: in-
house/ outsourced

Technology:
Automation, security

Processes:
Standardization
AMTOI & Ernst and Young White Paper Page 30
Future Operating Model Dimension: Organization
AMTOI & Ernst and Young White Paper Page 31
Organization: Service-driven
! Service driven organizations are required to understand the customers better and mine their insights
accurately in serving them.
! The main idea of service driven logistics systems is to meet predefined service goals.
Ideally all logistics service systems are defined along the following lines:
! Identify customers' service needs
! Define customer service objectives
! Design the multi-modal route
! Fulfill the need i.e. transport the cargo accordingly
! Identify customers service needs
The approach to service segmentation suggested here follows a three stage process:
! Identify the key components of customer service as seen by customers themselves
! Establish the relative importance of those service components to customers.
! Identify 'clusters' of customers according to similarity of service preferences
! Defining customer service objectives
! Exactly defining the value proposition for the customer, and understanding their unmet need
! Design the multi-modal route
! Depending on the cost and time of transportation, urgency of the cargo, service route availability,
value added services and customer preferences, the multi modal route is designed by the MTO
! Fulfill the need i.e. transport the cargo
! Finally, the cargo is transported to the set destination, adhering to the schedule and safety means

AMTOI & Ernst and Young White Paper Page 32
Organization: Structure
! A matrix structure groups employees by both function and product
! This structure can combine the best of both separate structures
! A matrix organization frequently uses teams of employees to accomplish work, in order to take
advantage of the strengths, as well as make up for the weaknesses, or functional and decentralized
forms
! In case of MTOs, the matrix structure can be based on the functional heads and the type of route
serviced
Functional
heads
Sales Marketing HR
Routes
A
B
AMTOI & Ernst and Young White Paper Page 33
Organization: Performance-linked growth
! Employee Ownership is a relatively new concept in India (primarily started by software development
companies) as far as ESOP is concerned. But, a century back, job opportunities were not many and
employees felt morally responsible to do their best without much incentives other than salary. But today,
Managers like to believe that simply introducing ESOP would lead to the creation of an ownership
culture (causing culture effect ) within the organization. In this culture, it is assumed, managers and
workers would always think of the company first when faced with any sort of problems in the course of
their day-to-day activities.
! One of the ways to link productivity can be achieved through Employee ownership only if there is parity
and fairness in the proposed plans (ESOP) affecting actual employee commitment, easy access to
decision making to all involved, besides realizing a culture effect conducive to better performance. Most
of the companies (other than MNCs) in India are family owned and unfortunately in such a scenario,
factors other than employee performance are considered pivotal. Close proximity to the owner ( or his
family) for reasons not related to job creates an undue advantage for the one who is close and in effect
results in loss of parity in remuneration scales. In such conditions, productivity does not play any role to
earn employee ownership.
! Employee ownership plans have positive effects on the employees if they perceive that it helps in
bringing greater income, better control over their jobs and builds job security. On the contrary, it may
have negative effects if employees do not perceive any difference in their work lives despite the plans,
have unfulfilled expectations or feel the plans bring forth an extra risk to their current income levels.
! Eg. Allcargo Global Logistics Ltd announced that the Committee of the Board of Directors of the
Company at their meeting held in January 2011 that the company has issued and allotted 12,236 equity
shares of Rs. 2 each fully paid of the Company to its employees in exercise of options granted to them
under 'Allcargo Employee Stock Option Plan 2006.



AMTOI & Ernst and Young White Paper Page 34
Organization: Talent Management
! A look at the financials of a set of 80 logistics companies in India across sectors reveals that manpower
spends comprise 8-10 percent of overall sales of the sector. This roughly translates to about an INR 500
billion spend on logistics manpower in the country annually. Only about 13 -14 percent of the overall
manpower costs are spent on non-salary, manpower development items (welfare, training etc.). This
share for the unorganized companies would expectedly be much less. As against this leading global
logistics companies spend around 20 percent of their employee expenditure on non-salary items.
Position Skill Gap Skill Required
Manager/
Owner
Inadequate knowledge of:

Procedures, paper-work for inter-state
movement, taxation related aspects
Importance of long term investments in
capacity building, manpower development,
etc.
Training needs of personnel employed with
them, leading to no incremental skill
improvement

Sound knowledge of taxation policies
and inter state laws to train and
educate supervisors and drivers for
applicable laws and policies
Ability to undertake activities such as
fleet management, network
optimisation, etc.
Ability to take decisions on long term
and short term investments or spends,
new equipment etc.
Ability to be conversant with new
technologies such as the use of GPS
in road transportation and ensure
efficient usage this helps keep pace
with emerging needs of clients
Effective communication skills to be
able to correspond with customers on
a daily basis

AMTOI & Ernst and Young White Paper Page 35
Organization: Talent Management
Position Skill Gap Skill Required
Supervisor Inadequate knowledge of:
Best warehousing practices
Technologies such as IT in the
transportation sector, SCM techniques such
as LIFO, FIFO, inventory management etc.
Taxation policies

Ability to ensure efficient route
planning, so that it is cost effective,
entails less turnaround and highest
safety levels
Practical knowledge of equipment
usage in loading or unloading goods in
trucks - such as the optimum or
efficient use of truck loading racks,
lorry loaders, etc.
Adequate spoken and written
language skills for efficient record
keeping and effective communication
even locally with diverse agencies
such as client, the driver, truck owners
Knowledge of inter-state transport
laws applicable
Ability to record and track transactions
AMTOI & Ernst and Young White Paper Page 36
Organization: Talent Management
Position Skill Gap Skill Required
Driver/
Helper
Characterized by a largely illiterate workforce
that has inadequate formal training in:
Driving
Handle increasing tonnage and higher
capacity trucks
Safety and first-aid
Octroi, applicable VAT
Safe driving practices and special
precautionary measures in case of handling
sensitive materials such as chemicals,
petroleum tankers, etc.



Basic reading and writing skills to be
able to read signage, proper
documentation of tax levied, octroi paid
etc.
Ability to understand routes and the
geographical profile of the route being
traversed
Ability to handle increasing tonnage
and heavier trucks
Excellent driving skills - Apart from the
basic driving skills, knowledge of
precautions in case of transporting is
critical
Knowledge of road safety practices,
basic knowledge of the tax regime
(region wise), traffic permit rules, etc.
Ability to handle dangerous, sensitive
and perishable cargo
Basic spoken language skills for
communication with supervisors and
fellow drivers or unloaders and
supervisors at the customers end
Ability to understand basic sanitation
and hygiene requirements
! Some of the training institutes offering specialized course to service this skill gap include:
! Indian Institute of Logistics, Chennai
! CII Institute of Logistics
! ISB&M, Pune
! All India Institute of Management Studies
! Indian Institute of Materials Management
AMTOI & Ernst and Young White Paper Page 37

Future Operating Model Dimension: Customer

AMTOI & Ernst and Young White Paper Page 38
Customer: 5PL
! The 5PL solutions focus on providing overall logistics solutions for the entire supply chain.
! 5PL is a business field with very good prospects for the future: more and more companies are
recognising that they have to concentrate on their core activities and are outsourcing all their logistics
operations. 5PL organizations are providers who plan, organize and implement logistics solutions on
behalf of a contracting party (mainly information systems) by exploiting the appropriate technologies
! The drivers of for the 5PL industry are:
! Economic imperatives
! Technological innovation
! Managerial competence in the provision advanced logistics services
! Some types of services offered by a 5PL are mentioned below:
Intermediary 5PL
Types of Services Strategic-IT Supply Chain
Basic Idea Turns customers supply chain into a function that
is completely driven by technology
Resources Few physical assets, extensive knowledge, and
technology based-assets
Potential Benefits Large companies with highly complex supply
chains
Potential Drawbacks Loss of control and relationships with supply chain
members, risk in long-term partnerships
AMTOI & Ernst and Young White Paper Page 39
Customer: Value Added Services
! Value added services are services that enhance transportation, warehousing, and certain logistics
offerings.
! By using value added logistics it helps companies and providers to lower inventory footprints of finished
goods by postponing the labeling and final assembly of the products until the customers orders are
received.
! Value added services can be performed directly by the participants in a business relationship or may
involve specialists.
! Some of the value added services offered by 3PLs and MTOs globally are:
! Transportation management
! Order management
! Vendor managed inventory capabilities
! Repacking
! Kitting
! Specialised labelling
! Reverse logistics
! Swap service
! Cleaning and disposal management
! Returnable packaging management
! Subassembly

AMTOI & Ernst and Young White Paper Page 40
Customer: Value Added Services
! The value added processes that are performed on customer returns, as well as the whole returns
process, have been described by the term Reverse Logistics.
! This process covers the method by which items are returned from the customer and the processing of
the returns by servicing and returning to the customer, putting the material back into stock or refurbishing
the items for resale. The returns process has now become an important part of the processing that takes
place in the warehouse.
! Remanufacturing and refurbishment activities may be part of the procedure.
! For an MTO, the disposition choice is determined by the expertise and the most profitable alternative:
! Reconditioning when a product is cleaned and repaired to return it to a like new state
! Refurbishing similar to reconditioning, except with perhaps more work involved in repairing the
product.
! Remanufacturing similar to refurbishing, but requiring more extensive work; often requires
completely disassembling the product
! Recycle when a product is reduced to its basic elements, which are reused also referred to as
asset recovery.
! Specialised Indian reverse logistics companies such as RT Outsourcing Services have grown in
response to the niche service environment bridging the gap between 3PL and 3PSP
AMTOI & Ernst and Young White Paper Page 41

Future Operating Model Dimension: Technology

AMTOI & Ernst and Young White Paper Page 42
Technology Enablers
! The logistics value chain in India is characterized by lack of transparency and existence of legacy
systems, which result in huge inefficiencies causing delays, penalties and lack of shipment visibility
! Therefore, it is not surprising that in India the logistics costs are as high as 11-13% of the countrys GDP
! Communication technologies like Electronic Data Interchange (EDI) and automated vehicle movements
like digitalized toll gates can help address these industry issues to bring in greater transparency, visibility
and real-time tracking ability
! The features of EDI include standard templates, standard protocols for data interchange and access to
statutory authorities. This Web-enabled enterprise application has drastically reduced communication
costs and integration complexity
! The real benefits of EDI are its ability to incorporate back office applications and legacy systems with the
information received and sent from/to clients, generate operational efficiencies, lower costs and higher
consumer satisfaction levels
! In addition to changing demographic profile and increasing consumer awareness, the online payment
service providers can help bridge the gap between the service provider, customers, and payment
channels with their customized, secure, and relevant e-commerce solutions, and are largely instrumental
in the turnaround and growth in e-commerce
! EDI can be used for filing of details by the MTOs who are Authorized Economic Operators. These
operators may be allowed to consolidate cargo in a private warehouse without customs supervision after
Out of Charge and move the container under self certification/sealing without customs supervision.
AMTOI & Ernst and Young White Paper Page 43
Technology Enablers
! Each of the entities in the cargo community such as shippers/consignees, carriers, customs and freight
forwarders realize the numerous benefits of EDI, some of which are as follows:

Supply Chain
entities
EDI system features Benefits
Shippers Single point data entry
Enables multiple Request for Quotation (RFQ)
floating to multiple service providers
Single window view to manage and track multiple
RFQs floated
Receive online scheduled updates of status via
SMS/e-mail
Facilitates cost savings, ensures
reliability and ease of process monitoring
Facilitates transmission and storage of
documents and e-payments

Carriers Data is received in the correct format
Automated status inquiry and booking processes

Significant cost and time reduction
Minimal human intervention
Quick response to enquiries, thereby
enhancing customer service and sales
Freight
Forwarders
Shipment data can be shared by shippers
electronically
Data is received and processed by internal system
without any manual intervention
Reduced shipment turnaround time
EDI messages giving status updates
provide complete shipment visibility
Customs Ensures e-governance Increased data security
Reduced congestion at customs station
Better connectivity with regulatory
authorities involved in transportation and
commerce
Industry Error-free order registration 2-3 days earlier to the
system of the sub-agent


Gain from reduced data transmission
time from 3 weeks to 1 day
Enhanced speed and accuracy in data
transmission to suppliers

Banks/
License
Authorities
Availability of post shipment confirmation Reduced documentation like receipt and
export promotion copy of the shipping bill
AMTOI & Ernst and Young White Paper Page 44

Future Operating Model Dimension: Process

AMTOI & Ernst and Young White Paper Page 45
Processes
! With proposed growth through either organic or inorganic route, it becomes imperative to be
structured in a manner which best meets business objectives
! Processes need to be defined taking all dimensions into consideration:
! People
! Technology
! Strategy
! Support
! Organizational culture
! Processes should be benchmarked against leading practices while customizing to meet existing and
future business needs and which enable users to follow them efficiently thereby, making them task-
oriented
! Benefits to customers should be measurable
! Processes should be standardized, uniform across locations and should promote SLA-driven culture
to best meet customer expectations
AMTOI Page 46

Success Stories

AMTOI Page 47
Success Stories: Deutsche Post DHL

Strengths:
Large scale and global
network
Exposure to high growth
geographies and
services
Diversified port-folio of
customers

Weaknesses:
Service and
geographical coverage
gaps
Underperforming freight
management business
Opportunities:
Asia-Pacific market
Cost savings from
integration and
restructuring
Threats:
Middle East and Latin
America
Low economic growth
and high input costs
Growth Story primarily through increasing network coverage and offering innovative
solutions
Through collaborative approach with group companies, DHL remains one of the prominent market players
with dominant market share. With its Express, Global Forwarding, Freight, Supply Chain divisions, DHL
offers International Express, Air Freight, Ocean Freight, European Road Freight, Contract Logistics,
Document Management and Outsourcing.
Deutsche Post AG progressively acquired DHL as global air express service provider from 1998 to 2002
and enhanced its expertise by purchasing other leading logistics companies, e.g. 1999 acquisition of
Danzas, 2004/2005 acquisition of 88 percent of shares of Indian express company Blue Dart, and acquired
Exel in the end of 2005

Source: Company annual report, Press Releases
AMTOI Page 48
Success Stories: Deutsche Post DHL (Contd.)
Broker intermediaries between customer and freight carrier
DHL being an asset light business model based on brokerage of transport services between their
customers and freight carriers. This enables consolidation of cargo and ability to carry higher volumes.
Due to wide network coverage DHL can manage to optimize the goods routing
Providing services to a range of industries
Caters to wide range of clientele - Technology, Automotive, Chemicals, Consumer, Retail (including
Fashion & Apparel) and Energy sectors
Depending upon the nature of the industry, offers products and services ranging from standard transport,
multi-link transport chains and specialized industrial projects for specific sectors, including temperature-
controlled and secure shipments and customized solutions to niche industries such as motor sports
Technology usage
DHL uses one of the most advanced technology interventions to enhance their operational excellence:
Two examples of the same are mentioned below
1. SmarTruck- intelligent technology for route planning based on satellite-supported geo and telematic
data, which locates the vehicle and analyzes the traffic situation
2. Parcel Robot: It is the first unloading system that can independently unload containers with loose
parcels. The robot now makes it possible to automate the physically strenuous work of loading on the
ramp, which was previously performed manually
Strong focus on strengthening brand DHL
In addition to traditional advertising, they continue to use sponsorships as a vehicle to strengthen their
brand image. In 2011, they maintained international logistics partnerships with Formula 1, IMG Fashion
Weeks and the Leipzig Gewandhausorchester.
Involved in the Volvo Ocean Race for the first time. Likewise, they became a main sponsor and the
official logistics partner of Manchester United
As the official logistics partner of the 2011 Rugby World Cup in the autumn of 2011 in New Zealand, DHL
was also able to showcase its brand.
Took part in around 120 events in 40 countries in the financial year 2010-11 as part of the DHL partner
programme
Key differentiators:
Source: Company annual report, Press Releases
AMTOI Page 49
Success Stories: UPS Supply Chain
Strength:
Global reach and
scale
Inorganic growth
Financial strength
Weaknesses:
Unionized labor
European contract
logistics
Opportunities:
Expanding Asia
Pacific market
Growth in e-
commerce
services
Threats:
Slowdown of US
economy
Rising oil prices
Growth Story primarily through acquisition and unique value propositions:
UPS Inc. introduced supply chain management into its service portfolio in 1993. In 1998 , it invested in
technology to promote traceability of its services and to sustain the owner-managed philosophy of its
operations.

UPS also formed a financial services subsidiary which offered lines of credit for small business owners
further expanding this offering to companies in the emerging markets.
The company became public in 1999, when it floated on the NYSE. Since becoming a publicly traded
company in 1999, UPS has expanded its capabilities primarily through the acquisition of more than 40
companies, including industry leaders in trucking and air freight, retail shipping and business services,
customs brokerage, finance and international trade services.
Source: Company annual report, Press Releases
AMTOI Page 50
Success Stories: UPS Supply Chain (Contd.)
Integrated Global Network
Integrated global ground and air network
Handle all levels of service (air, ground, domestic, international, commercial and residential) through a
single pickup and delivery service network
Sophisticated engineering systems allows them to optimize network efficiency and asset utilization on a
daily basis
Global Presence
UPS serves more than 220 countries and territories around the world. They have a presence in all of the
worlds major economies
Leading-edge Technology
New keyless entry systems automatically enable the ignition, unlock the doors, and open the bulkhead
door
Telematics sensor technology gathers and analyzes data from vehicles to improve safety, efficiency, and
customer service
Next Generation Small Sort (NGSS) improves efficiency of small sort operations by eliminating the
memorization of ZIP codes
With the Network Planning Tool (NPT) and the On Road Integrated Optimization and Navigation
(ORION), UPS links its operations technology with advanced analytics Broad Portfolio of Services
Customized services
Service portfolio enables customers to choose the delivery option that is most appropriate for their
requirements. Increasingly, customers benefit from business solutions that integrate many UPS services
in addition to package delivery. For example, their supply chain servicessuch as freight forwarding,
customs brokerage, order fulfillment, and returns managementhelp improve the efficiency of the supply
chain management process.
Employee-friendly distinctive culture
Employees dedication results in large part from their distinctive employee-owner concept. Their
employee stock ownership tradition dates from 1927, from their founders, who believed that employee
stock ownership was a vital foundation for successful business
To facilitate employee stock ownership, they maintain several stock-based compensation programs.
Their long-standing policy of promotion from within complements the tradition of employee ownership
Key differentiators:
Source: Company annual report, Press Releases
AMTOI Page 51
Success Stories: Sree Kailash Logistics
Strength:
Infrastructure
development in logistics
parks
Technology and System
integration
Weaknesses:
Over dependence on in-
house facilities
Opportunities:
Capitalize on clientele
from other segments
Growth in cities other
than Chennai
Threats:
Instability among the
construction clients
which form a main
composition of the client
base
Growth Story primarily through acquisition and unique value propositions:
Sree Kailas group was founded by Sri. S.Sivathanupillai with a modest beginning in the year 1983. Sree
Kailas Group has planned its Logicity in Chennai, Asias Detroit, for its strategic positioning in the world
market in terms of growth, connectivity and proximity

The group has its interests in Paper, Logistics, Residential Projects and Construction. It has a turnover of
over 400 crores for over a decade.
Source: Company annual report, Press Releases
AMTOI Page 52
Success Stories: Sree Kailash Logistics (Contd.)
Infrastructure Facilities
Warehouses of different measurements to handle electronic appliances, pharmaceuticals, sanitary,
furniture, garments, automobiles and retail
Spaciously designed for easy diagonal movement of 40 ft. containers.
Individual electric supply to each warehouse
Adequate water supply with overhead tanks.
Well-planned and connected drainage and sewage network.
Storm water management and rainwater harvesting.
Investments in expansion plans
Shri Kailash Logistics Limited (SKLL) to INR 800 crore in five warehouses.
Out of these five parks, three will be large warehouses spread over 10 lakh sq.ft each in North Chennai,
Pune and Bangalore. and two will be small of about 5 lakh sq ft each
The bookings for the first park have already begun
Logistics Park facilities
Information kiosk and helpdesk
User-friendly directional signage and guide maps at various points.
Resting lounge for drivers and support staff.
State-of-the-art bus stop inside the park.
CCTV cameras for enhanced security.
Presence of National transporters and clearing agents.
High-end security for the entire park.
Mobile communication tower.
Professionally-run park administrative office
Global Alliances
Sree Kailash is planning to launch a logistic park in Chennai in technical collaboration with BPS
Global,Singapore.
The group is planning for a 300 crores project specializing in Logistics Park, Villas and Comfort Homes
The project is very near to industries viz, Nokia, Hyundai, Saint Gobain Glass, Flextronics, Dell, Delfi
Nissan, Komatsdu, Avera, Tristler Ltd, Ashok Leyland , Ford Ltd, etc.
Key differentiators:
Source: Company annual report, Press Releases
AMTOI Page 53
Success Stories: Transcon Freight Systems Pvt.
Ltd.
Strength:
Single Window
Logistical Services
Trained Personnel
Weaknesses:
Network coverage only
in Maharashtra
Opportunities:
Developing owned tank
containers and
container freight
stations
Threats:
Congestion in the
containerization market
Growth achievement through integration:
Transcon freight Systems Pvt. Ltd. was established in 1984 in Biriya House, Fort in a rented office with a
only a table space. Since then it grew to own its offices in Biriya House, Wadala truck terminal, Afzhar
Building Fort, Kalamboli, Pune, Dronagiri, Raigad and Belgium. It has its head quarters in Ghatkopar.

Transcon has expanded its gamut of services from Sea and Air freight Forwarding to Container
transportation, Cargo Consolidation, Warehousing and Distribution, Haz ChemicalExpert, Multimodal
Logistics and Tank Management.
Source: Company Profiles, Annual Reports
AMTOI Page 54
Success Stories: Transcon Freight Systems Pvt.
Ltd. (Contd.)
Container Fleet
The company owns a fleet of 45 trailers
Ownership of these assets allows the customers to avail competitive prices under one roof
These containers are used for transporting dry boxes and liquid cargo in tanks from various parts of the
country
End to end (in bound and out bound) solutions can be provided due to in-house infrastructural facilities.
Tie ups with small and medium players across the value chain:
Transcon provides services across the supply chain by leveraging on their internal capabilities as well
as by using the best of medium and small players to allow flexibility
This allows Transcon to diversify risks and take advantage of the regional and geographical networks
of the small players
Online Vale Add Services:
The customers can check details of their shipment and evaluate shipment options based on the
following online services available:-
Currency Calculations
Shipment Schedules
World weather conditions
Online Tracking
Distance Calculator
Container Specifications
Metric Conversions
Expertise in handling hazardous substances:
Transon has experience in handling primary and subsidiary chemicals like explosives, compressed
liquefied or dissolved under pressure gases, flammable solids, oxidizing substances, toxic and
infectious substances, radioactive substances and corrosives.
Key differentiators:
Source: Press Releases, Annual Reports
AMTOI Page 55
Success Stories: Hind Terminals
Strength:
Self owned
transportation vehicles
In-House maintenance
technicians
Weaknesses:
Type of cargo handled

Opportunities:
Expansion of transport
routes to the east and
South of India
Threats:
Inability to provide sea
and air transportation
services
Growth achievement through diversification of services:
Hind Terminals started its operations December 2005 at Nhava Sheva. The Container Freight Station is
spread across an area of 30 hectares at Logistics Park, Dronagiri, near JN Port, Navi Mumbai under
Strategic Alliance Agreement with Central Warehousing Corporation (CWC) to develop, operate and
maintain the CFS for 15 years.
The company is amongst the 15 private players to be granted the License for container train operations.
The company has received "Principle Approval" from the Indian Railways and also executed the
Concession Agreement for operating container trains throughout India for a period of 20 years. It provides
services such as ICD / CFS warehousing, stuffing / de-stuffing, handling and transportation including rail,
road and all allied activities.

Source: Company Profiles, Annual Reports
AMTOI Page 56
Success Stories: Hind Terminals
CFS Amenities:
Customs clearance
EDI Connectivity
Fire Fighting and alarm systems
Wiegh in bridge for railway wagons
CCTV surveillance with footage upto 45 days
Yard management and automated cargo/container location finding system
4 lane gate complex
Shuttle service for customers with a frequency of 15 minutes for transportation within the CFS
Bank of India for Duty Payment
Rail cargo tracking via SMS:
Customers can view the container status at both the CFS and rail movement by sending one SMS
request
For rail tracking the customers need to know details like Container number whereas for CFS Tracking
container number details are required
Further tracking for multiple containers can also be managed through the tracking system
Mobile Maintenance Vehicle:
The mobile maintenance van is equipped with wireless communication system for immediate response
and the necessary equipments
Incase of breakdowns the mobile van is communicated. The van then reaches out to the concerned
vehicles any immediate redressal
Hence the vehicles do not have to wait till to be taken to repair stations thereby reducing the response
time. The shipments can be then be carried forward as per the original plans
E Track and E Performa
Hind terminal allows the customers to track shipments online and check on the payment facilities
Key differentiators:
Source: Press Releases, Annual Reports
AMTOI & Ernst and Young White Paper Page 57
In Conclusion
Over the years, need for logistics in India has largely been driven by the phenomenal
growth of the economy. While macro-economic conditions may have been cyclical in
nature in the past few years, the interest of global players in India remains promising.
In spite of a dismal performance of the infrastructure segment, investments in
strengthening logistics to facilitate global and domestic trade continues to raise hopes for
the sector.
Countries and players who have been successful in this space are ones who have played
a balancing act in innovating, understanding their customer segments and expectations
from all stakeholders while maintaining a unique value proposition as discussed across
this paper.
Investments trends in India have super imposed the significance of the pivotal role multi-
modal operators are likely to play in this space. Investments in SEZs, Logistics Parks,
Ports only go to validate that the boundaries in this opportunity space are widening.
The future remains fertile, however, it can be sustained with synchronized coordination
between the public and private sector with focus on exploring ways to reduce time, costs
and energy and improving operational excellence while successfully integrating
businesses with widely different asset profiles and core competencies.

AMTOI & Ernst and Young White Paper Page 58
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