16
CHAPTER - II
REVIEW OF LITERATURE
Review of earlier studies conducted on Clearing and Forwarding
agents and its related topics was very much a necessity for the
investigator to have a depth of knowledge about the functioning of
clearing and forwarding agents in general and supply chain management
in particular. Keeping this in mind, the researcher made a review of some
selected studies, which are directly as well as indirectly related to the
present study. Some of the relevant studies are compiled in this chapter
and given below.
Logistics1 has and will remain an integral part of the textile
industry. No industry can survive without the appropriate movement of
goods from one place to the other. Textile industry is no exception!
Timeliness is an important aspect of textile logistics. If any of the
two sides are not able to reach the goods on the agreed time, its reputation
is bound to suffer in the market. The deal may not bear the desired fruits,
if the task is not completed and delivered on time. Timeliness has a huge
role to play in the making of a textile business. There are a number of
1 www.fibre2fashion.com/industry-article/paidArticles/4009.asp
17
incidents that portray the importance of timeliness in textile logistics.
There are different types of transportation in the world. Each has its own
speed and charges. Courier by air, water, and road are different. Air is the
fastest. Hence, it costs more. No doubt, as compared to the edible goods
industry, timeliness has lesser importance in textile logistics. Still,
timeliness is an important matter of consideration in the textile logistics
industry.
Mr. Amit Maheshwari (2010)2, CEO, MD, Softlink Logistic
Systems, is of the opinion that India has become the prime destination for
logistics service providers all over the world. The demand for logistics
services in India has been largely driven by the remarkable growth of the
economy. The growth was being projected at 9-10 per cent in next few
years, with the CAGR (Compounded Annual Growth Rate) expected to
grow at a rate of 7-8 per cent. This growth is expected to gain greater
momentum due to the exponential growth of the Indian economy. India is
also experiencing a big retail boom as the buying capacity of the middle
and upper middle segment of the population has scaled new heights.
Many large multinationals from the retail industry are planning to set up
2 http://www.softlinkglobal.com/resources/Expert%20Opinion/Amit_ TTalkJan10.
aspx? Type=resources
18
operation in India and large local retailers are also planning to expand
their operations.
But with the infrastructure largely under-developed and incapable
of catering to a growing economy, logistics management in India
becomes too complex. The poor condition of infrastructure directly
translates to higher turnover, pushing up the operating costs and reducing
efficiency. There are other problems such as complex regulatory
compliance and limited adoption and utilization of technology, which has
resulted in increased paperwork and inability to communicate effectively
with customers.
Vassilis Markides and Matthias Holweg (1991)3 described a
Norwegian information system for customs clearance, TVINN, developed
by the Norwegian customs services. They have examined three Clearing
and Forwarding agents using the system to declare import orders and
discussed the influence on time, costs, flexibility, service level, and
industry competition. The direct effects for the Clearing and Forwarding
agents are improved cash-flow, reduced lead-time, and increased
flexibility in the handling of import orders. These effects have indirectly
3Vassilis Markides, Matthias Holweg, ―Customs clearance and electronic data
interchange — A study of Norwegian freight forwarders using Electronic Data
Interchange‖, International Journal of Production EconomicsVol. 24, Issues 1-2,
November 1991, pp. 91-101
19
caused change in conditions for the material flow and have impact on the
logistical performance. This will lead to a new competitive situation for
the Clearing and Forwarding business.
Aysegul Ozsomer, Michel Mitri and S. Tamer Cavusgil (1993)4
described the recent changes in the international forwarding environment
and have witnessed the emergence of “new forms” of forwarders
incorporating a broad spectrum of services under one roof. Such total
logistics companies are becoming a critical third party in obtaining a
competitive advantage in foreign markets. Hence the evaluation and
selection of an international Clearing and Forwarding agent is no longer a
simple operational decision but a strategic one. It presents and explains an
expert systems tool to assist decision makers in selecting the Clearing and
Forwarding agent who fits their needs best. The system, called “Freight”,
brings together international marketing, logistics and artificial
intelligence knowledge.
Luis Ferreira and Julius Sigut (1993)5 found that as the Interchange
point between road and rail, intermodal freight terminals (IFTs) are
4Aysegul Ozsomer, Michel Mitri and S. Tamer Cavusgil, ―Selecting International
Freight Forwarders: An Expert Systems Application‖, International Journal of
Physical Distribution & Logistics Management, Vol. 23,Issue.3, pp.11 – 21. 5Luis Ferreira , Julius Sigut, ―Measuring the performance of intermodal freight
terminals‖, journal Transportation Planning and Technology, Vol. 17, Issue 3 June
1993 , pp269 - 280
20
critical elements in the total freight distribution chain. Their paper
addresses the twin objectives of reducing freight transport costs and
improving customer service by putting forward a number of indicators
designed to measure the performance of IFTs. Each of the three major
performance areas namely customer service, operational efficiency and
terminal productivity are discussed in detail. A methodology is put
forward which enables operating strategies to be evaluated. Computer
simulation is used in order to arrive at strategies which reduce operating
and capital costs and satisfy customer service requirements. The
simulation model outputs include performance measures related to
customer service such as mean waiting times required for loading and
unloading of containers, as well as productivity measures of terminal
operations such as lifting equipment utilization.
Kant Rao and Richard, R. Young (1994)6 explored the attitude of
shippers and service providers towards outsourcing of logistics functions
performed within large multinational, manufacturing companies engaged
in global trade and presented a model describing the factors which
influence the outsourcing decisions. They indicate that five key factors
influence the outsourcing decision: centrality of the logistics functions to
6Kant Rao, Richard, R. Young, ―Global Supply Chains: Factors Influencing
Outsourcing of Logistics Functions‖, International Journal of Physical Distribution
& Logistics Management, Vol.24, Issue:6, 1994, pp.11 - 19
21
the firm's core competency; risk liability and control; cost/service
tradeoffs in operations; information and communications systems; and
market relationships.
An Assocham report projects that Indian textile industry is
estimated to grow 16% annually and reach USD 115 billion by the end of
2012. Growth in the textile segment will concurrently trigger growth in
the ancillary industries. A surging demand from the rural market, and
demand for textile machinery and accessories can also be witnessed. To
meet these requirements, Indian textile industry would require around 10
million trained workers. Despite the large pool of labour force in India,
the country needs to work hard to meet the rising global demands. This is
because as much there is availability of labour force, that much there is
also a deficit of 'skilled labor'. Indian textile industry is facing a crippling
shortage of skilled employees which is a threat to the economic growth of
the country.
Dave Crick and Michael R.Czinkota (1995)7 provided comparative
empirical evidence drawn from studies carried out in the USA and the
UK respectively. Their study indicates that even allowing for the time
period between studies, differences exist in how managers from both US 7Dave Crick, Michael R. Czinkota, ―Export assistance: Another look at whether we
are supporting the best programmes‖, International Marketing Review, Vol.12,
Issue.3, 1995, pp. 61 – 72.
22
and UK exporting companies rate three sets of attributes in their
international marketing effort. These sets of attributes are: those that are
believed to be desired by importers; the possibility for improving
performance of these factors by a change in emphasis by executives in the
exporting firms; and the support required by firms in order to assist
export activities. An implication of this research is that even allowing for
the time difference between the two studies, the respective governments
were not offering the type of assistance required by exporters within their
countries. Their study questions the provision of export promotion
programmes and suggested that policy makers must recognize that in
order to make the best use of their limited resources, assistance should be
focused on helping exporters meet the requirements of importers.
Jose L. Tongzon‟s (1995)8 study concluded that factors influencing
a port's performance and efficiency are few. Furthermore, studies have
failed to quantify the relative contributions of these factors to overall port
performance and efficiency. His article attempted to fill this gap by
establishing a model of port performance and efficiency. Specifically, it
aimed to specify and empirically test the various factors which influence
8 Jose L. Tongzon, ―Determinants of port performance and efficiency‖,
Transportation Research Part A: Policy and Practice,Vol. 29, Issue 3, May 1995, pp.
245-252
23
the performance and efficiency of a port. Based on a sample of 23
international ports, the study inter alia was able to provide an empirical
basis for the crucial role of terminal efficiency relative to other factors in
the overall port performance.
Brooks, Mary R. Button and Kenneth J.(1996)9 in their paper
explored factors influencing the rates charged by liner shipping firms on
the North Atlantic and, in particular, the influence customers type plays.
The study made use of a disaggregate data base to examine the role of
factors such as cargo weight and nautical distance as determinants of
standard (dry van) container rates. The nature of the customer (Clearing
and Forwarding agent, consignee or shipper) was examined to reflect the
influences of requirement variations on pricing in addition to that of the
commodity cost of provision. The study used basic statistical procedures
to consider variability of rates and to relate these to the set of explanatory
factors. No previous studies of conference pricing have included a
customer type variable.
9Brooks, Mary R. Button and Kenneth J, ―The determinants of shipping rates: A
North Atlantic case study‖, Transport Logistics, Vol.1, No.1, July 1996 , pp. 21-
30(10)
24
H.J. Schramma‟s (1996)10
paper is about the role of Clearing and
Forwarding agents in managing international logistic chains, where they
are often seen as their 'architects'. But they are in danger of being
bypassed or disintermediated, due to organisational and/or technological
reasons. First, a need for an integrated approach to logistic chain has been
already recognised in theory and practice. Multinational firms in the
industry or retail sectors show an increasing demand for complex
transport and logistic service like world-wide door-to-door delivery or
one-stop shopping. Second, the employment of new technologies in
connection with the Internet causes a deep change in the relationships
along the logistic chain due to a change in intermediation. This will be
reflected by developing a theoretical framework based on Casson's theory
of entrepreneurial networks in international business to provide some
insight in the complex relationships between shippers, Clearing and
Forwarding agents and other intermediaries or service providers along
with the international logistic chain.
William W. Wilson, Steven R. Priewe, and Bruce Dahl (1998)11
in
their analysis said that in late 1980s, grain-hauling railroads began
10
H.J. Schramma,The Role Of Freight Forwarders In international Logistic Chains,
Transportation Journal, Vol.35/4, July 1996, pp.5-11 11
William W. Wilson, Steven R. Priewe,and Bruce Dahl, ―Forward Shipping Options
for Grain by Rail: A Strategic Risk Analysis‖, Journal ofAgricultural and Resource
Economics vol. 23(2) Dec 1998, pp 526-544
25
offering alternatives that have made shipping decisions more strategic.
Shippers now confront alternatives ranging from nearby and
unguaranteed ordering to various durations of forward and guaranteed
shipment. Each has varying penalties for cancellation and payments from
the rail road for non performance, and differing risks and payoffs.
Because of the configuration of choices, shippers confront a portfolio of
shipping alternatives. A dynamics to chastic simulation model was
developed to analyze alternative strategies. The model includes the
effects of uncertainties in tariff rate changes, basis levels, forward and
spot grain purchases, and receiving railcars under each of three
alternatives. Shipping demand is determined by inter-month commodity
price differences, carrying costs, transport costs, and storage capacity.
Considering these factors, the shipper chooses grain sales and shipping
strategies that maximize net payoffs and confronts a trade-off between
expected profits and risk.
M.S. Michel (1998)12
in his study has focused on the problems of
production and distribution and its impact on a complete change in
corporate. He has stressed on the need for centralized planning systems
of companies that will be responsible for everything from raw material
12
M.S. Michel ― Problems of production & Distribution – A critical analysis‖, Ph.D
thesis – Newyork, 1998.
26
extraction/supply to manufacturing/production, sales/ marketing and
transport / distribution.
The article by Manolis G. Kavussanos and Nikos K.
Nomikos‟(1999)13
investigated the unbiasedness hypothesis of futures
prices in the freight futures market. Being the only market whose
underlying asset is a service, it sets it apart from other markets
investigated so far in the literature. Co-integration techniques employed
to examine this hypothesis, indicated that futures prices one and two
months before maturity are unbiased forecasts of the realized spot prices,
whereas a bias exists in the three-months futures prices. This mixed
evidence is in agreement with studies in other markets and suggests that
the acceptance or rejection of unbiasedness depends on the idiosyncrasies
of the market under investigation and on the time to maturity of the
contract. Despite the existence of a bias in the three-months prices,
futures prices for all maturities are found to provide forecasts of the
realized spot prices that are superior to forecasts generated from error
correction, ARIMA, exponential smoothing, and random walk models.
Hence it appears that users of the BIFFEX market receive accurate
signals from the futures prices (regarding the future course of cash prices)
13
Manolis G. Kavussanos, Nikos K. Nomikos, ―The forward pricing function of the
shipping freight futures market‖, Journal of Futures Markets, Vol. 19, Issue.3, 27 Apr
1999 PP. 353-379.
27
and can use the information generated by these prices to guide their
physical market decisions.
Paul R. Murphy and James M. Daley (1999)14
summarized
previous logistics research into the benefits of, and barriers to Electronic
Data Interchange (EDI). They argue that information management in
general, and Electronic Data Interchange in particular, is vitally important
for today‟s international Clearing and Forwarding agents. They presented
the findings from empirical studies of international Clearing and
Forwarding agents and customers of international Clearing and
Forwarding agents with respect to Electronic Data Interchange benefits
and barriers. They suggested that numerous opportunities exist for further
research into Electronic Data Interchange benefits and barriers across
various logistics constituencies.
David A. Henshera, and Thomas F. Golob (1999)15
say that an
efficient and effective freight transport strategy can be aided by early
professional contributions from key stakeholders. One broad group who
14 Paul R. Murphy, James M. Daley, ―EDI benefits and barriers: Comparing
international freight forwarders and their customers‖, International Journal of
Physical Distribution & Logistics Management, Vol. 29, Issue:3, June 1999, pp207 -
217
15 David A. Henshera, and Thomas F. Golob, ―Searching for policy priorities in the
formulation of a freight transport strategy: a canonical correlation analysis of freight
industry attitudes‖, Transportation Research Part E: Logistics and Transportation
Review, Vol. 35, Issue.4, December 1999, pp.241-267
28
have historically been given limited opportunity to influence the drafting
of a freight strategy, are commercial road users and shippers who
manufacture and distribute goods. Utilising a data set collected in
Australia in 1996 from a sample of organisations involved directly and
indirectly in road freight transportation, views were sought on road
infrastructure changes, new road infrastructure, non-road infrastructure
needs and transport policies. An optimal scaling approach using non-
linear canonical correlation is implemented to search for structural
relationships between the underlying policy and infrastructure dimensions
and the various industry categories. This framework provided a powerful
mechanism for identifying differences among stakeholders in terms of
their support for or opposite to specific policies. Results revealed the
considerable differences in attitudes associated with the component parts
of the freight industry.
R.M Joshi (1999)16
undertook a preliminary study on the impact of
services provided by the Clearing and Forwarding agents in logistics
industry. He has suggested that a taskforce has to set up a committee to
deliberate on issues relating to logistics including challenges ahead
unleashed by Globalization.
16
R.M Joshi, ― Study on the Impact of Services provided by freight forwarders‖, Ph.D
thesis, City University of Hong kong, December 1999
29
Nalin Shinghal and Tony Fowkes(2000)17
in their paper presented
empirical results of determinants of mode choice for freight services in
India. The Leeds Adaptive Stated Preference software was used for the
main survey on the Delhi to Bombay corridor. The empirical results show
that frequency of service is an important attribute determining mode
choice. Valuation of reliability is generally lower than expected. Value of
time is quite similar across different product segments. The results further
suggested that intermodal services could be viable for high value and
finished goods.
Ir. Y.M. Bontekoning‟s (2000)18
case study was carried out in
order to analyse and compare shunting and hub-operations. The case
study focused on the shunting yard in Metz-Sablon, France. The main
conclusion is that the hub-terminal carries out the same function as a
shunting yard, but in a different way. The daily productivity of the hub-
terminal is higher than shunting for a through put up to about 550 wagons
per day and train handling times are significant shorter in hub-operations.
A cost comparison could not be carried out, but it seems that the amount
17
Nalin Shinghala and Tony Fowkes, ―Freight mode choice and adaptive stated
preferences‖, Institute for Transport Studies, University of Leeds, Leeds LS2 9JT,
UK, December 2002, p.p 367-378 18
Ir. Y.M. Bontekoning, ―A jump forward in intermodal freight transport: are hub-
terminals an alternative for shunting?‖, Ph.D thesis (published), TRAIL Research
School, Delft, December 2000
30
of investment of a hub-terminal is lower than that of a modern shunting
yard.
D.A.Henshe and A.M.Brewer‟s (2001)19
paper examined the
development process of a Freight Strategy in which stakeholder and
action learning theories were used to procure collaborative inputs from
key players involved in the Freight Services industry. They reviewed the
positions presented by key stakeholders within a workshop setting. With
a focus on a broad based discussion from stakeholders, the collaborative
learning process sought some very specific directions at a strategic level
to assist NSW transport agencies in the development of its Freight
Strategy 2010.
Boyson , Sandor .C. Corsi (2002)20
et al touted that the demand
Supply management solutions to increase the amount spent under
management. The fast growing enterprises in logistics focuses on the
faster implementation and Return On Investment for the better efficiency
of Clearing and Forwarding agents.
19
D. A. Henshe and A. M. Brewer, ―Developing a freight strategy: the use of a
collaborative learning process to secure stakeholder input‖, Transport Policy, Vol. 8,
Issue 1, 1 January 2001, pp. 1-10 20
Boyson Sandor. C. Corsi, ‖Importance of logistics and intermediaries ― Ph.D
thesis, Homas Essay 23,Trade policy Research Centre, London 2002
31
An Assocham21
report projects that Indian textile industry is
estimated to grow 16% annually and reach USD 115 billion by the end of
2012. Growth in the textile segment will concurrently trigger growth in
the ancillary industries. A surging demand from the rural market, and
demand for textile machinery and accessories can also be witnessed. To
meet these requirements, Indian textile industry would require around 10
million trained workers. Despite the large pool of labor force in India, the
country needs to work hard to meet the rising global demands. This is
because as much there is availability of labor force, that much there is
also a deficit of 'skilled labor'. Indian textile industry is facing a crippling
shortage of skilled employees which is a threat to the economic growth of
the country.
Svensson G (2003)22
in his article stresses the crucial importance of
the balance between companies' policies of inventory management and
the occurrence of disturbances in logistics flows. The study is based upon
a mail survey in the automotive industry. It is concluded that there is in
part a significant association between companies' inventories and
disturbances in inbound and outbound logistics flows. The financial
21
www.fibre2fashion.com/industry-article/paidArticles/4018.asp 22
Svensson G. ―The principle of balance between companies' inventories and
disturbances in logistics flows: Empirical illustration and conceptualisation‖
International Journal of Physical Distribution & Logistics Management, Volume 33,
Number 9, 2003 , pp. 765-784(20)
32
benefits that might be achieved through leanness in inventory
management might also negatively influence the financial costs due to
increased disturbances.
Shore B.Venkatachalam A.R.(2003)23
opines that Competitive
advantage is often determined by the effectiveness of an organization's
supply chain, and as a result, the evaluation and selection of suppliers
have become an increasingly important management activity. But the
evaluation process is complex. The data that must be considered are both
technical and social/organizational. Much of the data are difficult to
obtain and ambiguous or vague to interpret. In addition, the dynamic
global environment of changing exchange rates, economic conditions,
and technical infrastructure, demand that the pool of potential suppliers
be re-evaluated periodically. Nonetheless, a rational process of evaluation
must exist to select the most appropriate suppliers. This paper addresses
one dimension of the evaluation process, the information sharing
capability of potential supply chain partners. It is an especially important
dimension since information technology is necessary to horizontally
integrate geographically dispersed operations. Fuzzy logic, a subset of
23
Shore B.; Venkatachalam A.R. ―Evaluating the information sharing capabilities of
supply chain partners: A fuzzy logic model‖, International Journal of Physical
Distribution & Logistics Management, Emerald Group Publishing Limited, Volume
33, Number 21, Sept 2003, pp. 804-824
33
artificial intelligence, together with analytical hierarchy process is used to
model this process and rank potential suppliers
Zeng A.Z.; Rossetti C. (2003)24
presented a five-step evaluation
framework and illustrates how this framework can be implemented using
a case study at a leading firm in the US aviation industry and its part
supplier in Chengdu, China. The framework not only identifies the key
logistics cost items, but also suggests a way of quantifying each of the
cost elements. The computational part of the framework can be easily
implemented on spreadsheets and offers substantial flexibility to
accommodate assessment of various transportation alternatives and
sensitivity analysis.
Ohnell S and Woxenius J.(2003)25
see large differences in both
speed and costs between the traffic modes road and air. Rail has not yet
successfully offered services "faster than road but cheaper than air",
although there are technical, logistical and economical opportunities for
competing with air for intra-continental shipments and co-operate for
intercontinental ones. The article categorises segments of the European
24
Zeng A.Z.; Rossetti C. ―Developing a framework for evaluating the logistics costs
in global sourcing processes: An implementation and insights‖, International Journal
of Physical Distribution & Logistics Management, Volume 33, Number 9, 2003,
pp. 785-803(19) 25
Ohnell S.; Woxenius J. ―An industry analysis of express freight from a European
railway‖, International Journal of Physical Distribution & Logistics Management,
Volume 33, Number 8, 2003 , pp. 735-751(17)
34
express freight market and analyses them in a rail perspective. The
analysis shows that a transport chain with many actors and long distances
does not necessarily entail longer transport times than a short-distance
with the same circumstances under a single management. The analysis
also shows that many express transport systems are built in a modular
way, implying that subsystems can be exchanged.
Ernest (2004)26
Says that the jobs of Customs House Agents‟ and
customs clearing are at stake- the possibilities of risk elimination of the
imported goods would be eliminated by the best management techniques
on a computer based system and not on the orders of customs examining
staff.
John Bowen & Thomas Leinbach‟s (2004)27
article points out that
rapid increase in the level of market concentration in the supply chain
management industries has created firms that enjoy the economies of
scale and scope necessary to offer multinational clients integrated
services on a worldwide basis. This article examined how changes in the
structure of the Clearing and Forwarding industry have affected the
nature of the services the industry offers across several Southeast Asian
26
Earnest ,‖ Role of CHA in Logistics Service‖, Ph.D thesis, Department of Social
Sciences, University of California at Berkley, February 2004 27
John Bowen & Thomas Leinbach, ― Market Concentration In the Air Freight
Forwarding Industry‖, Journal of economic and social geography Vol. 95 Issue 2,
December 2002, pp174 - 188
35
economies. The article focused on the role that large global forwarders
have played in bringing advanced logistics services, especially those
linked to the air freight industry, to this industrialising region. Data were
used from interviews with over 100 Clearing and Forwarding agents in
Singapore, Malaysia, and the Philippines to examine both the geographic
variation in the provision of air cargo services and the manner in which
the types of services a forwarder offers vary with firm size.
The paper of Steen Koekebakker and Roar Os Aringdland (2004)28
investigated the dynamics of forward freight rate dynamics. They
specified their model in a Heath-Jarrow-Morton framework. This model
was originally developed for interest rate markets and, in subsequent
work, the model has been applied to various commodity markets. They
analyzed ten years of weekly time charter (TC) rates for a Panamax
65,000 dwt bulk carrier. Their data set consists of 6-, 12- and 36-month
TC rates. They used this data to construct, each day, a forward rate
function using a smoothing algorithm. They used the smooth data to
investigate the factors governing the dynamics of the forward freight rate
curve. A strange volatility structure was found in the data. Their results
showed that the volatility of the forward curve is bumped, with volatility
28
Steen Koekebakker and Roar Os Aringdland, ―Modelling forward freight rate
dynamics—empirical evidence from time charter rates‖, journal Maritime Policy &
Management, Vol.31, Issue 4, October 2004 , pp 319 - 335
36
reaching a peak for freight rates with roughly one year to maturity. Also,
correlations between different parts of the term structure are in general
low and even negative.
M. Keeneth (2004)29
has analyzed the service concepts and trends
in logistics industry and has suggested that the relationship and activities
of Clearing and Forwarding agent through 3rd and 4th party logistics
plays a vital role and it can be well by combining the dry port,
warehousing and consolidation services and there will be a sustainable
development in logistics industry by the service providers
Ms. Jwekel (2004)30
project entitled “A Study on the Ports of India
- with special reference to Cochin Port” has taken the objectives of
studying and analyzing the cargo movement, cargo handling capacity &
containerization. He has suggested that Less Container Load (LCL) / Full
Container Load (FCL) activities, can be improved, and consolidation
should be made mandatory to increase the competition of logistics service
industry
29
M.Keeneth., ―The effect of incompleate service concept for logistics centres,
Cambridge university, UK: Cambridge university press, August 2009, pp 198- 220 30
Ms.Jwekel., ―Study on the ports of India‖ Ph.D, thesis (published), Standford
university, USA, April 2004.
37
G. Liedtke and H. Schepperle (2004)31
felt that transport models
are used to estimate the expected effects of policy measures - such as
infrastructure building, upgrading or the introduction of a highway toll -
on the users of a transport system. The results of transport models are a
necessary input for cost-benefit analyses, which answer the question of
whether a policy measure improves the economic welfare. In passenger
transport modelling, the activity-based approach links peoples' daily
behaviour patterns to their movements through time and space. Traffic-as
a macroscopic phenomenon—can be explained as the sum of many
individual behaviour decisions. In the modelling of freight transport, the
state-of-the-art method is still the aggregate and functional approach,
which concentrates on regions/traffic cells and their gross domestic
product by economic sector instead of individual logistical decisions. The
transports are losing the relation to the responsible decision-maker. There
is still a lack of suitable actor-based micro-models that are capable of
adequately modeling freight transport systems. Having a microscopic
modelling base for the transport of goods would be a significant
improvement for transport forecasts and the assessment of policy
measures, because of its ability to map individual adaptation reactions.
31
G. Liedtke H. Schepperle, ―Segmentation of the transportation market with regard
to activity-based freight transport modeling‖, International Journal of Logistics
Research and Applications, Vol. 7, Issue 3 September 2004 , pp.199 - 218
38
The article gives a short introduction to microscopic modelling
techniques in freight transport. However, the question of the modelling
object and its classification is the first to be answered when modelling
and simulating shipper and carrier behaviour. Relevant data sources were
critically analysed with regard to activity-based freight transport
modelling. It was shown that inadequate classifications have detained
methodical progress in freight transport modelling. A suitable
classification schema was deduced, which was based on the notion of
transport markets. For the identification of the characteristics of these
markets from existing trip samples, fuzzy-clustering techniques were
presented. Further approaches for calibrating a first generation of activity-
based freight transport models using the existing data sources were
shown.
Manolis G. Kavussanos, Ilias D. Visvikis, Roy A. Batchelor
(2004)32
et al to investigated the impact of the introduction of Forward
Freight Agreement (FFA) trading on spot market price volatility in two
panamax Atlantic (1 and 1A) and two panamax Pacific (2 and 2A) trading
routes of the dry-bulk shipping industry. The result suggest that the onset
of FFA trading (a) decreased spot price volatility in all investigated
32
Manolis G. Kavussanos, Ilias D. Visvikis , and Roy A. Batchelor Transportation
Research Part E: Logistics and Transportation Review, Vol. 40, Issue.4, July 2004,
pp. 273-296
39
routes, (b) has had an impact on the asymmetry of volatility in Pacific
routes, and (c) substantially improved the quality and speed of
information flow in three out of the four investigated routes. After
introducing control variables that may affect price volatility, the results
indicated that only in voyage routes may the reduction in volatility be a
direct consequence of FFA trading. It seems that the introduction of FFA
trading has not had a detrimental effect on the spot market, with an
improvement in the way information is transmitted into spot prices
following the onset of FFA trading.
Xiamiao Li and Ruhe Xie (2004)33
wrote that in recent years, the
statistics show that the turnaround time of wagons becomes longer and
longer in China railway transportation. The turnaround time of 1998 was
45.4% higher than that of 1987, and the forward speed of freight transport
is very slow. According to their investigations and analyses, they
concluded that the time that influenced the speed of freight transport is
mainly consumed at the freight stations and transfer stations. This part of
time makes up the major percentage, about 60% of the whole cargo ship
time, and the travel time only makes up less than 40%. This paper
analyzed factors influencing the turnaround time and the speed in detail,
33
Xiamiao Li and Ruhe Xie, ―Analyses of Freight Forward-Time in Railway
Transportation‖, ASCE Journals, April 2000, pp. 198-201
40
and finds out some main factors, and some suggestions and strategies
were proposed.
V. Radhakrishnan Iyer (2005)34
has stated that LCL hub will not
only reduce the transit time due to transcription all the other hub ports,
and it brings down the cost of ocean freight for shipping LCL cargo
world wide from India. The LCL operators has to rework the cargo
themselves at the designated ICD‟s/CFS‟s and route the cargo directly,
hence the activities of air, ocean transport, warehousing, custom
brokerage, trading, consulting, and distribution and can be made easily by
directing FCL/LCL Services from JN port, Chennai, Tuticorin and
Cochin port‟s-through the ICD‟s of Bangalore, Tirupur, Ludhiyana,
Hyderabad, Jodhpur and Jaipur.
Springer Berlin and Heidelberg‟s (2006)35
paper presented a
model for the collaboration among independent Clearing and Forwarding
entities. In the modern highly competitive transportation branch Clearing
and Forwarding agents reduce their fulfillment costs by exploiting
different execution modes (self-fulfillment and subcontraction). For self-
fulfillment they use their own vehicles to execute the requests and for
34
Radhakrishnan Iyer.,‖Buyer- Supplier relationship on LCL/FCL operations‖,Ph.D
thesis, Newburg, CA , Sage publications,May 2005 35
Springer Berlin and Heidelberg, ―Collaborating freight forwarding enterprises
Request allocation and profit sharing‖, OR Spectrum, Vol.28, No 3, July, 2006,
pp.301-317.
41
subcontracting they forward the orders to external freight carriers. Further
enhancement of competitiveness can be achieved if the Clearing and
Forwarding agents cooperate in coalitions in order to balance their
request portfolios. Participation in such a coalition gains additional profit
for the entire coalition and for each participant, therefore reinforcing the
market position of the partners. The integrated operational transport
problem as well as existing collaboration approaches are introduced. The
presented model for collaboration is based on theoretical foundations in
the field of combinatorial auctions and operational research game theory.
It is applicable for coalitions of Clearing and Forwarding agents,
especially for the collaboration of Profit Centres within large Clearing
and Forwarding companies. The proposed theoretical approach and the
presented collaboration model are suitable for a coalition of Clearing and
Forwarding companies with nearly similar potential on the market.
Jean-Paul Rodrigue (2006)36
on the core concepts in transport and
economic geography states that transportation is a derived demand, both
for passengers and for freight transport alike. This assumption is reflected
in the conventional literature which underlines that transport exists
because it is the expression of a spatially differentiated function of supply
36
Jean-Paul Rodrigue, ―Challenging the derived transport-demand thesis:
geographical issues in freight distribution‖, Environment and Planning, No. 38(8),
2006, pp. 1449 – 1462
42
and demand, and is thus considered to be „derived‟ from other activities.
However, recent developments in logistics and supply-chain management
underline a paradigm shift in the consideration of freight transport as a
derived demand. In many sectors of activity, the functions of production,
consumption, and transportation have become embedded to the point that
it is difficult to tell them apart. The author investigates the extent to
which the concept of derived transport demand is being challenged by
supply-chain management strategies. To overcome some of the
inadequacies of the conventional perspective, it is suggested that several
segments of freight-related activities should be considered as part of an
integrated transport demand. Although operationally derived demand still
applies to freight distribution, strategically—at the level of global
commodity chains-integrated demand appears to be the emerging
paradigm that is worth investigating further.
Nanci A. Tangeman (2006)37
found that between 1,600 and 3,000
Clearing and Forwarding agents operate in the United States. Sometimes
they called travel agents for Clearing and Forwarding agents to provide a
wide range of services, including cargo booking, air cargo documenting,
and consolidating cargo from numerous shippers. Clearing and
37
Nanci A. Tangeman , ―The international logistics of freight forwarding:
Performance measurement at the harper group‖, National Productivity Review,Vol
13 Issue 1Nov 2006, pp 107 - 114
43
Forwarding agents usually do not own aircraft, but book space on
commercial and cargo airlines on behalf of companies around the world
that manufacture or supply virtually every type of product. The Harper
Group, a San Francisco-based forwarder, has over 380 offices in 44
countries. Its Circle Airfreight subsidiary is one of the largest
international air export forwarders in the United States. In 1993 the
company expanded its quality program to measure internal and supplier
performance, as well as customer service in its Circle subsidiary. Harper's
program is one of only a handful of programs in the industry.
Samir K. Srivastava‟s (2006)38
paper seeks to comprehensively
examine and present the state of logistics and supply chain practices in
India. The two aspects are considered separately as these two have still
not integrated seamlessly in the Indian context. Their study was based on
both field observations and secondary data. They focused on supply chain
collaboration and partnerships, supply chain structure, facilities network
design, transportation and logistics and the role of Information and
Communications Technologies (ICT). On-site observations and informal
discussions and interviews with middle and top managers of 25 select
firms were carried out. These were substantiated with data and
38
Samir K. Srivastava, ―Logistics And Supply Chain Practices In India‖, The Journal
of Business Perspective Vol. 10 l No. 3 l July-September 2006, pp.70-78.
44
information from literature and other secondary sources. They analyzed
and assessed logistics and supply chain practices in order to discern
important issues such as emerging trends and areas of concern. They
highlighted and addressed issues related to supply chain managers, Indian
policy makers and other stakeholders.
Hutichnson(2006)39
stated that a strategic alliance between public
sector logistics major Central Warehousing Corporation (CWC) and
Social Logistics, a private logistics and trucking firm, K D Surajpur
commenced operation recently. It will provide containerization facilities
for LCL import / export cargo and bonded warehousing, with special
focus on road transportation of containers to and from gateway ports.
This Inland Container Depot has an impressive infrastructure comprising
a land area of 2 acres, warehousing space of 7,825 sq.m., container
stockyard of 20,000 sq. metre dedicated packing areas of 1,800 sq. m and
a fully air conditioned administrative complex of 600 sq. m.
Huffman(2006)40
in his study on “shipping lines to raise cargo
rates”-informed that the top 10 shipping lines have planned to increase
39
Hutichnson., ‖Gateway of ports‖ Journal of management. , Vol-21(1) 13-47,
February,2006,pp.56-74 40
Huffman., ―Shipping lines to raise cargo rates‖ Ph.D Thesis(Published) - Dept of
management studies, University of California.,at Berkley, USA,2007.
45
rates for moving cotton containers to china and other Asian Countries
from the US on increasing demand for fiber.
Roy Batchelora, Amir Alizadeha, and Ilias Visvikisb (2007)41
in
their paper tested the performance of popular time series models in
predicting spot and forward rates on major seaborne freight routes.
Shipping is a nonstorable service, so the forward price is not tied to the
spot by any arbitrage relationship. The developing forward market is
dominated by hedgers, and it is an empirical question whether forward
rates contain information about future spot rates. They sound that vector
equilibrium correction (VECM) models gave the best in-sample fit, but
implausibly suggest that forward rates converge strongly on spot rates. In
out-of-sample forecasting all models easily outperform a random walk
benchmark. Forward rates do help to forecast spot rates, suggesting some
degree of speculative efficiency. However, in predicting forward rates,
the VECM is unhelpful, and ARIMA or VAR models forecast better. The
exercise illustrated the dangers of forecasting with equilibrium correction
models when the underlying market structure was evolving, and
coefficient estimates conflict with sensible priors.
41
Roy Batchelora, Amir Alizadeha, and Ilias Visvikisb, ―Forecasting spot and
forward prices in the international freight market‖, International Journal of
Forecasting Vol. 23, Issue 1, January-March 2007, pp.101-114.
46
Paul R. Kleindorfer and Ilias Visvikis (2007)42
presented their
paper and analyzed changes in global logistics markets and the financial
instruments that are currently used to value and hedge the cost of capacity
and services in those markets. Logistics was at the center of network-
based strategies, since it was a key enabling factor for international trade
in linking manufacturing sources with intermediate and final markets.
The recent history of maritime and air cargo logistics was traced, and the
convergence and integration of the physical and financial networks that
underlie valuation and use of logistics services was described. In the
process, logistics was viewed as both a key enabler of globalization and
itself an interesting example of how network-based strategies and
competencies have evolved.
William E. Youngdahl and Arvinder P.S. Loomba (2000)43
are of
the opinion that Value-added services expand manufacturing
organizations‟ ability to compete beyond traditional measures of
manufacturing competitiveness such as cost, quality, flexibility, and
delivery. This concept of expanding the roles of factories to include
service had received considerable attention and wide acceptance among
42
Paul R. Kleindorfer and Ilias Visvikis, ―Integration Of Financial And Physical
Networks In Global Logistics‖, Working Paper , The Wharton School, University of
Pennsylvania, November 2007 43
William E. Youngdahl, Arvinder P.S. Loomba , ―Service-driven global supply
chains‖, International Journal of Service Industry Management, Issue: 4, January
2000, pp 329 – 347.
47
both researchers and practitioners. For example, recent empirical studies
have demonstrated that manufacturing performance, particularly delivery
performance can be enhanced through expanded service roles that focus
on effective information flows within the company and to external
customers. Despite such benefits, the scope of analysis had been limited
to individual manufacturing organizations. Given the realities of global
competition, practitioners require knowledge that extends beyond
individual organizations. The domain of their problems includes the
complexities of interactions with multiple stakeholders along global
supply chains. The purpose of this paper, therefore, was to extend the
concept of the service factory to global supply chains. Specifically, the
approach would be to provide a conceptualization of the role of service in
global supply chain management that could be used as a starting point for
discussion and further research in this area. They provide several
propositions and concluded with implications for both researchers and
practitioners.
Douglas M. Lambert and Martha C. cooper (2000)44
say that
successful supply chain management requires cross-functional integration
and marketing must play a critical role. The challenge was to determine
44
Douglas M. Lambert and Martha C. cooper, ―Issues in Supply Chain
Management‖, Industrial Marketing, Vol.29, Issue.1 Jan 2000, pp. 65-83
48
how to successfully accomplish this integration. They presented a frame
work for supply chain managements as well as questions for how it might
be implemented and questions for future research. Case studies
conducted at several companies and involving multiple members of
supply chains were used to illustrate the concepts described.
Hertz S. (2001)45
is of the view that partnerships and alliances are
both tools to increase integration in supply chains and effects of increased
integration. As a result of alliance, integration in supply chain networks
effectiveness and efficiency increase. To develop highly integrated
supply chain networks involve investing time, resources and much effort.
Therefore, firms often continue and grow within the existing supply chain
network rather than choose other alternatives. On the other hand, this also
means that the establishment of new alliances was hindered. The gradual
changes normally also apply to the dissolution of alliances. Even though
the firm seems to leave a specific individual alliance, it might stay on in
the same supply chain or still be a part of the firm network in another
supply chain. Few radical changes took place. If they do, acquisitions,
technological change or strategic alliances between networks are mostly
the triggers causing effects on several individual alliances. Over time, as
45
Hertz S, ―Dynamics of Alliances in Highly Integrated Supply Chain Networks‖,
International Journal of Logistics, Volume 4, Number 2, 1 July 2001 ,
pp. 237-256(20)
49
integration increases, supply chain networks become leaner and more
tightly connected, and complexity, risk and conflicts rise in the formation
and dissolution of alliances. This spiral effect is enhanced by the
tendency to imitate the successful supply chains' increasing homogeneity
of chains and stronger competition. Thereby the total industry network
will be increasingly integrated, which means fewer opportunities to
switch and lower flexibility. Most firms are already tied up and the
effects more difficult to foresee. To change alliances will be increasingly
problematic and costly when both the supply chain and the total industry
network are highly integrated. Acquisitions would rise since this might be
the only way to break into these integrated supply chains. As a result the
number of alternatives decreases and the dynamics of alliances reduced,
which in the end forced new waves of radical changes due to "domino"
effects.
Robinson R. (2002)46
in his paper argues that, with the rapid and
pervasive restructuring of supply chains and of the logistics pathways in
which ports are embedded, existing paradigms no longer offer adequate
insights into the functions of ports or port authorities. Rather, ports must
now be seen as elements in value-driven chain systems or in value chain
46
Ports as elements in value-driven chain systems: the new paradigm, ―Maritime
Policy & Management, Vol. 29, No. 3, 1 September 2002 , pp. 241-255
50
constellations. They deliver value to shippers and to third party service
providers; customer segmentation and targeting was on the basis of a
clearly specified value proposition; and the port captures value for itself
and for the chain in which it was embedded. The role of ports and port
authorities, and the way in which they position themselves in the new
business environments beyond 2001 must be defined within a paradigm
of ports as elements in value-driven chain systems, not simply as places
with particular, if complex, functions.
Athanasios Ballis (2007)47
says that freight villages reflect a
modern way of organizing logistics, transport, and goods distribution
activities. Warehouses are a basic element in such building complexes,
and their efficient planning and operation is essential for the viability of
the system. Warehouse design requires a mixture of analytical skills and
creativity. Although effort has been dedicated to defining a global
methodological design framework, the most scientific papers on the
subject address well-defined, isolated problems. A practitioner may
notice, however, that many warehouses offering efficient, cost-effective
services are in operation and that several warehouse design manuals exist
that tackle aspects of design and operation. Investigating academic and
47
Athanasios Ballis, ―Freight Villages: Warehouse Design and Rail Link Aspects‖,
Transportation Research Record: Journal of the Transportation Research Board,
Volume 1966 / 2006, February 28, 2007 , pp.27-33
51
pragmatic points of view, this paper was an attempt to present an overall
view of the facility layout and warehouse design problem, and it
introduced the analysis and results of the preliminary design phase of a
new freight village where issues related to facilities layout, warehouse
sizing, and rail connections have been considered.
Katrina Savitskie‟s (2008)48
paper gives a basic overview of the
Clearing and Forwarding function, detailing the benefits the function
provides, along with several viewpoints (from interviews with managers
in this field) to provide further insight into the role of a Clearing and
Forwarding agent. The interview responses from the qualitative
methodology lead to several academic and managerial implications and
sets directions for future research.
With drastic competition among logistics service limited, Clearing
and Forwarding agents must establish a long-term union relationship with
their customers such as the provision of customized logistics services.
One of the ways was through the use of a e-CRM system, which is a
knowledge intensive and complex process involving multiple knowledge
source and decision rules. Analyses of customers and customer
48 Katrina Savitskie, ―Freight Forwarding: Benefits and Implications for Managers‖,
The Icfai Journal of Supply Chain Management, Vol. V, No. 2, June 2008 pp. 58-67.
52
interactions for electronic customer relationship management (e-CRM)
can be performed by way of optimization methods, using data-mining
(DM), or combined approaches. This paper presented hybrid knowledge
and model system, which integrated mathematical models with
knowledge rules, in the formulation of shipment plans which customer
loyalty and cost-effective has to be considered at the same time. The
system would help logistics service limited to increase customer retention
rate and resource utilization significantly49
.
On a study presented in www.brunel.ac.uk (2008)50
a successful
performance for the improving and determinants of export supply chain
management (ESCM) for fresh fruit and vegetable (FFV), and assessed
practical issues of export supply chain. The classification scheme for this
review was based on exporting and supply chain management (SCM)
performance was ESCM and includes review dimensions for
(1) international marketing and theories, (2) exporting, (3) SCM,
(4) information technology (IT) and performance issues. They conclude
that although successful performance resolves difficult features
associated with internationalization, few researches address the practical
ESCM to improve in its performance.
49
http://ieeexplore.ieee.org/xpls/abs_all.jsp?arnumber=4680710 50
www.brunel.ac.uk
53
Ask what really has changed for and what to expect from future
supply chains, most surveys rank activities related to sourcing,
operations, customer services and marketing in terms of their importance
to, or degree of hindrance for successful Supply Chain Management
(SCM). A focused survey traced the development of supply chains and
networks over two decades. It observed the expected growth in use of
supporting IT systems, extent of information sharing and scope of
coordination efforts and characterized the different stages of supply chain
evolution on the basis of supply chain integration and changing roles and
responsibilities of the companies. It seems that due to the continuous
structural change of the business environment the very concept of supply
chain, let alone the best practice of managing one, should be subjected to
re-examination in a wider context. In order to reach the current ideal of
SCM practices, the strategic preconditions for innovative networking also
need to be in place51
.
All these studies have done on various aspects of supply chain
management and freight forwarding but not on the satisfaction level of
the customers and their problems. Hence the study.
51
http://www.sciencedirect.com