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Scenario/Summary
Aero Marine Logistics (AML) was incorporated as a Private Limited Company in South Delhi in the year 1996. The promoters of AML are two professionals who had gathered 15 years of experience working for Tata Steel (one of the biggest and oldest companies in India) in the field of shipping, customs clearance, forwarding, and transportation. Over the last five years, AML has been successful in building an infrastructure and pool of experienced personnel to handle the entire gamut of logistics. In fact, it was one of the first companies to offer door-to-door delivery. It considers itself the specialists in customized solutions and services—a concept that is still unheard of in the transportation industry in the rural belts of northern India. AML handles the entire package of logistics for all its customers. Some of the services they offer include the following.
Import consolidation. AML has a well-spread 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. AML is fully equipped to deliver door to door, which includes cargo pickup from the supplierÂ’s warehouse, warehousing prior to customs clearance, complete customs clearance of exports from overseas, and freight booking with airlines and shipping lines to receive cargo in India. It also undertakes local customs clearance and transportation to deliver to the door of the customer.
Exports. AML has expertise in handling exports of various kinds of cargo by ocean and by air freight. It ensures the timely movement of cargo at the most competitive rates. It takes care of both the complete export documentation formalities and the physical movement of cargo.
Consultancy on customs and logistics. AML is well-equipped with professionals to guide customers regarding various modes of transportation and to help customers to optimize utilization of space and save on freight. It acts as liaison with different authorities, such as the RBI (Reserve Bank of India), Port Authority of India, India Civil Aviation Regulatory Body, TEXPROCIL (The Cotton Textiles Export Promotion Council of India), DGFT (Directorate General of Foreign Trade), and so on, on behalf of clients for various permissions and quotas related to import and export of cargo. This could perhaps be classified as its most valuable service, which it hopes will build up its brand image. The red tape, bureaucracy, lack of work ethic, and corruption preclude anyone lacking either clout or established relationship channels (with babus or permanent government employees, notorious for their apathy toward fulfilling job duties and penchant for taking bribes) to do business in India.
To enable itself to offer these services, AML has partnered with various associates all over the world to render forwarding services to its customers. It has covered warehouse space of 1,000 square meters and has the ability to arrange for additional space. It has its own two 407 Tata trucks for pickup and delivery of small consignments. It has dedicated a fleet of five low-bed trailers for pickup and delivery of containers. All the field personnel have been provided with two-wheelers for faster conveyance between various points of work.
AML has grown rapidly and recently established an online presence whereby clients can place orders online and check the status of their cargo. So far, the increase in sales from the online presence has not been much. Most of AMLÂ’s clients are spread out in rural areas and, except for customers in Delhi, do not have access to the Internet. Today, AML is handling 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; see Exhibit 8-A.) Luckily, most containers are used for traffic in both directions; moving empties is unproductive. Main items for export are bathroom fittings and spares, machine spares and agricultural equipment, machine spares and chemicals, scientific equipment, medical equipment spares and chemicals, food processing machinery, furniture and kitchen equipment, and interiors. Main items for import are automobile engines and spares, cotton yarn, food products, electronics, televisions and components, rice, stone for stone crafting, and so forth.
Recently, one of the AML partners, Mr. S. Singh, was approached by the Chairman of Freshfoods, Mr. R. Maan, with a promise of a huge potential volume (150,000 kilograms per month) for importing frozen mushrooms from Europe if AML would build up its Indian infrastructure to handle such volumes. Freshfoods is the biggest regional exporter and importer of food products in North India. It was founded 20 years ago by a collective of farmers wanting to find markets for their surplus produce of exotic and nonnative foods (like avocados and strawberries) that did not have much local demand except for five-star hotels catering to mostly foreign tourists. The shift in eating habits in recent years had prompted Mr. Maan to promote mushrooms as a daily food item in a major way. To keep the price of imported mushrooms comparable with locally grown food items, huge quantities would have to be transacted to make use of economies of scale.
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