Case Study All-Indian Logistics Services

All-Indian Logistics Services (AILS) is a third-party logistics provider headquartered in South Delhi, India. The company was founded by two former logistics executives from Tata Steel (one of the biggest and oldest companies in India) with expertise in ocean shipping, customs clearance, forwarding, and land transportation. Over the last five years, AILS has been successful in building an infrastructure and pool of experienced personnel to handle a wide range of logistics activities. AILS considers itself a specialist in customized logistics solutions and services. Its services include:

Import consolidation. AILS has a well-developed network of offices and trade connections in the United States, Europe, the Far East, and the Middle East to render import consolidation by both air and sea to any part of India. It promises a personalized, prompt service with value for cost.

Door-to-door services. AILS is fully equipped to deliver door to door, which includes cargo pickup from the suppliers warehouse, warehousing prior to customs clearance, complete customs clearance of exports from overseas, and freight booking with airlines/shipping lines to receive cargo in India. It also undertakes local customs clearance and transportation to deliver to the door of the customer.

Exports. AILS has expertise in handling exports of various kinds of cargo by ocean and by air freight, and ensures the timely movement of cargo at the most competitive rates. The company takes care of both the complete export documentation formalities and the physical movement of cargo.

Consultancy on customs and logistics. AILS can guide customers regarding various modes of transportation and can help customers optimize utilization of space and save on freight. It acts as liaison with different Indian authorities like the RBI (Reserve Bank of India), the Ministry of Shipping, the Ministry of Railways, and the Ministry of Road Transport and Highways, among others, on behalf of clients for various permissions and quotas related to import and export of cargo. Indias red tape, bureaucracy, and corruption preclude anyone lacking clout or established relationship channels from conducting business in India.

Today AILS handles an average of 200-plus TEUs (20-foot container equivalents) of imports and exports every month between Delhi and Mumbai (Bombay), which is the nearest big port (a distance of 1,407 kilometers). Luckily, most containers are used for traffic in both directions; moving empties is unproductive. Main items for export are bathroom fittings, agricultural equipment, chemicals, scientific equipment, medical equipment, food processing machinery, and furniture and kitchen equipment. Main items for import are automobile engines and spares, cotton yarn, food products, electronics, televisions and components, rice, stone for stone crafting, etc.

AILS has slowly expanded its consulting offerings to include site selection for manufacturing plants and warehousing facilities. Recently, AILS was retained on a site selection project by American Athletic Apparel (AAA), a large multinational supplier of athletic clothing. AAA has asked AILS to determine the best location for a manufacturing plant that will produce wickable athletic shirts for export to North America and Western Europe.

AAA has one key stipulation for the chosen site: the manufacturing plant must be located in a city with a population of between 1,500,000 and 3,500,000 residents, which excludes places like Delhi, Mumbai, and Bangalore, among others. Because the majority of shirts will be exported from India via water transportation (air freight may be utilized in extraordinary situations), AAA has agreed to let AILS leverage its existing relationships with logistics personnel at Mumbai Port. With this consideration in mind, after several months of arduous work AILS narrowed the plant location to two metropolitan areas: Patna (in the state of Bihar) and Lucknow (in the state of Uttar Pradesh).

Questions

With respect to the natural resources needed to make wickable shirts, is Patna or Lucknow the preferred location? Why?

With respect to transportation considerations, is Patna or Lucknow the preferred location? Why?

With respect to labor characteristics, is Patna or Lucknow the preferred location? Why?

With respect to quality-of-life considerations, is Patna or Lucknow the preferred location? Why?