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INTRODUCTION
Freight costing is method of ascertaining the cost of providing service by a transport undertaking. This includes air, water, road and railways; motor transport includes private cars, private cars, carriers for owners, buses, taxies, carrier Lorries etc.
Freight forwarding market in India is poised to grow at a cargo of ~a% till 2018, In India; freight forwarding can be broadly categorized into Road, Rail, Air and Sea Freight. India is expected to witness considerable growth in freight business provided freight companies diversify their business to other logistic segments.
MEANING
A freight rate is a price at which a certain cargo is delivered from one point to another. The price depends on the form of the cargo, the mode of transport (truck ship, train, and aircraft), the weight of the cargo, and the distance to the delivery destination. Many shipping services, especially air carriers, use dimensional weight for calculating the price, which takes into account both weight and volume of the cargo.
DEFINITION
According to “Business Dictionary” Freight cost is a cost incurred in moving of goods, it includes packing, palletizing, documentation, loading and unloading charges carriage costs and marine insurance costs.
TYPES OF FREIGHT COSTS
Standard or Fixed Charges: These charges are including even though vehicle is operating or not. Such as Insurance premium, taxes, depreciation on vehicles and part of driver wages. Interest on capital, general supervision, and salary of operating managers is items come under the category of fixed or standing charges.
Maintenance charges: There are semi fixed or semi variable expenses in their nature and includes wear on tires, repairs and overheads painting etc.
Operating and running charges: These are the cost of operations. These charges vary slightly in direct proportion to kilometers etc. These expenses are variable or fluctuate in nature because they are dependent on distance covered and trips made by the vehicle.
Collection of costing data: After determining the cost unit, the cost regarding to the service is collected. The collected cost is a submitted under the heads suitable for control purpose i.e. fixed cost and variable cost. The presentation of cost information under different categories helps to improve managerial control over cost.
PROCEDURE
The freight cost will be calculated as shown below, it includes mainly Variable cost and Fixed costs.
Variable costs: Variable expenses are the running and operating activity charges. These include expenses of variable Nature, e.g. petrol, diesel, lubricating oil, grease etc. The Material Requisition Note and Time Sheet (or Log) bears the Vehicle No. The relevant Vehicle Account is debited with its direct material cost and direct labour cost. Direct Expenses such as fuel are debited to the Vehicle Account on the basis of Log Book and the cash/purchase/journal vouchers.
Check Your Progress:
• Give the format of Transport Operating cost-sheet
• Give the Cost Unit of the following
• Passenger Transport
• Good Transport
• Electricity
• Hospital
• Hotel
EXISTING METHODS AND TOOLS OF FREIGHT COSTING
FORECASTING: Forecasting charter market fluctuations is a particularly difficult task. There are mainly two categories of difficulties.
First, it is difficult to forecast demand for transport.
Even if future demand is assumed to be known with certainly, it is difficult to link fluctuations in that demand ( and equivalent fluctuations in transport supply ) with fluctuations in freight rates, or in other market parameters such as prices.
Demand for transport is a derived demand, depending on factors such as demand for the commodity to be shipped, and existence of alternative means of transport (e.g. and oil pipeline).
As such, it not only depends on a variety of macroeconomic factors that are not trivial to predict (oil prices, industrial growth etc), but is also heavily dependent on political developments, which are even more difficult to predict.
FREIGHT RATE AS FUNCTION OF SUPPLY AND DEMAND
It is also interesting to note that for all the considerable degree of uncertainty in the charter market, none of the methods mentioned so far considers uncertainly in an explicit sense. Were in most of the industries are depending on freight rate as a major tool for supply chain management.
Market-Segmentation Method
This method identifies markets where changes in modal shares are possible and then
Estimates the impacts of a modal shift. Generally, the method is performed using a table of commodity flows by origin/destination (O/D) pair. Commodities and O/D pairs that currently are could potentially be served by alternate modes are identified and diversion potential is calculated. Resulting future modal shares can then be used to estimate overall productivity, environmental, and other societal costs and benefit.
Benefits of market segmentation include simplicity, ease of implementation and minimal data requirements. In nearly all cases, this method uses existing commodity-flow and transportation network flow data from national, state wide, or regional sources.
Comparable Markets Study
The study estimates how much additional freight traffic might travel by rail if the rail improvement program were implemented, increasing capacity of the rail system and allowing for both faster travel times and greater travel-time reliability. The model uses a shift-share approach that compares the rail share in freight market.
Strategies for Managing Freight Costs
Consolidating shipments
Improving decision-making and planning utilizing reporting
Working with fewer partners(carriers and forwarders)
Optimizing internal resources (labour, equipment, etc)
Implementing internet-based transportation management apps
Adopting KPIs/performance metrics for carriers
Working with more shipping partners
Aspect of shipping Operations in Need of Improvement
Carrier KPIs and performance metrics
Improve import/export operations
Improved networking across multiple modes of transportation
Staging, bay planning, loading strategies, order-picking efficiencies
Implement Internet-based applications
Load tendering
Procurement process
Reduce miles and CO2 emissions
Load optimization (consolidation, back hauls, pooling etc...)
Electronic communication (EDI ,XML ) with customers and carriers
Billing and invoicing/Auditing and payment
Reporting capabilities (manifests, maps, planning, load sheets etc.,)
Integration of logistics and transportation applications with other enterprise apps
1.1 INDUSTRY PROFILE
A battery is an electro chemical device in which the free energy of chemical reaction is converted into the electrical energy contained in the active materials is converted into electrical by means of electrochemical oxidation reduction reactions.
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a physical stock of goods kept for the purpose of future affairs. The term is generally used to indicate raw materials in process, finished products, packing, spares and others stocked in order to meet expected demand or distribution in the future.
INTRODUCTION TO BATTERY MANUFACTURING PROCESS
The manufacturing process involved in production of maintenance free valve regulated lead acid storage batteries is explained below
Grid casting
Plate Production
Pasting
Assembling
Formation
Dispatch
Grid Casting
Positive and negative grids required for batteries are made from different alloys. Besides
Providing the necessary support to hold the active material together, the grids serve as a conductor of current required for the electro chemical reaction that takes place at the active material/electrolyte interface in the battery.
Grids are obtained by pouring molten lead alloy in to special water cooled grid moulds. Casting is done on sophisticated automatic casting machines which control the parameters within narrow tolerance to produce consistently good quality grids.
Plate Production
The lead oxide produced by the Barton process is mixed with water, sulphuric acid and special additives like synthetic flock and expanders. The paste mixing is done in a tub mixture. Dry lead oxide along with the additives is added to the tub. Distilled water is first dispensed into the tub when it is in rotation. After a fixed quantity of water addition, sulphuric acid is slowly dispensed into the tub at a slower rate to avoid temperature rise in the mixer
The lead oxide along with the water and acid from a thick and crunchy paste. This paste is then moved and sent to the pasting section.
The pasting is done on an automatic pasting machine. The paste is dumped into a hopper which is located at the grid feeding end of the pasting machine. Grids are automatically fed into the machine by a mechanical feeder. The quantity of paste dispersed through the hopper is mechanically adjusted and a pasted plated comes out on a conveyor belt at the other end of the pasting machine.
From the pasting machine, the plates are passed through a flash drier which removes surface moisture from the plates. Drying is accomplished by recirculation of heated air, next sent to the curing operation. In this process, the plates are maintained at a specified temperature and relative humidity. Curing for positive plate is done an oven at a temperature around 80°-90° C. The negative plates are cured in a humidity room at a lower temperature.
Assembling
The process of assembly is different for power plus and power stack. Plates are first stacked into groups with the negative and positive plates alternating with the glass absorbent separator inters read between the plates. These separators are wrapped around individual plates.
The stacked plates are next burned together in a group burning machine. In the case of smaller batteries, this operation is done on a cast on strap machine. The groups of plates with separator is inserted into a mould wherein a strap machine. The positive and negative straps are burned manually using an oxyacetylene torch.
The completed elements are then introduced into cell jars or battery monoblock containers. Minimodule batteries pass through the intercell welding stage wherein adjacent elements in the battery are interconnected by welding the respective lead posts through a hole in the partition of the plastic. The welding is accomplished by a two stage process.
The welding electrodes will press on the lead alloy posts in the first stage. Under the pressure the lead extrudes through the hole in the partition of the container. When the two posts make contact, a very high welding current is passed which fuses and welds the two parts. The weld is next tested on a shear tester. This internal cell welding operation is not necessary for the large single cell units. These cells are connected externally to suit various configurations by using lead plated copper connectors.
The batteries next pass through the process of a cover sealing on a heat sealing machine. Here, a plastic cover is heat sealed onto the plastic container. The sealing is accomplished by melting the bottom surfaces of the cover and top surface of the container with the help of heating plates and then pressing the two parts together allowing the molten plastic to fuse together and form a leak proof joint. Batteries are further checked on a leak tester to confirm the soundness of the sealing operation. This test consists of pressurizing the cell or battery and immersing in a water tank then batteries are subjected to formation.
Formation
The assembled batteries are filled with a specified grades and quantity of sulphuric acid and left on stand to enable the absorbent separators to soak. Then electricity is passed through the grids for formation. During the formation, the active material on the positive plate is converted into lead oxide and is converted into spongy lead on the negative plate. Time of formation and charging current depends on the size and the number of the plates.
After formation, the batteries are cleaned and the resealable vent plugs are fixed. Finished operations like labeling, stamping final cleaning and inspection are being carried out before packing. The mini-modules can be kept on mild steel racks or inside the system as per the requirement.
How a Battery works?
When you place the key in your car’s ignition and turn the ignition switch to “ON”, a signal is sent to the car’s battery. Upon receiving this signal the car battery takes energy that it has been strong in chemical form and releases it as electricity. This electric power is used to crank the engine. The battery is also used to power the car’s light accessories. It is the only device, which can store electrical energy in the form of chemical energy, and hence it is called as a storage battery.
Sealed Maintenance Free (SMF) Batteries
Sealed Maintenance Free (SMF) batteries technologies are leading the battery industry in the recent year in automobile and industrial sector around the globe. SMF batteries come under the rechargeable battery category so it can be used a number of times in the life of a battery. These batteries are more compact than the west type batteries. It can be used at any position, these batteries are very popular for portable power requirement and space constraint applications.
Valve Regulated Lead Acid (VRLA) Batteries
VRLA batteries are leak proof, spill-proof and explosion restraint and have life duration 15 to 20 years. These batteries withstand the environment conditions due to high technology in-built in the batteries. Each cell is housed in a power coated steel tray making them convenient to transport and installation, so transit damages are minimized incase of these batteries.
Sealed Maintenance Free (SMF) batteries and VRLA batteries technology are leading the battery industry in the recent years in Automobile and Industrial battery sector around the globe. VRAL batteries had become the preferred choice in various applications such as uninterrupted power supply (UPS) and security systems and weighting scales.
Classification of Batteries
Batteries are broadly classified into two segments like,
• Automotive Batteries
• Industrial Batteries
Automotive Batteries
All the automobiles including scooter needs a storage battery. So automotive batteries play a pre-dominant role in automobile sector by influencing customers in the market. Automobile batteries can be further distinguished as the original equipment (OE) markets as low as 5-6%. OE segment has the advantage of securing continuous orders and inquiries. This enables manufacturers to streamline production facilities, plan production schedules and attain certain level of operational efficiency.
The replacement market, on the other hand, is much larger. The replacement market is characterized by the presence of large unorganized sector, which constitutes around 55-60% of the total replacement market. This is possible due to low capital entry barrier. These players have the advantage of inapplicability of excise duties.
Industrial Batteries
The industrial battery segment comprises of two main categories. One comprises of he “Stationary Segment” and the second relating to “Motive Power and Electric Vehicles”. The Motive Power and Electric Vehicles Segment comprising of “Telecom, Railways and Power Industries have registered a growth in excess of 20% and this trend is likely to continue in the next 5 years”.
The Industrial segment is highly technological intensive and access to high quality work class technology is an important factor and is vital for brand reference. The total demand for the industrial battery segment is met by indigenous production with a small saves of about 10% by imports. The demand for industrial batteries has grown slowly and steadily.
As far as industrial batteries are concerned the evolving consciousness among Corporate and Government departments regarding environment factors will result in a shift towards pollution free technology. There has been a preferential shift in this segment from the Conventional Lead batteries to sealed maintenance free batteries (SMF). The bull of battery industry admits that the sales are fallen but at the same time they are expecting larger orders especially form telecom industry which gets going.
Recycling Batteries
Batteries acid is recycled by neutralizing it into water of converting it to sodium sulphate for laundry detergent, glass and textile manufacturing. Cleaning the battery cases, meeting the plastic and reforming in into uniform pellets recycle plastic. Lead which makes up 50% of every battery, is method poured into slabs and purified.
Prospectus of SMF/VRLA Batteries in India
The following factors are influencing demand of VRLA Technology batteries.
• Entry of multinationals in telecom industry.
• DOT’S policy decision to upgrade the overall technology base.
• Constraints in the use of conventional battery in radio paging and cellular segments.
Telecom
The government policy to increase the capacity form 10 millions lines by 2006 increased the demand for storage batteries considerably. The value added services like radio paging and cellular will increase the demand for storage batteries in future considerably.
Railways
In railways, the estimated demand is based on the annual post production which comes to 2500 numbers by railways itself and 1000 numbers more by various other segments, plus replacements demand and annual requirements for railway electrification.
Power Sector
In power sector the estimated 90 private power projects which are estimated to produce is 40000 MV with approximate capital outlay of Rs. 1,40,000 crores would keep the industry figured brighter in the coming years. The demand for VRLA batteries is increased due to its performance over the conventional batteries. So is more acceptable to the consumers.
Major Manufacturing of batteries in India
The following are the major manufacturers in battery industry in India:
Excide Industries
Standard Batteries
Hyderabad Batteries
GNB
Prestolite and
AMCO
COMPANY PROFILE
AMARA RAJA GROUP OF COMPANY
The Amara Raja Group is an Indian conglomerate company with its corporate office at Hitec city, Hyderabad. The group has presence in packaged foods and beverages, electronics products manufacturing, infrastructure sector, power system production and fabrication of sheet metal products and fasteners. The Amara Raja Group is better known for its automotive battery brand “AMARON” which is the second largest selling automotive battery brand in India today. Amara Raja Group employs a work force of over 7000 employees and it has international joint venture alliance with Johnson Controls Inc. Amara Raja Batteries made it to Asia’s ‘Best under a Billion’ 2010 list of companies compile by Forbes magazine.
HISTORY
A first generation entrepreneur, Dr. Ramachandra Naidu Galla is the founder of Amara Raja Group of companies in 1985. The automotive batteries business unit commenced operations
In 2001 with technology form Johnson controls Inc., - joint venture partner and the world’s largest manufacturer of automotive batteries. It pioneered the introduction of Zero maintenance technology in India’s automotive battery segment, the key differentiator in an otherwise cluttered Indian automotive battery market.
It is named after Jay Galla’s grandparents Amaravati and Raja Gopal Naidu
• Amara Raja Batteries Limited (ARBL) is engaged in manufacturing of industrial and automotive batteries. It was founded in 1985. ARBL was first to introduce Valve Regulated Lead Acid(VRLA) batteries with three-year warranty in industrial and automotive applications. It was also first to introduce 60-month warranty for automotive and two-wheeler batteries.
• The company has pan India presence with network spread across 18,000 retail outlets, 2,000 service hubs and 400+ power zone retail outlets.
• The company is largest and dominant market leader of standby batteries in Railways, Telecom, Power Generating stations in India. It is the largest manufacturer of stand VRLA batteries in South Asia.
• ARBL owns one of the largest and most modern automotive battery plants in Asia with a producing capacity of 2.5 million batteries per annum. Amara Raja Group on February 2, 2011, unveiled a new identity coinciding with its silver jubilee celebrations. On the occasion the group Chairman, Dr. Ramachandra N. Galla announced setting up of Amara Raja Digital World City (ARDWC) and shared group vision to achieve $25 billion revenue by 2025 and continue to create non-migratory jobs.