CII Logistics
Weekly News Letter
Weekly Logistics & Freight News Letter
17 March 2008 – Vol. 1 No 80
INSIDE……………
2
Feature
Logistics Operations of Mumbai Dabbawalas – A Review of
Critical Success Factors
6
Recent Happenings
India
International
8
Freight Rates
Road Freight Rates
Air Freight Rates
Ocean Freight Rates
CII Institute of Logistics
98/1, Velacherry Main Road, Guindy
Chennai – 600 032
Ph: 91-44-42444555, Fax: 91-44-42444510
Website: www.ciilogistics.com
CII Logistics & Freight News
FEATURE
Logistics
Operations
of
Mumbai Dabbawalas – A
Review of Critical Success Factors
Introduction
The logistic operations of Mumbai
Dabbawalas are one of the finest examples of
operations in Indian logistics sector. The
organisation has received international
recognition for its efficient operations. It has
been certified as Six Sigma Organisation by
Forbes group and has received ISO 9001:2000
by Joint Accreditation System of Australia and
New Zealand (JASANZ). The status of Six
Sigma was accredited for bringing efficiency
in its operations to the extent of 3.4 defects in
1m operations. The organisation has also
received Outstanding Service Organisation
Award by National Institution for Quality and
Reliability (NIQR).
A typical model of Dabbawala operations is
given in the case study below. First of all food
is cooked by family members of the
customers. Then the members of the
Dabbawala team accomplish the task of
delivering tiffin boxes to their customers and
collecting back the empty tiffin boxes during
their reverse journey.
Case Study
Nutan Mumbai Tiffin Box Suppliers
Association (NMTBSA) was started as in
1880 and registered as a charitable trust in
1956. NMTBSA is a streamlined organisation
with 4,500 semi-literate members which
supplies door-to-door tiffin services to its
customers. Other than the suburban train
service, the transportation was done on
pushcarts, cycles and by foot.
Table 1: Statistical Highlights of NMTBSA
Total area coverage
60Km
Volume of business
2,00,000 tiffin boxes
per day
Time
taken
in 3 hours
collection and delivery
Error rate
Cost of service
Annual turnover
Employee earning
1
in
16m
transactions
Rs300 p.m
Rs36 crore
Rs5,000-6,000 p.m
Source: Dabbawala
For example at Vile Parle Station, there are
four groups of dabbawalas, each group having
twenty members and each member serves 40
customers. These 3,200 tiffin boxes are
collected by team members at 9A.M., reach
the station and are sorted according to their
destinations by 10A.M. when the Dabbawala
Special train arrives. Dabbawalas use the
coding system based on combination of
alphabets and numbers. These numbers and
alphabets give details about the origin station,
destination station, building name, floor of
the office where lunch is to be delivered.
VLP
E
3 9 EX 12
Source: Dabbawala Website www.mydabbawala.com
Here, VLP denotes Vile Parle which is a suburban region in Mumbai. E is code for
Dabbawalas at residential location and 3 is
code for destination station. 9 EX 12 is code
for Dabbawalas at destination. EX denotes
Express Towers which is the building where
tiffin is to be delivered. 12 is floor number of
the office in the building.
Success Factors
Flexible Infrastructure
The activities carried out by Dabbawalas are
dependent on the sub-urban train services of
Mumbai. As the railway infrastructure is
developed resulting in higher frequency of
trains, continuity is maintained in the
operations.
2
CII Logistics & Freight News
Appropriate network
The network of Dabbawalas combines
various logistics modes such as milkman
route, inter hub transfer and hub and spoke
distribution.
Codification System
The codification system is very useful for the
smooth flow of material and accurate tracking
of the boxes. The codification system involves
combination of alphabets, symbols and
colours. With the help of these codes, the
floor number, building name, starting and
destination point can be accurately predicted.
Chart 1: Operations flow chart of Dabbawalas
Team members collecting lunch boxes from
residential areas
Sorting lunch boxes at sorting station
according to destination
Loading lunch boxes in set carts to suburban train for hub/final destination
Transferring lunch boxes to final destinations
using rail
Unloading and rearranging lunch boxes
according to final destination
Loading on special carts and transferring to
final destination
Delivering lunch boxes at final destination
Collecting lunch boxes and beginning of
reverse journey
Sorting of lunch boxes at the destination as
per origin station
Transferring lunch boxes to origin station
using rail network
Unloading at original station and
regrouping lunch boxes to individual
houses
Final delivery of empty lunch boxes to
individual households
Topography
The topography of Mumbai is longitudinal.
Hence there are long distances between
various regions of Mumbai.
Process Capability
The time required by Dabbawalas is about 3
hours while the time available for end-end
delivery is 4 hours. Thus, it meets the needs
and expectations of its customers. Besides
this, delivery of lunch boxes is consolidated at
the floor level at the customer location which
saves lot of time and reduces the chances of
errors.
Transport Economics
Public transport i.e. sub-urban rail network is
used by Dabbawalas to deliver lunch boxes to
their customers. This result in affordable costs
for their customers and at the same time
allows Dabbawalas to carry out operations
using volume and scale economies.
Redundancy
Every individual is assigned a particular route.
This information on routes is known to other
members also in the team. Therefore, a
member can be easily substituted on its
collection route without affecting the accuracy
of collection process.
Coordination
The responsibility of collecting and delivering
lunch boxes lies on the individual. There are
no supervisors or managers in the team to
govern the process as every member is
properly trained, self motivated and
empowered to perform in the best possible
manner.
Structure
The structure is three-tier co-operative type
and easily scalable depending on business
opportunities available.
Compensation
All the members of the team receive uniform,
compensation independent of work load and
responsibility shared by various members.
Operation completed
Source: IIM Ahemadabad Research
3
CII Logistics & Freight News
New initiatives
The level of technology used in operations
carried out by Dabbawalas is low as the
barefoot delivery men is the prime movers,
but dabbawalas have started making use of
modern information technology. Under these
initiatives, they are now allowing booking for
delivery through SMS. A web site,
mydabbawala.com, has been added to allow
on-line booking to remain at pace with
modern technology. An on-line poll is also
regularly conducted on the web ensuring to
take consideration of customer feedback.
Challenges for Dabbawalas
Now-a-days, changing environment is posing
a threat to the Dabbawalas for their survival.
Dabbawalas are unable to recruit new people
from their families and relatives, who used to
be the major recruitment source for them in
the past. Besides this, the trend of two
members earning in the family has increased
women employment, thus wives are having no
time to prepare elaborate meals. Demand for
service of Dabbawalas has also come down
due to organisations giving free lunch
vouchers to their employees.
Future Outlook
In spite of these challenges, outlook of
Dabbawalas seems to be bright. First, there
are people from various communities, castes
and religions in Mumbai who eat food items
as per their religion or caste. Hence, they will
be consuming food prepared by their family
members only and so services of Dabbawalas
will be required. Secondly, due to awareness
among people regarding their health, they take
proper care of food consumed by them and
view food served at fast food outlets and
restaurants as unhealthy.
4
CII Logistics & Freight News
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5
CII Logistics & Freight News
RECENT HAPPENINGS AND
NEWS BRIEFS (ROUND UP)
India
TNT India planning for 5 mega hubs
TNT India, the wholly owned subsidiary of
the Netherlands based TNT NV is planning
to set up 5 mega hubs in the country within
the next few years. These are expected to
come up at Nagpur, Delhi, Kolkata and one
location each in the South and West (around
Mumbai). The investment involved to set up
each of these hubs is expected to be around
€2m.
Rutges Cargo to handle European road
freight services
Contract has been granted to London based
Rutges Cargo by Jet Airways to exclusively
handle its road feeder trucking services from
Brussels. As per the terms of the deal, Rutges
Cargo will provide trucking to and from offline handling at 100 airports throughout
Europe. Rutges won the contract following a
competitive tender.
Dimensions Logistics in strategic tie-up
with Ipsen Logistics Group
Dimensions Logistics Services Pvt Ltd (DLS),
one of the starters in delivering global logistics
solutions to its customers by sea and air has
formed an alliance with Europe based Ipsen
Logistics Group, a multimodal cargo player,
to enter a new era in the logistics industry.
This deal will allow DLS to provide
specialised door-to-door delivery services in
inland European destinations.
Transcare planning to set up Distribution
Park at Vallarpadam
Transcare India Logistics Pvt Ltd has planned
to set up a distribution park at Vallarpadam,
part of the proposed port-based special
economic zone (SEZ) for consolidation and
distribution of cargo. The project will develop
modern food processing units and facilitating
integration of port handling and logistics
services. It has been proposed to set up the
park in an area of 53 hectares of land leased
from the port and it is estimated to involve an
investment of Rs35.66 crore.
MbPT to set up harbour wall berths Feb
2010
Union Government has approved the
proposal of Mumbai Port Trust (MbPT) to
develop harbour wall berths at Indira Dock
(ID). Setting up of harbour wall berths is
expected to involve a cost of Rs353 crore and
will be raised by internal resources of MbPT.
The project includes provisions for handling
of cargo, equipment and dredging in the
project area and the approach channel for
easily handling deep-draught ships. This
project will lead to increase in the handling
capacity of the port by 8m tonnes.
Jindal Stainless to enter power, logistics
sectors
Jindal Stainless Ltd, India's largest stainless
steel producer is setting up a separate firm for
entering into infrastructure sector. It will start
by entering logistics sector with its own fleet
of trucks and later on will enter power sector.
The new firm will be known as Jindal
Infrastructure & Utility Ltd. Jindal Stainless
Steel will invest up to Rs5 billion in a phased
manner to set up the firm.
IR to take Chinese expertise in logistics
parks, heavy haul operations
Indian Railways (IR) has decided to take
assistance from China for developing
multimodal logistics parks, heavy haul
operations, as well as in research and
development
(R&D).
Following
the
memorandum of understanding (MoU) signed
between both countries. Possibilities of
cooperation in the proposed high- speed
corridor, development of stations and heavy
haul operations will be main issues to be
discussed.
IR freight loadings up 14% in February 08
Indian Railways (IR) carried out 70.54MT of
freight traffic in February showing growth of
14.38% over the freight traffic carried during
the corresponding period of last year. The
major drivers of high growth rate are expected
to be iron ore and cement traffic. Indian
Railways carried 714.25MT of freight traffic
during the first eleven months (April 2007 –
February 2008) of the current financial year
showing almost 9% growth over the
corresponding period last fiscal.
6
CII Logistics & Freight News
International
JV for rail route between Western Europe
and Russia
Deutsche Bahn (the German national railway
company) and the Russian Railways RZD
have established a JV with their partners
Polzug, Kombiverkehr and Transcontainer
which is known as Trans-Eurasia Logistics.
The JV is formed to provide single-source
logistics services for the transportation of
containers between Western Europe and
Russia to simplify rail freight transportation
on this route.
TNT inaugurated scheduled road
connection to Ukraine
To handle growing shipping volumes to and
from one of Europe’s fastest-growing
economies TNT has opened an international
road connection to Ukraine. TNT has become
the first express integrator to provide such
services. The new route will link Ukraine’s
major economic centres, such as Kharkov,
Dnepropetrovsk and Odessa, to Europe and
the rest of the world via Kiev and TNT’s road
hub in Warsaw, Poland.
Three new Asia-Middle East services to
be launch by MOL
Three new Asia-Middle East services in April
2008 will be launched by Mitsui OSK Lines
(MOL) to enhance its direct services and
offers the fastest transit times available
between Japan and the Middle East. The new
three services are CM4, CM5 and CM6.
NYK Logistics to open first warehouse in
Moscow
NYK Logistics has announced to open
warehousing operations in Moscow in June,
2008. The operations will come up after
Japanese group signed a long-term rental
contract with developers Logo Group in
February 2008, for a newly constructed
13,500-square-meter warehouse in the Pokrov
region of Russia's capital.
FTZ designation to Dallas Logistics Hub
The part of 6,000-acre multimodal Dallas
Logistics Hub, developed by Allen Group, has
been included in the expansion of Foreign
Trade Zone (FTZ) No. 39 in Dallas. A FTZ
provides cost savings to U.S. importers,
especially retail distribution operations.
Upgradation of services by Maersk Line
To improve transit times to Newark from the
South Indian market and a number of
Mediterranean ports, Maersk Line has
upgraded its direct service between the Middle
East, the Mediterranean, and the US East
Coast (MECL2).
Barloworld Logistics acquires Swift Group
Barloworld Logistics has acquired the Dubaibased Swift Group and its affiliates in the Far
East, India, UAE, Africa and Germany, for
US$70 million. The acquisition will help the
company to extend its operation into
international services in the markets of South
East Asia, the Indian sub-continent, Europe
and Africa.
Romanian Trans Courier Service to be
acquired by UPS
In order to extend its business UPS has
agreed to acquire 100% of its authorised
service contractor in Romania, Trans Courier
Service (TCS). The acquisition will help UPS
to strengthen its premium service offering to
its customers in Romania and investment
opportunity in developing and expansion of
its services.
29 new terminals by China Merchants by
2010
China Merchants Group is planning to build
29 new terminals in Asia by 2010. The
company planned expansion would include 25
container berths in western Shenzhen,
Zhangzhou, Qingdao, Tianjin, Shanghai and
Ningbo, as well as new berths in Zhanjiang
port and new terminals in Vietnam's Ba RiaVung Tau. China Merchants would invest
US$112 million in berth construction.
3PL summit in Singapore in April 2008
A three day Asia-Pacific 3PL summit will be
held in Singapore from April 21-23, 2008, to
analyse key 3PL trends across Asia Pacific,
share industry best practice, benchmark
operations and network with its potential
partners.
7
CII Logistics & Freight News
FREIGHT RATES
(All freight rates given below are purely indicative)
Road Freight Rates
Truck freight rates in Rupees per tonne for nine tonnes from metros to the following
destinations
To
Kolkata
Kolkata
Chennai
2,778
Delhi
2,574
Mumbai
2,926
Ahmedabad
2,870
Bangalore
2,889
Bhopal
2,370
Bhubaneshwar
1,020
Chandigarh
2,410
Coimbatore
3,444
Cuttack
1,000
Guwahati
2,574
Hyderabad
2,167
Jaipur
2,444
Jalandhar
2,360
Jamshedpur
700
Kanpur
1,944
Kochi
3,330
Lucknow
1,981
Madurai
2,955
Nagpur
1,722
Patna
1,333
Pune
2,815
Siliguri
1,352
Visakhapatnam
1,556
Vijayawada
1,815
Source: The Hindu Business Line, 17 March, 2008
From
Chennai
2,888
3,333
2,000
2,350
777
2,050
2,050
3,850
950
2,050
5,425
1,050
3,150
3,875
3,000
3,310
1,410
3,115
850
1,600
3,600
1,725
3,850
1,445
500
New Delhi
2,111
3,278
1,667
1,022
3,056
1,000
2,667
556
3,778
2,667
3,889
2,111
500
778
2,000
867
4,444
1,000
4,167
1,222
2,000
1,889
2,333
2,889
2,556
Mumbai
3,700
2,444
2,444
888
1,833
1,388
2,700
2,667
2,500
2,667
6,200
1,333
1,722
2,889
3,500
2,555
2,666
2,555
2,556
1,222
3,600
556
4,550
2,111
1,722
8
CII Logistics & Freight News
Air freight Rates
Domestic (Non documents) (all rates in Rupees)
10 kg
To
Chennai
Delhi
Mumbai
From
Chennai
Delhi
Mumbai
Kolkata
Hyderabad
Bangalore
826
506
706
320
226
812
533
546
639
812
Location
Chennai
Delhi
Mumbai
Kolkata
Hyderabad
Bangalore
Chennai
3,149
1,861
2,710
1,331
732
Delhi
3,076
1,831
2,048
2,197
2,710
Location
Chennai
Delhi
Mumbai
Kolkata
Hyderabad
Bangalore
Chennai
5,932
3,502
5,139
1,598
1,465
Delhi
6,005
3,542
3,821
3,954
4,833
519
586
719
373
439
50 kg
Mumbai
1,904
2,197
2,490
1,465
1,465
100 kg
Mumbai
3,515
3,954
4,647
2,929
2,783
500 kg
Location
Chennai
Delhi
Mumbai
Kolkata
Hyderabad
Bangalore
Chennai
19,772
12,449
22,036
6,657
7,323
Delhi
24,898
15,179
16,377
16,843
21,237
Location
Chennai
Chennai
Delhi
38,080
Mumbai
24,898
Kolkata
39,545
Hyderabad
13,315
Bangalore
14,646
Source: Blue Dart, 17 March, 2008
Delhi
49,797
30,357
28,094
33,686
39,545
Mumbai
15,378
15,012
19,905
13,182
10,985
1,000 kg
Mumbai
30,757
26,363
39,811
23,434
21,969
Kolkata Hyderabad
732
626
706
919
852
Bangalore
226
639
373
732
453
226
799
413
839
453
-
Kolkata Hyderabad
3,662
1,132
2,050
2,197
3,528
1,465
2,780
2,996
4,261
1,797
Bangalore
1,132
3,149
1,538
2,929
1,797
-
Kolkata Hyderabad
7,323
2,263
3,808
3,954
5,459
2,929
3,954
4,926
8,521
3,595
Bangalore
2,263
5,932
2,929
5,566
3,595
-
Kolkata Hyderabad
36,615
11,317
15,978
16,843
27,295
13,182
19,772
24,632
42,607
15,978
Bangalore
11,317
23,434
10,985
24,166
15,978
-
Kolkata Hyderabad
73,231
22,635
31,955
33,686
54,590
23,434
39,545
49,264
85,214
31,955
Bangalore
22,635
38,080
21,969
43,938
31,955
-
9
CII Logistics & Freight News
International (Non documents) (all rates in Rupees)
To
From
Chennai
Delhi
Hyderabad
Mumbai
Kolkata
New York
Beijing
9,516
9,516
9,516
9,516
9,516
9,239
9,239
9,239
9,239
9,239
Location
Chennai
Delhi
Hyderabad
Mumbai
Kolkata
New York
32,488
32,488
32,488
32,488
32,488
Beijing
28,959
28,959
28,959
28,959
28,959
Location
Chennai
Delhi
Hyderabad
Mumbai
Kolkata
New York
61,381
61,381
61,381
61,381
61,381
Beijing
54,058
54,058
54,058
54,058
54,058
Location
Chennai
Delhi
Hyderabad
Mumbai
Kolkata
New York
294,920
294,920
294,920
294,920
294,920
Beijing
256,973
256,973
256,973
256,973
256,973
Location
New York Beijing
Chennai
589,839 513,946
Delhi
589,839 513,946
Hyderabad
589,839 513,946
Mumbai
589,839 513,946
Kolkata
589,839 513,946
Source: Blue Dart, 17 March, 2008
10 kg
London Frankfurt
9,172
9,172
9,172
9,172
9,172
9,172
9,172
9,172
9,172
9,172
50 kg
London Frankfurt
30,557
30,557
30,557
30,557
30,557
30,557
30,557
30,557
30,557
30,557
100 kg
London Frankfurt
56,720
56,720
56,720
56,720
56,720
56,720
56,720
56,720
56,720
56,720
500 kg
London Frankfurt
267,625
267,625
267,625
267,625
267,625
267,625
267,625
267,625
267,625
267,625
1,000 kg
London Frankfurt
535,249
535,249
535,249
535,249
535,249
535,249
535,249
535,249
535,249
535,249
Singapore
Tokyo
Dubai
7,802
7,802
7,802
7,802
7,802
11,847
11,847
11,847
11,847
11,847
6,755
6,755
6,755
6,755
6,755
Singapore
19,972
19,972
19,972
19,972
19,972
Tokyo
31,889
31,889
31,889
31,889
31,889
Dubai
17,908
17,908
17,908
17,908
17,908
Singapore
36,615
36,615
36,615
36,615
36,615
Tokyo
58,984
58,984
58,984
58,984
58,984
Dubai
32,621
32,621
32,621
32,621
32,621
Singapore
171,093
171,093
171,093
171,093
171,093
Tokyo
275,613
275,613
275,613
275,613
275,613
Dubai
16,0442
16,0442
16,0442
16,0442
16,0442
Singapore
342,187
342,187
342,187
342,187
342,187
Tokyo
551,227
551,227
551,227
551,227
551,227
Dubai
32,0883
32,0883
32,0883
32,0883
32,0883
Note: Volumetric rate for bulky height/weight shipment will be calculated as:
[Length (cm) x Breadth (cm) x Height (cm)]/6000=kg
10
CII Logistics & Freight News
Ocean Freight Rates
Destination
Rates in US$
East Coast (Chennai)
West Coast (Mumbai)
TEU
TEU
Antwerp
1,350
1,086
Auckland
1,550
NA
Adelaide
1,475
NA
Bandar Abbas
1,550
708
Bangkok
325
203
Barcelona
1,450
NA
Colombo
475
NA
Djibouti
NA
NA
Durban
1,600
1,235
Hamburg
1,350
1,086
Hong Kong
325
NA
Port Kelang
250
NA
Los Angles
NA
1,768
Osaka
NA
708
Rotterdam
1,400
1,086
Source: www.millionlinkfreight.com & www.infobanc.com, Container Freight Rate is taken
on March 17, 2008
Website: www.cygnusindia.com
Disclaimer: All information contained in this report has been obtained from sources believed to be
accurate by Cygnus Business Consulting & Research (Cygnus). While reasonable care has been taken
in its preparation, Cygnus and CII-IL make no representation or warranty, express or implied, as to
the accuracy, timeliness or completeness of any such information. All information should be
considered solely as statements of opinion and neither Cygnus nor CII-IL will be liable for any loss
incurred by users from any use of the contents of this report.
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