Significance of Bonded Logistics Parks in China, Enabling Indian Retail Industry for Effective Logistics

Abstract

Multiple handling and resting of materials at different points in the flow of Supply Chain has come into the limelight in the recent time due to severe cost pressure for the reduction and savings of Logistics costs. The ease of material movement is been on a large focus in-order to achieve cost savings and to have a win-win situation for both the Suppliers and the Customers. With the effect of globalization, the foreign Suppliers are exporting goods to the consignee country by paying customs duty and in-turn the consignee on the receiving end pays import customs duty for the consumption of the goods and on top of it pays an additional storage and handling charges for the Warehousing and Distribution activity in the consignee country. This makes the logistics costs to go up. To tackle this challenge and complexity in the Logistics system, major economies are introducing FTZ - Free Trade Zones or Logistics Parks in major cities. These Free Trade Zones are backed up the concern country’s government and customs authorities. With lot of initiatives coming from the government side but still there is a huge demand gap for these Free Trade Zones or Logistics Parks and many of them are underutilized or rather unoccupied. Still many of the Consumers are relying upon traditional CFA – Custom Freight Agents or other warehouses for getting this service done. But they are missing a big picture of Logistics Cost Savings, Transit time reduction in transferring the goods and the major advantage in tax rebates. At this backdrop, this paper address the major advantage of using the Bonded Logistics Park, developed and promoted by the People’s Republic of China by analyzing the data of an Indian customer who is sourcing more than 70% from China.