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    SUMMARY

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    EXECUTIVE SUMMARY

    It is clear that the 3PL market in India is relatively new and fragmented where a few

    large players dominate the entire market. One of the most important factors plaguing

    the growth of 3PL in India is poor infrastructure, as also evident from the

    respondents feedback.

    Slow movement of cargo and congestion at the seaports due to insufficient

    infrastructure, bureaucracy, red-tapeism and delay in government clearances coupled

    with unreliable power supply and slow banking transactions add to the woes of the

    exporters and make it difficult for them to meet the deadlines for their international

    customers.

    To expedite shipments, the exporters have to book their consignments as airfreight

    rather than sea freight, which adds to the cost of the goods making them

    uncompetitive in the international market. Many large shipping liners avoid Indian

    ports in order to avoid delays in loading and unloading, and hence the Indian

    exporters have to resort to transshipments at ports like Singapore, Dubai and

    Colombo, which again adds to the cost of shipments and delays the delivery of export

    goods. In domestic transportation of goods by rail, which accounts for 35% of the

    total cargo movement, Container Corporation of India (CONCOR), a subsidiary of

    Indian Railways, has a monopoly.

    The global 3PL providers have to depend on CONCOR for containerized

    transportation of goods by rail from one part of the country to another. This adds to

    the transaction costs of the service providers, and also affects their service. Moreover,

    due to insufficient number of rakes and Inland Container Depots (ICD), CONCOR is

    not being able to manage the growing volumes of exports from the country.

    All these facts ultimately point to the suggestion that the monopoly of CONCOR

    should be done away with and private participation in development of infrastructure

    should be allowed. Another important factor responsible for the slow growth of 3PL

    in India so far, perceived by there spondents, is the lack

    of trust and awareness among the Indian firms. On the one hand, the Indian firms

    have not been aware of the benefits of 3PL. On the other hand, they do not trust the

    3PL providers and do not want to share with them sensitive organizational

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    information. One Delhi-based respondent said during a personal interview that many

    firms do not want to outsource logistics activities because of vested interests.

    VISION:- TO lead the Logistics industry into a new Era of Innovation, Quality,

    Productivity, employee Opportunity and Social Responsibility.

    Mission:- Making the most of our collective Passion, Experience and Scale, to build

    the best

    Logistics company and become our customers and our employees first choice,

    worldwide.

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    INTRODUCTION

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    INTRODUCTION OF DHL

    In (D, 1969, Adrian Dalsey, Larry Hillblom and Robert Lynn H, and L) founded DHL as a

    service shuttling bills of lading between San Francisco and Honolulu. The company grew

    rapidly and in a few years initiated service to the Philippines, Japan, Hong Kong, Singapore

    and Australia, creating an entirely new industry of international door-to-door express service

    in the Pacific Basin. Steady expansion continued in the 1970's as DHL initiated service to

    Europe (1974), Latin America (1977), the Middle East (1978) and Africa (1978). The

    international delivery company was the first to bring air express to the Eastern Bloc countries

    in 1983 and to the People's Republic of China in 1986.

    DHL's rapid growth reflects the globalization of trade. As our customers expand into

    international markets, DHL is there to meet their needs. Today, DHL is the world's

    largest and most experienced international air express network with service to 120,000

    destinations in more than 220 countries and territories. DHL maintains its position as

    the world's leading international air express network by continually expanding and

    upgrading its network of offices, hubs and gateways, and by offering superior service.

    More than 4,400 offices support DHL's extensive worldwide coverage. Of that total,

    over two-thirds are owned and operated by DHL, far greater than any other company in

    the air express industry. As a result, DHL has a significant advantage over other air

    express carriers who use more third party agents in the

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    foreign countries they serve. DHL also has dedicated customs personnel in nearly every

    country where it operates to assist with customer shipments. These advantages result in

    faster transit times, streamlined customs clearance ,effective tracking of shipments and

    billing.DHL operates an unmatched global system of 238 gateways and more than 450

    hubs, warehouses and terminals. This allows for the rapid and efficient movement of

    shipments, resulting in fast, reliable and cost-efficient service to over 4.2 million

    customers worldwide. More than 400 aircraft operate for or on behalf of DHL, giving

    DHL the flexibility to use the fastest possible. As important as these facilities and

    equipment are to supporting DHL's global network, it is the worldwide team of more than

    170,000 professionals whose commitment to anticipating, understanding and meeting

    each customer's unique shipping needs that makes DHL the industry leader.

    DHL Express Worldwide (2009)

    more than 124,000

    more than 220

    Hubs 36

    4,700

    Employees 72,000

    Countries and territories 350

    Packstations (only Germany) 900

    DHL Logistics worldwide (2009)

    Employees * more than 162,500

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    Countries and territories 150

    Terminals, warehouses, offices 813

    Air freight volume 4,110,000 tones

    Ocean freight volume TEU ** 2,400,000

    DHL Exel Supply Chain

    Countries and territories 59

    Centers, warehouses, terminals 2,500Storage area sqm 23,000,000

    DHL Freight

    Countries and territories more than 30

    Full truckload movements p.a. 2,000,000

    Terminals more than 160

    * Full-time employees at cut-off date

    DHL NAMED GLOBAL 3PL OF THE YEAR AT SUPPLY CHAIN

    ASIA LOGISTICS AWARDS

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    DHL, the worlds leading express and logistics company, has won the coveted Global

    3PL (third-party logistics) of the Year award at the Supply Chain Asia Logistics

    Awards 2007, organized by Supply Chain Asia magazine. Readers of Supply Chain

    Asia magazine and a panel of experts have bestowed this accolade on DHL for its

    innovation, service excellence and commitment to providing customers with superior

    express and logistics solutions. DHL received the award at a ceremony held at the

    Hong Kong Convention and Exhibition Center yesterday The criteria for the Global

    3PL of the Year takes into account customer service, product and service innovation,

    as well as network and technology. DHLs quest to provide customized solutions and

    efficient service made it a perfect candidate for this award. We are very honored to be

    the recipient of this award. Our objective is to provide our customers with best-in-

    class outsourcing and logistics services. To be voted Global 3PL of the Year speaks

    volumes of how far we have gone to produce the best results for our customers, said

    Paul Graham, Chief Executive Officer, DHL Exel Supply Chain Asia Pacific.

    The annual awards ceremony is organized by Supply Chain Asia magazine, a leading

    logistics and supply chain publication. Through votes cast by readers, finalists were

    short-listed in each of the 15 categories. An independent panel of 15 judges then

    selected the winners. This latest award further attests to DHLs leadership position in

    the industry, having also received a string of awards this year. It won Best Express

    Operator, Best Lead Logistics Provider, Best 3PL, Best Air Freight Forwarder, Best

    Project Cargo Forwarder and Best Sea Freight Forwarder - at the prestigious 2007

    Asian Freight & Supply Chain Awards (AFSCAs). It was also named International

    Express Operator of the Year 2007 at the World Air Cargo Awards.

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    Types of 3PL providers

    Hertz and Alfredsson (2003) describe four categories of 3PL providers:

    y Standard 3PL provider: this is the most basic form of a 3PL provider. They

    would perform activities such as, pick and pack, warehousing, and distribution

    (business) the most basic functions of logistics. For a majority of these

    firms, the 3PL function is not their main activity.

    y Service developer: this type of 3PL provider will offer their customers

    advanced value-added services such as: tracking and tracing, cross-docking,

    specific packaging, or providing a unique security system. A solid IT

    foundation and a focus on economies of scale and scope will enable this type

    of 3PL provider to perform these types of tasks.

    y The customer adapter: this type of 3PL provider comes in at the request of

    the customer and essentially takes over complete control of the companys

    logistics activities. The 3PL provider improves the logistics dramatically, but

    do not develop a new service. The customer base for this type of 3PL provider

    is typically quite small.

    y The customer developer: this is the highest level that a 3PL provider can

    attain with respect to its processes and activities. This occurs when the 3PL

    provider integrates itself with the customer and takes over their entire logisticsfunction. These providers will have few customers, but will perform extensive

    and detailed tasks for them.

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    2009 TOP 10 3PL SERVICES

    1. DHL

    2. SCHENKER

    3. KUEHNE&NAGAI

    4. TPG/TNT

    5. UPS

    6. P&O NEDLYOD

    7. NIPPON EXPRESS

    8. PANAPIINA

    9. CH ROBINSON

    10. NYK LOGISTICS

    003 Top 25 3PLs13 Expeditors Intl 2,625 (all Revenue US$ Millions)12

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    3rd Party Logistics (3PL) is the supply chain practice where one or more logistics

    functions of a firm are outsourced to a 3PL provider. Typical outsourced logistics

    functions are: inbound freight, customs and freight consolidation, public warehousing,

    contract warehousing, order fulfillment, distribution and management of outbound

    freight to the client's customers.On top of this, also Value Added Services can be

    provided, such as: repackaging, assembling and return logistics. The 3PL Provider

    manages and executes these particular logistics functions using its own assets and

    resources, on behalf of the client company. The thoughts behind this are to keep the

    firm competitive by keeping it lean without owning much assets, allowing it to focus

    on niche areas and to reduce operational costs. Third Party Logistics is also referred to

    as Contract Logistics.

    3PL is evolving from predominately transactional-based to more strategic in nature.At the same time 3PL is gradually evolving into 4PL. A Fourth Party Logistics

    provider is a supply chain services provider that searches the best logistical solutions

    for its client, typically without using own assets and resources. Relatively new is the

    term 5PL or even 7PL, indicating Total Supply Chain Management Outsourcing.

    Evolution of 3PLThe concept of logistics outsourcing can be traced back as far

    as one goes down the history of mankind. In Europe, a number of logistics service

    providers can trace their origins back to theMiddle ages1. We restrict ourselves to therecent decades, and trace below the evolution of 3PLFrom the 1950s.1950s &

    1960s Logistics outsourcing was limited to transportation and warehousing. The

    transactions were mainly short-term in nature.

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    1970s Emphasis was on improved productivity, cost reduction and long-term

    contracts1980s Value-added services such as packaging, labeling, systems support

    and inventory management were on offer1990s to present import/export Outsourcing

    has picked up momentum, and more value-added services are being offered. Some of

    them are management, customs clearance.

    Firms with a wide and/or complex distribution network

    Example: IBM

    Firms that do not focus on logistics as one of their core competencies

    y In strategic discussions on Core Competence.

    y In the case of the creation of a new product group.

    y When a company is integrating activities of a takeover,Compare Acquisition

    Integration Approaches

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    Steps in 3rd Party Logistics (3PL). Process

    The application of 3PL is normally done in a number of phases:

    y Awareness. Investigate possibilities, inform employee

    y Market Research. Investigate market trends, in particular service

    demands. See: SERVQUAL, Customer Satisfaction Model, and

    Quality Function Deployment.

    1. Strategy. Develop and compare logistics concepts.

    2. Make or Buy. Build own competence or outsource.

    3. Business Plan. Costs, benefits. Phasing. Timing.

    4. Selection. Selecting partner based on market coverage,

    competency, integrity, vision, etc.5. Agreement. Agreeing on mutual expectations using set of

    Performance metrices.

    6. . Evaluation and Renewal. Sustain partnership via mutual

    financial costs and benefits.

    STRENGTHS OF 3RD PARTY LOGISTICS (3PL). BENEFITS

    Allowing firms to focus on developing their

    Cost competencies.

    Freeing up resources (money).

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    Benefit from the logistics know-how and international networks of

    specialized

    3PL LOGISTICS PROVIDER.

    ROLE OF 3PL IN INTEGRATION&SECURITY

    Paris, October 6, 2008 Capgemini, one of the worlds FOREMOST providers of

    consulting, technology and outsourcing services, in cooperation with the Georgia

    Institute of Technology, Oracle and DHL today released an in-depth study into the

    current state of logistics outsourcing. The study is based on a survey of 1,644 logistics

    executives from North America, Europe, Asia Pacific and Latin America and

    identifies a number of key findings:

    y Green supply chain initiatives are essential for future business success according to

    98% of logistics executives, yet the majority are unwilling to invest any additional

    funds in the greening of the supply chain.

    y The theft of material goods continues to be the top security concern. But the changing

    business environment means that companies must focus more attention on other

    causes of supply chain

    y Underpinning sustainability and security are strong relationships across the different

    parties in the supply chain achieved through integrated systems and services. Through

    deliberate efforts to form solid relationships with logistics providers using detailed

    contracts and metrics, companies can achieve significant cost savings, shorter order

    cycles, better customer service and improved.

    Business Efficiency

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    Although the survey shows that 3PLs and their users believe the associated costs of

    creating a more secure,-integrated, environmentally-friendly supply chain should be

    split, there is continued resistance to collaboration and the unspoken assumption that

    costs will ultimately be carried by the customer.

    Green supply chain:

    Companies are almost unanimous in their belief that green supply chain initiatives,

    such as local sourcing, are important but there is widespread uncertainty about how to

    move forward with sustainable supply chain.

    Integrated Logistics

    The benefits of supply chain collaboration and logistics integration can be huge, but

    this can only be achieved by putting aside fears over loss of control, visibility,

    internal competency, and of being too dependent on a third party service provider.

    However, through the use of comprehensive service level

    agreements that balance cost sand risks and 3PLs investing in their own service

    offerings, companies will begin to experience the payoffs of working so closely

    together. By adopting integration-enabling, open standards-based technologies

    together.

    3PL MARKET

    . Currently, the logistics cost around the world is about $2 trillion. For any country,

    the logistics cost is pegged between 9% and 20% of GDP. For India, the figure is

    about 13%. Considering a GDP of over $475 billion, the logistics cost in India turns

    out to be about $62 billion2.The 3PL market across the world is increasing at a rapid

    rate. According to Armstrong & Associates, the world 3PL revenues in 1992, 1996

    and 2000 were $10 billion, $25 billion and $56 billion respectively. According to

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    another research firm IDC, the 3PL revenue was $141billion in 2003, and it will touch

    $300 billion in 2006 growing at a compounded annual rate of 17%3. The worlds

    largest 3PL providers are headquartered in Europe (Top seven 3PL providers in terms

    of revenues are European-based, UK-based Exel plc being the largest in the world

    with $8.3 billion in revenues), but the largest market is the U.S., which was about $80

    billion in 2003 accounting for nearly 60% of the world market4. The 3PL market in

    India is least developed. The market is highly fragmented, and there are very few

    service providers, who generate substantial revenues (more than Rs. 50 crore). A

    survey conducted by Frost & Sullivan estimates the logistics market in India at $298.7

    million in 2003 or 0.48% of the logistics cost in that year5. Compare this figure with

    7% across the world and 9% in the U.S. considering a GDP of over $10 trillion and

    8.7% of the GDP being the logistics cost. There is an immense potential for cost

    savings for India if it can bring down its logistics costs from the current level of 13%

    of GDP to 8.7% (level in the U.S.). The savings would be around$20 billion resulting

    in a potential 4.3% cut in prices of Indian goods globally making them more

    competitive, a Logistics Institute Asia-Pacific study estimate.

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    OBJECTIVE

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    OBJECTIVES

    PRIMARY OBJECTIVES

    y TO UNDERSTAND 3PL SERVICES OF DHL

    SECONDARY OBJECTIVES

    y TO STUDY ABOUT THE CUSTOMERS OF 3PL

    y TO STUDY THE BENEFITS OF 3PL & ITS MARKET IN INDIA

    y TO KNOW THE STRENGTH AND WEAKNESS OF 3PL PROVIDERS

    IN TERMS OF THEIR ASSETS &SERVICES OFFERED

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    SIGNIFICANCEOF THE

    PROJECT

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    SIGNIFICANCE OF PROJECT

    It helps in getting clear view that how Logistics has become so important , & how

    third party logistics is helping DHL in providing different services to their

    customers. It also helped in getting clear knowledge about how these can help in

    achieving success in terms of more and more market share.

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    RESEARCHMETHODOLOGY

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    RESEARCH METHODOLOGY

    The research methodology was based on collection of data from and secondary

    sources. The primary sources were the 3PL providers, and data collection was through

    questionnaire surveys, telephonic interviews and personal visits. The secondary

    sources were books, published reports, journal articles and the Internet. The details of

    the questionnaire design and the process of administering the questionnaire to

    potential respondents are outlined below.

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    THIRD PARTYLOGISTICS

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    DEFINITION

    Thi t Logi ti i si l the use of an outsi e company to perform all orpart ofthe firms materials management and productdistri ution function.

    -- Simchi-Levi (2000)

    A relationship bet een a shipper and third party which, compared with thebasic services, has more customi ed offerings, encompasses a broad number ofservice functions and is characteri ed by a long-term, more mutually beneficial

    relationship --Murphy & Poist (1998)

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    Current State-- Servi e Offerings

    Dedicated Contract Transportation / Transportation Procurement Inventory Management Logistics Management and Consulting Freight Audit and Bill Payment Customs Services Shipment Tracking and Tracing Reverse Logistics and Value-added Services

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    Current Industry Status

    No commonly accepted terminology

    Technologies increase visibility, efficiency and integration

    The service menu is rapidly changing

    New breed of companies are emerging

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    3PL SERVICES

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    THIRD PARTY SERVICES

    y Any form of transportation that is offered to a shipper or a receiver ads

    part of a total package of logistic services in which transportation is one

    component.

    y Use of a hire firm to perform all or part of a companys

    supply/distri ution function.

    SERVICES OFFERED BY THIRD PARTIES

    y TRANSPORTATION

    y .Freight forwarding

    y .Freight brokerage

    y .Dedicated carriage

    y .Traffic management

    y .Intermodal services

    y .consolidation

    y .Freight bill auditing.

    y .Career selection.

    y Rate negotiation

    y .International services

    y Logistics

    y .Warehousing

    y .Inventory control

    y .Information systems

    y .Network design

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    y .Facility location

    y .Order processing

    y .Customer service

    y . Assembly packing

    y .Product return /repair

    y .Supply chain mgmt

    SERVICES OFFERED BY THIRD PARTIES

    y .Transportation firms

    y .Motor, Air Rail&Ocean carriers

    y .Transportation mediaries

    y ..Forwarders,Brokers,Imcs,Agents

    y.Warehousing companies

    y .Public ,Contract ,Dedicated

    y Consulting firms

    y Financial institutions

    y Manufacturers

    y Computer companies

    REASON FOR THIRD PARTY USAGE

    y Return to core competencies

    y Reduction in headcount

    y Provide operational flexibility

    y Provides economics of scale

    y Need for improved customer service

    y Increased awareness of l&t value

    y Trigger event

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    THIRD PARTY BUYING PROCESS

    y Diagnose need

    y Identify alternatives

    y Select provider

    y Negotiate&implement agreement

    y Process improvement

    THIRD PARTY SELECTION CRITERI

    y .Financial strength of provider

    y .Expertise &experience

    y Customer references

    y .Integrated capabilities

    y Information system capabilities

    POTENTIAL LIMITATIONS TO THIRD PARTY SUCCESS

    y Fear of losing control

    y Fear of losing internal skill

    y Managers do not want to lose their powers

    y Reliance on outside firms can e dangerous

    Pro lems in the growth of the 3PL market in India

    There are some operational and regulatory roadblocks to the growth of the 3PL

    market in India.

    The major problems are outlined below.

    The Indian firms are still wary of outsourcing their logistics activities due to lack of

    trust and awareness. The 3PL activity is less than 10% of the total logistics operations

    in India, whereas the corresponding figures for the U.S., Europe and Japan are 57%,

    40% and 80% respectively2.

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    According to a TCI-MDI survey6 of 130 Indian firms, 55.4% respondents indicated

    that their firms use 3PL services. The mostly used 3PL services are inbound and

    outbound transportation and customs clearing and forwarding. Outsourcing of other

    value added services such as warehousing, inventory management, distribution and

    order.

    Prospects of the 3PL market in India

    Despite the problems mentioned above, the 3PL market in India is poised to grow at

    over 20%

    compared to the average world growth rate of 10%7. Some of the large Indian

    corporate such as

    Reliance, Tata, Mahindra and Mahindra, TVS Group and Essar Shipping have already

    forayed

    into the logistics business. Initially these corporate formed divisions to handle internal

    logistics,

    but sensing the potential of the market, they have started offering logistics solutions to

    other

    Indian corporate and have already turned these logistics divisions into profit centres8.

    Some

    large express cargo and courier companies such as Transport Corporation of India

    Ltd. (TCIL),

    Gati, Safexpress and Blue Dart have also started offering 3PL services. Owing to the

    large asset

    base and distribution networks that are already put in place, it was just a matter of

    time for these

    companies to venture into the logistics business. Some of the reasons for the prospects

    of the3PL market in India are given below.

    3PL market in India are given elow Indian firms increasingly realize the importance of reducing cost and staying

    competitive in the world market. One of the means of reducing cost is through

    outsourcing logistics.

    The Indian GDP is growing steadily at 6% compared to the world GDP growth rate

    of 3%,which even beats the GDP growth rates in the U.S. (3.3%), U.K. (2.6%) and

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    Japan (1.3%)9.This eventually will translate into more outputs and more demand for

    specialized logistics services.

    The Indian Government has focused on infrastructure development. One of the

    initiatives is the golden quadrilateral project of the National Highway Development

    Program, which will connect all the four metros and will act as East-West and North-

    South corridors. Once completed, it will give a boost to the road transportation

    network in India.

    3PL services come under the purview of the BPO sector. The BPO sector in India,

    mainly IT and ITES, is growing at a rapid rate, and the Indian Government has

    declared many sopsincludingallowing 100% FDI though with certain restrictions in

    some cases. This is in contrast with China where foreign investment in domestic

    logistics is still not permitted. Almost all the large global 3PL providers have their

    presence in India doing mainly customs clearance and freight forwarding for their

    international clients. With the logistics market growing at a rapid rate and

    infrastructure developing, it is just a matter of time before global 3PL providers invest

    in domestic logistics. The possible routes may be acquisitions, quickand easy for the

    fragmented logistics market, and forming wholly owned subsidiaries or joint ventures.

    The Indian Government is working towards a uniform VAT regime. Once

    implemented, it will enable the 3PL providers to consolidate the warehousing

    facilities currently maintained in different states bringing in economies of scale.

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    FOURTH PARTY

    LOGISTICS

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    Fourth Party Logistics (4PL

    Fourth Party Logistics provider (4PL is a supply chain integrator thatassembles and manages the resources, capabilities and technology ofits own

    organization with those complementary service providers to deliver a

    comprehensive supply chain solution

    In Europe, most of the large 3PLs move towards being 4PLs, alone of thru

    partnerships, by integrating a large range of operations and new added value

    services addressing forecasting, planning and supply chain global optimization

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    A Note on Fourth-Party Logistics (4PL The Next

    Evolution? Thought of as supply chain integrator, a firm that assembles and manages

    the resources, capabilities, and technology ofits own organi ation with thoseof complementary service providers to deliver a comprehensive supply chainsolution.

    4PLs manage and directthe activities of multiple 3PLs, serving as anintegrator.

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    CONCLUSION

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    CONCLUSION

    It is concluded from the project that 3pl services is growing around the world as more

    and more corporations prefer to outsource their logistics operations to the 3pl or

    logistics service providers. The 3PL market in India is still in its infancy and is highly

    fragmented. However, there is a high potential for growth of the market, which was

    evident from the survey of the Indian logistics service providers. The respondents

    held the poor infrastructure and the lack of awareness and trust among the Indian

    firms responsible for the low growth of 3pl in India so far.DHL is one of the largest

    3pl service provider in the world. It is well equipped with modern technology to meet

    present day requirement. It is attired with sophisticated computerized system like ERP

    and SAP as per the requirement of the branches. The 3pl services became very

    efficient by the use of such software there is no space for human error after

    implementation of these gizmo.

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    BIBLIOGRAPHY

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    BIBLIOGRAPHY

    y WWW.DHL.COM

    y WWW.AMAZON.COM

    y WWW.ALIBRIS.COM

    y WWW.GOOGLE.COM

    y LOGISTICS IN INTERNATIONAL BUSINESS( RAJIV ASERKAR)

    y THE TEXT BOOK OF LOGISTIC MANAGEMDENT(D.K.

    AGGARWAL)

    y WWW.WIKEPEDIA.COM

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