AMANDEEP SINGH MADAAN (100858751)

SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST

ASSIGNMENT - 2 (ANSWERS)

1. The four different modes of transportation used for international shipment are:
 Air
 Water
 Rail
 Road
Each mode has pros and cons in terms of price, dependability, speed, and environmental
impact.
Sea freight (Waterways) is the most popular method of moving products across
international borders, and it plays a major part in international logistics. 70% of all
freight volumes worldwide are carried by sea. Large, bulky, or heavy cargo without a
tight deadline is appropriate for sea freight. Compared to air freight, sea freight is also
more economical and less harmful to the environment, but it requires longer transit
periods and has more risks of delays, damage, and loss. Additional paperwork and
customs clearance are needed for sea freight compared to other modes. Sea freight is a
crucial component of global logistics because it gives companies access to markets
around the world, lowers transportation costs, diversifies their supply chains, and helps
them manage their inventory levels. By easing the flow of products and services
between nations, sea freight also promotes global trade and economic growth.

2. An Export Management Company (EMC) is a company that enables the export of

commodities from other companies to foreign markets, typically on behalf of several
non-competing producers or suppliers. A commission, fee, or retainer is often required
from an EMC in exchange for handling the marketing, sales, logistical, documentation,
and financial aspects of exporting whereas, an Export Trading Company (ETC) is a
corporation that manages the exportation process for clients, handling all legal criteria
and rules that a company must follow before a country permits its goods to be exported.
An ETC may also acquire and sell goods on its own behalf and offer its clients storage,
shipping, insurance, and billing services. An ETC typically focuses on the operational part
of exporting, whereas an EMC is primarily concerned with the marketing side.
Depending on its needs and objectives, a company may opt to use either an EMC or an
ETC. Some of the possible reasons are:
I. To save time and money by hiring professionals to handle the difficult and
expensive aspects of exporting.
II. To gain access to new markets and clients without spending money on personnel
or operations abroad.
III. To lessen export-related risks and liabilities such currency fluctuations, political
unrest, trade restrictions, and legal conflicts.
AMANDEEP SINGH MADAAN (100858751)
SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST
ASSIGNMENT - 2 (ANSWERS)

3. Third-Party Logistics (3PL) refers to the outsourcing of supply chain management and
logistical tasks to outside service providers. These companies are referred to as third-
party logistics providers. Businesses can improve productivity, cut costs, and optimize
their supply chains with the help of 3PL companies, who provide a variety of services.
These services may include delivery, warehousing, inventory management, order
fulfilment, customs brokerage, and other activities.
Some of the participants in 3PL sector are:
I. Freight Forwarders: These are firms that coordinate the movement of products
between locations utilizing a variety of modalities and carriers.
II. Courier Companies: These are firms that transport packages, documents, and
other materials, typically by road or air.
III. Fulfillment Warehouses: These organizations handle order storage, packing, and
shipping for e-commerce sites or other clients.

4. Five types of Third-Party Logistics Firms are:

 Transportation-Based 3PLs
 Warehouse-Based 3PLs
 Forwarder-Based 3PLs
 Financial-Based 3PLs
 Information-Based 3PLs

I. Warehouse-Based 3PLs: Warehouse-Based 3PL firms enable you to deliver and

keep your goods without having to pay for your own warehouse or personnel.
They can manage many inventory kinds, including returns, finished goods, and
raw materials. Additionally, they can provide value-added services like quality
assurance, labelling, kitting, or assembly. 3PLs with warehouse locations can save
your overhead expenses, increase order fulfilment efficiency and accuracy, and
boost customer happiness. They might, however, also come with certain
disadvantages, such as less flexibility, a loss of control, or greater costs for
complicated orders.
II. Transportation-Based 3PLs: These firms assist you in moving your goods via a
variety of transportation methods, including truck, train, air, or sea. They can
handle a variety of cargo, including parcels, less than truckloads, and full
truckloads (FTL). Additionally, they can provide value-added services like tracking,
goods forwarding, and customs clearing. Your transportation expenses can be
decreased, your delivery reliability and speed can be improved, and your market
reach can be expanded. However, they could also come with some
disadvantages, like poor visibility, reliance on outside contractors, or increased
danger of damage or loss.
AMANDEEP SINGH MADAAN (100858751)
SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST
ASSIGNMENT - 2 (ANSWERS)

5. There are many activities that are outsourced in logistics, some of them are:
I. Transportation: Specialized third-party suppliers are regularly used to provide
transportation services. These service companies handle the conveyance of
commodities by various means of transportation, including road, rail, air, and sea.
Companies that outsource their transportation can take advantage of
professional route planning, carrier selection, freight booking, and real-time
tracking. The efficiency of the supply chain can be improved, and transportation
expenses can be decreased, by using this method.
II. Warehousing: Outsourcing warehousing entails entrusting third-party suppliers
with storage, inventory management, and delivery services. These suppliers offer
specifically selected warehouses with cutting-edge inventory control
technologies. Companies may efficiently manage inventory levels, improve order
fulfilment, and guarantee on-time deliveries to clients by outsourcing
warehousing and saving on the overhead costs of operating their own facilities.
III. Customs Brokerage: Customs brokerages are frequently outsourced to specialists
experienced in handling complicated international customs regulations. These
professionals handle the paperwork, compliance, and coordination with customs
officials, guaranteeing seamless cross-border movements of commodities.
Customs brokerage is best outsourced to avoid potential compliance problems,
cut down on administrative hassles, and assure smooth international trade
operations.
IV. Forwarding: Outsourcing forwarding tasks involves partnering with third-party
logistics firms who specialize in shipping arrangements and logistics coordination.
Working with a variety of carriers and forms of transportation, these firms handle
the complexities of international shipping. Companies can obtain knowledge
about worldwide shipping operations that are streamlined and cost-effective by
outsourcing forwarding.

6. A Bill of lading is a legal document issued by the carrier of goods to the shipper of the
goods. The kind, quantity, and location of the products being transported are all
specified in a B/L. It functions as a contract, a receipt, and a proof of ownership for the
goods as well. Some of the basic functions performed by Bill of Lading are:
I. Receipt: It serves as a record of the issuing body's receipt of the goods. It verifies
that goods were received by the carrier in compliance with the terms of the
agreement with the shipper and were in good condition and quantity.
II. Contract: It serves as documentation of the contract of carriage with the carrier
and specifies the shipping method to be employed for the shipment. It details
AMANDEEP SINGH MADAAN (100858751)
SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST
ASSIGNMENT - 2 (ANSWERS)

the transportation's terms and conditions, including the freight costs, the liability
exclusions, and the delivery date.
III. Document of Title: It transfers legal ownership of the goods to the person
holding the bill of lading. The goods can be transferred or claimed at the airport
or port of destination with the help of this document. Additionally, by endorsing
or transferring the bill of lading, the holder can sell or pledge the goods while
they are in transit.
The Bill of Lading is a key document that regulates the transportation of products, offers
legal protection, and promotes effective supply chain operations. This is why it is
significant in international freight forwarding. It guarantees effective communication
between all parties involved, including shippers, transporters, consignees, banks, and
customs officials. Due to its complexity, the B/L is an essential part of global logistics
since it helps ensure the safe and orderly flow of commodities in the context of
international trade.

7. Smaller shipments (LTL) are more challenging to transportation managers than the
bigger ones (FTL) because of the following reasons:
I. More Complexity: LTL shipments require precise planning and coordination since
they must fit into timetables with other shipments, which sometimes originate
from different places and have various destinations and delivery periods.
Additionally, LTL shipments require additional handling operations and transfers,
increasing the possibility of damage or loss.
II. Higher Costs: LTL shipments are typically more expensive than FTL packages. This
is because the cost is shared between several shippers, and carriers also have to
take into account the extra time and labour required to load and unload
different shipments. The addition of further services like liftgate, inside delivery,
or home delivery could result in higher charges.
III. Uncertainty: LTL shipments are subject to capacity restrictions, especially at peak
times or in certain areas, which may limit the service's availability and
dependability. Additionally, compared to FTL shipments, these shipments
typically have longer travel periods and lower visibility, which may result in
delays and difficulties tracking the status and location of the items.
8. Logistics Managers have to worry about demurrage and detention because are extra
fees that can raise costs and decrease supply chain efficiency. Even though demurrage
and detention are frequently used interchangeably, they have different meanings:
I. Demurrage: Demurrage is a certain amount of money that the shipper or
recipient must give the shipping firm as compensation for keeping the container
at the terminal longer than the specified amount of time. Usually, demurrage is
calculated on a per-container, per-day basis.
AMANDEEP SINGH MADAAN (100858751)
SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST
ASSIGNMENT - 2 (ANSWERS)

II. Detention: The term "detention" refers to the compensation that the shipper or
receiver must give the shipping company when a container in the chain (outside
the terminal) is delayed for a longer period than anticipated. Detention is
normally assessed on a daily and container basis.
Depending on the region, the shipping company, the port, and the time of year,
demurrage and detention fees can change. For shippers and receivers, they can be a
substantial hardship, especially if they have delays brought on by events beyond their
control, such as traffic, customs clearance, documentation issues, or weather conditions.
Utilizing averaging agreements is one technique to cut back on demurrage and detention
expenses. Averaging agreements are arrangements between shippers or receivers and
shipping companies that permit them to offset or average out their demurrage and
detention expenses over several shipments or containers within a specific time frame. To
manage their demurrage and detention costs with more flexibility and predictability,
shippers, and receivers with frequent or regular shipments may find it beneficial to use
averaging agreements.

9. A carrier performance scorecard is a systematic evaluation instrument used by

businesses to evaluate and quantify the performance of their transportation carriers,
including shipping firms, trucking firms, or other logistics service providers. It is based on
key performance indicators (KPIs) that represent the objectives and expectations of the
business and the carrier. Few examples of KPIs are:
 On-Time Delivery
 Transit Time
 Billing Accuracy
 Cost per mile
 Fuel efficiency, etc.
Transportation managers can efficiently track and assess carrier performance over time
and across several lanes or areas by using a carrier performance scorecard. Managers
can provide individualized comments and provide incentives for improvement by
recognizing carriers' strengths and weaknesses using objective measures. The scorecard
also makes it easier to measure and compare carrier performance, which helps in
choosing the best carriers for next contracts or negotiations. Additionally, by
coordinating carriers' performance with strategic business goals and customer
satisfaction, logistics operations are kept in sync with overarching corporate objectives,
encouraging supply chain excellence and efficiency.
As a supply chain manager working with logistics firms, I would like to employ a carrier
performance scorecard to:
I. Choose the most effective and dependable carriers to maximize my
transportation spending and cut costs.
AMANDEEP SINGH MADAAN (100858751)
SCMT 1201 – LOGISTICS, TRANSPORTATION AND DIST
ASSIGNMENT - 2 (ANSWERS)

II. Increase my network's visibility and control, and make sure that my shipments
arrive on schedule and in good shape.
III. Promote a cooperative and beneficial connection with my carriers by bettering
my interactions with them.
IV. Provide my customers with high-quality service and value to strengthen my
competitive advantage and customer loyalty.

10. INCOTERMS are a set of accepted international regulations that outline the obligations
and dangers that buyers and sellers in global trade face. They outline responsibilities for
organising shipping, insurance, customs clearance, paying duties and taxes, and
delivering goods.

The fundamental INCOTERM EXW (Ex Works) denotes that the seller has the products
available for pickup at his facilities at the designated location on the mutually agreed-
upon date. All shipping-related costs, including loading, transportation, insurance,
customs clearance, duty and tax payment, and delivery to the final location, are the
buyer's responsibility.

The most comprehensive INCOTERM, DDP (Delivered Duty Paid), denotes that the seller
takes all ownership and risk of the products until they are delivered to the buyer's
premises at the stated destination on the mutually agreed-upon date. Transportation,
insurance, customs clearance, payment of tariffs and taxes, and delivery of the
purchased products are all handled by the seller.

The decision to use the more comprehensive INCOTERM (DDP - Delivered Duty Paid)
rather than the more fundamental INCOTERM (EXW - Ex Works) depends on a buyer's
level of control, level of experience, and desired level of involvement in international
logistics. EXW may be chosen by buyers with experience in managing logistics to
preserve control, negotiate costs, and take advantage of their knowledge. On the other
hand, customers seeking for a hands-off, streamlined method, especially those who are
not familiar with shipping regulations, could prefer DDP because it involves fewer steps,
less involvement, and predictable expenses that are handled by the seller.