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Logisitics > Part 7- Transportation systems > Flashcards

Part 7- Transportation systems Flashcards

1
Q

The weak link in a supply chain

A

“A chain is only as strong as its weakest link”

  • additional financial costs
  • very important that the company arrange transportation as efficiently as possible
  • transportation and logistics account for 7-14% of company sales depending on the sector
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2
Q

The four most important ways of transportation

A

Rail, road, sea and air

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3
Q

Transportation costs

A

Both fixed and variable:

Fixed- do not change with the transported volume (vehicle depreciation, buildings)
Variable- change with the transported volume (fuel, maintenance, drivers wages)

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4
Q

Areas where transportation costs are incurred:

A
  • Ways (railroad tracks, road, canal..)
  • Terminals (classification, load and unload goods, connections, maintenance. administration..)
  • Vehicles (owned, leased)
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5
Q

Modes of transportation and costs:

A

1) Trucking companies
2) Rail companies
3) Cargo airlines
4) Shipping companies
5) Intermodal companies
6) Pipeline

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6
Q

Trucking companies

A
  • high volume consumer goods over short distances
  • the most widely used mode
  • provides rapidity and flexibility to shippers
  • door-to-door services
  • low fixed and variable costs
  • ftl/ltl/ small-package carriers
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7
Q

Rail companies

A
  • slowest and least flexible
  • low cost mode
  • transportation of lower-value commodity cargoes over long distances
  • natural monopolies
  • heavy cargo (minerals, metals, oil products, gasoline ++)
  • large capital investment required
  • high fixed cost and low variable costs
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8
Q

Cargo airlines

A
  • fastest and most expensive mode
  • low fixed costs and high variable costs
  • has longest average miles per shipment
  • high-value, lower-volume, time-sensitive cargoes at premium rates
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9
Q

Shipping companies

A
  • moderate fixed costs and low operating costs
  • slow and not very flexible mode
  • low-value bulk cargoes or commodities over long distances
  • with containerization, major facilitator of international trade
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10
Q

Intermodal companies

A
  • combination of several modes of transportation
  • goods carried into an intermodal container or vehicle
  • no handling of the cargo when changing mode –> reduces damage of cargo and increases the speed of transportation
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11
Q

Pipeline

A
  • for high-volume gas or oil products
  • high-volume movements
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12
Q

Global transportation intermediaries

A

1) Freight agencies (road transport)
2) Freight forwarders
3) Custom agencies
4) Non-vessel-operating common carriers (NVOCCs)

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13
Q

Freight agencies (Road transport)

A

They bring together buyers of transportation (shippers) and sellers (trucking companies)

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14
Q

Freight forwarders

A
  • Shippers (exporters) use them very frequently in global trade, mainly for sea and air transportation.
  • Extensive knowledge about documents, regulations, transportation costs, banking practices etc. required to export to many different countries all around the world
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15
Q

Customs agencies

A
  • perform transactions at ports on behalf of other parties
  • an importer hires a customs agent to help the importer to clear the goods from customs when they arrive to the country
  • they are also in charge of payment of taxes and duties related to those cargoes entering the country
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16
Q

Non-vessel-operating common carriers (NVOCCs)

A

The yard shipping companies that offer ocean transportation of goods but they do not own or operate the vessels on which the goods or containers are transported

17
Q

Cost factors

A
  • distance (costs go up the longer the distance)
  • weight (the cost per pound deceases the more weight)
  • density (the cost per pund decreases the more density)
  • stowability (how easy a cargo is stowed)
  • other factors- amount of handling necessary, type of handling, liability, perishability, amount of freight flowing in both ways etc)
18
Q

Cost elements (two main elements)

A

Line haul costs:
Costs of moving cargo from A to B
- include mainly fuel, labour and depreciation of the vehicle
- normally expressed as total costs divided by the distance travelled
- other line haul services: reconsignment, diversion, pooling, stopping in transit etc.

Terminal handling costs:
- depend on how many times the shipment must be handled
- for FTL cargoes- no terminal handling costs
- for LTL- shipments must be sent to a terminal where handling costs are incurred
- other terminal services: consolidation, dispersion or distribution, vehicle service ++

19
Q

Documents for export:

A

Export license (from government) + export declaration (for customs) + export taxes and quotas

20
Q

Documents required by the importing government:

A

1) CERTIFICATE OF ORIGIN
2) CERTIFICATE OF MANUFACTURE
3) CERTIFICATE OF INSPECTION
4) CERTIFICATE OF FREE SALE (THE MANUFACTURER HAS NO UNRESOLVED ENFORCEMENT ACTIONS PENDING)
5) IMPORT LICENSE
6) CERTIFICATE OF INSURANCE

21
Q

Included in the sales contract (important for the exam):

A

FOB- free on board → means the ownership of the shipment is transferred from the seller to the buyer once the cargo pass the board of the vessel, transportation is not included in the price

CIF- Cost, insurance, and freight (CIF) is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer’s order while the cargo is in transit.

22
Q

Terms of sale:

A

International commercial terms (incoterms) are a set of rules that define the responsibilities of the seller and buyer for the delivery of goods under sales contracts for International trade, and what company will be in charge of contracting and paying for the transportation.
- published by the ICC (international chamber of commerce)

23
Q

Two main categories of incoterms:

A

1) Incoterms for any mode of transportation:
- EXW (ex works)
- FCA (free carrier)
- CPT (Carriage Paid To)
- CIP (carriange and insurance paid to)
- DAT (delivered at terminal)
- DAP (delivered at place)
- DOP (delivered duty paid)
- etc

2) Incoterms for sea transport:
- FAS (free alongside ship)
- FOB (free on board)
- CFR (cost and freight)
- CIF (cost, insurance and fright)

24
Q

The CMR- international transportation documents

A
  • the most common document for road transportation
  • not a document of title = NON-NEGOTIABLE !!
  • agreed in the CMR convention in 1956

It has four parts:
- shipper´s copy
- carrier´s copy
- consignee´s copy
- administration copy

25
Q

The bill of lading- international transportation documents

A
  • The document used for maritime transportation
  • a contract of carriage between the shipper and the shipowner

3 different functions:
1) a proof that there is a transportation contract between the shipper and the shipowner
2) a proof that the cargo has been loaded into the vessel in a proper good condition
3) IT IS A DOCUMENT OF TITLE of property/ownership of the cargo- whoever holds the bill of lading may take delivery of the goods

  • a very risky and important document
  • a buyer and his bank are assured that the dispatch of goods according to the contract of sale is underway
  • no vessels sails with original bills of lading onboard
  • need an original bill of lading to receive the goods
  • the bill of lading becomes an essential element in controlling payment procedures in international trade
26
Q

The air waybill- international transportation documents

A

A document of carriage that is issued by airlines to shippers of cargo

  • its conditions are issued under the Warsaw Convention from 1929
  • NOT a document of title- the document often travels forward with the goods allowing the immediate release of the goods into the consignees charge for subsequent clearance and delivery

It has 3 purposes:
- evidence of a contract of carriage
- proves receipt of goods for shipment
- a freight bill

Logisitics (11 decks)

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