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Report on the Organizational Study done at
AirLift(India) Pvt. Ltd.
Submitted in partial fulfillment of the requirement
Of the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
To the FISAT Business School
Submitted By,
NAVEEN JOY
Under the guidance of
Mr. Prashanth P. John
FISAT BUSINESS SCHOOL
(Affiliated to M.G. University)
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ACKNOWLEDGEMENT
I would like to acknowledge my profound sense of gratitude to the
Almighty for giving me strength and ability to successfully complete the study and make this
report on time.Mr. Prashanth P. John, my guide, FISAT BUSINESS SCHOOL, for his support
and guidance which he rendered throughout the study was instrumental in shaping the
study.
I would like to place my humble thanks and sincere gratitude to Mr. VINAY KUMAR, Board
of Directors, Airlift (India) PVT LTD for all the help he has done for this project.And I am very
much obliged to our Dean and Director Dr. P.P. PILLAI, for providing the opportunity
undertakes the study at Airlift (India) PVT LTD.Last but not least I would like to thank all the
official and employees of the company and to my parents, friends and my well wishers for
their valuable suggestions and encouragement for completing my project.
Hormis Nagar
8-06-2010 NAVEEN JOY
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DECLARATION
I hereby declare that the Organization study Report entitled A Organization Study on
Airlift(India) Pvt. Ltd. is a record of bona- fide work done by me in Airlift(India) PVT LTD,
during one month under the supervision of Mr.R Renjith,Cargo Manager, Airlift(India) PVT
LTD, and Mr. Prashanth P John, Lecturer, FISAT Business School, and that no part of this
report has formed the basis for award of any degree, diploma, associateship, fellowship or
any other similar title or recognition in any other institution.
Hormis Nagar
8-6-2010 Naveen Joy
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TABLE OF CONTENTS
1.Industrial profile 10
1.1 Introduction 10
1.2 Freight forwarding :modes of transport 11
1.2.1 Air cargo 11
1.2.2 Sea Freight 16
1.3 Historical Background 17
1.4 3pl and freight forwarders 18
1.5 factors favouring freight forwarders 20
1.6 Indian Perspective 21
1.7 Market Growth 22
1.8 Major Players 26
1.8.1 Global Players 26
1.8.2 Indian Players 29
2.Company Profile 30
2.1 Introduction 30
2.2 History and Milestones 31
2.3 At a Glance 33
2.4 Major Clients 35
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3.Organisation Structure 37
3.1 Finance and Administration 38
3.2 Marketing Department 42
3.3 Operations Department 49
4.Case Study 53
4.1 Analysis of the problem 54
4.2 SWOT Analysis 56
5. Conclusion 57
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List of Tables:Table A:INTERNATIONAL TRAFFIC CARRIED BY INDIAN CARRIERS___________13Table B:DOMESTIC TRAFFIC BY INDIAN CARRIERS_______________________14Table C:TOTAL TRAFFIC CARRIED BY INDIAN CARRIERS___________________15Table D:3pl vs Freight forwarders vs custom brokers_____________________19Table E:MAJOR PLAYERS___________________________________________26Table F:major Players in India_______________________________________29Table G:Organization at a Glance____________________________________33Table H:Major Carriers____________________________________________34Table I:Finance and Administration Structure___________________________38Table J:Ratio Analysis______________________________________________40
List of figures:
Figure 1:market growth____________________________________________24Figure 2:market forecast___________________________________________25Figure 3:Global Market Share_______________________________________27Figure 4:Organizational Structure____________________________________37Figure 5:Finance and Administration Structure__________________________38Figure 6:Marketing Structure_______________________________________42Figure 7:Air Cargo Export___________________________________________45Figure 8:Ocean Cargo Export________________________________________46Figure 9:Cargo import_____________________________________________47Figure 10:Ocean Cargo Import______________________________________48Figure 11:Operation Structure_______________________________________49Figure 12:Warehousing____________________________________________52Figure 13:common activities outsourced in India and USA_________________59
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RESEARCH METHODOLOGY:
Objective of study
To present an introductory profile of Airlift(India) Private Ltd.
To provide an industrial profile of the freight forwarding
industry- with reference to global and domestic market
To study in depth the organisation structure of Airlift( India)
Private Ltd.
To study the various functional areas in the company
Limitation of the study
This study is limited to Airlift(India) Private Ltd.
This study is presented on the basis of information and
knowledge which could be gained during the course of
organisational study at Airlift(India) Private Ltd,Cochin.
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Methodology
The methodology used in the organisation study are given as
follows:
Primary Data:
This information is collected by interviewing those who are working for the
Freight forwarding company
Secondary Data:
This data is collected from various sources such as
Internet
Books
Newspapers
Magazines and journals
Statement,audit reports and balance sheet of the company
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Introduction :
Business Globalization stimulated the need of paying closer
attention to the management of the chain providing logistics services innoded to
reduce the cost price of goods and services. The companies realized that full
attention should be paid for the competence of the company which include
manufacturing, services etc rather than concentratating in additional functions
such as transportation ,distributon of goods,storage etc.Here comes the need of
using 3rd parties ,when specialized services are required to ensure the
presentation of product of any services for the final customer.One such parties
which provide outsourcing is Freight forwarding.A freight forwarding is an
agent providing with services related to consignment on his own or clients
name. The freight forwarder can be defined as a commission agent performing
tasks such as transportation of goods,storage etc on behalf of the exporter or
importer.But ,with the expansion of trade and emergence of new means of
transport changed the role of freight forwarders.The services that freight
forwarder renders may vary from customs clearance to services up to total
transportation and distribution services.
There may be wrong assumptions that freight
forwarders are agents who earn money from the imperfection in the transport
companies.This is nothing but due to the lack of knowledge of the role of
freight forwarders in process of organizing transport services.The freight
forwarders are nothing but transport architects who takes responsibility for the
timely and quantitative delivery of the consignment.The freight forwarders
solves not only the problems of loading but also coordinates the questions
concerning overload consignments from one type of transport to another as
well.Without the help of freight forwarders ,the owner of the company has to
deal with a number of carriers which is quite a confusing process.The owner
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will find it difficult tomatch up the demands such as speed,economy,and
safety.in such cases ,the stimulation of goods flow is disrupted and results in
financial as well as other losses.Any disorder in the transport flow directly
affects the common market.Thus,by opting for freight forwarders the costs are
reduced drastically by chhosing the optimal transport route and by getting
commercial discounts for transport and insurance rates.
As a percentage of world gross domestic
product, the value of intercontinental trade has almost tripled from 5.2 percent
in 1962 to slightly more than 15 percent in 2009, and is expected to rise1. This
trend directly benefits freight forwarders as most manufacterers and suppliers
rely on them for transportation of goods. This unique positioning has allowed
forwarders to not only participate in the expansion of global freight flows but
also to control the most complex and valuable activities of these flows.As the
forwarders’ influence in the market has increased, customers,
competitors,strategic buyers and financial investors seek to better understand
how and why forwarders have been able to consistently generate superior profit
and create value over a long period of time.
1 (ForwarderMomentum, march 2008)
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1. INDUSTRY PROFILE
1.1 Introduction
With trade liberalization,the face of global supply
chain has changed considerably.Sourcing and manufacturing shifted from
countries having high labour costs to low labour costs.As the result of this
outsourcing ,the manufacturing and retailers have relied entirely on freight
forwarders to be their network manager of their intercontinental supply
chain.The customer base of a freight forwarder varies from small to big
manufacturing and retailers.
The services (ForwarderMomentum, march 2008) provided by the freight
forwarders include the following:
Transportation (intercontinental and destination delivery). Customs brokerage. Origin consolidation. Destination deconsolidation. Warehouse contract logistics services
The freight forwarders are both
competitors and customers of asset based air and container sea freight
carriers.They compete with asset based carriers for customer freight shipments
and purchase capacity from the same carriers to manufacture origin/destination
itineraries for their customers.
Most of the modern big freight
forwarding companies do not limit their activities only in broking operations
and organizing goods transport. They are involved in the process of transport
acquiring and maintaining transport equipment in both inland and international
transport. At the same time, goods owner is offered not only the services of
freight forwarding but also the sercvices of goods transport.
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In order to keep a customer, they are provided with services unusual for the
notion of traditional freight forwarding.Regarding his own employees from
transport branches, a freight forwarder sends them to customer’s company.
These ‘in-plant’ freight forwarders become effective means for supporting
freight forwarder’s relations with goods consignors and thus reduce data cycle
and improve management decisions. The largest freight forwarders may provide
a customer with a packet of logistics and freight forwarding services including
transport by different means.The global growing tendency of freight forwarding
is to provide the customer all necessary services to supply chain management.
1.2 Freight Forwarding:Modes of transport
The mode of transport is very essential in freight
forwarding or logistics business.The mode of transport is selected as per the context
demands.The modes of transport will vary according to the needs.The freight forwarding
company gives the best mode of transport meeting the need of the customer. The various
modes of transport used by the freight forwarding companies are:
AIR CARGO
SEA FREIGHT
ROAD TRANSPORT
RAIL FREIGHT
1.2.1 AIR CARGO:
Air freght or Air cargo constitutes the goods carried through Air
transport. Air transport plays a major role in international trade. More and more
goods ,particularly goods of high value, time-sensitive commodities and
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perishables are being found suitable for movement by air. It has been
estimated that goods moving by air account for about more than 20 per cent of
the world trade in terms of value. About 90 per cent of the world's air cargo
traffic is handled by air cargo agents who act not only on behalf of air shippers
but also on behalf of the airlines of whom they are approved sales agents.Air
Transport is one of the most effective tool to explore and serve world market.
The most common items carried through air are mainly of high value.they
include:
Aircraft and auto parts
Computers
Electronic and optical equipment
Pharmaceuticals
Machine tools
Precision instruments
Perishable foodstuffs
Most of the existing airlines have scheduled and chartered
carriers for transporting goods.Ground handling also plays an important role in
air cargo.Most of the airports have facilities like coolers, chilled rooms,
livestock rooms and security vaults to assist the handling of cargo.
Scope of air cargo in India:
Inspite of recurring losses of about $1.5billion during
the time of economic crisis ,Indian airline industry is showing great potential,
thanks to the steps taken by the Indian aviation industry.Eventhough, Lack of
infrastructure continues to be a roadblock for the industry, which is expected to
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touch Rs 13,300 crore by 2011-12, a growth of 20 per cent, by industry
estimates2.
Till recently,cargo
business was nit looked upon seriously as they comprises only 5-10 % of the
airlines revenue. But now, airlines are targeting cargo and have realized that it
has good scope. Airliners like Jet Airways have started floating a dedicated
cargo service by collaborating with a logistics company.The domestic and
international traffic of Indian cargo industry are as follows:
Table A:INTERNATIONAL TRAFFIC CARRIED BY INDIAN CARRIERS
Year Scheduled(tonne)
Non-Scheduled(tonne)
Total(tonne)
1999-00 100298 143 100441
2000-01 101351 2 101353
2001-02 97529 125 97645
2002-03 103729 91 103820
2003-04 97698 41 97739
2004-05 112157 0 112157
2005-06 112179 9 112188
2006-07 123694 0 123694
2007-08 142901 4 142905
2008-09 174092 0 174092
As per the given data ,the domestic cargo
sccounts for most of the air traffic with a whoopping figure of 278603 tonnes as 2 (Business Line, 2010)
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of lately.Whereas ,the traffic which accounts for international cargo is 174092
tonnes.As shown in these figures ,the potential of the Indian cargo industry is
very vast and as per the data,the air cargo industry is showing an increasing
trend and is expected to rise to gigantic levels.The total trafiic carried by air
cargo both domestic and internationally accounts for 452695 tonnes. (Business
Line, 2010).
Table B:DOMESTIC TRAFFIC BY INDIAN CARRIERS
Year Scheduled(tonne)
NonScheduled(tonne)
Total(tonne)
1999-00 158879 196 198453
2000-01 166668 118 209166
2001-02 160556 289 210409
2002-03 160556 289 210409
2003-04 197490 145 255665
2004-05 245151 402 325858
2005-06 256481 293 259774
2006-07 266421 418 266839
2007-08 302565 360 302925
2008-09 277608 995 278603
Source: (Business Line, 2010)
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From these figures,the growth in the air cargo traffic is
perfectly visible and as per the given figures the scheduled cargo accounts for
almost the whole of them.The freight forwarding companies in India accounts
for most of the scheduled cargo which is handled by the Indian air carriers.The
scheduled3 flights are the flights which operats regularly and are planned long
time before.Wheras non-scheduled4 flights refer to flights which operate
irregularly and my be planned a short time before flying. And charter flight.
Both scheduled flight and charter flight have restriction by agreement and the
local law.
Table C:TOTAL TRAFFIC CARRIED BY INDIAN CARRIERS
YearScheduled(tonne)
Non-Scheduled(tonne)
Total(tonne)
1999-00 250177 339 298894
2000-01 268019 120 310519
2001-02 258085 414 308063
2002-03 283314 597 338515
2003-04 295186 186 353404
2004-05 357308 402 438015
2005-06 368660 302 368962
2006-07 390115 418 390533
2007-08 445466 364 445830
2008-09 451700 995 452695
Source: (Business Line, 2010)
1.2.2 SEA FREIGHT:3 Operates as planned4 Chartered flights
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Shipping constitutes the principal mode of international
transport and is estimated to carry about 90 per cent of international trade in
terms of volume. Sea freight is the most cost effective way to transport cargo
raging from bulk exports to mails.Eventhough yhe goods take long time to
reach their destinations,it is still the safest and reliable means of
transportation.It is convineint for mostly for regular high bulk shipment.
Freight forwarders arrange the cheapest and quickest means as
they deal with many shipping companies and customers.
The main items transportedthrough sea are:
Coal
Oil
Furniture
Heavy Machinery
Project Equipments
The goods transported through sea are put into
regular shipping containers, which can be handled anywhere and can be
transferred directly from ships to trains for land transport. The regularization of
the industry resulted in reliability and better Sea-freight. Today the shipping
industry is well-organized and regulated, making it easy for companies to safely
transport their goods overseas.
Loss and damage costs resulting from sea cargo are very low
relative to other modes of because damage is not much of a concern with low
valued bulk products,and losses due to delays are not serious.the main concern
of mishandling occurs only at the time of loading and unloading which is to be
taken care of.
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1.3 Historical Background of freight for freight
forwarders
The freight forwarding services began in the 17 th
century when active trade development started and markets started growing
up.the expansion of operation didn’t allow businessmen to carry out all
operations and meet the requirements of necessary for process like
loading ,discharging,and storage of goods on their own.These problems were
overcomed by agents who did not had any agreement in buying and selling nor
in the transport.They were called by different names in continental European
countries varying from Authorized persons ,brokers ,agents etc.It was during
this time the need of a representative was considered at the intersection of
transport and trade.Such representative came to exist by the name ‘forwarding
arent’ in England.
It was in the beginning of 19 th century that
USAoverload carriers in international cotton trade innovated and brought up the
name ‘Freight forwarders’.The freight forwarders appeared as an inseperable
party in the contract of goods transport and used to take goods from
sender,issued direct consignment ans participated in the practical realization of
the contract for goods transport.In the ideal model,the freight forwarders should
have the complete control of the delivery of the goods up to the destinstion.The
carriers should be part of transport services for market freight forwarders.In
many countries,carriers go beyond their limits of transport activities and provide
services like goods storage,financial remittances,freight forwarding etc.
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1.4 3 rd Party Logistics and Freight Forwarders
The 3pl or 3 rd party logistics and freight
forwarders are more or less the same.Some suggest 3pl is just a fancy name for
freight forwarding (Dechter).But there are difference between the two.Freight
forwarders are more transport specific.They move the cargo from one place to
another.Wheras logistics providers move,store and process inventory.The
functions of a 3pl go beyond freight forwarding.
Since freight forwarders are specialists in
transportation,they focus on the cost and logistics of the transportation and thus
providing more cost-effective transportation.Wheras,since 3pl are generilst as
they provide services beyond forwarding, they need not necessarily be cost
effective as freight forwarders.The 3pl even depend on freight forwarders for
their forwarding needs.Head to head ,forwarders are going strong as they
dominate the international trade by controlling 90% of the international trade
(Dechter).Most of the direct carriers heavily depend on forwarders to sell their
transportation,rather than directly marketing to the customers.
The freight forwarders are the architect
of transport.Since they are specialist in that particular area,freight forwarders
carry the reputation of arranging the best and cheapest way of transporting
goods.The 3pl or third party logistics eventhough do arrange such service,they
are more expensive and are not able to keep up with the freight forwarding
campanies as they have a more generalistic5 approach in providing the logistics
solutions and freight forwarding is only a part of it.
5 Includes freight forwarding
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Table D:3pl vs Freight forwarders vs custom brokers
The figure above gives a clear idea of activities
of freight forwarders and 3pl.3pl is more likely a one stop solution for logistics
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CUSTOMS BROKER
Custom brokerage Service
FREIGHT FORWARDERS
Arcitect of transport
Books space on all transport modes
may have Warehousing and transport asset
Custodian of Cargo
Collaborates with customer and Carrier
requires IT to automate clerical functions
3PL
Generalist
Books space on all transport modes
Provides a range of value added logistics
services
collaborates with multiple supply chain
players
May depend on forwarders for transportation
Iuses IT to manage information and keep
customer informed about shipment status
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and are expensive for the same reason.Due to the same Inspite of these
differences ,the services of freight forwarders and 3pl are blending together.
1.5 Factors favouring freight forwarders
There are several structural factors
in the forwarding industry that allow forwarders to generate superior financial
returns compared to air and container carriers. These include:
Control of the end-user customer.
Ability to provide better supply chain information to customers.
Flexibility of services across means and different carriers
Ability to attract and retain high quality people.
Better understanding of costs due to less complexity.
However, contrary to the above factors, there is also a
level of commitments which forwarders maintain including:
Information systems.
Facilities.
Minimum commitments with air and container carriers
Forwarders are able to take control of the end-
customer relationship as asset operating air and container carriers increasingly
rely on forwarders’ wholesaling capacity instead of direct marketing to end
customers, especially medium and small sized accounts. These carriers are
adding capacity to fulfill long term market share objectives and are not
constrained by the quarterly earnings expectations of shareholders.Te freight
forwarders are also able to give the customers with better data which will help
the latter to calculate the transportation cost which in turn is necessary for
optimizing their suplly chain requirements.
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Forwarders can be more
flexible with customers and are able to customize their services to specific
requirements because they need not have to fill planes or ships each
day.Wheras, Carriers are focused on maximizing the load factor and yield of
each flight or vessel departure and they have an incentive to encourage
customers to choose routings that is profitable for them and best for the carriers
interest ,rather than the looking the customers interest.Due to same reason the
flexibility factor is less in the case of carriers.
Freight Forwarders also have
competitive advantage in human resources. They are able to attract and retain
high quality people because of their ability to promote faster and pay well due
to higher growth and profitability. Many forwarders reward employees based on
area level profitability.This attracts more quality people to freight
forwarding .Wheras in the case of carriers,the opportunities for career
advancement is limited.Another advantage of freight forwarders over carriers is
their nature of work.Since the freight forwarding is less complicated work,they
have better understanding of the cost and effectiveness of transportation
business. Forwarders are far less complex because they focus on the basics
factors like sales,terminal operations ,procurement of transport servicesetc
1.6 Indian Perspective
The Indian freight forwarding
industry currently plagued with low demand, poor infrastructure, high costs,
government regulations etc. However, it is going to turn around on the might of
various factors like robust GDP growth, globalization, FDI in logistics and
increasing government support. The annual logistics cost in India is estimated
to be 14% of the GDP, which translates into USD 140 billion assuming the
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GDP of India to be slightly over USD 1 trillion. Out of this USD 140 billion
logistics cost,almost 99% is accounted for by the unorganized sector
approximately USD 1.5 billion, is contributed by the organized sector which is
about slightly more than 1%. Due to which,the logistics industry in India is in a
promising stage.
However, the industry is growing at a fast
pace and if India can bring down its logistics cost from 14% to 9% of the GDP ,
savings to the tune of USD 50 billion will be realized at the current GDP level,
making Indian goods more competitive in the global market. Moreover, growth
in the logistics sector would imply improved service delivery and customer
satisfaction leading to growth of export of Indian goods and potential for
creation of more job opportunities.
But there are certain problems existing within the logistics in
India. There is lack of trust and awareness among Indian shippers with regard to
outsourcing logistics.The volume of outsourcing by Indian shippers is presently
very low compared to the same for the European ,pacific and other developed
countries. The unwillingness to outsource logistics on part of Indian shippers
may be attributed to speculation about the possible benefits, perceived risk, and
losing control, of sensitive organizational information, and vested interests in
keeping logistics activities in-house.Unfortunately ,this tendency exist among
most of the Indian companies.
Indian freight forwarders also face stiff
competition from multi-national freight forwarders for international freight
movement. The multi national companies ,because of their size and operations
in many countries, are able to offer low freight rates and extend credit for long
periods. Indian freight forwarders, on the other hand, because of their smaller
size and lack of access to cheap capital, are not able to match the same.
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Moreover, clients of MNCs often want to deal with a single service provider
and especially for FOB or Free on Board specify the cargo freight forwarders,
which most of the time happen to be the multi-national freight forwarders.
Asthe result of this sort of an attitude towards the Indian freight forwarders ,
most of the international freight forwarders dominate the Indian market.
1.7 Market Growth
The growth in the global freight forwarding
market have always shown alarming growths until the later half of 2008 when
the economic slowdown hit the market.The slowdown resulted in the hindrance
to the growth of the market but the overall the company was still
growing.Eventhough the economic slowdown hits the brake in the market,it
could only slow down the growth of the overall industry.This shows the
potential of the market.
The main reason for the recovery
during the slowdown was strong growth it had during the first half of 2008.Te
growth rate for global forwarding is shown in Figure 1:market growth.as shown
in the figure,the growth rate were at alarming rates in the beginning .In 2004,the
rate of growth was 12% which showed an increasing trend to go on to 14.3% in
the year 2005.The year 2006 also gave good results as it again clocked double
digits in its growth rate to 13.4%market growth.The growth rate managed to
stay in the double digit barrier in 2007 when it showed a 10.9% growth .It was
when the economic slowdown began,a sudden depth in the growth of the global
freight forwarding business became visible.The growth rate drastically droped
to 2.9% from 10.9 in the previous year.
Eventhough the global freight forwarding
market will recover from this,the growth rate wont be in such a rate as it used to
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be.The global freight forwarding market will take at least three years to
recover.But it does not mean that there wont be any growth in the global
industry.The only concern will be that the growth will be in much reduced pace
till 2012.
2003 2004 2005 2006 2007 20080
20000
40000
60000
80000
100000
120000
140000
Global freight forwarding market size and growth
€m
Figure 1:market growth6
6 Tansport intelligence
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Figure 2:market forecast
According to the experts (transport
intelligence),the forecasted growth in the global freight forwarding industry on
2012 will be mere 1.90%,but is expected to be back in its earlier growth rates
after that.Figure 2 shows the market forecast of the global freight forwarder.
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1.8 Major Players
1.8.1 Global Players
The major global players dominating the freight
forwarding mark are given s follows:
Table E:MAJOR PLAYERS
Source:Armstrong and associates
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The global forwarding market remains highly
fragmented with top 10 accounting for just 42 percent of the market. The market
leader, DHL, controls just 8.8percent, and it doesn’t expect a miracle growth in
the coming years .The rest 58% is controlled by the remaining freight
forwarding companies which include many small ones too.Due to this
fragmentation the market has great scope for emerging companies and is
expecting to grow at a larger pace.
dhl global forwarding9%
K+N8%
DB Schenkar6%
panalpina4%
Expeditors3%
Sinotrans3%
Agility3%
UPS SCS2%
CEVA2%
DVS2%
Others58%
Global Market Share of freight forwarders
Figure 3:Global Market Share
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1.8.2 Indian Players:
Due to the market penetration,the major
share Indian market is dominated by global MNC’s which include
DHL,Schenker,K+M,UPS,Fedex etc.As mentoned earlier ,mostly the MNC’s
dominate the total market of freight forwarding in India.Other than these,the
other Players in the market includes Bluedart,Jetairways,Firstflight,Safe
Express,GATI,Aqualogistics,AirliftIndia etc.In india,the Organized players use
technology-based infrastructure, and integrated air and surface solutions in the
domestic and international markets to their advantage. Considering that huge
investments are required to set up a pan-India network, economies of scale play
a very important role.
The organized players offer superior service toclients in
comparison to their unorganized counterparts as they provide online tracking of
cargo, warehousing facilities, etc. This has enabled organized players to gain a
larger share of the express cargo distribution industry. With extensive networks
and high service standards, organized players have captured 65% of the express
business, while unorganized or semi-organized players account for 25% of the
total market.The express7 cargo mainly deals with consignments which are
mainly documents due to price factor. However, within the domestic sector,
unorganized players offer a price advantage over organized players. As a result,
organized sector has only 45% share of the market with unorganized players
having a comparable 41% share.
The dominance of the unorganized companies is
clearly visible in the Indian market mainly due to its price .The unorganized
companies offer more flexibility in their price when compared to the big Mnc’s
operating in India.
7 Non stop cargo
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The major players in India are given in Table F.The table shows
both the Indian and domestic players in India.
Table F:major Players in India
Indian Players International
PlayersTVS logistics Exel
Safe Express DHL
CONCOR Aramex India
Dynamic Logstics SembCorp
Gati ltd Fedex
Associated RC ltd BlueDart
PRL
SERL
TCIL
There are many hindrance in the cargo business
in India mainly caused due to poor infrastructure.Due to which the that will
cause a slow pace in total freight forwarding process.
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2 . COMPANY PROFILE
2.1 Introduction
AirliftIndia came into existence in
the year 1979 by a group of individuals who were working in big international
forwarding companies with a strong desire to build up an independent
forwarding company of their own. It was to grow to such gigantic proportion in
just 7 years, to become one of the top five cargo agencies in India.Airlift India
has branches across eleven cities of India including Mumbai, Delhi, Bangalore,
Rajkot, Ahmedabad, Madras, Cochin, Pune, Vadodra ,Trivandrum and
Hyderabad .Airlift (India) Private Limited , manages ,conduts and handles every
year more than 50,000 tonnes of cargo in exports & forwards 70000 tonnes in
imports through these branches.According to one of the directors,since its
inception in 1980, Airlift (India) Private Limited has constantly grown by leaps
and bounds to justify its present high status and the esteem it commands on the
National and International fronts.Presently,
Airlift (India) Private Limited in India has
more than 1400 sq. ft. For its warehousing facilities showing maximum
utilization and yet , more that 50% of its cargo moves directly from supplier to
airline warehouses.The main features of Airlift India at a glance is given as
follows:
• A highly efficient staff of over 200 persons.
• Turnover – over 700 Millions in INR.
• A highly qualified team of personnel on the research sales and
operations panel.
• A network of professional receiving and handling agent.
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• Ancillary services of Consultancy and Distribution cost analysis.
• A decent communications network, providing immediate access to
detailed shipment date and appropriate rates throughout the world.
2.2 History And Milestones
AirliftIndia came into existence in Dec,1979
by a group of individuals who were working in big international forwarding
companies with a strong desire to build up an independent forwarding
company of their own.It started as an export air cargo agents.In the year
1980,AirliftIndia gets the approval of IATA8.
By the year 1984,AirliftIndia showed
implacable progress and were the no.3 agents in IndiaAs the plan of their
expansion,AirLIft India branches out into Break bulk cargo in the year
1985.The company started its second branch in the capital city of Delhi in
the year 1986.Success didn’t forsake the company as it was adjusted the no.2
in all India Basis in the year 1988.
It didn’t take long to declare
AirliftIndia as the no.1 agents in India by IATA.This was during the year
1990.The company started its new branches in Cochin and Pune in the year
1993 and was quoted as the landmark year by one of the directors.It had
operations in both sea and air cargo.In the year 1994,it again expanded its
branches in Vadodra.
AirLiftIndia rooted its strong presence in south
India by opening up new branches in Tiruvanathapuram and Coimbatore in
the year 1998.The new branches in Ahmedabad was added in the year
8 The Air Transport Association
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1998.As a plan to expand its business overseas,AirliftIndia opened its first
overseas branch in Los Angels,USA in the year 2001.By the year
2002,Rajkot was added to its branches.It was in the same year the only
overseas branch of AirLift India had to closed down due to management
problems.The company claims to be in the forefront of air cargo industry in
india.
AirliftIndia claims to have a special bond with
the customer that is trust.According to one of the directors, understanding
the customer requirements,finding the ideal solutionand going the extra mile
to achieve it is the reason of their success. The customers Range varies from
various industry and the list is steadily growing.
The range varies from FMCG,
Pharmaceuticals,Textile,Wine,Engineering,Plastics,Ceramics,Furniture,Che
micals,Construction,Fashion,Hospitality,Automobiles,InformationTechnolog
y,Confectionaries,Telecom,Industrial Produce etc.Air lift(India) ,due to the
nature of the materials it transport mainly ,the most of the transportation
solutios through Airlift(India) are through Air cargo.
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2.3 AT A GLANCE:
Table G:Organization at a Glance
Airlift(India) in fig:
Branches
Warehouse,offices etc
Cargo exports volume
Cargo imports Volume
12
50
50,000 tonnes
70,000 tonnes
Since airlift(India) focuss on giviving the best
transportation solution in the most cheap and effective way,the professionals in
Airlift(India) keeps tracks of every possible transportation means and aims at
delivering the best transportation means meeting the requirements of the end
customer.As a result,Airlift(India) recommends the best carriers for both air and
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sea cargo in the world.The major carriers through which the transportation
needs of Airlift(India) are satisfied are given below:
Table H:Major Carriers
|
Air India
Air France
Luftansa
British Airways
KLM
Emrites
Air Cargo
CMACGM
MaerskLine
K-Line
APL
Sea Cargo
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2.4 Major Clients
The clients list of AirLift (India) privte ltd varies
fromFMCG,Pharmaceuticals,Textile,Wine,Engineering,Plastics,Ceramics,Furni
ture,Chemicals,Construction,Fashion,Hospitality,Automobiles,InformationTech
nology,Confectionaries,Telecom,Industrial Produce etc.The Major clients of
Airlift(India) pvt Ltd are:
ARJUNA NATURAL EXTRACTS LTD:
Arjuna natural extracts ltd is a global manufacturer and exporter of standardized
herbal spice extracts, specialized essential oils and omega 3 fatty acids from
marine and vegetable source, in Oil and Powder forms
BATCRAFT INTERNATIONAL PVT. LTD.
Batcraft International manufactures modern cricket bats
POLYHEDRON.
Polyhedron is a company focusing on development, manufacture and
marketing of nutraceutical products.
SHAHI EXPORTS PVT. LTD.
SHAHI Exports Pvt. Ltd. is engaged in the manufacture and export of
readymade garments in the International market
SYMEGA SAVOURY TECHNOLOGY PVT. LTD.
Symega are specialists in plant derived natural product
STERIPHARM.
It manufactures Medical, Laboratory And Scientific Equipment
CIPLA LTD
Cipla, is a prominent Indian Pharmasuetical company
SHAH SAFARI
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design, manufacture, market and distribute trend-setting young men’s
sportswear.
SARJU INTERNATIONAL
It specializes in manufacturing High quality Branded Fashion Apparels
for the International market
B.SORABJI
They are involved in the activities of Manufacturing & Trading
EAST AND WEST HANDICRAFTS PVT.LTD
Manufactures and Exporting of Readymade Garment
ALOK TEXTILES
Fully integrated textile company and are amongst India’s largest textile
manufacturers
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3 ORANIZATION STRUCTURE
Figure 4:Organizational Structure
|
MANAGING DIRECTOR
BOARD OF DIRECTORS
FINANCE &ADMINISTRATION
MANAGER
Accountant
Clerks
Marketing Department
ExportsManager
Manager{ Perishable}
Manager {General
}
AirFreight
Sea Freight
ImportsManager
Overseas Coordinat
orPacific
Overseas CoordinatorMiddle East
Overseas Coordinat
orEurope
Customer service Manager
OPERATIONS MANAGER
Cargo Manager
Counter Supervisor
CounterStaff
Workers
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3.1 Finance and Administration:
The structure of Finance and Administration department of the
company is shown below:
Table I:Finance and Administration Structure
Figure 5:Finance and Administration Structure
|
Finance and Administration Manager
Senior Accountant
Accountant
Clerical Staff
39 | P a g e O r g a n i z a t i o n S t u d y
The Finance and Administration
Department is responsible for overseeing the budgeting, control and expenditure
of the company.It is also responsible for all issues concerning manpower
development, management and administration.
The main functions of the finance and administration department are:
a) Preparation of Balance Sheet
b) Preparation of Payroll
c) Preparation of cash flow reports
d) Preparation of audit reports
e) Advising the management on legal matters
f) Man power selection and allocation
g) Administrating property security
h) Checking the employee needs
i) Overseeing the requirements of equipments in all branches
The finance and administration manager heads the
finance and administration manager. The main objective of the Finance
Manager is to manage funds in such a way so as to ensure their optimum
utilization and their procurement in a manner that the risk, cost and
control considerations are properly balanced.His functions include
forecasting and estimating the requirements of funds which include both
long range and short range planning.he also plays an important role in
carrying out negotiations with the various financial institutions, banks
and public depositors for raising funds on favourable terms.
The Senior accountant comes under the
hierarchy of finance and administration manager.Senior manager is
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responsible for supervising all the book keeping and other related
things.The auditors report is presented to the financial and administration
manager by the senior accountant ,the latter forwards the same to the the
shareholders.The senior accountant also interprets and analyze the present
accounts and prepares financial and statistical data so as to provide
recomemdations to the financial manager. Under the Senior accountant
comes the accountant.The accountant is responsible for the higher
function of designing where necessary, improving or modifying the
system of accounts. Accountant supervise and coordinates the work of the
book keeper, staff, writes up more important private and impersonal
accounts and prepares the annual profit and loss accounts and balance
sheet.
Ratio Analysis 9
Table J:Ratio Analysis
YEAR Equity to Total Funds Ratio
Debt Equity Ratio
Fixed Assets to Long Term Funds Ratio
Current Ratio
2006- 2007 .219 .73 .043 1.54
2007- 2008 .213 .92 .039 .162
2008- 2009 0.257 1.017 .037 1.99
9 Equity to total funds ratio = Equity share capital + Pref. share capital + Reserves and surplus – Accumulated losses / Debt + Equity
Debt Equity Ratio = Debt / Equity
Fixed Assets to long term funds ratio = Fixed Assets / Long term funds
Current Assets = Current Assets / Current Liabilities
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Equity to total funds ratio indicates the long term solvency mode
of financing extent of own funds used in operation. It can be noticed that
from the year 06-07 the long term solvency of the firm has decreased
from .219 to .213 in 07-08. And there after their firm showed an increase
to .257 in 08-09.Debt Equity ratio indicates the relationship between debt
and equity. It can be seen that in 06-07 the debt equity ratio was .73 and
there after of the firm showed a slight increase to .92 in 07-08 and to
1.017 in 08-09. it indicates a better solvency position.
Long term fund ratio means the sum
of shareholders fund and debt funds. It shows the proportion of fixed
asset financed by long term funds. It indicates the financing approach
followed by the firm. It can be understood from the table that the firm is
showing a decreasing trend from 06-07 which was at .043 to .039 in 07-
08 and .037 in 08-09 .Current Asset TO ratio indicates the firm’s ability
to pay of its short term liabilities. Initially the ratio was 1.54 which was
decreased to .163 in 07-08 and later it was recovered to 1.99.
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3.2Marketing Department
The marketing in
the case of Airlift(India) freight forwarding company is mostly based on
the trust and giving the cheapest and effective solution to the
transportation of cargo for the company.Airlift(India) pvt ltd marketing is
mainly based on their performance and the consistant clients have the
share the same ,according to one of the directors.The basic structure of
the marketing department in Airlift(India) lt is given as follows:
Figure 6:Marketing Structure
|
Marketing DepartmentExports
Manager
Manager {Perishable}
Sea Freight
Air cargo
Manager {General}
Imports ManagerOverseas Coordinator
[Pacific]
OverseasCoordinator
[Middle east]
Overseas Coordinator[Europe]
Customer Service Manager
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As shown in the above
structure,the marketing department has two divisions ie;exports and imports
division.The Export division is headed by exports manager and takes care of the
exports cargo.The hierarchy follows under the exports manager as manager
[perishable] and manager[general].The manager[general] takes care of matters
concerning general cargo or non perishable cargo.in the case of perishable
components,they are taken as air cargo due to their nature.And for the same
reason,the manager[perishable] need only be concerened with air cargo.
Wheras in the case of Manager [general],he/she has to
deal with both air cargo and sea cargo.The exporter contacts the company
regardin the information regarding the cargo.The freght forwarding company
deals with the documentation part which include the airwaybill10 and the carrier
is selected meeting the requirements of the exporter.The company is responsible
to bring in the best and cheapest deal for the .
In exporting of goods,there are mainly two ways:
Fob(freight on board)
Cif(cost,insurance and freight)
In the case of fob,the freight charges is
payed by the consignee. Depending on specific usage, it may stand for Free On
Board or Freight On Board, with similar but distinct implications. FOB
specifies which party pays for which shipment and loading costs, and/or where
responsibility for the goods is transferred. The last distinction is important for
determining liability for goods lost or damaged in transit from the seller to the
buyer.Free on board means that the buyer has to bear all costs and risks of loss
10 Documents concerning te consignee and consigner
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45 | P a g e O r g a n i z a t i o n S t u d y
of or damage to the goods from that point. The FOB clears the exporter with
the goods for export after cargo is on board.The consigee11 is to responsible for
all the costs occurred after the cargo is loaded on board.
Wheras in the case of cif(cost,insurance and freight),the
consigner12 is responsible for all the payments.The exporter must pay all the
cost necessary for the cargo to reach the required destination.The risk and
damage occurring to the cargo is transferred from the exporter to the
consignee.The exporter is also responsible for payment of insurance of the
cargo to be transferred.
The procedure in Air Cargo expoting is given in Figure 7.the
exporter gives the details of the cargo to the Airlift(India) pvt ltd. who works
out the documentation including the airwaybill which specifies the detils of the
cargo and the consignee and consigner.
The company deals with the Indian customes to
clear the cargo giving the necessary data and documentation needed for them
and the cargo is put on board .Once the cargo reaches its destination ,the
overseas agent with which the Airlift(India) has association withrecevies the
cargo and after checking the cargo sttus is made to reach the consignee.
In the case of exporting of cargo through sea
mode,the procedure is almost the same .The only difference lies is the mode
of transport for the crgo is through sea carriers.
11 Person receving goods12 Person sending the goods
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46 | P a g e O r g a n i z a t i o n S t u d y
Figure 7:Air Cargo Export
The preocedure in Ocean cargo export is given in Figure 8.As shown in the figure ,the overall process for exporting remains the same in se ans air cargo.The cargo hanled by sea mostly doesn’t del with perishable items wheras the othe one does.
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Figure 8:Ocean Cargo Export
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Wheras in the import manager deals with
the matters regarding importing of the cargo.As shown in the organization
hierarchy,the Overseas agents and customer service manager comes under
import manager.Mostly the Import cargo in Airlift India is based on air
cargo.Since most of their clients interested in importing are related to
drugs,medicines and other perishable materials,the 90% of the imports are done
through air only.The various procedures which goes through the impoting cargo
through air are given as follows:
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49 | P a g e O r g a n i z a t i o n S t u d y
Figure 9:Cargo import
There are mainly three overseas coordinater for the
imports division of Airlift(India) pvt ltd .They are each for the Pacific,Europe
and Middle east.The main duties of the overseas coordinater include
communicating with the overseas agents with whom they have a tie up with and
ensure an healthy relationship with their respective overseas agent
abroad.Whearas the customer service manager deals with the consignee and the
make ensure the safety of the imported cargo Eventhough there occurs limited
amount of imports through sea,the importing through sea does occur in Airlift
(India).before the import,the overseas coordinater is contacted by the respective
overseas agents giving information about the cargo and the customs clearance
and other documentation in India are tken care by the company.
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50 | P a g e O r g a n i z a t i o n S t u d y
Figure 10:Ocean Cargo Import
3.3 Operations Department The basic structure of the operation department in
Airlift(India) is given as follows:
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51 | P a g e O r g a n i z a t i o n S t u d y
Figure 11:Operation Structure
Operating transportation and freight
forwarding assets requires expertise in a wide range of areas, including asset
acquisition, aircraft and vessel operations, terminal operations, maintenance and
overhaul, labor management, fuel purchasing and regulatory affairs. This wide
range of disciplines also requires lots of expertise in multiple functional silos,
most of which are internally focused and not facing the customer. The
operations department in Airlift(India) is headed by a cargo manager who has
the clear cut idea of the different transportation means and maintenance of the
cargo.The operation assistant is present to assist the cargo manager in the
|
OperationsDepartment
Cargo Manager
Counter Supervisor
Counter Staff
52 | P a g e O r g a n i z a t i o n S t u d y
operation procedures angives the updates about the various cargo handled by
the company.
The cargo manager gets reports by the divisional cargo
manager regarding the imports and exports in the particular area.The daily
works of cargo department varies from documentation of cargo to supervision
of cargo.The daily works of cargo department in one the branches of
Airlift(India) in Cochin is as shown is sequence as follows:
Daily works on cargo department in Cochin branch:
1) Issuing of carting order on export cargo
2) weighing of export cargo
3) Booking cargo for agent
4) Allocation for the flight
5) Supervision of cargo loading
6) On arrival of flight meet and collect input documents
7) As per docement confirm cargo received
8) supervision of loading to filght
9) prepare cargo manifest
The operation department is also responsible for
the customs clearance and other documentation procedures needed for the
transportation process.There are mainly three types of documentations in freight
forwarding:
Bill of Lading
Freight Bill
Freight Claims
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53 | P a g e O r g a n i z a t i o n S t u d y
Bill of Lading is the key contract on which freight moves.It
is the legal contract for the movement of designated freight with reasonable
dispatch to a specified destination,arriving damage free.The main three
purposes of bill of lading are:
It serves as a receipt of goods.
It serves as a contract of carriage.
It serves as a documentary evidence of title.
Wheras ,Freight Bill contain information bout the
freight charges.In addition to this ,it contains much of the same information of
bill of lading such as origin and destination,quantity ,product and the persons
involved.The freight Claims deals with the claims made against the carrier.
Now ,for the purpose of transportation of
goods,there exist airwaybill dealing with the nature if transportation.There are
mainly two types of airwaybill:
MAWB (Master Airway bill)
HAWB (House Airway bill)
In the case of MAWB or Master airwaybill,the
shipments are sent on the direct basis.Wheras in the cse of HAWB or House
Airwaybill,the shipments are sent on a consolidation basis whereby grouping
together various clients consignments under one MAWB being issued by the
company.
The operations department is also responsible for the storage of
the cargo if necessary.The company deals with mostly perishable items and
most the air ports have facilities to or cold storage to store these
components.Since most of the consignments are received at the time of the
delivery,there is hardly the need of storing for a long period of time.Eventhough
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54 | P a g e O r g a n i z a t i o n S t u d y
,if the situation demands the company has a good warehousing facilities all
over India to meet the needs of the customer if needed.The Figure 12 shows the
warehousing module of the company:
Figure 12:Warehousing
4 .CASE STUDY: From its
existence,Airlift(India) pvt ltd has been showing considerable growth and
managed to strengthen its roots in the country by opening various branches all
across the country including cities like
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55 | P a g e O r g a n i z a t i o n S t u d y
Delhi,Mumbai,Banglore,Ahmedabad,Rajkot,Chennai,Pune,Cochin,Vadodara,tir
uvanathapuram,Hyderabad etc. Inspired by the alarming growth and the
increasing customers,the directorial board of Airlift(India) pvt ltd decided to
extend its business to the international stage.The expansion of the branch would
give the company more brand value and increase the revenue of the
company.The expansion will also reduce the dependency of the home market of
the company.
As the part of the expansion
plans,the board meeting was called upon to decide the location to open its
branch overseas.The decision was finally made to open its first branch in Los
Angels,USA in the year 2001 where the company thought is worth investing as
they deal a lot of freight shipments through their fellow forwarders in Los
Angels.
They roped in a group
of professionals who were working in other private companies in USA and were
dealing with the Airlift(India) ltd in their shipments in the pacific region to
work for the Los Angels branch of AirLift(India) pvt Ltd.The company started
of by recommending the former clients(who dealt with fellow forwarding
companies in USA) to utilise the services of the new office of Airlift(India)pvt
ltd.The branch in Los Angels failed to perform with the expectations of the
companies and was forced to close down within an year of its functioning.The
directorial branch at the head office found it difficult to manage the branch
overseas and had to cope up myriad issues involving the management of the Los
Angels branch.The same affected the performance of the branch in the Los
Angels and the first and only overseas branch of the company ceased to exist in
2002.
4.1 Analysis of the problem
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56 | P a g e O r g a n i z a t i o n S t u d y
The case identified in the
the concerened organisation deals with failure of the expansion of the
company’s branch overseas.The company eventhough started with great
enthusiasm in the start ,it failed to carry forward the momentum forward.The
company managed to get great individuals at the start who are great at getting
the things going but lost their motivation once the company went beyond the
start up phase.The main reason for the collapse of the overseas branch in Los
Angels was the lack of control of the branch from the head office perspective
which is located in Mumbai.The head office of Airlift(India) pvt ltd eventhough
had followed successful management strategies in the regional branches ,it
failed to keep in track with the changing developments in the Los Angels
branch.
The company
communication with the overseas branch located in Los Angels was limited and
this lead to certain management problems occurring in the Los Angels
branch.One of the main mantra behind the success of an organisation is the
communication between the branches and departments ,failing to do so will
result in disastrous results.The lack of communication between the branch at
Los Angels and the head office created a distinction among the employees at
Los Angels from the company and for the same reason the head office wasn’t
able to succusfully heed to the opinions of the management team in the Los
Angels branch.
This lack of communication lead
to distrust among the employees of the overseas branch and the head office.The
management problems gave rise to decrease in the office assignments receiving
in the Los Angels branch which in turn lead to causing financial debts in the
Los Angels branch.The branch in Los Angels let alone meet the company’s
expectations , failed to deal with rising financial debts in their branch.As this
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continued , the directors of board in the head office decided to hold a meeting
which decided to shut down the companies first overseas branch in Los Angels
by the latter half of 2002.
4.2 SWOT Analysis
Strengths
Quality and reliability.
Superior performance vs competitors in terms of delivery.
Experience of staff.
Delivery capability
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A network of professional receiving and handling agent.
Management is committed and confident.
Weakness
Freshers training not practised
Stiff Competion from MNC’s
Failure to manage overseas branch
Opportunities
Potential Domestic and International Market
Could extend to overseas
Growth in freight forwarding market
Threats
Competion from other forwarding companies
Offerring competitive price to customers
Conclusion:
The study at Airlift(india) pvt Ltd reveals the
imporatance of the freight forwarding in the trade.The marketing of
Airlift(India) pvt Ltd is mainly based on trust and keepin a good healthy
realationship with the existing customer.They takes responsibility of the given
consignment and supplies transport companies with large flows of goods. As a
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59 | P a g e O r g a n i z a t i o n S t u d y
result, confinement and time of transport services without consignment is
noticeably shortened. In such a way,the participation of skilled freight
forwarders in the process of organizing the transportation of goods do not
increase expenses for transport service for the customer but reduces costs due to
the choice of the optimal transport route and commercial discounts for transport
and insurance rates.
The freight forwarding industry will continue
to benefit from growth in trade in the recent years.A need for an integrated
approach to logistic chain has been already recognised in theory and practice.
Multinational firms in the industry or retail sector i.e. show an increasing
demand for complex transport and logistics service.The emergence of new
technologies causes a deep change in the relationships along the logistic chain .
The transport and logistics provider are urging to attain the services of the new
developments in IT sector to provide better and cheap services and to oust out
their competitors.
FINDINGS:
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60 | P a g e O r g a n i z a t i o n S t u d y
From the organisation study conducted Airlift(India) Pvt Ltd
,certain trends in the Indian scenario was noticed.My findings from the study is
summarized below:
Most of the Indian companies use the freight forwarding or logistics
providers purely for the inbound and outbound transportation and also for
the custom clearance.Hardly any of the customers in Airlift(India) ltd are
keen in utilising the warehousing facilities provided to them.
Upon enquiring with some of the Indian companies who use the services
of such providers ,the reasons for not utilising the outsourcing were that
they were concerned about the capabilities of the freight forwarders and
also mentioned about the poor infrastructure of the forwarders in india.
Upon detailed inquiry,the Indian companies who outsource their
transportation needs was found to be only 55% of the whole when
compared to 71% in the US (Sahay).Most of the Indian companies are not
opting to it because they have still doubt in the capabilities of the
provider.
Also,those who opt for them,mostly confine the services to custom
clearance and transport.
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Figure 13:common activities outsourced in India and USA
Bibliography
|
INDIA USA
62 | P a g e O r g a n i z a t i o n S t u d y
Ballou, R. H. (2005). Business Logistics/Supply Chain Management (5th edition ed.). Pearson Education.
Burkovskis, R. (2008). EFFICIENCY OF FREIGHT FORWARDER’S PARTICIPATION. Dept of Transport Management, Vilnius Gediminas Technical University,Lithuania.
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