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