LOGISTICS

IN GLOBAL CONTEXT

NAME : YASHASVI PARSAI SUBJECT CODE : ISC7000

STUDENT ID : ST20132116 PROF. : AADIL DALVI
BATCH : PGDMFC15CM ROLL NO. : 2018
 Introduction
Logistics is incomplete without transportation. Without the ability to transport
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products through the supply chain, a business cannot work effectively. It also
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enables businesses to bridge the gap between where products are manufactured
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and where they are consumed. Transportation is a feature of logistics that involves
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planning, scheduling, and controlling activities related to mode, vendor, and

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inventory movement into and out of an organisation. (Transportation Mode In

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Logistics, 2019)

For any organisation responsible for selecting an international shipper or carrier

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for cross-border transactions, selecting international transportation can be a time-

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consuming process. The first decision includes deciding whether to travel by air,
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land, or water. The second decision involves selecting a carrier, as facilities and
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rates are not necessarily uniform, with significant variations between the services
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provided by one shipper and those provided by another.

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Although certain products have only one feasible mode of transport due to their
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characteristics, there are several situations where the decision requires a thorough
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examination. (Transportation Mode In Logistics, 2019)

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How To Choose Appropriate Transportation
Mode In Logistics
(Factors to Consider while choosing the most Suitable Mode of Transport, 2020)

Cost Of Service :
The cost of transportation is added to the prices of the product, so keep this in mind
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at all times. Rail transport is a less expensive means of transportation for

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transporting heavy and bulky cargo over long distances. Motor transportation is
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ideally suited and most cost-effective for transporting limited amounts of traffic
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over short distances. Motor transportation reduces the cost of packaging and
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handling. Water transportation is the most cost-effective mode of transportation.

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It is only ideal for transporting heavy and bulky goods over long distances where
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time is not an issue. Air transport is the most expensive mode of transportation, but
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it is ideal for transporting perishable, light, and valuable items that must be
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delivered quickly.
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Speed of Transport :
Air travel is the fastest mode of transportation, but it is also the most expensive.
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Over short distances, automobiles are faster than trains. Railways, on the other
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hand, have a faster long-distance speed than all other modes of transportation
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except air transport, and are best suited for long-distance travel. Water transport is
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extremely sluggish, making it unsuitable for situations where time is critical.

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Flexibility: i

Railways, water transportation, and air transportation are all inflexible means of
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transportation. They run services on predetermined routes and at predetermined

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times. The goods must be transported to the stations, ports, and airports, where
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they will be picked up. Since it is not bound by fixed routes or timetables, motor
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transportation offers the most flexibility. It can run at any time and can get to the
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business premises to load and unload goods.

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Regularity of Service :
In comparison to every other mode of transportation, railway service is more
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reliable, consistent and constant. Climate conditions have no impact on it. Motor
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transport, ocean transport, and air transport, on the other hand, are all affected by
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bad weather, such as heavy rains, snow, fog, and storms.

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Safety :
The choice of a suitable mode of transport is often influenced by the safety and
protection of goods in transit. Motor transport can be preferable over railway
transport because losses in motor transport are usually lower. Water
transportation exposes goods to the dangers of the sea, so it is considered a last
resort from a safety perspective.

Nature of Commodity :
Rail transport is ideal for transporting low-cost, bulky, and heavy goods.
Perishable goods that need to be delivered quickly can be transported by car or
by plane, depending on cost and distance.

Other Consideration :
When choosing a mode of transportation, a variety of additional facilities such as
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warehousing, packaging, loading, and unloading are taken into consideration. It is

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evident from the preceding discussion that each mode of transportation is best
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suited for a specific form of traffic.

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Rail transportation is ideal for transporting large, bulky goods over long distances.
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Motor transportation is ideal for transporting small packages over short distances.
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Air transport is best for light and valuable items that need to be transported
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quickly. Ocean transportation is ideal for transporting large, bulky items over long
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distances at the lowest possible cost. (Factors to Consider while choosing the
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most Suitable Mode of Transport, 2020)

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The Impact of COVID-19 On Logistics
(The Impact of COVID-19 on Logistics, 2021)

The COVID-19 pandemic has had a direct impact on logistics companies that deal
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with the movement, storage, and flow of goods. Logistics companies promote
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trade and commerce by assisting businesses in getting their goods to consumers,

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both within and across international borders. As a result, supply chain disruptions
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caused by the pandemic may have an effect on productivity, economic

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development, and job creation.

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We can observe the impacts on freight capacity in three key global transportation
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segments ocean, land, and air.

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Ocean Freight :
In the first months of 2021, total container volumes handled at Chinese ports fell
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by 10.1 percent. Ocean freight is experiencing significant constraints around the

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world, according to Agility Logistics, affecting both main exporters such as

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Brazil, China, India, and Mexico, as well as importers such as the European
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Union. Low demand will continue to affect routes between Asia and Europe, the
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United States, and Latin America, according to DHL. As a result, more blank
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sailings are likely in the coming weeks.

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Land Freight :
Land transport, unlike ocean and air transport, has remained partially accessible
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around the world as roads have remained open, even in countries with extreme
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lockdowns, according to Agility Logistics' monitoring tool. Under lockdown,

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trucking capacity is strained due to increased demand for their services—

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particularly food and medical supply transportation—combined with reduced i i i i i i i

employee availability (due to COVID-19-related restrictions), resulting in higher

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prices. Because of the lockdowns, other economic sectors that include land
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transportation, such as construction, are usually not operating at maximum

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capacity. As a result, some markets' spot road freight prices have decreased.
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Because of higher air cargo freight prices, blank sailings, and longer truck transit
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times, demand for rail services has increased.

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Air Freight :
Due to a sharp decline in passenger flights (which hold freight as belly cargo) and
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a decrease in manufacturing in China, volumes dropped by 19% in March 2021.

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However, as more shippers and governments depend on air cargo for critical
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goods, air freight prices have risen, and some carriers are experiencing delays due
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to increased airport congestion. Mid-April saw a rise in capability as well as a

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recovery in volume transported (though still lower than last year). The net
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reduction in demand is greater than the total reduction in capability, resulting in

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higher air freight prices. (The Impact of COVID-19 on Logistics, 2021)

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How New Technologies Has Benefited The Logistics

Industry
(How Technology is Benefiting Logistics, 2021)

Shipment Tracking System :

Customers used to book orders, obtain an approximate delivery date, and then be
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left in limbo unless they called to inquire. Customers can now use delivery and
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tracking services 24/7, thanks to advancements in the internet and apps. This not
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only improves the customer experience, but it also saves the company time and
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money. Shapiro 360° is a shipment monitoring system designed specifically for

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our customers that allows them to monitor and manage their shipments. It has
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shipment alerts and messages, customizable reporting, and customer profiles with
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cargo-specific details.
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Autonomous Trucks & Drones :

A future in which a machine drives you from point A to point B or where you
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receive a package from a flying unmanned aerial vehicle sounds like something
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out of a science fiction film, but it's exactly where we're going. Self-driving cars
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are already a reality, and trucks aren't far behind. Embark and Uber have already
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completed longer journeys with self-driving trucks, and Tesla is expected to

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release one this year. While it wasn't entirely driverless, with a driver in the
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passenger seat monitoring the screen, it was a significant step forward in this
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ground-breaking technology and has the potential to improve distribution

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performance.
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Amazon Prime Air, a future in which deliveries are delivered directly to your
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doorstep by drones, has been revealed. Drone deliveries are still a few years away
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due to regulatory requirements and related costs, but the prospect of not having to
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wait for a delivery for four hours is appealing.

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Enhancing GPS Accuracy :

The days of printing instructions from the machine before leaving the house are
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long gone. Almost everybody now has GPS, whether it's built into their cars or on
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their tablets. The accuracy of these devices has steadily improved over time,
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benefiting not only frustrated and lost drivers, but also the supply chain. By
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monitoring trucks' positions and optimising hauls through access to updated

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traffic data, GPS allows for improved efficiency and happier customers.
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Social Media :
Every day, who doesn't search any kind of social media platform? The logistics
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industry and operations as a whole are benefiting from the influence of social
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media. These networks are rapidly becoming the most convenient and effective
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way for businesses to connect with consumers, allowing them to quickly

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communicate urgent information, industry news, and customer responses.

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According to Hootsuite, 59 percent of Americans with a social media account

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believe that social media customer support has made it easier to answer issues and
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complaints. We use a variety of tools to communicate with our customers at

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Shapiro, including LinkedIn, Facebook, and Twitter. (How Technology is

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Benefiting Logistics, 2021)

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“Keeping up with the latest technologies is important for remaining competitive
and increasing performance. The logistics industry has benefited greatly from
recent technological advancements and will continue to do so as further advances
are made. For years to come, technological breakthroughs will continue to push
the limits.”

What is Multimodal Transportation

Multimodal transportation, also known as combined transportation, is the

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shipping of goods using several modes of transportation. Despite the variety of

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modes of transportation, multimodality is accomplished by a single contract,

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resulting in a single bill of lading.

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There is also only one contractor who is responsible for the freight and its final
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destination. Multimodal transportation, which involves rail, road, sea, and air, is a
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part of international transportation.

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Importance of Multimodal Transportation

System

Companies are constantly searching for shipping companies. They need not only
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high-quality providers, but also those who can travel internationally. A single
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mode of transportation is often insufficient due to the unavailability of

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commodities in some countries or the basic choice of customers.

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Continually, multimodal transportation allows consumers and companies to look

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for a shipping company who can assist them in determining the mode of
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transportation is best for their freight. More significantly, multimodality involves

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door-to-door delivery as part of their services, making it the most common mode
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of transportation. (Multimodal Transportation Archives - Deni, 2020)

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Time Saving :
Since one shipping service manages the entire process in multimodal
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transportation, you'll just have to deal with and receive a report from one
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company. This means less stress about the shipment and shorter transit times,
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which leads to increased efficiency.

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Cost Efficiency :
It might seem that choosing the cheapest carriers is the most cost-effective choice.
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The cheapest price, however, is not always the best offer. Intermodal
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transportation entails not only a variety of contracts and carriers, but also a variety
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of shipment insurance policies. Multimodal logistics coordination is much

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simpler, which can help you save a lot of money on transportation.

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Less Worrying :
It's easier to communicate and track the freight when it's handled by a single
carrier from start to finish. It transfers more responsibility and liability to the
company in charge of the logistics.

Easier Communication :
When a company uses multimodal transportation, all shipment alerts, delays, and
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communications are handled by a single supplier and contract. This gives shippers
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peace of mind and streamlines the communication process between various

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contacts and carriers. When you have one person in charge of the entire
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transportation chain, it's much easier to concentrate on the company rather than
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bouncing from one call to the next.

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Faster Transit Option :

Some longer-haul shipments are taking longer than they used to due to new limits
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on truck drivers' driving hours and other regulations. You can have peace of mind
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and balance transit time by combining various modes of transportation under one
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contract. As a result, you stop drivers travelling too long and, as a result, you avoid
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delivery delays. You gain leverage and flexibility over the loading and unloading
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process by giving businesses more options for their shipments.

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Finally, multimodal transportation ensures on-time deliveries and true cost

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savings for customers. Multimodal shipping can be a solution for you if you're
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shipping by air, rail, or barge. (Multimodal Transportation Archives - Deni, 2020)

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Payment Method That Are Used By Logistic
Professionals

Cash In Advance :
Cash in advance, also known as prepayments, is just what it sounds like. Until the
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merchandise is delivered and sent to the buyer, the buyer completes the payment
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and pays the seller in full.

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Although there are a variety of cash-in-advance payment options, credit cards and
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wire transfers (bank-to-bank electronic payments) are the most widely used
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payment types.
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Although this is an appealing choice for sellers, it carries a major risk for
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consumers because it results in a negative cash flow and no guarantee of receiving

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the products or in the condition they arrive in.

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This is typically a recommended choice for sellers dealing with new buyers or
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buyers with poor credit scores, as well as for high-value products. (Gocmez, 2020)
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Other cash in advance methods include:

• Debit card payment
• Telegraphic transfer
• International cheque

Letter of Credit :
One of the most secure payment methods available to foreign traders is a letter of
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credit, also known as a "credit letter." It's a letter from a bank promising that a
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buyer's payment to a seller would be paid on time and for the correct sum, and it's
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one of the safest payment methods for foreign traders. The customer establishes
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credit and pays for the service through his or her bank. When well-founded credit
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information about a foreign buyer is unavailable or difficult to obtain, but the

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exporter is confident in the creditworthiness of the buyer's foreign bank, a Letter

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of Credit may be useful. A customer is often covered by a Letter of Credit so they

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are not required to pay until the items have been delivered as expected. (Gocmez,
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2020)

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Documentary Collection :
Documentary collections is a trade facilitation mechanism in which both the
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buyer's and seller's banks play a role.

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The seller submits to its bank the documents that the buyer requires, such as the
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Bill of Lading, which is required for the transfer of title to the goods. The seller's
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bank would then give these papers, along with payment instructions, to the buyer's
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bank. The records can only be published in exchange for payment, which can be
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sent immediately or at a later date.

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When a seller uses documentary collections, also known as Bills of Exchange, he

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is essentially handing over payment set to his bank.

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Open Account :
Merchandise is shipped and distributed prior to payment under Open Accounts
(also known as Accounts Payable), which has proven to be a very appealing
choice for consumers, especially in terms of cash flow. Sellers, on the other hand,
are at a significant disadvantage.
The seller ships the products to the buyers with a credit period added when they
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choose this payment option. This is normally done in 30-, 60-, or 90-day
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increments, during which the buyer is required to pay in full.

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Open Accounts are normally only recommended for reliable and trustworthy
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consumers, for buyers and sellers who have a long-standing and trusting
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relationship, and/or for low-risk exports. (Gocmez, 2020)

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Role Of Various Logistics Services Provider In
Cross Border
(Roles and Duties of Logistic Service Providers, 2021)

Knowledge/Expertise :
Logistics service providers handle all transportation requirements, from origin to
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delivery to final customers. Professionals with thorough knowledge of customs

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legislation and tariff schedules know how to ensure that the right and most
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effective distribution route is taken.

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Warehouse Management :
Service providers now assist with warehouse design, preparation, technology
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implementation, and other tasks that can help maximise space usage and
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streamline warehouse needs. Inventory management systems are one of the few
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services that these service partners are gradually providing.

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Documentation Service :
There is no doubt that a free flow of goods is critical to the sustainability of foreign
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trade. These companies assist in putting one's company on the global map by
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handling all of the required paperwork and legal standards for international trade.
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Create a Network :
Logistic service providers assist companies in expanding their markets by using
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geographically positioned distribution networks. These service providers are

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well-versed in the various rules and regulations that govern economic markets and
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can provide advice on which ones are viable.

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Service With an Added Value :

Many providers provide extra services like labelling and packaging to make
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exporting easier. With the aid of real-time monitoring systems, these providers
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can also share control and visibility of shipments and inventory.

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Cost Cutting :
Logistic service providers can prove to be cost-effective by freeing up capital,
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providing Turnkey solutions at a low cost, providing versatile, customised

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services, and much more. They eliminate unnecessary trade barriers, determine
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the best tariffs, and expand shipping insurance to provide the customer with a
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comprehensive service plan. There is no question that outsourcing supply chain

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operations to logistics service providers will result in substantial cost savings and
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an increase in a company's profit potential.

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(Roles and Duties of Logistic Service Providers, 2021)

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<https://www.abivin.com/post/how-to-choose-transportation-mode-in-
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Deni Internacional. 2020. Advantages of Multimodal Transportation Archives -
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[Accessed 16 May 2021].
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transportation/> [Accessed 16 May 2021].
Gocmez, M., 2020. Payment Methods in International Trade. [online] More Than
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Icontainers.com. 2021. [online] Available at:
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96384cd36ab3/IFC-Covid19-Logistics-
final_web.pdf?MOD=AJPERES&CVID=naqOED5> [Accessed 16 May
2021].
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providers/> [Accessed 16 May 2021].
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international-transport/> [Accessed 16 May 2021].
Shapiro.com. 2021. How Technology is Benefiting Logistics. [online] Available at:
<https://www.shapiro.com/how-technology-is-changing-the-future-of-
logistics/> [Accessed 16 May 2021].
World Economic Forum. 2021. The ongoing impact of COVID-19 on global supply
chains. [online] Available at:
<https://www.weforum.org/agenda/2020/06/ongoing-impact-covid-19-global-
supply-chains/> [Accessed 16 May 2021].

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Your Article Library. 2020. Factors to Consider while choosing the most Suitable
Mode of Transport. [online] Available at:
<https://www.yourarticlelibrary.com/geography/transportation/factors-to-
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