MATERIAL HANDLING

► Material handling is the taking care of

material. The material handling is
undertaken at every stage of logistics
activity and is an integral part of the other
elements of logistics function. It starts from
receiving of the raw material to the sending
of finished goods to the customers.
Flow chart of movement of materials
in a production unit

Finishing work at
Another unit

receipt despatch
Customer
vendor storage production storage Dealer
unit
Warehouse
transport transport

Temporary
storage of
Semi-finished
product
 Receipt & Despatch
RECEIPT

► Receipt of trucks ,ships, rails etc in a nominated area or

location.
► Unloading of individual truck , wagon or ship.
► Storage of the goods unloaded.
► Weighment of the goods.
► Sampling of the materials received.
► Documentation for receipt of goods.
► Documentation for storage of goods.
► Communication to all concerned about the receipt of
goods.
 Despatch
► Receipt of trucks ,ships, rails etc in a nominated
area or location.
► Weighment of the goods.
► loading of individual truck , wagon or ship.
► Storage of the goods to ensure uninterrupted
loading.
► Sampling of the goods that are loaded.
► Documentation of despatches, storage,
weighment, & samples.
► Communication to all concerned about the
despatch of goods.
 Activities performed under material
handling
► The loading & unloading of trucks, wagons
or ships.
► Waiting space for trucks, wagons or ships.
► Adequate storage space.
► Weighment facilities.
► Sampling facilities.
► Documentation & communication system.
 Handling Methods

► Type of material to be used.

► Volume
► If the process not going to be changed over
time than automation handling equipments
can be used.
► The handling methods also depends upon
on labour shortage.
 Checklist for designing Material
handling
► Materials to be handle must be studied (solid,
liquid gas)
► Quantity to be move.
► Continuous or intermittent movement of material
► Speed at which the material is to be moved.
► Characteristics of the building & working
condition
► Replacement of existing equipments or material
 Principles & Guideline for
handling System
► Allthe unnecessary of handling of material to
be avoided
► The material should be handle in the largest
possible load by the quickest means over the
shortest route.
► Handling to be done with least amount of
damage
► The material must be handled at least possible
cost
► The handling method & equipments must
be of proper standards.
► Automation must include in handling
process.
► Those methods & equipments should be
used which can perform a variety of tasks.
► The methods and equipments selected must
make the system safe.
 Ware housing
► Ware house :It is the location with
adequate facilities where volume shipments
are received from the production section,
broken down, reassemble into combination ,
representing a particular order and shipped
to customer’s location or locations.
 Need of the Warehouse

► To ensure the protection against delays &

uncertainties in transportation
► Eliminating the uncertainties in the availability of
product at desired time and place.
► Providing adjustment between the time of
production & time of use.
► Act as a store for goods, receiving surplus
goods when production exceeds demands &
releasing them when supply reduces.
 Types of warehouses

► 1. Private Warehouse : a warehouse

owned by a company making its own goods.
► 2. Public Warehouse : a ware house may
be operated by another organization,
including a government agency and only
used by company o certain terms and
conditions .
Advantage of Private Warehouses
► Private warehouses offers better control over the movement &
storage of the products as required by management from time
to time.
► There is less likelihood of errors in the case warehouse since
the companies products are handled by its own employers
► A special design of warehouse facilities for automated
handling, may lead to a reduction in the handling cost. This
may not be present in public warehouse.
► In some location for certain products and material, the public
warehouse may not available, the only, possible is the
establishment of private warehouses.
Advantages of Public warehouses
► It is generally less expensive
► They are usually immediately available
► The fixed cost of warehouse are distributed
among many users, therefore the overall cost
of warehouses per unit works out to be lower
figure.
► Public warehouses facilities can be given up as
soon as necessary without any additional
liability on the part of the user.
 Warehouse Cost
► Cost of buying the site
► Cost of buying the furniture
► Repair and maintenance cost
► Depreciation of building & equipment
► Insurance
 Warehouse Operations
(Functions)
► Receiving of goods (Raw material/semi-
finished/finished goods).
► Indentifying the goods(giving particular number to
the goods).
► sorting of the goods(to store at particular area).
► Holding of the goods( to store at proper protection).
► Dispatching of goods.
► Preparing records .
 Warehouse Location

► Market service area.

► Satisfaction of transport requirements and
facilities available in the form of rails, roads &
vehicles etc.
► Transportation rates prevailing in the area and
distribution cost per unit area
► Competition from the competitors means that
whether they have warehouses in the same
area or not
► Availabilityof power, water, gas etc. & their cost
► Labor supply labor cost in that area
► Real estate, excise, Govt. taxes, subsides in that
area
► Potential of further expansion
► Attitude of local residents & Govt. towards
establishment of warehouse.
► Cost of land for warehouse.
 Insurance And Claim Procedure

► Insurance is process of making arrangement

with an insurance company for the payment of
sum of money in the event of loss, injury or
accident. Type of Insurance are:
► Insurance against life
► Insurance against Risks such as fire, loss by
robbery, strikes and civil commotion.
► Marine Insurance
► Insurance against third parties
 Claim Procedures

► Imported consignments
► Indigenous consignments
 Marine Insurance Policy
► A policy is obtained to cover approximate
value of a consignment to be received by
sea, air and post in a year plus 70% of the
value to cover custom duty , freight and
other overhead expenses.
► Monthly statement regarding shipment
receipt are send to the insurance with the
following particulars
► Purchase case number and date
► Number of packages
► The name of vessel
► The port of shipment
► The sum to be insured in Indian currency
► On receiving the monthly statement, the insurance
company calculates the premium account to be
paid and send the bill. On receiving the payment,
certificate is issused indicating that consignments
are insured.
 Imported consignments
► Carriersare bound to delivered the goods in
condition in which they were tendered for
carrige. They are liable to make the loss or
damage occurring while the consignment is
under their custody.
► When cargo is discharge, the consignee must
examine the goods thoroughly. If there is any
loss or damage, an application to the steamer’s
agent must be made for the survey and this
survey must be conducted within 3 days from
the date of landing of goods. In case the
steamer survey is not granted by the steamer
agent, the reply to that must be obtained from
the steamer agent by the consignee.
 Filling claims with carriers
► As soon as steamer survey report is obtained, the claim
for the loss or damage must be preferred, supported by
the following documents.
► Claim bill in triplicate (3 copies).
► Invoice and Packing list.
► Bill of lading.
► steamer survey report .
► landing remark certificate from the Port Trust.
claim is to be settled with in one year
from the date of arrival of streamer.
 Filling claims with insurance
company
► . If the claim is not settled within the 6 months with the
steamer agents then it should be brought in the notice of
insurance company The documents to be sent to the
insurance company are :
► 1. bill of lading
► 2. invoice and packing list
► 3. Correspondence with streamer agents
► 4. survey reports
► If the consignment is landed but missing in docks, a claim must be
put against the Port Trust and Landed But Missing Certificate
should be obtained. The insurance company should be achieved
immediately with the following documents:-
► Name of the streamer
► Bill of lading (their number and date)
► No. of packages missing.
► Marks and numbers.
► Policy number
► Invoice value
► Date of discharge
 Claims for packages in sound
condition
► If consignment is received in sound condition but if there
is a shortage then the consignee must immediately refer
the matter to the supplier to make proper loss. Such cases
should be surveyed if the loss is to be more than Rs.500.
As soon as the liability is admitted by the supplier, the
consignee must withdraw the claim put with the insurance
company. Consignee must immediately put a claim with
the custom authorities for the refund of appropriate
custom duty. Claim to be put within six months for
refund of appropriate custom duty.
 Claims for air consignments
► Airlinesare responsible for the loss and
damage to the goods under their custodies.
The rest of the steps of the claim are same
as of steamer agent.
 Claims for postal consignments
► Claimfor the loss should be put within one
month from the date of the delivery of the
parcel with the postal authorities at the
destination. In case of non-receipt of parcel,
claim should be put within 3 months from
the date of booking. The monetary claim
should be submitted to the insurance
company with following document:-
► Copy of bill of entry.
► Customs examine certificate.
► Official stamp of survey fee paid.
► A copy of the bill of lading.
► Invoice and packing list.
► Insurance certificate.
► Documents showing the exact value of loss.
Payment of claims is made by Indian
Insurance Companies only in Indian currency.
► Generally the claim against insurance company
in respect to imported consignments may be
categorised as follows:
► 1. claim for damages.
► 2. claim for shortages.
► 3. claim for short landed consignments.
► 4. claim for landed but missing consignments.
 Indigenous Consignments
► In this ,action has to be initiated in the same way as for
imported consignments. The supporting documents to
be furnished to the insurance company are:
► Invoice .
► Certificate of the loss obtained from the carrier.
► Survey report.
► Official stamps receipt from the surveyors .
► Insurance particulars such as policy number.
► Documents showing the exact value of loss.
► Incase of the claims with the railways it
should be put within the 6 months from the
date of railway receipt as laid down in
section 78 B of Indian Railways Act. If the
entire consignment is not receipt at the
destination from over 2 months after the
date of booking, the consignee should write
to the railways under whose zone the
destination station is situated.
► If the consignment is received in damage or
in open condition, the consignee should
asked for the open delivery assessment to
the Chief Commercial Superintendent of the
destination railway for the survey. The Chief
Commercial Superintendent will have to give
the survey report with the 3 days.
 Freight Rate Structure
Freight rates for any mode of transport
are based on the following principles:
► Fixed cost.
► Variable cost
► Public use (material for public daily use will
be carried at lower rates than others)
► Government policy
► Reasonable profit
 Booking of goods by Road
Forwarding note : This contain the
information on
► the consignor & consignee,
► originating & destination address ,
► nature of goods & their quantity,
► selected route for despatch,
► packing condition
► The carrier is supposed to examine the
forwarding note and the nature of goods
offered for despatch , work out the distance
he would have to cover to deliver the goods
and quote a freight rate for transport. If this
rate and other conditions given by carrier are
accepatable to the owner of the goods, the
forwarding note is accepted by the carrier and
a contract is deemed to have been arrived at.
► Goods Consignment Note : this note is
issued by carrier. It gives the details of the
goods accepted for despatch , the rate of
transport charge, the total freight. It also
mentions whether transport charges are
pre-paid or payable at destination. On the
back of this note terms and conditions are
printed , taken from Common Carrier Act
1880
 Selection of a Carrier
► Constitution of the carrier firm.
► Carrier’s business turnover.
► Carrier’s area of operation.
► Carrier’s branch offices.
► Number of truck owned by Carrier.
► The name of clients currently served by Carrier.
► Normal transit time.
► References from other companies.
► Expedition with which claims for damages/shortages etc are settled.
► The nature and value of the contracts with other companies
 Setting Claims with road
transport
► A claim must be filled in writing within 7 days after taking the
delivery of goods. The claim may be filled with the carrier
issuing G.C. note.
► In case of non-delivery the claim must be filled within 60 days
after a reasonable time for delivery has been closed.
► Suits for the claims must be filled in the appropriate court with in
9 months and 1 day from the day a notice in writing is given by
the carrier that the claim has been disallowed.
► A claim must be filled with in 6 months of booking. No suit lies
against the carrier in respect of consignment without a claim in
writing have been filled first.
► In deciding the claim for damages, a carrier gets the benefits
of any insurance that may have been taken by the owner of
goods.
► The value of goods to be paid is equals to actual value of the
goods or their invoiced value, or that written in the dispatch
documents.
► The storage of the goods in Transporter’s warehouse is at the
owner’s cost expect when the negligence of the carrier is
proved. The carrier is authorized to recover the cost of
repairs, expect when the negligence of the carrier is proved.
 Freight rate Structure
(Rail transport)
► 1.Class Rates:- In this commodities are classified into
different classes. The class rates per quintal for certain
distances are fixed These rates are less for the longer
distances.
► 2.Special rates:- These are the subsidy rates for defense
material, exist at subsided rates.
► 3.Station to Station rates:- They are fixed rates to meet the
competition from other sources of transportation. There is no
reduction in the first 150 km. Also there is no reduction in
the rates for petroleum and other hydrocarbons oils.
 Freight rate Structure
(Air transport)
► General Cargo Rates (GCR):- These are the rates which are
fixed or weight upto 45 kgs.
► Class rates :- discounted rates for certain classified items. E.g.
valuable cargo, live animals etc.
► Specify commodity rates:- These are the heavily discounted
rates applicable directly between two points for e.g. Delhi to
Frankfurt , Delhi to Sri Lanka.
► Govt. Mandatory Rates:- These rates offer incentives to
export of certain commodities. For e.g. Indian Govt. has
directed low rates for the export of leather from India to
various countries in Europe and for USA also.
 Freight rate Structure
(Sea transport)
► Factors while making tariff structure
► character of cargo.
► Volume of cargo
► Availability of cargo
► Competition from other carriers
► distance
► fix charges
► Insurance
► port charges/facilities
 Factors that must be considered
before Exporting goods by Sea
► 1. Packaging : following things should be
in mind :
► Packaging to be of minimum dimensions
► There should be optimum utilization of
space within the package.
► Goods with different freight rate should not
be packed together in a one package.
Marking :
► company name .
► location to send
► quantity
► the serial no. of each pacakage out of total
number .
► Import/export licence number.
► The country of origin
► Freight broker: He furnished the following
things:-
► Name of the shipper
► Quantity & description of the cargo
► Part of shipment
► Port of destination
► Name of the ship in which he seeks space.
► Clearing & forwarding Agent:- These
persons give assistance in processing the
custom documents. They pay EXIM duty on
the behalf of shipper.
► Bill of lading:- It includes the following:-
► Name of the ship
► Nationality
► Shipper's Names
► Marks & No. of packaging
► Description of goods
► Weight of goods
► Freight rates (Total)
► Measurement of goods.
 Import of goods by Sea

► When an import cargo expected, the copy of bill

of lading, invoice, packing list etc. are received
from the shipper in advance by clearing &
forwarding agents who process the custom
document & pay the custom duties and also
obtained a delivery order from shipping
company and clears the goods from the post
after paying port charges & delivers the goods to
the importer at the destination.
 Claims
► Under Indian carry of Goods by sea Act
1925),claims are to be settled in one year
from the date of their landing. The claim for
the partial loss or damage or short landing is
given to consignee or to clearing & forwarding
agents in writing, requesting the shipping
company for the survey. The survey should be
done within the three days of landing.
► 
 CHARTERING
►A merchant who want so ship large amount,
particularly if in bulk, would charter or hire a
tramp ship. The merchant or organization
who hires the ship is referred to as the
charterer. The formal contract drawn up
between the ship owner and the charterer is
known as the charter party.
 Kinds of Charter
► Time Charter
The ship is chartered as a functioning operating
unit or a period of time. The charterer pays
the hire money and the ship transport cargo
wherever the charterer wishes.
► Voyage Charter
The ship is chartered to carry on specified
voyage between places.
► Demise Charter
Normally a ship owner or prospective ship
owner prefer this method. The charterer will
have to equip the ship with personnel, fuel
and other necessaries and operate the ship.
This charter is usually for a long period say
for about five years or more.
 Charter Party
► Afterthe terms have been agreed upon, the
documents called the charter party is drawn
up. The different types of charter party
arrangements determine the distribution of
responsibilities and items of costs between
ship-owners and charterers.
► The charter hire depends on the duration of the
charter. The owners have to pay for depreciation,
insurance, survey and brokerage, if any, unless
otherwise agreed. The charterers have to pay for
wages, maintenance and repairs, stores, supplies
and equipment, lubricating oil, water, insurance
and survey (unless otherwise agreed), overhead
charges, fuel, port charges, cleaning of holds,
commissions on cargo, brokerage and claims. The
freight depends on the quantity of cargo.
STRUCTURE OF STANDARD TIME
CHARTER FORM
► Date, Name and Address of Ship owners and
charterer.
► Description of Ship-Name, where registered,
capacities, speed, fuel consumption, etc.
► Condition of ship.
► Trading limits.
► Hire money, how paid, what currency to be used,
and when payments are to made.
► Date hire commence and date completed
► Where hire commences
► Agreement on charterers right to complain
and perhaps remove master or chief
engineer.
► Clauses concerning strikes, war, etc.
► How arbitration should be organized in the
event of a dispute.
 STRUCTURE OF STANDARD
VOYAGE CHARTER FORM
► Date, name and address of ship owner and charter.
► Description of ship – name and where' registered, capacities,
relevant to the cargo in question.
► Name of goods to be shipped and in what manner.
► Name of loading and discharging ports.
► Details of routes to be followed.
► Date, vessel is to arrive at the loading port.
► The freight rate and currency.
► How the problems of strikes, ice congestion in ports, are to be
settled.
► Arbitration clause.
 LINEAR CONFERENCE

►A linear conference is a group of two or

more vessels operating carriers which
provides international linear services for the
carriage of cargo on a particular route or
routes with in specified geographical limits
on uniform or common freight rates and on
other mutually agreed conditions.
 A linear service provides
► Regularity of sailings to scheduled ports .
► Stability of freight rates.
► Coverage of wide range of ports .
► Rebates on rates .
► Uniform rates for all shippers.
 Norms & Practices
► Deferred Rebate system :-(If he is using the
vessels of the member lines of the conference then
he get the rebates 10% of
for 3-6 month.
► The Dual rate system :- If a shipper sign a
contract with conference to protect, They get bereft
of rates which are lower than other non-contractors.
► Immediate Rebate system :- Contract shipper are
given cash or immediate rebate (9.5%) of freight on
shipment of their cargo.
 CONTAINER
►A container is defined as a transport device,
a case or a tank which carries liquids and
solids. They are specially designed to permit
unbroken transport of goods. They are
equipped with fittings to enable easy
handling for different transportation modes.
 Basic product requirement for a
container are
► It must have an airtight and water tight outer
shell & flooring
► It must have sufficient strength to withstand.
► It must have internal lining which can be cleaned
easily and does not buckle with temperature
changes.
► It should not absorb moisture.
► It must have such a construction as allows easy
circulation of air around the cargo.
 Types of container
► Conventional enclosed containers.
► Insulated and ventilated containers.
► Refrigerated containers.
► Open top containers.
► Open sided containers.
 Advantages
► Reduces loss and damage claims.
► It gives door to door pick up & delivery service.
► It eliminates multiple handling of cargo , for the
container is handled as a unit.
► Improvement relating to handling, marketing and
pattern of packaging is made possible by the
container.
► Cost of packaging gets reduces.
► Containers can be used as an efficient storage system
till the goods are finally used.
Infrastructure for containerisation
► Modernisation of ports.
► Inland depots .(dry ports)
► Customs procedure.
► Insurance
► Mechanised handling of Containers.
► Cranes.
► Lifts
 Interstate tariffs and
documentation
► Intra state movement of goods : In India we
have a regulated intra state transport. These
regulations try to manage the transportation
system within the state. All the state
authorities are committed to provide
adequate, well co-ordinated, economical and
efficient transportation services to the people
of the state. In this the regulations may be
based on vehicle size, rates and routes.
► In
India the state Govt. try to regulate the
documentation system by dividing the
vehicles into various categories.
 Heavy Weight Vehicles : Wt. more than 12000
kgs.
 Light Weight Vehicles : Wt. less than 7500
kgs.
 Medium Weight Vehicles : Wt. between 7500 to
12000 kgs.
 The vehicles in order to transport goods within a state
need to follow the following procedure.
► Apply to the District Transport Office for permit with the
vehicle registration card (Form No. 26) .
► Clarify the purpose of transport vehicle.
► Deposit form and fees with the district transport office.
► DTO will issue the permit under the form 32/33 that is known
as Temporary Permit.
► Thus the intra state transport requires a permit & that is
known as Temporary Permit.
 Temporary Permit (SEC-87)
► A regional transport authority and the state transport
authority may without following the procedure as laid
down in section 80, grants permits to be effective for a
limited period which, shall not exceed 4 months, to
authorize the use transport vehicles temporary.
► For the convenience of passengers on special
occasions such as religious gatherings.
► For the purpose of seasonal business.
► To meet a particulars temporary need.
► Provided that the regional transport
authority or state transport authority in case
of goods carriages under circumtances of
special nature, a permit for a exceeding 4
month but not more than a year.
 Inter State movement of goods
► It means when we are sending our goods from one
state to another and for that we require a
document that is known as National Permit.
► National Permit:-It means a permit granted by
appropriate authority for carrying the goods from
one state to another.
► An Application for National Permit (Sce-86):-An
application for the grant of National Permit for the
registration are submitted to registering authority
in the following way:-
 Form Contents and duration of
Authorization (Sec-87)
► a) An application for the grant of authorization for National
Permit shall be made in the form-46 and shall be deposit with
a fee of Rs.500 per annum in the form of bank draft.
► b) Every authorization shall be granted in the form-47. The
authority which granted the authorization shall inform the
state transport authorities concerned , of the registration
number of vehicle, the name and the address of the permit
holder and the period for which they said authorization is
valid.
► c) The period of validity of authorization shall not exceed
one year at a time.
 Age of vehicle for the purpose of
National Permit
► No National permit shall be granted in respect
of goods carriage which is more than 12 years
old at any point of time.
► No. National permit shall be granted for a
multi axel goods carriage which is more than
15 years old at any point of time.
► Quarterly return to be filled by a national
permit holder in form No. 49 to the authority
which granted the national permit.
Additional conditions for National
Permit (Section 90)
► 1. The vehicle under national permit shall be painted in dry leaf
brown color with 30 cms board white board and the words "National
Permit" shall be there on the both sides of the vehicle in bold letters
within a circle of 60cm diameter.
► 2. A board with words "National Permit valid in the states
of ...................." with blue letters on white back ground shall be
carried in the front top of such vehicle.
► 3. No such vehicle shall carry any goods without a bill of lading.
► 4. The vehicle shall have minimum of 2 drivers and shall be
provided with a seat across its full width behind the driver seat
providing the facility for the spare driver to stretch himself and
sleep.
5. The vehicle must have the following documents and shall
be produced on demand by an officer, namely given below.
► Certificate of fitness
► Certificate of Insurance
► Certificate of Registration
► National Permit
► Taxation
6.The vehicle shall be subject to fulfill all local rules or
restriction as imposed by the State Government.
 Common carrier liabilities

► Common carrier is liable for all loss or

damage to the goods. The common carrier
is liable for loss or damage caused wholly by
the negligence or where the goods are
destroyed by accidental fire or when they
are stolen from him.
 Exceptions
► The following exception are there
► 1. The Excepted Perils
► A. the act of God.
► B. public enemies(mobs , thieves , strikers etc.)
► C. inherent vice (the common carrier is not
liable for damage or loss to goods which has
arisen due to inherent vice in or natural
deterioration in the goods . eg.animals carried in
the normal way may attack each other)
► 2. Termination of liability : when the
common carrier has brought the goods to the
destination ,given the consignee or his agent
notice of arrival and allowed the consignee
reasonable time in which to remove the
goods , his liability as carrier ceases.
► 3. Special contract : the common carrier
may limit his liability by special agreement
with the consignor.
 Under the Carrier Act,1865
► Goods for the purpose of liability are divided
into two categories namely:
► 1. scheduled goods.
► 2. non – scheduled goods
► Liability in respect of scheduled goods : they
are usually valuable articles for example,
gold & silver coins , precious stones , maps ,
work of art , glass etc.
 Liabilities of Railways
► theliability of the railway administration as
a carrier is laid down in chapter VII of the
Railway act. The main provisions are
summarized as under:
Carriage by Sea
Carriage by Air