16

CHAPTER 2

LITERATURE REVIEW

2.1. Introduction

The apparel industry is a classic example of global sourcing and has one of the

widest business spread in the world. The network of apparel supply chain connects

developed, developing and under developed countries through export-import

business. The apparel exports business witnesses fierce competition amongst

suppliers and making right priced product available at right time as the prime

business winning criteria. Time sensitivity of fashion driven apparel business and

distance between buying and supplying countries make time factor very crucial to

the trade. The timely delivery of products is dependent on efficient logistics systems.

Issues and challenges involved in logistics activities effect on-time delivery which

results in business loss. Logistical hindrances have been identified as major apparel

sourcing risk by many research studies. Therefore, the research is focussed on the

study of outbound logistics activities of apparel exports, related issues and

challenges and cost implications with respect to India. Understanding of global

apparel supply chain and its characteristics, business process of apparel exports,

significance of lead time, understanding of logistics activities of apparel exports,

related issues and challenges and cost implications were very crucial. Additionally,

understanding of Indian apparel exports in context of explained parameters was

equally important to progress in the research. Therefore, comprehensive review of

available research studies was done and this chapter attempts to showcase the

compilation of relevant literature review. Compiled contents intend to give insights

of perspectives and characteristics of apparel supply chain, logistics scenario in

India, activities of international outbound logistics, micro level challenges of

outbound logistics activities and cost implications due to delay in logistics activities.

Section 2.2 outlines the structure of coverage of literature review. Section 2.3 covers

the apparel supply chain characteristics, exports activities and stakeholders involved.

Section 2.4 focuses on logistics scenario with respect to India and existing issues and

challenges. Section 2.6 covers international outbound logistics activities, related

micro level issues and challenges. Section 2.7 highlights on the cost factors due to

17

delay in logistics activities in export business. Section 2.8 summarises the compiled

body of literature and Section 2.9 explains the research gap emerging out of the

reviewed literature.

2.2. Structure of literature review coverage

The structure and logical flow of literature review is given in the following figure:

Figure 2.1: Macro level literature review structure and flow

Source: Author

2.3. Apparel supply chain

Apparel supply chain is complex and characterised by short product life cycles,

tremendous product variety, volatile and unpredictable demand, and long and

inflexible supply processes (Johnson, 2002; Rollins et al, 2002; Lam and Postle,

2006; Sen, 2008). The relevant areas of apparel supply chain are discussed in the

following Subsections of 2.3.

Apparel supply chain

Post production busniess process flow of apparel exports

International outbound logistics activities involved in

apparel exports

Issues and challenges involved in logistics (India

specific & activities specific)

Cost implications due to delay in logistics activities

of EXIM business

18

2.3.1. Fashion Business characteristics

Fashion is a broad term that typically encompasses any product or market where

there is an element of style that is likely to be short-lived. With the characteristics of

short life-cycles, high volatility, low predictability and high impulse purchasing

fashion markets are synonymous with rapid change (Christopher et al., 2004).

Fashion cycles are governed by seasons and right forecasting of fashion trends is

extremely critical with high level of flexibility and responsiveness (Lam and Postle,

2006; Tyler et al, 2006; Masson et al, 2007; Marufuzzaman and Deif, 2010; Chen

and Fung, 2013).

There are three critical lead times that must be managed by organisations that seek to

compete successfully in fashion markets: time-to-market, time-to-serve, time-to-

react (Christopher and Peck, 1997). These time lines are so crucial that any delay in

these may lead to business loss like stock obsolescence as shown in figure 2.2.

Figure 2.2: Shorter Life-cycles making timing crucial

19

Source: Christopher et al, 2004. Creating agile supply chains in the fashion

industry. International Journal of Retail & Distribution Management, 32(8), 367-

376.

With consumers demanding more variety, more fashion, more product access and

lower prices; business is always looking for new suppliers, sourcing strategies and

techniques (Abernathy et al, 2006; Tyler et al, 2006; Cagliano et al, 2010). These

characterise, a complex supply chain. Interestingly availability of data makes the

industry a suitable repository for efficient supply chain management research and

practices (Sen, 2008; Marufuzzaman and Deif, 2010).

2.3.2. Structure and stakeholders of apparel exports supply chain

Apparel is one of the oldest and largest export industries in the world. It is also one

of the most global industries because most nations produce for the international

textile and apparel market (Werner Stengg, 2001; Gereffi and Frederick, 2010).

Since the production of mechanical sewing machines in the 1850’s, sewing apparel

products has always been and remains a labour-intensive activity with small capital

investment requirements resulting as the typical starter industry for countries

engaged in export-oriented industrialization (Gereffi, 1999; Abernathy et al, 2006;

Palpacuer et al, 2005; Adhikari and Weeratunge, 2007; Brentton and Hoppe, 2007;

Pfohl and Shen, 2008). In summary this industry became a unique industry at global

platform as it gave opportunity to many developed and developing countries to

significantly increase and diversify exports. Being labour intensive it gave

employment to millions and provided low entry barriers and intense competition due

to low capital and skill requirements. It also became one of the most protected of all

manufacturing industries due to quota system (Rollins et al, 2002; Brentton and

Hoppe, 2007; Adhikari and Yamamato, 2008).

The apparel supply chain is indeed complex and showcases relationships between

the different players dispersed globally. Raw materials of one garment can be

sourced from different countries and likewise manufacturing/processing may happen

in different locations and ultimately the same gets transported to far distant locations

20

for sale and consumption (Johnson, 2002; Parrish et al, 2004; Shelton and Wachter,

2005). To make the product available for sale at right place and time an efficient

coordination is required amongst raw material suppliers, apparel manufacturers,

export agents, numerous transportation providers, freight forwarders, and warehouse

providers, brands, retailers (Johnson, 2002) (Figure 2.3)

Figure 2.3: The Apparel Supply Chain

Source: Johnson, M. E. (2002). Product design collaboration: capturing lost supply

chain value in the apparel industry. Tuck School of Business Working Paper, (02-08)

The apparel exports supply chain falls under the category of buyer-driven value

chains. In this kind of chain large retailers, marketers and branded manufacturers

play the pivotal roles in setting up decentralized production networks in a variety of

exporting countries, typically located in developing countries with low entry

barriers. In buyer-driven chains, profits come from combinations of high-value

research, design, sales, marketing and financial services that allow the retailers,

21

designers and marketers to act as strategic brokers in linking overseas factories and

traders with product niches in their main consumer markets (Gereffi, 1999).

Figure 2.4: The Buyer Driven Commodity Chain

Source: Gereffi, G. (1999). International trade and industrial upgrading in the

apparel commodity chain. Journal of international economics, 48(1), 37-70

The apparel supply chain is organized around five main parts as shown in the

following Figure 2.5. Raw material supply including natural and synthetic fibres;

provision of components, such as the yarns and fabrics manufactured by textile

companies; production networks made up of garment factories, including their

domestic and overseas subcontractors; export channels established by trade

intermediaries; and marketing networks at the retail level. These stake holders have

22

different scale/type of enterprises, labour skills, conditions, technology and are

situated at different geographical locations (Gereffi and Memedovic, 2003).

Figure 2.5: The Apparel Value Chain

Source: Christerson, B., & Appelbaum, R. P. (1995). Global and local

subcontracting: Space, ethnicity, and the organization of apparel production. World

Development, 23(8), 1363-1374.

23

As shown in Figures 2.3, 2.4 and 2.5, there are many stakeholders in clothing supply

chain and supply network including different kinds of retailers,

agents/intermediaries, garment manufacturers, yarn and fabric producers, trims and

embellishment producers, logistics, freight forwarding and warehousing companies,

etc. Relationships among the entities in a supply network, and particularly between

prime organization and other entities have frequently been noted to have an

important influence on network structures and management (MacCarthy and

Jayarathne, 2012). The work processes in fashion industries are highly

interdependent and time sensitive and it requires comprehensive coordination

practice, information sharing and product flow coordination among stakeholders

(Simatupang et al, 2004; Cao et al, 2008).

In this buyer driven commodity chain, the retailer, as the buying entity, is powerful

and influences the structure, relationships and operational practices across the

network (Stengg, 2001, MacCarthy and Jayarathne, 2012). The most valuable

activities in the apparel value chain are not related to manufacturing per se, but are

found in the design, branding, and marketing of the products. These activities are

performed by lead firms, which are large global retailers and brand owners in the

apparel industry (Greeffi and Frederick, 2010). These lead firms have different retail

formats like department stores, specialty stores, mass merchandise chains, discount

chains, etc. (Gereffi and Memedovic, 2003; Chen and Fung, 2013). In most cases,

these lead firms outsource the manufacturing process to a global network of

suppliers with due consideration on lead time, cost benefits, quality standards, code

of conduct practices to meet their fast moving and demanding consumer needs

(Bruce et al, 2004; Sen,2007; Greeffi and Frederick, 2010, Hasan and Alim, 2010).

In addition to these parameters, firm size, ethnicity, market strategy, and trade

regulations powerfully affect the location of apparel production (Christerson and

Appelbaim, 1995).

The retail industry faces fierce competition and business is extremely dynamic

which has also become one of the prime reasons for retailers to focus on their

competencies and externalise many process including clothing production (Brun and

Castelli, 2008; Caridi et al, 2013). Retailers may deal directly with a prime

24

manufacturer in the supply base or retailers may use agents (buying offices or

trading companies) as intermediaries when dealing with manufacturers (MacCarthy

and Jayarathne, 2010).

Retailers prefer to focus on getting the right products to the market and leave the

managing of the overseas supply network to intermediaries based in supplying

countries (Popp, 2000; MacCarthy and Jayarathne, 2010; Chen and Fung, 2013). At

the firm level, they speed up the flow of information in the supply chain and

improve communication between buyer and seller. They coordinate the flow of

materials and resources between customers and suppliers. Intermediaries help clients

search for new opportunities to trade, new sources of products, new materials and

design and through new ways in which supply and demand can be integrated (Popp,

2000). The typical tasks of an intermediary would include sourcing, supplier quality

control, shipping management and distribution. Such functions are especially critical

in transactions where buyers and sellers are separated by geographical and cultural

distances (Fung et al, 2006). Sourcing agents can reduce the financial risk of

manufacturers and retailers by assuming responsibility for production and delivery

and can better interpret the capabilities/systems of factories (Cook, 2004).

Majority of the apparel manufacturing factories are small manufacturing enterprises

(SMEs) (Birnbaum, 2005; Taplin, 2006; Ahsan and Azeem, 2010). Apparel

manufacturers perform different levels of business functions depending on the extent

of supply chain role and functions (Gereffi, 1999). The CMT (cut make and trim) or

assembly factories do not become involved in the design of the garment and only

produces garments for a customer by cutting fabric provided by the customer and

sewing the cut fabric into garments in accordance with the customer’s specifications.

Original Equipment Manufacturing (OEM) units are capable of sourcing all

specified raw materials, providing production services, finishing, and packaging for

delivery. In the clothing industry, OEMs are also known as FOB or package

contractors and typically manufacture according to customer specifications and

design. In Original Design Manufacturing (ODM), a full package supplier will

organize and coordinate: the design of the product; the approval of samples; the

arrangement of materials; the completion of production; and, in some cases, the

delivery of the finished product to the final customer (Gereffi and Memedovic,

25

2003). The desire of buyers to reduce the complexity of their own operations, keep

costs down and increase flexibility to enable responsiveness to consumer demand

has spurred the shift from CMT to OEM package contractors (Gereffi and Frederick,

2010).The manufacturer may decide to finish all the work in the factory, or to

subcontract parts of the order to smaller manufacturers further down the chain.

These smaller manufacturers may also decide to subcontract part of the order to

other manufacturers or homeworkers (Hurley et al, 2003).

Apparel manufacturers depend on raw material suppliers for fabrics, trims and

accessories like threads, zippers, buttons, hooks, lace, interlining, labels, price tags

etc. Raw materials can be imported depending on the buyer requirement. Buyer may

also nominate suppliers to source these materials (Adewole, 2005; Ahsan and

Azeem, 2010; Hasan and Alim, 2010)

2.3.3. Apparel sourcing complexities

Apparel sourcing process faces various kind of issues and challenges and these

complexities are critical for understanding of apparel exports supply chain.

Apparel manufacturing units face intense competition (Lim and Lam, 2007;

Watchravesringkan et al, 2009) and are always under pressure of low cost

production (Banomyong and Beresford, 2001; Lim and Lam, 2007) in less time

(Banomyong and Beresford, 2001, Gereffi and Frederick, 2010, Ahsan and Azeem,

2010). There is growing need to offer full package options and make multiple

products in small runs (Tewari, 2005; Gereffi and Frederick, 2010; Chen and Fung,

2013). Table 2.1 shows various kinds of issues and challenges faced by apparel

manufacturing exporters.

Table 2.1: Apparel Sourcing Complexities faced by Manufacturer Exporters

Type Complexities Source

Operational

Complexities

Long lead time involved in

imported raw materials,

underdeveloped domestic

Lewis and Dickson, 2003; Chen

and Shih, 2004; Kalegama, 2005;

Kohpaiboon, 2008;

26

raw material base, poor

raw material quality, low

productivity and

technology

Watchravesringkan et al, 2009

Financial

Complexities

Lack of investment, capital

and other financial

problem

Lewis and Dickson, 2003; Chen

and Shih, 2004; Kalegama, 2005;

Kohpaiboon, 2008;

Watchravesringkan et al, 2009

Managerial

Complexities

Conflicting

relationships/business

interests/inert-firm

competition, lack of

information sharing with

suppliers

Lee and Kincade, 2003;

Kohpaiboon, 2008

Collaboration and

communication issues with

raw material suppliers

Lee and Kincade, 2003; Chen and

Shih, 2004; Masson et al, 2007

Shortage of senior

management and design

people, weak knowledge

of intellectual property

rights protection, problem

of piracy

Chen and Shih, 2004

Lack of competitiveness Kohpaiboon, 2008

Less exposure and

flexibility towards

international business

dynamics and demands

Kalegama and Foley , 1999; Lewis

and Dickson, 2003; Kohpaiboon,

2008

Political and Political uncertainties Watchravesringkan et al, 2009;

27

Social

Complexities

Frazier et al, 2004

Growing labour cost and

other labour related issues

Frazier et al, 2004; Jin, 2004; Chen

and Shih, 2004; Kalegama, 2005;

Watchravesringkan et al, 2009

Infrastructural

Complexities

Small and fragmented

units

Chen and Shih, 2004; Guercini,

2004

Underdeveloped domestic

infrastructure and

distribution network, inter

modal transportation and

logistics related issues

Banomyong and Beresford, 2001;

Chen and Shih, 2004; Kalegama,

2005; Watchravesringkan et al,

2009

While coordinating business with exporters and retailers, apparel sourcing

intermediaries also face various kind of issues and challenges which are explained in

Table 2.2.

Table 2.2: Apparel Sourcing Complexities faced by Intermediaries

Type Complexities Source

Regulatory

Complexities

Export-Import permits, trade

regulations, tariffs, border

crossing procedures such as

customs inspection

Masson et al, 2007

Financial

Complexities

Currency regulations, credit

issues, lack of financial

capability to invest in people

and technology

Masson et al, 2007

Operational

Complexities

Industry wide overcapacity,

over reliance, difficult

relationships, little knowledge

Masson et al, 2007

28

of clothing industry

operations

Management

Complexities

Poor communication, poor

management education

Masson et al, 2007

On the other side amidst competitive domestic retail environment; retailers also

come across various complexities in off shore apparel sourcing. They face various

kind of challenges while doing business with apparel exporters and intermediaries.

These issues and challenges are explained in Table 2.3.

Table 2.3: Apparel Sourcing Complexities faced by Retailers

Type Complexities Source

Operational

Complexities

Long lead time Palpaucer et al, 2005; Akesson et

al, 2007; Chen and Fung, 2013

Logistics problems and

delays, lack of

communication and

transportation infrastructure

Cho and Kang, 2001; Teng and

Jaramillo, 2006; Lucero 2008;

Ruamssok et al, 2009

Delivery damage, invoice

accuracy, safety stock levels

Ruamssok et al, 2009

High price/cost and product

quality issues

Palpaucer et al, 2005; Teng and

Jaramillo, 2006; Akesson et al,

2007; Gereffi and Frederick,

2010

Managerial

Complexities

Compliance to social and

technical standards

Gereffi and Frederick, 2010

Lack of cooperation,

flexibility and trust

Cetindamar et al, 2005; Akesson

et al, 2007),

29

Geographical,

legal and

social

complexities

Different time zones,

business practices,

regulations and legal

systems

Cho and Kang, 2001; Hurreeram

and Little, 2004; Ruamssok et al,

2009; Su and Gargeya, 2012

Multiplicities of languages,

cultural and social

differences and other

geographical and

demographic variations

Cho and Kang, 2001; Hurreeram

and Little, 2004; Teng and

Jaramillo, 2006; Lucero 2008;

Ruamssok et al, 2009; Su and

Gargeya, 2012

Financial

Complexities

Risks with respect to foreign

exchange rate, economic

and political uncertainty in

foreign countries

Cho and Kang, 2001; Hurreeram

and Little, 2004; Lucero 2008;

Ruamssok et al, 2009; Su and

Gargeya, 2012

2.3.4. Logistics and lead time in apparel exports

Lead time is the gap between an order when placed and when it is received (Chopra

et al, 2010). Procurement lead time is defined as the span of time from the date of

order to receipt of the shipment in inventory. This includes (a) administrative lead

time (from the date a decision is made to initiate an order to receipt of the order by

the supplier), (b) production lead time (the time from receipt of order by the supplier

to completion of the manufacturing) and (c) delivery lead time (from completion of

manufacturing to receipt of the item in the inventory) (Blanchard, 2003).Thus the

total lead time is made up of time devoted to processing orders, to procuring and

manufacturing items, and to transporting items between the various stages of the

supply chain. Lead time can also be divided into two broad components: Information

lead times (i.e. the time it takes to process an order) and Order lead times (i.e. the

time it takes to produce and ship the item) (Levi et al, 2007).

International sourcing involves longer lead time than domestic sourcing and is

affected by international logistics activities resulting in delayed delivery (Cho and

Kang, 2001; Yu, 2011; Yu and Lindsay, 2011). In the context of international

30

purchasing, the key variable underlying logistics factors are the lead-time (Lucero,

2008).

Lead time is one of the most critical success factors in sourcing fashion apparel

products (Froza and Vinelli, 2000; Christopher and Towill, 2002; Mattila et al.,

2002; Jacobs, 2006; Caro et al, 2010; Kam et al, 2011; Candace et al, 2011) and

clothing lead times are traditionally long (Mattila et al., 2002; Yu and Lindsay,

2011). The delivery date of apparel export shipments are often not met due to issues

and challenges involved in logistics activities (Chandra and Kumar, 2000;

Subramaniam and Arnold, 2001; Zubaidi and Tyler 2004; Kumar and Arbi, 2008;

Moon and Ngai, 2008; Pfohl and Shen, 2008; Nuruzzaman and Haque, 2009; Ahsan

and Azeem, 2010; Hasan and Alim, 2010).

2.3.5. Country specific studies of logistics issues and challenges related to

apparel exports

Bangladesh, which is one of the leading garment exporting countries has many

logistics related issues and challenges which affect lead time of apparel export

process. Delay in export documentation activities, delay due to bureaucratic process,

port congestion (lack of efficiency and sufficient infrastructural facilities), poor

infrastructure in railway and road transport, lack of communication facilities are

major logistics hindrances (Nuruzzaman and Haque, 2009; Ahsan and Azeem, 2010;

Hasan and Alim, 2010). China, which is the top exporter of clothing in world also

has logistics related issues and challenges. Research studies have mentioned

challenges like regulatory restrictions, fragmented distribution systems and limited

use of technology in the logistics sector are some of them (Chen and Shih, 2004;

Pfohl and Shen, 2008; Fierro and Benı´tez, 2011). Sri Lankan garment exports

industry suffers from poor logistics infrastructure also (Kalegama, 2005; Kapuge

and Smith, 2007). Developing countries in Africa and South America too face

logistics barriers (Hurreeram and Little, 2004; Teng and Jaramillo, 2006). Similarly

logistics infrastructure in Bolivia, Cambodia and Vietnam pose hindrances to

garment exports (Frazier et al, 2004; Bargawi, 2005; Thoa, 2006). Poor port

infrastructure, tedious customs regulation, slow clearance time and long physical

inspections, poor rail and road infrastructure, large number of octroi posts in

highways, local regulations regarding road use during specific hours only and

31

absence of expressways are the logistics issues and challenges mentioned with

respect to Indian apparel exports (Ramachandran, 2001; Shetty, 2001; Verma, 2002;

Singh, 2008).

2.4. Business process of apparel exports and involved international outbound

logistics activities

Like other business the garment manufacturing process also follow the value chain

model. The primary activities represent the sequence of bringing materials into the

business (inbound logistics), converting them into final products (operations),

shipping out final products (outbound logistics), marketing them (marketing and

sales) and servicing them (service). Outbound logistics consists of the activities

required to get the finished products to customers: warehousing, order fulfilment,

transportation, distribution management (Thoa, 2006).

The business process analysis of outbound logistics process of garment exports can

be explained in nine steps: arrange transport, arrange for inspection, obtain cargo

insurance, collect empty container from yard, stuff the container, transportation to

port of departure, customs inspection and clearance, container handling, prepare

documents for importer (Ramasamy, 2010).These linkages of these steps are

explained in Figure 2.6.

The inspection of final shipment is conducted by the third parties nominated by the

buyer and the cargo insurance can be obtained by exporter or buyer. The steps of

collecting empty container from yard and stuffing the container can be categorised

under export packaging activity. The steps of arranging transport and transportation

to port of departure can be categorised under inland transportation activity. The step

of preparing documents can be categorised under export documentation activity. The

step of customs inspection and clearance can be categorised under customs clearance

activity. The step of container handling can be categorised under warehousing and

material handling activity.

32

Figure 2.6: Export Process Analysis for Garments

Source: Ramasamy, B. (2011). An analysis of import-export procedures and

processes in China. Asia-Pacific Research and Training Network on Trade Working

Paper, 88

Thus the above mentioned steps of outbound logistics process of garment exports

fall under five international logistics activities of export documentation, export

33

packaging, warehousing and material handling, customs clearance and inland

transportation (Pierre David, 2003; Douglas Long, 2003; Alan Branch, 2009)

2.5. Logistics Scenario in India

India is the fourth largest economy with 1.252 billion (World Bank Statistics, 2014)

population which is second highest in the world. India’s recent growth and

development has been one of the most significant achievements of recent times.

Historic changes are unfolding, unleashing a host of new opportunities to forge a 21st

century nation. India will soon have the largest and youngest workforce the world

has ever seen. At the same time, the country is in the midst of a massive wave of

urbanization as some 10 million people move to towns and cities each year in search

of jobs and opportunity. The manufacturing sector–vital for job creation–remains

small and underdeveloped. The country’s infrastructure needs are massive. One in

three rural people lack access to an all-weather road, and only one in five national

highways is four-lane. Ports and airports have inadequate capacity, and trains move

very slowly.1 The following subsection showcases India’s position on global

platform basis the logistics related performance.

2.5.1. Global logistics performance indicators and India

As per the report “Connecting to Compete”, Trade Logistics in the Global Economy

(Arvis et al, 2014), India’s rank is 54 amongst 160 countries of the world in terms of

Logistics Performable Index (LPI). Basis the LPI index, India’s score is 3.08.

Performance wise it is 66.6 percent of Germany which is holding LPI rank 1. LPI is

the weighted average of the country scores on the six key dimensions: efficiency of

the clearance process by border agencies including customs, quality of trade and

transport related infrastructure (e.g. ports, railroads, roads, information technology),

ease of arranging competitively priced shipments, competence and quality of

logistics services (e.g. transport operators, customs brokers), ability to track and

trace consignments, timeliness of shipments in reaching destination within the

scheduled delivery time. The LPI scorecard demonstrate comparative performance.

1 http://www.worldbank.org/en/country/india, accessed on 01/08/2014, 15.14 pm

34

The dimensions show on a scale of 1-5 relevant to the possible comparison groups of

all countries, region and income groups (Arvis et al, 2014).

2.6. International outbound logistics activities and related issues and challenges

The five international outbound logistics activities mentioned in section 2.5 are

export documentation, export packaging, customs clearance, inland transportation

and warehousing and material handling. In the following section issues and

challenges involved in these logistics activities are explained. The inland

transportation is further divided into two: rail and road transportation. The

warehousing and material handling activities are further divided into two: seaport

related activities and inland container depot (ICD)/container freight station (CFS)

related activities. Thus seven international outbound logistics activities are covered

in the following subsections.

2.6.1. Export documentation activity

Requirement of export documentation in international trade serve various purposes.

These may include for example, documents required as part of governmental

procedures, supply chain management and payment requirements. These export

documents can be considered under four types: Bank related documents, customs

clearance documents, port and terminal handling documents and transport

documents (Doing Business, World Bank, 2012).

Export documentation process of apparel exports has several steps. The main steps

of export documentation process are covered here. Opening of letter of credit is an

important step. This is the main document for payment purpose. Exporters, buyers

and bank of both parties are involved in opening of letter of credit (LC). LC is

opened after sales contract between buyer and exporter (shipper) is signed. Purchase

Order, a formal document of export order is issued by the buyer. Exporter intimate

the freight forwarder on ex-factory schedule for the export shipment. Freight

forwarder books space in the sea vessel accordingly and issues shipping order is

issued. Exporter prepares commercial invoice and packing list once cargo is ready.

Documents like Country of Origin (COO), GSP certificate (Generalised systems of

35

preferences), Consular invoices, etc. are obtained as per the requirement. COO and

GSP are issued by bodies of export promotion councils/chamber of commerce.

Consular invoice is issued by the consulates of countries who require this document.

The inspection report of the cargo is issued by the concerned authority. Shipping bill

is filed in custom for regulatory clearance. At this stage custom broker, freight

forwarder and exporters are involved. Transportation and other regulatory

documents are obtained from state authorities to cross state borders and move

shipment from factory premises to sea port. Multiple documents are required during

ICD/CFS warehousing and material handling and road/rail transportation. At

seaport; terminal handling document, dock receipt and mates receipt are issued.

Customs issues Let Export Order after completion of all stages of inspection. Bill of

lading is an important transportation document which is issued by shipping

line/freight forwarder. (Doing Business, World Bank, 2012; Ramasamy, 2010;

Hasan and Alim, 2010).

Main export documents related to apparel exports are: Bill of lading, Letter of credit,

Shipping order, Forwarder cargo receipt, Shipping bill, Commercial invoice,

Packing list, Mates receipt, Manifest, Certificate of Origin, Generalised Systems of

Preferences, Consular invoice, Inspection report, Technical standard certificate,

Terminal handling receipts, Let export order, IEC code, Export trade control license,

Export General Manifesto, Truck invoice, Shed Manifest, CFS report, Carting chit,

Boat note, Export tally sheet, etc. (Chaturvedi, 2007; Planning Commission Report,

Government of India, 2007; Haddad and Juhel, 2010; Doing Business, World Bank,

2012; Ramaswamy, 2010; Hasan and Alim, 2010; De, 2011).

2.6.1.1. Issues and challenges in export documentation

Export documentation activity faces many issues and challenges listed below:

1) Multiple Documentation: Managing various documentary requirements becomes

problematic in Indian scenario. This requires involvement of national and

international businesses, traders and transport operators have to cope with multiple

documents and forms (sometimes up to 40 originals), often containing redundant and

repetitive data and information (200 data elements on average). Handling and

processing of number of documents becomes a major challenge (Sengupta and

36

Bhagabati, 2003; Chaturvedi, 2007; Haddad and Juhel, 2010; Doing Business,

World Bank, 2012). 2) Complications involved in documentation: The information

need to be submitted to different agencies in different countries and languages, on

different forms, and with various supportive documents attached to them. These kind

of complications lead to delay in process ( Peters, 1990; Planning Commission

Report, Government of India, 2007; Haddad and Juhel, 2010; Doing Business,

World Bank, 2012). 3) Lack of clarity in sales contract and lack of understanding of

established international practices and guidelines: Many times buyers and shippers

are not able to bring required clarity on terms and conditions of business in export

documents. The personnel involved in exports activity may not have understanding

of set international practices and guidelines like Uniform Customs and Practice

(UCP 600), guidelines of banks and enterprises, etc. which becomes a major barrier

in getting and executing the export order without delay and confusion ( Leonidou,

2001; Julian and Ahmed, 2005; Han, 2011). 4) Wrong declaration and typing errors:

Export documents gets stuck at various stages due to wrong declaration or typing

errors in the documents. This happens due to discrepancies in the crucial information

like value/volume/quantity/product category/duty structure/consignor consignee

information, etc. (Subramanian and Arnold, 2001; Mei and Dinwoodie, 2005;

Planning Commission Report, Government of India, 2007). 5) Partial

automation/integration of IT systems: For effective implementation of IT systems all

concerned bodies need to integrate in one system which is not the case in India so

far. The effectiveness of the IT/EDI system depends on the connectivity between all

the players - ports, airports, customs, directorate general of foreign trade (DGFT),

Reserve Bank of India (RBI), steamer agents, shippers, ultimately reaching railways,

road transport, banking institutions, insurance and so on. The partial integration

becomes major challenge in avoiding duplication and expediting the process

(Sengupta and Bhagabati, 2003; Planning Commission Report, Government of India,

2007).

2.6.2. Export packaging activity

Textiles and readymade garments fall under one of the principal commodities which

are transported in containerised cargo (Raghuram and Gangwar, 2007). The

containers having standard dimensions are easier to handle mechanically with lower

37

risk of damage, pilferage and loss of cargo. Transfer of cargo from one transport

mode to other can be managed efficiently without disturbing the cargo inside. The

productivity of handling equipment is many times greater than break bulk cargo.

Readymade garment shipment cargo can be sent in “ready to sell” or “consumer –

ready” condition. Garment containers are fitted with hangers to help loading a large

number of garments in hangers inside the container (Beresford and Dubey, 1990;

Steenken et al, 2004; Deloitte report, 2012).The container can be fully stuffed by the

garments to make it full container load (FCL). Alternatively, the container may be

stuffed with various other goods (for same destination) along with garments in case

the shipment quantity is not enough to fill the whole container. This is known as less

than container load (LCL) shipments. Full container load stuffing can happen at

factory premises or at inland container depot or container freight station. A container

needs to be arranged from shipping lines for FCL stuffing. The ready cargo needs to

be taken to consolidation point (normally ICD or CFS) for LCL stuffing (Hall, 1987;

Peters, 1990; Tyan et al, 2003; Planning Commission Report, Government of India,

2006; Cheong et al, 2007; Raghuram and Gangwar, 2007; Ramaswamy, 2010;

Hasan and Alim, 2010; ILO report, 2011).

2.6.2.1. Issues and challenges in export packaging

The focus is to cover the issues and challenges that occur in containerisation type of

export packaging activity. 1) Container unavailability: Many times containers are

not available due to imbalance in export- import volumes from a particular place. In

this case container has to be moved empty one way to be available in the particular

place for consolidation. This movement means extra cost too. Moreover the

availability of the containers is limited and demand pattern may also create scarcity

of the same (Raghuram and Gangwar 2007; Notteboom and Rodrigue, 2008;

Vidović et al, 2011; Deloitte Report, 2012; Kye et al, 2013; Dong et al, 2013). 2)

Delay due to LCL consolidation: In less than container load consolidation; different

cargoes are stuffed in one container which are supposed to go to the same

destination point through the same route. All cargoes which are planned to be stuffed

in one container have to reach consolidation place before the given cut-off time.

Many times delay occurs in LCL consolidation because all planned cargoes do not

reach the consolidation point on time and hence delay occurs. (Peters, 1990;

38

Higginson, 1995; Tyan et al, 2003; Bhatnagar and Teo, 2009; Baykasoglu and

Kaplanoglu, 2011).

2.6.3. Customs clearance activity

Customs is the main body of a country to administrate the action of importing or

exporting commodity and to collect the duties. The customs clearance efficiency and

service level not only affects the trade efficiency, but also creates great impact on

the investment, employment and even regional economic development (Yaqin and

Yuming, 2010). Customs department operates in an increasingly complex and

rapidly changing environment characterized by new trade patterns, demands for

better trade facilitation and efficiencies while at the same time dealing with growing

safety and security concerns and new risks. The core roles of customs are: revenue

collection, community protection, conventional anti-smuggling, security and

facilitation and collecting trade data (Apples and Swielande, 1998; Hors, 2001;

Ireland, 2011; World customs organisation annual report, 2011-12).

The export procedure with Indian customs department till the cargo gets on board of

sea ship is briefly explained below.

The exporters have to obtain Permanent Account Number (PAN) based Business

Identification Number(BIN) from the Directorate General of Foreign Trade (DGFT)

prior to filing of shipping bill for clearance of export goods. The exporters need to

register authorised foreign exchange dealer code (through which export proceeds are

expected to be realised) and open a current account in the designated bank for credit

of any drawback incentive. Whenever a new airline, shipping line, steamer agent,

port or airport comes into operation, they are required to be registered into the

customs system registration. All the exporters intending to export under the export

promotion scheme need to get their licences and necessary documents registered at

the customs station. Garments exporters also avail duty exemption and draw back

schemes.

In current scenario most of the shipping bills are filed through electronic data

interchange (EDI) system. Under EDI System, declarations in prescribed format are

to be filed through the service centres of customs. A checklist is generated for

39

verification of data by the exporter/customs house agent (CHA). After verification,

the data is submitted to the system and shipping bill number is generated, which is

endorsed on the printed checklist and returned to the exporter/CHA. For export

items which are subject to export cess, one document is given to the exporter/CHA

immediately after submission of shipping bill for cess payment. The cess can be paid

at the designated bank. No copy of shipping bill is made available to exporter/CHA

at this stage.

The quota allocation label is required to be pasted on the export invoice. The

allocation number of Apparel Export Promotion Council (AEPC) is to be entered in

the system at the time of shipping bill entry. The quota certification of export

invoice needs to be submitted to customs along-with other original documents at the

time of examination of the export cargo.

The goods brought for the purpose of examination and subsequent 'let export' is

allowed entry to the dock on the strength of the checklist and other declarations filed

by the exporter in the service centre. The port authorities have to endorse the

quantity of goods actually received on the reverse of the check list. In many cases

the shipping bill is processed by the system on the basis of declarations made by the

exporters without any human intervention. In other cases where the shipping bill is

processed on screen by the customs officer, he may call for the samples, if required.

This is done for confirming the declared value or for checking classification under

the drawback schedule. The officer may also give any special instructions for

examination of goods, if felt necessary.

The exporter/CHA can check up the status; whether the shipping bill submitted by

them in the system has been cleared or not, before the goods are brought into the

docks for examination and export. In case any query is raised, the same is required

to be replied. The customs officer may pass the shipping bill after all the queries

have been satisfactorily replied to. Once the cargo arrives at the dock, the customs

officer present there is contacted to present the check list with the endorsement of

port authority and other declarations as aforesaid along with all original documents

such as, Invoice and Packing list, AR-4 document, etc. Customs officer verifies the

quantity of the goods actually received and transfers all original documents to the

dock appraiser. The dock appraiser assigns a customs officer for the examination, if

40

any.The customs officer inspects the shipment along with the dock appraiser. After

this examination; report is entered in the system and the electronic bill along with all

original documents and check list goes to the dock appraiser. The dock appraiser

checks whether the data entered in the system conforms to the description given in

the original documents and as seen in the physical examination, he proceeds to allow

"let export" for the shipment. After the "let export" order is given on the system by

the appraiser, the shipping bill is generated by the system in two copies i.e., one

custom’s copy, one exporter’s copy. Then signatures are required by the customs

officer and the representative of the CHA on both copies of the shipping bill and

examination report. The appraiser thereafter signs and stamps both the copies of the

shipping bill at the specified place.

The "let export" approval goes to the preventive officer for allowing the shipment.

The stuffing of container may happen at dock under preventive supervision along

with loading of cargo. The required data is entered in the system with the

endorsement on the exporter copy of the shipping bill. The customs preventive

officer supervising the loading of container on to the vessel gives "Shipped on

Board" endorsement on the exporter’s copy of the shipping bill. In garment exports,

the AEPC quota detail and other certifications are retained along with the shipping

bill in the dock after the shipping bill is generated by the system. At the time of

examination, apart from checking that the goods are covered by the quota

certifications, the details of the quota entered into the system needs to be checked.2

(Delhi customs information, 2013; Planning Commission Report, Government of

India, 2006)

2.6.3.1. Issues and challenges in customs clearance

The customs clearance process is understood as lengthy and complex. (World Bank

Report, 1993; Hors, 2001; Wulf and Sokol, 2005; Wu and Lin, 2008; Chandra, 2009;

Mitra, 2011; Boschian et al, 2010; Grainger, 2011; WCO report, 2012). Various

issues and challenges are involved in the process which is explained below. 1)

Product/tariff classification issues: It is mentioned above that in customs clearance

of garments, quota classification is very crucial because duty is calculated basis the

2 http://delhicustoms.gov.in/exportpro.html#reg accessed on 8/4/13, 18.52 PM

41

same including the exemption/draw back value. Garments are not standard products

and style variations happen very frequently which leads to difficulty in

understanding about component materials and product category. Customs officials

possess discretionary power to single-handedly decide which cargo to stop and

whether to reassess the classification of goods for tariff purposes or to validate

prices (Subramanian and Arnold, 2001; Chaturvedi, 2007; Cadot et al, 2011; UN

Report, 2011). 2) Lengthy Manual /physical inspection: It is entirely on customs

officers to decide on physical inspection of goods for clarification on product

classification/quantity/value etc. Generally the physical inspection procedure is very

lengthy and time taking. It requires to unpack the cartons/taking out goods from

stuffed container, etc. (Hellberg and Sannes, 1991; Haughton and Desmeules, 2001;

Subramanian and Arnold, 2001; Chaturvedi, 2007; Hsu et al, 2009; Buyonge, 2009;

Donner and Kruk, 2009; Ansizweski, 2009; Arvis et al, 2010; Cantens et al, 2010;

Behar et al, 2011; De, 2011). 3) Lack of staff/officials/resources of customs:

Customs clearance services often have to cope with the growing trade volumes

without any commensurate increase in staff or resources. In addition, customs

administrations continue to face changes to their operating environment, which

emphasize the need to adjust and modernize their processes (Wulf and Sokol, 2005;

De, 2011). 4) Bureaucracy/Non Cooperation of customs officials/Corruption: All

stakeholders involved in customs clearance process perceive customs clearance

process outdated and overly bureaucratic which poses greater barriers to trade than

tariff barriers. Inefficient border management creates opportunities for

administrative corruption. Corruption in customs department includes informal

payments to officers and staff involved in the clearance process (Subramanian and

Arnold, 2001; Wilson et al, 2003; Sawhney and Sumukadas, 2005; Wulf and Sokol,

2005; Garnwa et al, 2009; Cadot et al, 2011; Cantens, 2012). 5) Lack of

understanding of customs valuation and supporting procedures /policies of customs

administration: The lack of understanding of customs valuation and of its supporting

procedures are two of the principal factors minimizing the efficiency of the customs

administrations in many developing countries. Despite several remedial steps taken

by the customs department, the field staff is often unacquainted with the valuation

and assessment procedures. Department officials, especially those who come from

agencies other than customs, are often unaware of the nuances of customs policies

and thus creating complicacies. Poor trained officials lack the competence to

42

interface with traders that operate in a constantly changing and challenging business

(López and Poole,1998; Wulf and Sokol, 2004; Wulf and Sokol, 2005; Chaturvedi,

2007; UN Report, 2011; WCO Annual Report, 2012). 6) Limited working hours of

customs officials: Most of the Indian customs offices have limited working hours

which is not sufficient considering the increasing volume of trade. This pose big

challenge to exporters (Planning Commission Report, Government of India, 2007).

7) Technical challenges in EDI systems: It is common phenomena in the customs

department that communications networks are unreliable, and systems like electronic

data interchange (EDI) cannot be supported. Due to this problem delay happens

since data cannot be fed or traced when the network systems are down (Lee et al,

2000; Haughton and Desmeules, 2001; Planning Commission Report, Government

of India, 2007; GOI Report, 2011). 8) Missing documents/error in documents or in

registered data at customs: Missing documents and error in documents pose major

hurdle in terms of reworking and repeating steps of customs clearance (Boschian et

al, 2010; UN, 2011). 9) Appeal process against decisions: Many times shipment gets

rejected in customs due to various kinds of discrepancies found in data entered and

the actual shipment. The exporter/CHA again appeals to customs for clearance

process after required amendments. The appeal process is considered to be long and

time taking (UN, 2011). 10) Heightened Security Initiatives like CTPAT, etc.: Post

9/11, the meaning of borders changed for all countries exporting to the United States

of America (USA). The US policy responded to the attacks by implementing the

Container Security Initiative (CSI) and the Customs-Trade Partnership against

Terrorism (C-TPAT). Both of these initiatives consider the starting point for borders

in the country of export and calls for strict procedures to be followed (Wulf and

Sokol, 2005; Ansizweski, 2009; Arvis et al, 2010; Polner, 2011; Behar et al, 2011).

11) Informal Trade Practices (Wrong Declaration by shipper): Exporters may adopt

unfair means to save duty/taxes to be paid to government by wrong declaration in

the customs related documents. Moreover smuggling activities undermine revenue

generation and impart unfair advantages to unscrupulous traders, and undermine the

intended protection policies embedded in the tariff structure (Wulf and Sokol, 2005).

2.6.4. ICD/CFS related activities

The establishment of dry ports allowed shippers to undertake consolidation and

distribution activities at inland locations relatively closer to their production

43

facilities, resulting in the reduction of transaction costs and accompanying risks, and

leading their products to become competitive in the global markets (Ng and Gujar,

2009). A dry port is a hinterland intermodal freight transport hub, typically

providing valuable space for logistics and onward distribution activities. The dry

port strengthens multi-modal transportation solutions by providing services like

trans-shipment, consolidation, depot, track and trace, maintenance of containers, and

customs clearance. There is one common feature for all of them, and that is the daily

rail connection to the seaports. When it comes to handling equipment, all of the dry

ports are equipped with reach stackers for handling containers of different weights.

In addition, some also have gantry cranes or forklifts for empty containers. Dry ports

play an important role in integrating modes of transport, reducing border crossing

and transit delays. It facilitates the use of energy efficient and lower emission means

of transport, and creating new clusters of economic growth (Jaržemskis &

Vasiliauskas, 2007; Roso, 2008; Roso and Lumsden, 2010; Do et al, 2011). There

are many parties who operate at dryport /ICD. The stakeholders are ICD operators,

Rail operators, customs department, customs brokers, forwarders, consolidators,

warehousing personnel, etc. (Rodrigue et al, 2010) The quality of the access to a dry

port and the quality of the road–rail interface determines the dry port’s performance.

Scheduled and reliable high capacity transportation to and from the seaport is

therefore necessary (Roso, 2007). Dry ports in developing economies seem to be

more ‘cluster oriented’, reflecting their dynamic interrelation with the industrial

clusters surrounding them (Ng and Cetin, 2012).

India introduced Inland Container Depots (ICDs) in 1983. India also uses the term

Container Freight Station (CFS), which differs from an ICD since containers are

stuffed and stripped there. Hence, an ICD is a consolidation node for containers

whereas a CFS aggregates individual consignments into containers. A CFS function

might be added to an ICD. ICDs are normally located outside the port towns but

there are no site restrictions regarding CFSs (Thorby, 2004). India has 247 dry ports

out of which 170 are functional and rest are under implementation. Nearly 40

percent of dry ports are owned by Container Corporation of India (CONCOR) and

Central Warehousing Corporation (CWC). Rest 60 percent dry ports are owned by

the private sector. Availability of land for railways & highways, environment &

forest clearance, huge rehabilitation cost, delay in land acquisition, clearances of

44

railways for rail over bridges and rail under bridges poor performance by some

contractors due to cash flow problem are major challenges for development of dry

ports in India (Saran, 2014).

2.6.4.1. Issues and challenges in ICD/CFS related activities

The ICD/ CFS material handling and warehousing activities face various kind of

challenges which are explained below. 1) Absence of RFID/GPS and advanced

warehousing systems: The ICDs in India do not have warehouses made with

advanced technologies. They are not made with innovative, long-term efficiency-

enhancing investments, research and development plans. Technologies like RFID,

GPS, etc., were never considered to make storage, tracking, loading unloading

activities efficient. (Peters, 1990; Ng and Gujar, 2009). 2) Lack of space for stack

and storage: India’s biggest ICD, ICD Tughlakabad3 in New Delhi faces acute

shortage of space for internal movement and also for warehousing activities.

Moreover the space planning, surrounding ICDs are also not planned properly. In

terms of local road connectivity around ICDs, there is no explicit planning for

consequential trailer movements for empty containers and empty trailer. Similarly,

there is no planning for trailer parking, maintenance, facilities for drivers etc. These

could lead to avoidable congestion and first/last mile problems (Raghuram and

Gangwar, 2007; UN Report, 2008; Cronje et al, 2009; Saran, 2014). 3) Lack of

coordination/communication problems amongst intermodal players: Missing

cooperation between the different actors of the intermodal transport chain is a big

challenge in ICD/CFS operations. Inefficient internal administrative processes,

communication problems, inefficiencies between main-haul, terminal, pre and end

haulage pose hindrances. Insufficient information exchange of container data causes

an inadequate planning. Limited planning for physical and administrative inspection

between customs and inspection authorities causes delay. The lack of resources and

unwillingness to invest also add to coordination issues (Langen and Chouly, 2004;

Visser et al, 2007; Horst and Langen, 2008; UN Report, 2008). 4) Long waiting of

inbound vehicles at ICD entry: The inbound cargo trucks face long waiting time at

ICD entry. ICD entry gates are narrow and trucks also cannot enter due to internal

3 Raghuram, G., & Gangwar, R. (2007). Containerization: building global trade

competitiveness. India: Indian Institute of Management.

45

space congestion (UN Report, 2008). 5) Insufficient rail sidings: Indian ICDs have

only one or two rail sidings. This makes cargo trains to wait for loading and

unloading. This causes delay and disturbance to planned schedule (Jamshed, 2007).

6) Lack of trained/experienced personnel: Lack of trained personnel in ICD

operations is a serious problem. Activities like containerisation of cargo, open space

management at ICD, warehousing of containers, terminal operations majorly loading

and unloading gets affected due to lack of trained people (Peters, 1990; Garnwa et

al, 2009; Ng and Gujar, 2009). 7) Inadequate cargo handling equipment: ICD/CFS

warehousing and terminal operations requires various types of material handling

equipment. Various types of reach stackers, cranes are required efficient storage and

movement which are not available in sufficient numbers (Peters, 1990; Gujar, 2006;

Raghuram and Gangwar, 2007; UN Report, 2008; Garnwa et al, 2009). 8)

Insufficient Security Measures: Many ICDs face problem of pilferage and theft of

products. This creates big challenge for the shippers/agents/brokers etc. as it leads to

loss and quantity variation with respect to data declared in the export document (UN

Report, 2008; Garnwa et al, 2009; Ng and Gujar, b2009). 9) Insufficient

maintenance/breakdown of infrastructure: The material handling equipment

available at ICD/CFSs suffers from frequent breakdown due to poor maintenance

policies. The maintenance management activities are reactive rather than following

preventive maintenance. The large response time, unavailability of spare parts is

common phenomenon (Raghuram and Gangwar, 2007; Ng and Gujar, 2009).

2.6.5. Road transportation activity

India’s road network is second largest in the world. Roads carry about 65 percent of

the freight and 80 percent of the passenger traffic. National highways constitute 1.7

percent of all roads and carry 40 percent of the road traffic.4 It is evident from these

data that road transit is most important mode of freight transportation in India.

Irrespective of continuous efforts through projects and regular work by the

authorities, still there are many issues and challenges involved in this activity.

2.6.5.1. Issues and challenges in road transportation

1) Delay at regulatory check points: During road transit of cargo from factory

premises to gateway seaport; it has to cross many state borders. All of these state

4 http://www.nhai.org/roadnetwork.htm; accessed on 31/07/2014,18.24 PM

46

borders have several regulatory check points in place to regulate cargo

transportation. These regulatory check points inspect the export and transportation

documents and may also physically check the cargo along with fulfilment of tax

formalities (Subramanian and Arnold, 2001; Gujar, 2006; Planning Commission

Report, Government of India, 2007; Srinivas and Krishna, 2009; Mitra, 2011;

Chandra, 2009; Gupta et al, 2010). 2) Time bound vehicle entry restrictions in cities:

Many highways pass through the small and big cities. These cities already have their

local traffic movement which is very high during day time compared to late evening

and night time. Therefore cities put entry restrictions for the cargo trucks to enter

and cross the city during day time as these trucks occupy more space on roads and

are normally slow moving too. Due to this kind of restriction; cargo trucks have to

wait at city border for city entry time (Rangaraj and Viswanadham, 2001;

Subramanian and Arnold, 2001; Planning Commission Report, Government of India,

2007; Rodrigues et al, 2008; Chandra, 2009; Gupta et al, 2010). 3) Unavailability of

trucks/trailers: Availability issue of trucks and trailers may not be there in all areas.

But in few areas, shippers face this challenge (Horst and Langen, 2008; Macharis

and Bontekoning, 2004). 4) Technology level of existing vehicles: Most of the cargo

trucks do not have inbuilt tracking technology through GPS which makes it difficult

to have real time and correct information. The trucks are also ill maintained which

leads to breakdown of vehicles. Breakdown of the vehicles also happens due to

excessive cargo load which is beyond the permissible load (Gujar, 2006; Sahay and

Mohan, 2006; Chandra, 2009; Planning Commission Report, Government of India,

2007; Rodrigues et al, 2008; Chandra, 2009; Hsu et al, 2009; Gupta et al, 2010; Shi

et al, 2011; Kemp et al, 2013). 5) Professionalism/skill level of drivers:

Professionalism and skill levels of truck drivers is big area of concern as they

become the sole caretakers of the cargo during transit. Drivers have responsibility of

both vehicle and cargo as safety of cargo and vehicle depends on them. The

maintenance of vehicle during transit, safeguarding of vehicle from any

breakdown/damage/accident and safeguarding of cargo from damage/theft/pilferage

is very crucial issue for road transportation (Subramanian and Arnold, 2001; Fugate

at al, 2009; Chandra, 2009; Taylor and Whicker, 2010; Overstreet et al, 2012; Kemp

et al, 2013). 6) Inadequate road networks: Although India has second largest road

network in the world but still the inadequacy of road network is felt in case of freight

transportation (Peters, 1990; Mitra, 2011; Chandra, 2009). 7) Traffic congestion in

47

hinterland/urban areas: The number of vehicles has been growing at an average pace

of 10.16 percent per annum over the last five years on Indian roads.5 This data helps

in understanding the traffic congestion scenario in almost all cities and towns as

road. The cargo transit time gets badly hampered due to traffic jams. (Schijndel and

Dinwoodie, 2000; Sahay and Mohan, 2006; Loa and Hall, 2008; Chandra, 2009;

Garnwa et al, 2009; Sen et al, 2010; Ehmke et al, 2012). 8) Unfavourable weather

conditions/acts of God: Weather conditions like rains, etc. and occurrence of natural

calamities can be challenging for road transportation (UN Report, 2003; UN Report,

2011). 9) Poor quality/condition of roads: The poor quality and bad conditions of

roads are a challenge in road transportation. It has been observed that roads are

narrow and made of substandard quality materials. Moreover, the maintenance and

repair work of roads are not as per standard. Many road accidents and traffic

congestions are also due to poor quality and conditions of roads (Sahay and Mohan,

2003; UN Report, 2003; World Bank Report, 2005; Sahay and Mohan, 2006;

Planning Commission Report, Government of India, 2007; Singh, 2008; Chandra,

2009; Deloitte Report, 2009; USITC, 2009; Deloitte Report, 2012).

2.6.6. Rail transportation activity

Indian railway network is one of the largest in the world. Despite investments worth

thousands of billions of US$ in the next 20 years on rail infrastructure, Indian

railways are facing a real challenge regarding congestion. The authorities have

already defined priority corridors to invest or upgrade, targeting a 50 percent plus

rail market share from their existing 40 percent share of the freight market (UN

Report, 2011).

2.6.6.1. Issues and challenges in rail transportation

There are several issues and challenges involved in freight rail transportation which

are explained in this section. 1) Coordination and planning issues: Efficient

functioning of freight trains is crucial and dependent on many others including rail

operators. It requires coordination amongst exporters, ICD operators, sea port

authorities, etc. There are many coordination related challenges due to inefficient

and ill trained manpower resulting into poor service quality (Peters, 1990; Horst and

5 http://www.nhai.org/roadnetwork.htm; accessed on 31/07/2014,18.24 PM

48

Langen, 2008; Horst and Lugt, 2009; KPMG Report, 2010; UN Report, 2011;

Deloitte Report, 2012). 2) Absence of dedicated and good quality tracks for cargo:

There is major issue of dedicated cargo rail tracks. There have been instances of

delay even in transportation on the main railway routes between the metropolises

due to inadequate rail corridors. It takes nearly a week to transport cargo from

Mumbai to Delhi. Lack of proper connections to ports is another cause for hindrance

in a smooth transport system. Often there is only a single track line directly

connected to one of the Indian ports. For example, about 60 percent of the port

traffic on the west coast is moved by rail to the northern hinterland implying huge

congestion on these routes. Moreover the infrastructure quality of the railway tracks

is also not satisfactory (Gujar, 2006; Jamshed, 2007; Deloitte Report, 2009; EBTC

Report, 2014; Gupta et al, 2010) 3) Availability of rail rakes, wagons and other

related infrastructure: This is one of the biggest issues in rail transportation. There

are many reasons which hamper the timely availability of rail rakes, wagons, etc.

One of the reason is imbalance of export import volumes from the destinations. Due

to which the inbound and outbound cargo traffic from a particular place is not

balanced. This leads to deviation and delay in freight train planning. There is also

mismatch in the turnaround times due to congestion and lack of proper facilities for

loading and unloading of containers. The mechanism of supply of rakes to customers

has been also inefficient due to frequent stabling of rakes and inefficient interchange

commitments between regional zones (World Bank Report, 2002; Phang, 2003;

Sahay and Mohan, 2003; Sahay and Mohan, 2006; Gujar, 2006; Hong, 2007;

Jamshed, 2007; Dablanc, 2009; UN Report, 2011). 4) Low priority of cargo trains

over passenger trains: In most of the cases passenger trains are given priority over

freight trains in case of shared tracks. This also leads to delay in given timelines

(Jamshed, 2007; Gupta et al, 2010; Catrina, 2012). 5) Weather conditions/acts of

God: The weather conditions and natural calamities like excessive rain fall, flood,

etc. obstruct the normal functioning of freight trains (UN Report, 2011).

2.6.7. Port related activities

The main function of the port is to transfer goods from land to shipping transport,

and vice versa. The complete sea-land process can be divided into seven handling

stages: (1) arrival of land transport to the port area (2) unloading the cargo on from

49

land transport; (3) moving the cargo from the unloading platform to transit; (4)

transit storage; (5) moving the cargo from transit storage to the quay ; (6) loading of

the cargo from the quay to the ship’s hold; (7) passage of the ship through the quay

up to the channel.

Stakeholders involved in the throughput of cargo include ship brokers, ships’ agents,

shippers and forwarders, stevedores, transport operators and warehouse operators

(López and Poole, 1998). Efficiency depends on loading and unloading time,

availability of the quay cranes and several yard machines like forklifts, straddle

carriers, reach stackers and tractors (Wong and Kozan, 2010). The timely arrival and

departures of sea vessels is very crucial for inbound and outbound cargo traffic and

further activities (Nishimura et al, 2009). Container stay-time is affected by

parameters like sufficiency in container handling from ship-to-shore and within

terminal, container through-put (total TEU/year/area of the terminal), height of

stacked containers, the high ratio of imported containers against exported ones and

ratio of empty/full containers (Kia et al, 2009). The market environment in which

ports are operating is changing considerably. Since ports have become links in a

global logistics chain, port competition has moved from competition between ports

to competition between transport chains. Port users such as shipping lines and

terminal operating companies are aware of the fact that the world wide transport

chain is perceived as an integrated system (Franc and Horst, 2008). Main shipping

line operators worldwide are APM-Maersk, Mediterranean Shipping Co., CMA-

CGM group, Evergreen group, Hapag-Llyod, CSCL, COSCO Container Lines, etc.

(Sys, 2009).

India has 12 major and 176 minor and intermediate ports along its more than 7500

km long coastline. Ports in India handle 90 percent by volume and 70 percent by

value of EXIM trade. Out of 12 the major ports, 6 ports in are east coast and 6 ports

in west coast. Major Ports handle about 60 percent of total seaborne traffic. 176 non

major ports handle 40 percent of total traffic. Container traffic at major ports almost

doubled in the past 5‐6 years. Average growth of container traffic is 13.27 percent

per year (Saran, 2014).These ports serve the country’s growing foreign trade as well

as the increasing movement of containers. The lengthened turnaround time at Indian

ports continues to be a significant bottleneck for export import business, with the

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lack of investment in technology being a major differentiator. The operational

challenges lead not only to higher turn-around time and consequently higher costs,

but also to peak time waiting periods that are several times higher compared to

several modern ports in other parts of the world (Deloitte Report, 2009). Study done

shows that one of the India’s biggest port Jawaharlal Nehru port rust (JNPT) is

relatively inefficient and it is critical for India to strengthen its container handling

operations and make them more efficient and smooth flowing (Wu and Lin, 2008).

2.6.7.1. Issues and challenges in port related activities

Issues and challenges related to port related activities are explained. 1) Lack of space

for seaport operations/storage/internal movement: a) The main problems seaports

face today, as a result of growing containerized transport, are lack of space at seaport

terminals and increased bottlenecks in the land-side transport system serving the

seaports. b) For some seaports the weakest link in their transport chain is their back

door, where congested roads or inadequate connections cause delays and raise

transport costs. c)The space problem has two dimensions: more space is required

within the port to increase the scale of terminal operations, and more is required

outside the port area for backup, storage, parking facility and trucking facilities. d)

Ports are facing acute shortage of storage space to implement their expansion plans

for handling additional cargo as economic activities around most of the ports have

increased to a large extent. The space congestion can be eased out by focussing

towards all around infrastructural development of sea port (Wang, 1998; Paik and

Bagchi, 2000; Sahay and Mohan, 2003; Kozan and Preston, 2006; Planning

Commission Report, Government of India, 2007; Jaržemskis and Vasiliauskas,

2007; UN Report, 2008; Nishimura et al, 2009; Deloitte Report, 2009; UNCTAD

Report, 2011; Harrison and Fichtinger; 2013; Hsu, 2013). 2) Insufficient cargo

handling equipment: Most Indian sea ports are inefficient in loading and unloading

operations. The result, ships are stuck for longer time here, which multiples the cost

for the shipper by as much as 10-20 percent. The cargo handling

equipment/machinery at the ports were commissioned years ago and have outlived

their expected lifespan. They do not conform to the requirements of the modern

vessels now calling at Indian ports. The right type of cargo handling accessories like

container spreader, special gears required by various commodity trade are either not

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available or are insufficient. Sophisticated container handling equipment like Quay

Gantry Crane (QGC) is available only in few ports like Chennai, Cochin, Mumbai,

Vizag and JNPT. The rest of the ports are left to handle containers with conventional

cranes or those belonging to vessels. The other types of container handling

equipment at the terminal like Rubber Tyre Gantry Crane (RTG), Rail Mounted

Gantry Cranes (RMGC), Top Lift Trucks (TLTs) and Reach Stackers (RS) are yet to

be provided in sufficient numbers at most of the ports. Wu and Lin’s specific study

of Jawaharlal Nehru Port Trust (JNPT) also indicates that the operating equipment at

is completely insufficient, including the number of quayside gantries, yard gantries,

and straddle carriers. The port’s management must come up with a long-term plan

for equipment improvement and replacement, and government needs to accelerate its

efforts to adjust and upgrade the infrastructure and facilities at its port (Peters, 1990;

Subramanian and Arnold, 2001; Planning Commission Report, Government of India,

2007; UN Report, 2003; Ray, 2004; Kozan and Preston, 2006; Rodrigue, 2006;

Planning Commission Report, Government of India, 2007; Stahlbock and Voß,;

2008; Wu and Lin, 2008; Nishimura et al, 2009; Panayides et al, 2009; Mitra, 2011;

Deloitte Report, 2010). 3) Labour related issues: The Indian labour laws are a major

hindrance to economic vitality because they make it harder to dismiss employees

than in any other country in the world. This is one of the biggest reasons for India’s

port sector being less attractive than counterparts in countries. Frequent political

strikes and transport industry strikes outside the port cause congestion and inhibit

mobility. This increases the transit time by one to several days to more than a week.

Enforcement of discipline amongst the unionized workforce is difficult. The poor

work ethics such as the tendency to report late/break early at the low level

mechanical post affects the individual’s as well as the gang’s productivity in the

shift. (Subramanian and Arnold, 2001; Monie, 1987; UN Report, 2003; Ray, 2004;

UN Report, 2006; Langen, 2008; Wu and Lin, 2008). 4) Congestion of inbound

vehicles at entry: The roads which are used by the cargo trucks near sea ports are

narrow and most of the seaports have only one entry gate for the inbound cargo

trucks. The proper management of incoming trucks at the sea port entry is missing

which leads to long waiting time for the cargo to enter the sea port area for further

formalities and operations required for loading of cargo on sea vessel. Moreover, the

scarcity of cargo movement and storage space inside the seaport adds to congestion

at entry. This cargo trucks have to wait for hours and days together to gate in the

52

cargo at seaport. Long queue of cargo trucks waiting to enter at seaport entry is

common sight (Planning Commission Report, Government of India, 2007; Wu and

Lin, 2008; Notteboom and Rodrigue, 2008). 5) Coordination between concerned

agencies and department: There are many stakeholders involved in the seaport

material handling and warehousing operations. The people who execute and manage

day to day activity at sea port are ship brokers, ships’ agents, shippers and

forwarders, stevedores, transport operators and warehouse operators along with

customs/inspection authorities. Efficiency of the seaport operations depend on the

work efficiency of these stakeholders. The activities at seaport are interdependent

and sequential. Delay at any stage operations affect the whole process at sea port.

Therefore effective communication and coordination amongst all the players is very

crucial and also the area of concern. There have been incidences of missing

cooperation between different parties leading to delays. Coordination problem lead

to less efficiency and create confusion in seaport operations (Peters, 1990;

Evangelista and Morvillo, 1999; Paik and Bagchi, 2000; Paixao and Marlow, 2003;

UN Report, 2006; UN Report, 2008; Wu and Lin, 2008; UN Report, 2008; World

Bank, 2012; Demirbas et al, 2014). 6) Weather conditions/acts of God: Seaport

operation gets severely affected by the weather conditions at sea. Heavy rains/ high

tides obstruct the regular activities and timelines (Monie, 1987; Harrison and

Fichtinger; 2013). 7) Challenges in consignment tracking: In normal case scenario

the export cargo gets stored in the storage area of the port before it gets boarded on

the vessel after required inspections and clearances. Due to lack of storage space and

absence of proper warehousing systems it becomes challenging to locate the cargo.

Tracking of the consignment in already congested and ill managed (UNCTAD

Report, 1999). 8) Increased Security regulations: Increased regulation is also a

growing feature of the sector, particularly with regard post 9/11 security issues. In

July 2004, a new international security code known as International Ship and Port

Facility Security Code came into effect and was designed to detect and deter threats

to international security. Additional security checks and inspections, including

information and documentation leads to delay (Barnes and Oloruntoba, 2005;

Huasman et al, 2005; Mangan et al, 2008; UN Report, 2008). 9) Inefficient

maintenance practices: The handling equipment available at ports suffers from

frequent breakdown due to poor maintenance policies. The maintenance activities

are reactive rather than following preventive maintenance. The large response time,

53

unavailability of spare parts is common phenomenon. Time dependence on

proprietary parts and cumbersome purchase procedures result in large down time of

equipment. Equipment breakdowns can increase processing time by three days

(Peters, 1990; Ray, 2004; Planning Commission Report, Government of India,

2007). 10) Out-dated technology and inefficient IT systems: Ports are using outdated

technology for seaport operations and also for integrating with other regulatory

agencies for data transmission. Many manual entries can be integrated to new IT

systems which is not happening due to inefficiency and lack of motivation.

Stakeholders also complain about IT system not working properly in required speed

(Peters, 1990; Notteboom, 2006; Langen, 2008; Deloitte Report, 2009; Baron and

Matheu, 2013; Hsu, 2013). 11) Bureaucratic issues: India’s bureaucratic system is

also a barrier to port operations. This bureaucratic system comprises of excessive

number of administrative agencies and employees. These bodies and their employee

do not have clear lines of responsibility. The bureaucracy also spawns bribery,

corruption and autocratic decision-making (Paik and Bagchi, 2000; UN Report,

2006; Wu and Lin, 2008; Zhan, 2011).

2.7. Cost implications in EXIM business due to delay in logistics activities

Material movement in export import business face delays at various stages. These

delay in logistics activities of EXIM business have cost implications. Djankov et al

(2006) calculate that a delay of one day is equivalent to an additional bilateral

distance of about 70 kilometres. Hummels (2000) found that each additional day of

transit time for a country’s trade would reduce the probability of the United States

sourcing from that country by 1–1.5 percentage points. The delay cost is higher for

developing countries because of the nature of their exports. There are different kind

of cost implications due to logistics delay which are explained below.

2.7.1. Administrative workload costs

Post delay there are many administrative activities required to ensure delivery of

cargo. The administrative activities related to customer service, communication,

documentation and tracking, etc. require extra expenditure (Saccomano, 1999;

Djankov et al, 2006; Chen, 2008; Zhang and Figliozzi, 2010).

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2.7.2. Transportation costs

Various stages and modes of transportation are involved in logistics activities of

EXIM cargo. Delay at many of these stages require extra cost to transport the cargo

further. There may be requirement of transport mode change for faster delivery or

rerouting or cargo. Shipper might have to incur more cost because of an urgent

situation and sudden demand (Simatupang and Sridharan, 2004; Hausman et al,

2005; Ballou, 2006; Jaržemskis & Vasiliauskas, 2007; Holter et al, 2008; Manuj and

Mentzer, 2008; Lin & Zhou, 2010; Vijayvargiya and Dey, 2010; Zhang and

Figliozzi, 2010; Bretzke, 2011; Liedtke, 2012; Unnikrishnan et al, 2012; Ishfaq,

2013; Selviaridis and Norrman, 2014).

2.7.3. Sales and promotion plan costs

Exporters have high concerns about company reputation, service level and long-term

relationships with their retailers. Delay in delivery of cargo pose risk to their future

business, may damage their image and it may also lead to loss of business. Exporters

tend to incur extra cost in their sales and promotion plans in this situation (Rodrigues

et al, 2008; Guiffrida and Jaber, 2008; Zhang and Figliozzi, 2010; Hishamuddin et

al, 2013; Vedel and Ellegaard, 2013).

2.7.4. Inventory costs

Delay in logistics activities may impact higher inventory cost. Cargo may also face

damage or pilferage in these situations (Wanke and Zinn 2003; Hausman et al, 2005;

Zhang and Figliozzi, 2010; Azzi et al, 2012; Liedtke, 2012; Havenga and Simpson,

2015).

2.7.5. Account receivable and cash flow

Delays may force exporters to offer price discounts, rebates or penalty payments.

Longer delays may even result in the cancellation of orders, the return of cargo or

the auction of the shipment at foreign ports. Moreover the contractual and payment

terms have a significant impact on exporters’ cash flows when delays take place

(Chen, 2008; Manuj and Mentzer, 2008; Zhang and Figliozzi, 2010).

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2.7.6. Customs-port costs

Delay at ports due to extra custom requirements or cargo inspections, for instance,

may increase considerably the associated port costs. Based on the results from

screening and/or scanning the container is opened and unstuffed for a visual

verification of contents. This generates unreasonably long delays, as a consequence

considerably increases costs associated with port activities (Park and Kim, 2005;

Clark et al, 2004; Hausman et al, 2005; Donner and Kruk, 2009; Nishimura et al,

2009; Zhang and Figliozzi, 2010).

2.8. Summary

The objective of the research was to study outbound logistics activities and related

issues and challenges of apparel exports. The prime focus of the study was to

measure the effect of logistics hindrances on delivery lead time and cost implications

with respect to India. In this regard, the relevant literature in the available research

studies were covered to build better understanding. The major areas covered under

the literature review were: apparel supply chain, apparel export activities and its

business partners, logistics scenario of India, international logistics activities and

their issues and challenges and cost factors due to delay in logistics activities.

Apparel supply chain represents a complex supply chain characterised by ever

increasing demand of fashionable and fresh products coupled with quality and low

prices. Pressure of customer demands adds to supply chain dynamism and makes it

intensive. Buyers scout for suppliers who can meet their criteria of lead time, price,

quality and product innovation.

The main stakeholders of apparel export business are: a) Buyer who is retailer, b)

Seller who is manufacturer/exporter and c) Intermediary who acts as an interface

between buyer and the seller.

Exporter deals with raw material suppliers at preproduction stage of apparel

manufacturing. Freight forwarder manage logistics activities of apparel export

shipment along with exporters and buyers. There are various other multimodal

transport players who facilitate physical movement of export cargo from origin till

destination.

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There are several kinds of sourcing complexities which buyers, exporters and

intermediaries face. Operational, managerial, infrastructural, financial, social and

political complexities pose various hindrances in apparel sourcing process. Being

part of extremely dynamic and time sensitive supply chain, lead time of apparel

exports is very significant. Logistics related complexities were found to be very

crucial for delivery lead time of apparel exports. Various kinds of operational,

infrastructural, managerial complexities related to logistics are mentioned in

research studies.

The outbound logistics process of apparel exports are: arrangement of inspection and

insurance, arrangement of container and stuffing of cargo, arrangement of

transportation till port, customs clearance and export documentation. In apparel

exports, cargo inspection and insurance are mostly handled by buyers. Rest other

logistics activities till gateway port can be categorised under following international

logistics activities: export documentation, export packaging, customs clearance,

inland transportation (road and rail transportation), warehousing and material

handling activities. Warehousing and material handling activities can be further

categorised under seaport and ICD/CFS related activities. All these seven outbound

logistics activities face several issues and challenges.

Export documentation activities of apparel exports has multiple document

formalities to follow. There are complications involved in this lengthy

documentation process. All concerned regulatory and clearing agencies may not

have complete automation and integration of systems. Lack of clarity in export sales

contract lead to erroneous documentation and there may be wrong declaration or

typing errors also.

Garments are shipped as containerized cargo and this requires stuffing of product in

the container. Lack of availability of container may impact the timely

stuffing/packaging of garments. Moreover delay is involved in waiting for all

shipments which are planned to get stuffed in one container under less than

container load (LCL) mode.

Customs clearance of apparel exports is long and tedious process and has several

steps of inspection and documentation. Lack of clarity on product and tariff

classification may create issues. Lack of staff/officials/resources, lack of

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understanding of customs valuation/policies, limited working hours,

corruption/bureaucracy create hurdles in the process. Lengthy manual/physical

inspection, lengthy apparel process against decision, operational limitation of EDI

system, missing documents, heightened security initiatives, informal trade practices

also hinder customs clearance process.

From landlocked areas, apparel export shipment gets rail connectivity from ICD.

ICD/CFS warehousing and material handling activities have various issues and

challenges. Waiting time of cargo at entry due to less entry points, lack of storage

space, older technology involved in warehousing systems, lack of trained manpower,

lack of rail sidings, insufficient cargo handling equipment and maintenance

practices, lack of coordination amongst different stakeholders, insufficient security

measures pose hindrances in ICD/CFS related activities.

Road transportation activity too has many issues and challenges. Bad

quality/condition of roads, time bound vehicle entry restriction in cities,

unavailability of trucks/trailers, delay at regulatory check points, older technology

level of existing vehicles, lack of professionalism/skill levels of drivers, inadequate

road networks, traffic congestion, and unfavourable weather conditions are problem

areas.

Rail Transportation faces issues and challenges like coordination/planning issues,

absence of dedicated and good quality tracks, availability of rakes/wagons, low

priority to cargo trains over passenger trains and unfavourable weather conditions.

Export cargo gets loaded on ship/vessel at seaport. Seaport warehousing and

material handling has various issues and challenges. Lack of space for seaport

operations, storage, lack of cargo handling equipment, maintenance practices, labour

and bureaucratic issues, congestion of inbound traffic due to less entry points,

coordination issues, challenges in consignment tracking, increased security

regulations, outdated technology and inefficient IT systems, unfavourable weather

conditions create hurdles in seaport operations.

There are various cost implications due to the delay originating from logistics issues

and challenges. The types of cost implications are administrative workload,

transportation; inventory, customs-port charges, promotion and sales, account

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receivable and cash flow costs. The summary of relevant review of literature can be

briefly explained through Figure 2.7.

Figure 2.7: Literature review summarization

Source: Author

2.9. Research gap

Literature review highlighted the fact that apparel sourcing has global spread and big

number of countries in the business of apparel exports. Research studies were found

having focus on the country specific challenges of apparel exports. Research studies

having focus on apparel sourcing complexities faced by buyers, exporters and

intermediaries were covered and it was found that these studies mentioned about

complexities related to logistics. Many research studies were found which

mentioned that risks and challenges related to logistics are amongst crucial

hindrances of apparel exports. But no research study was found having specific

focus on issues and challenges related to logistics activities of apparel exports.

Global apparel sourcing challenges including delivery lead time

Business Process of apparel exports including outbound logistics process

Macro level logistics challenges including some micro level challenegs involved in apparel export process

Cost implications due to delay in logistics process of EXIM business

Research gap- Identification of micro level challenges in outbound logistics process, delay lag and cost implications due to delay in delivery lead

time of apparel exports

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Research studies related to apparel exports and having country specific focus were

also covered. Research studies having focus on apparel exports of Bangladesh

(Nuruzzaman and Haque, 2009; Ahsan and Azeem, 2010; Hasan and Alim, 2010),

China (Chen and Shih, 2004; Pfohl and Shen, 2008; Fierro and Benı´tez, 2011) and

Sri Lanka (Kalegama, 2005; Kapuge and Smith, 2007) were found in which logistics

complexities and some macro level issues and challenges were discussed along with

other sourcing challenges. One research study having focus on lead time

management of Bangladesh apparel exports (Nuruzzaman and Haque, 2009)

focussed on logistics issues and challenges affect lead time of apparel exports but

did not cover micro level logistics issues and challenges. One research study having

focus on China (Carter et al, 1997) focussed on logistics activity wise micro issues

and challenges but the study did not have sector specific focus neither had focus on

lead time.

Thus the first research gap was identified as: Research studies covered did not have

focus on micro level logistics issues and challenges related to apparel exports.

Besides, the studies did not discuss micro level issues and challenges that affect

delivery lead time of apparel exports.

During literature review, logistics research studies of non-apparel sectors were also

covered to find out studies having focus on logistics issues and challenges with

focus on lead time. But any sector specific study having focus on logistics issues and

challenges and lead time was not found.

Thus the second research gap identified as: Research studies (both apparel and non-

apparel sector) did not focus on research related to logistics issues and challenges

and its effect on lead time of export business. Research studies had not focus on

identification of severity level of logistics issues and challenges and their effect on

delivery lead time of export business.

One research study was found having focus on logistics barriers in China and

measured the cost implications of delay due to logistics related issues and

challenges. But this study did not have focus on apparel exports neither had any

discussion on delay lag.

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Thus the third research gap identified as: Research studies did not measure delay lag

and cost implications arising due to logistics related issues and challenges in apparel

exports.

The prime focus of the research was to focus on the above mentioned identified

gaps. These three identified gaps gave three main objectives of the research which

are discussed in Section 1.2 of chapter one.