Strictly Private and Confidential Logist

Logistics Management - INCOTERMS
Level#1
© Copyright 2016 Strictly Private and Confidential Page 1

DETAILED AGENDA - SYLLABUS
Introduction : Logistics framework and definitions
Logistics objectives, Logistics in the Supply Chain process and Logistics operations
Transportation #1: Logistics Service(s) Providers / The 3PLs / Intnl Logistics routes
Introduction to the different Logistics players and intermediairies such as 3PLs & 4PLs.
3PLs selection process. Presentation of the different routes to market and the InCoTerms
Transportation #2 : Logistics Computing
Cargo container (TEU) outlook and its associated computing (CAF, BAF, THC…). Freight
forwarding
Order Processing – Warehousing – Cross-Docking
Contract logistics operations, Warehousing introduction, Goods fulfillment
Warehousing Management System (WMS)
WMS planning, Design, Efficiency & Inventory health

Inventory Management #1
Inventory concepts, practices, systems. Types of inventories and classification (ABC

model). Inventory planning & control. Theory of constraints with CCR/DBR. Components of
inventory costs
Inventory Computing #2
Fundamentals on inventory computing (CGA - COGS - Lead time - ABC - EOQ …) and the
different ways to manage efficiently inventories (stock rotation, ITR,…). Distribution
financials with margins
Spare parts - Reverse Logistics (claims, returns, pos)
Service Support. Claims & returns processes with SLAs. Sales & Warranty returns &
Management.
Logistics documents
Suppliers contracts. Quality check & certificates. Documents for clearance (BOEs) &
payment (LCs).
Logistics Management
Bibliography / References & Websites
International Logistics : Management of International Trade Operations, Pierre David & Richard
Stewart, Atomic Dog Publishing
A practical Guide to Transportation & Logistics, Michael Stroh, Logistics Network Inc
Logistics Management & Strategy, Alan Harrison & Remko Hoek, Prentice Hall / Financial Times
Websites :
www.inboudlogistics.com / www.logisticsmgmt.com / www.cma-cgm.com
www.maerskline.com / www.aircargoworld.com / www.fedex.com / www.dhl.com / www.ups.com
www.hapag-lloyd.com / www.alphaliner.com / www.logisticsbusiness.com

Introduction

Logistics Definition
The word of logistics originates from the

ancient Greek logos (λόγος), which means
“ratio, word, calculation, reason, speech,
oration”
Those activities that focus on getting the

right amount of the right products to the
right place at the right time at the lowest
possible price

Logistics is an Essential Link in the Value Chain
The Seven R’s
Ensuring the availability of the

Right product
in the Right quantity
in the Right condition
at the Right place
at the Right time
for the Right customer
At the Right cost

Logistics Management Definition
The practice of organizing the cost-effective

flow of raw materials, in-process inventory,
finished goods, and related information from
point of origin to point of consumption to
satisfy customer requirements

Logistics objectives
Inventory Reduction
Reliable and consistent delivery performance
Freight economy
Minimum product damage
quick Response

Logistics & Supply Chain Management
Logistics & SCM
Logistics is the backbone on which Supply Chains are driven
Logistics refers to the
Management of flow of goods and supplies

Involving information, data and documentation between two entities
or points
Logistics play important role in post procurement function of delivery

of raw material from the supplier to the point of production and
Finished Goods Supply Chain management from the point of
dispatch from factory to the point of delivery to the customer

Logistics & SCM

An example of the Automotive Industry

Logistics & SCM
The flow of goods flows through a network of transportation by

road, rail, air or ship and intermediary warehouses to hold
inventories before moving to the forward locations
The entire activity involves multi tier suppliers, agents and

agencies including freight forwarders, packers, customs
department, distributors and Logistics service providers etc
Logistics therefore is an integral component

of Supply Chain Management

Logistics & SCM
In many cases Supply Chain is often referred to as

Logistics and vice versa. Though logistics and supply chain
are intricately linked, both do not mean the same. Logistics is
a sub component and extension of Supply Chain
Supply Chain design in an organization would detail, plan and

strategize the procurement strategy, manufacturing location
selection, design and develop distribution network and
strategy for finished goods etc.
While logistics planning would deal with the details of

procurement logistics, finished goods distribution, sales order
fulfillment and inventory management etc. Logistics planning
derives the strategic direction and framework for its design
planning from SCM Strategy
Logistics & SCM
SCM strategy will define overall network design for stock holding
and further channels of distribution
Logistics deals with the entire gamut of designing

transportation network, partnering with 3rd party logistics
providers to establish distribution centers and warehouses,
planning inventory management and operations process
including packing, promotional bundling etc, primary,
secondary distribution network and vendors and at the end
the complete documentation and information process for the
entire chain of activities

Logistics Operations (1/2)
Third Party Logistics Service Providers both at global levels and

local levels form major partners to manage and offer Supply
Chain services and the second major factor being the internet and
IT technology which helps manage information and data ahead of
or along with flow of materials and goods
A firm that provides multiple logistics services for use by

customers. Preferably, these services are integrated or bundled
together by the provider. Among the services 3PLs provide
transportation, warehousing, cross-docking, inventory
management, packaging and freight forwarding
Ex: DHL, K&N, Schenker/Bax, UPS SCS, CH Robinson, NYK Logistics

Logistics Operations (2/2)…Some vocabulary
Cross - Docking
Practice of unloading products from suppliers,

sorting products for individual stores, and quickly
reloading products onto trucks for a particular store
Freight Forwader
Firms that accumulate small shipments into

larger lots and then hire a carrier to move
them, usually at reduced rates

Logistics Service Providers…Keep the SC moving (1/6)
Third-party logistics providers include freight forwarders,

courier companies, as well as other companies integrating &
offering subcontracted logistics & transportation services:
Standard 3PL provider: this is the most basic form of a 3PL
provider. They would perform activities such as: pick &
pack, warehousing & distribution
Service developer: this type of 3PL provider will offer their
customers advanced value-added services such as:
tracking & tracing, cross-docking, specific packaging…
Non-asset based logistics provider: perform functions such
as consultation on packaging and transportation, freight
quoting, financial settlement, auditing, tracking, customer
service and issue resolution(ex: FedEX Supply Chain…)
Procurement Logistics, Manufacturing Logistics and

Finished Goods Logistics functions are managed by
different independent departments in a company.
Though the functions of the departments involve common
activities like transportation etc, however the processes and
nature of logistics functions are specific to each function
besides the requirements and sensitivities of delivery times,
schedules etc
With the emerging trends and availability of third party

logistics providers has pushed the companies to adapt the
practice of outsourcing all supply chain components and
logistics functions termed as non core functions to their part
logistics providers
Third Party Logistics field is a multi-layer or multi-tier

integration of various players who have the niche
segment expertise to manage any one or many functions
of Logistics
In any Logistics Contract or Supply Chain Network, you will

not find one single service provider being able to manage the
entire chain of activities. You can have a lead logistics service
provider who will further tie up with and manage other service
providers to provide a single window service to the client
organization. At all levels, a lot of components of logistics get
outsourced by these service providers to contractors and local
players

Logistics further also works with the concept of the 4Party

Logistics providers in market who take up large projects
spanning huge volumes and multiple locations and services as
the lead service providers. They draw up the operating plans,
requirements, and specifications for the services and in turn
choose the best service provider in each segment or function for
each of the locations and thus manage to provide the entire
gamut of logistics services to the customer
Normally in Logistics, the lead players front ending the

businesses would be the Freight Forwarders, Transport
Companies (generally in long haul segment only) and
Warehousing Service Providers In
many cases Freight Forwards own and manage warehousing
Freight forwarders are those agencies who consolidate

the cargo and book the cargo for onward freight using an
airline or a shipping line or use ground transportation network
including rail services wherever required
Freight forwarders do not own any mode of transportation

services. They book the space with airlines and shipping
lines and negotiate the freight
They play the key role of providing origin and destination

services coupled with single window client services using other
third party service providers. Most of them also have in house
customs clearance division to support ground logistics
operations
Without the support of the freight forwarders who are multi national
companies capable of managing your supply chain with ability to
provide services in any country, any location across the globe
Supply chain would not be able to function efficiently, for it is

impossible for companies to co-ordinate and manage each leg and
every activity in so many locations and manage so many vendors
and interfaces

Transportation – part#1

International Logistics (1/7)
Supply Chains ride on Logistics Networks and IT

Applications / Internet. In this section a brief introduction
to each of the Logistics Function / Industry is attempted
The foundation of logistics function is based mainly on

Transportation by Road, Rail, and Air & Sea
Global trade is dependant 80% on sea route than air route,

simply for the fact that air route is far more expensive and is
used only in case of light weight cargo, perishable cargo and
priority shipments or in other conditions where shipping would
not be possible
Shipping trade is characterized by shipping companies who

own vessels and specialize in transportation of certain types of
cargo like General Cargo, Containerized cargo, bulk
commodities carriers, oil tankers, gas tankers
Normally the so called mother vessels ply on the main
shipping route across the continents traveling through pacific
or Atlantic oceans and calling on countries from point to point
Some of the major international shipping lines dominated

world shipping trade is P&0 Nedlloyd, Maersk, Hapag
Lyod, American President Lines, Evergreen, NYK, HanJin,
Cosco, CSCL etc.

The twenty-foot equivalent unit (often TEU or teu) is an inexact
unit of cargo capacity often used to describe the capacity of
container ships & Terminals.
It is based on the volume of a 20 foot-long (6.1m) intermodal

container, a standard-sized metal box which can be easily
transferred between different modes of transportation
1 TEU represents the cargo capacity of a standard intermodal

container: 20 feet long (6.10m) & 8 feet wide (2.44m) & 4 feet 3
inches height (1.30m) / 9 feet 6 inches (2.90m) / 8 feet 6 inches
(2.59m) which is the most common
2 TEU = a 45-foot container (13.7m)
1 TEU = 38.5 m3 & a 2TEU = 77 m3

The most common dimensions for a 20-foot (6.1 m) container

are 20 feet (6.1 m) long, 8 feet (2.44 m) wide, and 8 feet
6 inches (2.59 m) high, for a volume of 1,360 cubic feet
(39 m3).
The maximum gross mass for a 20-foot (6.1 m) dry cargo

container is 24,000 kilograms = 24 Tons
Similarly, the maximum gross mass for a 40-foot (12.2 m) dry

cargo container (including the 9-foot-6-inch-high (2.90 m) cube
container) is 30,480 kilograms = 30,48 Tons

International Logistics (5/7) – source: Alphaliner, Sept.2013

International Logistics (6/7) – A 3 steps process
1. Shipping liner announces schedules of the vessels a few

months in advance
2. Freight forwarding agents book space on the vessels either

based on estimates or based on their pipeline orders.
Depending upon the volume that the forwarder is able to give
and patronize shipping lines, they get to bargain and negotiate
for better rates (in general cargo, the shipments are made in
FCL Containers)
3. FCL Containers are provided by shipping lines to the freight

forwarders who stuff the cargo and get the cargo sealed after
customs inspection which is then picked up and loaded on the
ship at the port

FCL (Full Container Load) # LCL (Less Than Container Load)
BAF : Bunker Adjustment Factor,cost of oil .

Exemple BAF : 320 euros/TEU
CAF : Currency Adjustement Factor
BAF & CAF : to be redefined every month
PSS : Peak Season Time
THC : Terminal Handling Chare

Freight Forwarding & Logistics (1/5)
Most of the logistics players have been traditionally freight

forwarders dealing with cargo bookings coupled with origin
and destination services
However as the global business practices changed and Supply

Chain Managements started gaining ground, these companies
realized the potential of being able to offer multiple services
including ground transportation, warehousing and contract
logistics under one umbrella as the future trend and quickly
turned themselves to acquire the required capabilities

In any supply chain, these 3PL Service providers further

outsource certain functions and segments to many other local
service providers
Any SCM expert would naturally wonder if it is possible to

deal directly with the other service providers and cut out the
3PL Lead provider and thereby save some cost
In a global scenario, this would not be possible for many

reasons

3PL Service providers are able to offer you standard

operating processes and procedures across all locations and
countries
Ex: If you deal with a 3PL office in Europe and another in Japan besides
your local office in Houston for example, all three offices would follow the
same methodology, documentation and processes
Secondly 3PL providers know the local situations and can

adapt international processes to suit local situations better. A
principle company may not be able to get into the local
situation be it with transportation or customs or legal
compliance and is better left to the 3PL to deal with it
effectively

By virtue of the size of these companies 3PL logistics

providers have built core competencies and capabilities in
all of the functions namely Freight, Customs Clearance
and Contract Logistics and are equipped with cutting
edge technology to support international operations and
provide visibility to the customers at all time
3PL companies rely heavily on electronic exchange of data

and information in their businesses
Today 3PL companies not only provide highly specialized

inventory management and warehousing operations, they offer
other value adds like Purchase Order Management, Semi and
Light Manufacturing, other value added services designed for
niche segments called as Integrated Logistics Services
3PL service providers are today investing into building

distribution networks and facilities to cater to the client’s
requirements wherever required
They are building in house capabilities with employing SCM

Experts to specialize in Automotive Logistics, Aero Spares,
Medical & Environmental Logistics and other specific
segments
SCM strategy of the company today aims at converting

logistics cost to transactional cost and thus avoids any
investments into managing Supply Chain

3PL (Third-Parties Logistics)
3PL Contract Logistics Operations (1/6)
While Freight Forwarding is an important function of 3PL

Service providers to facilitate the Supply Chain, another
equally important function managed by 3PL Logistics
Companies is Contract Logistics
Under the broad umbrella of Contract Logistics, 3PL

providers provide services of setting up consolidation
centers, distribution centers, warehouses and inventory
management services

3PL companies rent out such facilities or in some cases invest

into building their own facilities in strategic locations in the
transportation network or near major markets or in some cases
in specific locations close to customer facilities
3PL Warehousing is used for managing inventories of both

raw materials and finished goods including spare parts,
consumables and promotional materials as the case may be
Depending upon the need and size of operations, a 3PL

may set up completely dedicated facility for a client
specific requirement or provide dedicated storage space
and services in shared facility or provide pallet wise
storage on rental basis. All these modes are used depending
upon the particular need of the logistics plan
Normally the warehouses consist of vertical racks with levels

anywhere from five levels up to ten and above with a carrying
capacity of one ton per pallet position
Depending upon the storage need, racking design will vary

from pallet racking to block stack, deck racking, shelving, bins
etc…
The entire warehousing operations include Receiving Process

involving unloading, de skidding, inspection, in warding and
put away. Delivery or shipment includes receipt of shipping
order from customer along with invoice or sales
documentation, picking materials, consolidation, packing,
marking, preparing outbound documentation and shipping out
by loading into containers
Besides these functions, the other main functions in the

warehouse include Inventory Management which involves
location management, managing storage capacities and bulk
and loose inventory, carrying out inventory counts to ensure
accuracy of inventory and stock takes

The entire warehousing operations are dependant upon

documentation and systems which manage operations and
inventory
Generally warehouses use WMS - Warehouse Management

System as the backbone. The system manages inbound
transactions, location management and generates and
controls warehousing operations for both inbound and
outbound transactions coupled with maintaining inventory in
detailed level and managing inventories

For any principle employer, the support of a good 3PL is

necessary because its entire inventory amounting to huge
amount in terms of value is in the custody of a third party.
Inventory management operations are core to any operations.
Hence it is necessary for every SCM Expert to understand
nuances of 3PL Contract Logistics operations before
taking decisions to outsource these functions

3PL Service & Warehouse Management (1/5)
Global business models are rapidly changing

Shorter life cycles of products and new business needs
exert pressure on Supply Chain managers to keep pace
with the new scenarios
They are often faced with the target to reduce logistical
costs and establish new supply networks
It has now become a common practice to outsource all
logistical activities to third party vendors both in procurement
side of logistics as well as finished goods, spare parts and
reverse logistics areas too

Today the 3PL service providers market is filled with players

of all sizes and competencies, from single owner driven local
service provider to multi national companies
Most of the companies have traditionally been transporters or

freight forwarders and over the years have acquired
warehousing and contract management capabilities keeping in
line with the growing needs

Selecting a 3PL service provider to provide warehousing

services needs careful considerations on the part of the
SCM manager responsible for the decision
=> The right partner selection is important because you are

handing over the companies assets to someone else’s and
secondly any performance hindrance can seriously effect the
sales and revenues of the company in case of FG Supply chain
or effect the plant production in case of Raw Material supplies

3PL Service & Warehouse Management (3/5) - A
1. Size of company, Structure & Responsiveness
The business volumes and size of the project will determine

the selection of the Service provider. Most of the Multi National
Companies are able to offer integrated logistics services to
manage the entire supply chain including freight,
transportation and warehousing, you will also find companies
at regional or local levels who offer warehousing as a core
competency area
The size of the company is important as a key parameter as

one would not want to deal with a small company which does
not have the capability to invest or a fly by night operator
3PL Service & Warehouse Management (3/5) - B
1. Size of company, Structure & Responsiveness
A multi national company being able to invest into your

business does not necessarily make for the best choice. They
can more often turn out to be expensive. Besides availability of
expertise in another location or country does not necessarily
ensure competence locally. However Multi nationals are
preferred as partners most of the times due to many other
advantages like integrated services, global standards, ability to
invest etc
Responsiveness measures the quality and speed with which

the service provider company responds to your bid request
and engages with you to offer a solution

2. Technical & Operational competency of Vendor
A vendor should be able to demonstrate the competency in

terms of its experience in managing functions for other
customers and products
A company with experience in managing distribution center

operations would have the team comprising of people with
sufficient experience in the operations at management level,
supervisory and staff levels
The company needs have to have a strong IT management

and functional operational competence and capability in
managing the IT system at site as well as being able to
support the site with IT administration at management level
3. Service provider’s interest and attitude towards your

business proposal
The capability, interest and attitude of the vendor would help

you to choose the vendor who is interested in your business
with long term prospect and is willing to invest time, money
and effort and not somebody who is chasing business as a
sales target and doesn’t have the required interest,
organizational and operational capability to service your
business

Selecting a 3PL Service Partner (1/4)
When an Organization chooses to outsource its inventory

management services, the project success hinges on choosing
the right partner because the stakes in a warehouse
management projects are very high. Besides the impact to the
other functions like manufacturing or markets, the third party
service provider is the custodian of your inventory which
meaning your money is in someone else’s hands
So the question one needs to ask for is - What are we

looking for in a 3PL Partner ?
The answer to this question will take you through few of the
important factors that are to be considered
Selecting a 3PL Service Partner (2/4) - A
1. Choice between Multi National 3PL Service Provider or

Local Service Provider
This is often a dilemma faced by SCM managers while

choosing the partners. Dealing with Multi National Companies
has its advantages. Normally the MNC service providers
provide integrated logistics services which gives you value
addition besides seamless service coupled with lower costs.
Strategically it makes sense to go with Multi National
companies who are able to leverage on their competence
available across the network and provide standardized
processes across various locations

Selecting a 3PL Service Partner (2/4) - B
However on the flip side, these companies may not have the
same management focus and competence in all countries and
all locations. Besides many companies have been traditionally
transportation providers who have acquired warehousing
competence and skill sets and are not warehouse centric or
focused players

Selecting a 3PL Service Partner (2/4) - C
Domestic Service providers on the other hand would know

the laws of the land better and know how things work. They
will have the local expertise and capability to manage
operations and resources better. By virtue of them being local
and small players, one can expect better focus and attention
The choice is a difficult one to make. At the end it depends

upon the size of the project, the number of locations and the
company’s policies besides any local specific situations to
decide on the above

Selecting a 3PL Service Partner (2/4) - D
Global companies prefer to tie up with Multi National Players

to be able to leverage on their network as well as operate with
a global agreement. With a lot of business in transportation
and warehousing being given to a MNC, the buyer can have a
better bargaining power with the 3PL provider. Contractual
obligations, third party obligation and local statutory
compliances can be easily owned and managed by MNC 3PL
providers

Selecting a 3PL Service Partner (3/4)
2. Service Provider Capability Evaluation
Evaluation of a 3PL service provider involves understanding

of their capabilities both in terms of technical competence,
operational capabilities and Management Culture
The evaluation normally consists of Detailed Response

document to RFQ from the 3PL service provider, followed by
presentation by the 3PL and subsequent site visits to the
proposed location, site visits to other locations /operations of
3PL, coupled with customer references. Detailing these
processes becomes important especially in the case of a
bigger project depending upon the criticality of the project

Selecting a 3PL Service Partner (4/4) - A
3. Management Focus / Involvement and commitment at

corporate and local level
Often the face to the markets from the 3PL side is the
marketing and BD teams. As contract logistics is capital
intensive and operations intensive, it is important to
understand the company management’s focus and
commitment towards this part of the business, especially in
cases where 3PL is a Integrated Service Provider with other
logistics businesses. A management interested and focused
on CL business is likely to invest into building a long term
relationship and enhance its competence and deliver better
value proposition to the buyer. Company profile and meetings
with management will enable one to assess this criterion

Selecting a 3PL Service Partner (4/4) - B
The other important and relevant areas to be evaluated are

the IT Backbone and capabilities of the 3PL and its experience
and expertise in deploying and managing WMS systems
Expertise in Operations and inventory management as core

functions coupled with project management capability, local
expertise availability and quality programs etc can be judged
from the response document and subsequent personal
discussions and site visits

International Commercial Terms
Initially created in 1936 by the International Chamber of

Commerce (ICC) and have been periodically revised (Incoterms
2010 is the 8th revision)
Available worldwide through 100 International Chamber of

Commerce National Committees

INCOTERMS

Key Definitions
What is Delivery?
As defined in Incoterms 2010: it is used to indicate where the risk of

loss of or damage to the goods passes from the seller to the buyer
It is not always:
When the goods arrive in your customer’s hands or
When the goods leave your dock
Defined the same in all countries
You must know your contract and your Incoterm

Note: A Purchase Order and a matching Acknowledgement
will constitute a contract if there is not a separate stand-
© Copyright 2016
alone contract related to the transaction
Strictly Private and Confidential
Page 60
Transportation Definitions (1/2)
Pre-carriage: inland (inside country) transportation on the seller’s side

Domestic: from the place where the shipment starts to any subsequent
transportation carriage
International: from the place where the shipment starts to the departure point
on the seller’s side
Main Carriage:
Domestic: subsequent transportation beyond pre-carriage
International: transportation from the point of departure on the seller’s side to
the arrival point on the buyer’s side
On-carriage:
Domestic: subsequent transportation beyond main carriage
International: transportation from the arrival point on the buyer’s side

Transportation Definitions (2/2)
Door – to – Door
Contract of carriage that includes pre-carriage, main-carriage and on-
carriage by the same carrier
Door – to – (Air) Port

Contract of carriage including pre-carriage and main-carriage to airport or
ocean port or truck terminal port or rail port
(Air) Port – to – (Air) Port

Contract of carriage for main carriage only
(Air) Port – to – Door

Contract of carriage including main carriage and on-carriage

Type of Transportation?
Company A
Company B
Door to Door
–> one contract for all carriage
(pre, main, and on-carriage)

Type of Transportation?
Company A
Door to Port
–> 2 contracts:
1 for pre-carriage
1 for main-carriage
Company B responsible for arranging pick
up at Arrival Airport

A Few More Definitions…..
Omni-modal: Used with terms that use all modes of transportation (truck, airplane, vessel, train…)
Marine-restricted: Terms that only apply to carriage by vessel
Shipment Contract: sales/purchase contract where the seller’s responsibility ends when goods are handed
over to the first carrier
Arrival Contract: sales/purchase contract where seller’s responsibility ends when goods have arrived at
agreed place

Packaging Definitions
1. The packaging of the goods to comply with any requirements under the contract of sale
2. The packaging of goods so that they are fit for transportation
3. The stowage of the packaged goods within a container or other means of transport
Only Definition 1 & 2 are addressed in Incoterms 2010

Definition 3 must be addressed within the contract between
the parties.

What Questions to Ask when you are in charge of Logistics???
Who furnishes the goods?
Who packages the goods in a manner suitable for shipment (export)?
Who moves the goods from the seller’s factory to a port, airport, or border crossing in the
seller’s country?
Who arranges for export clearance in the seller’s country (if applicable)?
Who arranges for main carriage (international transportation) from the departure port to
the arrival port?
Who pays for main carriage?
Who insures the shipment?
Who arranges for import clearance?
Who pays import duties?
Who pays for on-carriage from the arrival port to the delivery destination?
Who arranges and pays for country-specific documentation (e.g., consular invoices,
inspection reports, licenses)?
What do Incoterms 2010 Do (for you)?
(more info on http://ec.europa.eu/taxation_customs/customs/policy_issues/customs_security/aeo/)
(http://www.cbp.gov/xp/cgov/trade/cargo_security/carriers/security_filing/
Divides up tasks, responsibilities, costs and risks to deliver goods from seller
to buyer
If used correctly, no duplication of effort between seller & buyer
Acts as signposts for who needs to have additional contracts (i.e., with vessel steamship line,
inland trucking company, etc.) to complete transaction
If something goes wrong, clearly defines responsibilities based on where the goods were in
the transportation chain of delivery
Address String sales (i.e Sales Chain)
Shipments where ownership changes in transit
Address Cargo Security concerns
Authorized Economic Operator (AEO), Customs-Trade Partnership Against Terrorism (C-TPAT),
Importer Security Filing (ISF)
Defines mode of transportation by their use
4 Terms are for Marine-Restricted for sea & inland waterway transport only
7 Terms are Omni-modal for use with all modes of transportation

What Incoterms 2010 DO NOT Do…(1/2)
Automatically Apply
Determine When Ownership Changes

When delivery occurs or when payment happens can impact when ownership changes
Must be addressed specifically in contract
Under US Law, it is when the product is delivered
If jurisdiction is under another sovereign nation law, you need to address per that
country regulation
If contract is subject to the United Nations Convention on Contracts for the
International Sale of Goods (CSIG) the law does not specify if it is not addressed
specifically within the contract
Identify when Revenue is Recognized

Under GAAP and Securities & Exchange Commission (SEC) Rules 1) ownership must pass
prior to recognizing revenue and 2) delivery must occur
If not specifically addressed in contract, look to applicable contract law

What Incoterms 2010 DO NOT Do…(2/2)
Identify if a Breach of Contract occurs, when it happened

Does not determine remedies for breach of contract
Provide relief from obligations/exemptions from liability in unexpected or unforeseeable situations
Address Payment issues

Tells you that the buyer must pay, but not when or where
Address more than one contract

Drop Shipments are TWO Contracts
1) between the seller and their supplier and
2) between the seller and the buyer
Incoterms® 2010 could be the same or different in each contract
Specifically task a party with container stowage obligations

Incoterms 2000 vs. 2010
Marine Restricted Omni-Modal
EXW – Ex Works EXW – Ex Works
FCA – Free Carrier FCA – Free Carrier
FAS – Free Alongside Ship FAS – Free Alongside Ship
FOB – Free On Board FOB – Free On Board
CFR – Cost and Freight CFR – Cost and Freight
CIF – Cost, Insurance & Freight CIF – Cost, Insurance & Freight
CPT – Carriage Paid To CPT – Carriage Paid To
CIP – Carriage & Insurance Paid To CIP – Carriage & Insurance Paid To
DEQ – Delivered Ex Quay DAT – Delivered At Terminal
DES – Delivered Ex Ship DAP – Delivered At Place
DAF – Delivered at Frontier DDP – Delivered Duty Paid
DDU – Delivered Duty Unpaid
DDP – Delivered Duty Paid

F-Group Terms
Are considered to be Shipment Contracts
Are considered Buyer Friendly
Seller Buyer
• Handles Export Clearance • Contracts for Main Carriage
• Handles Pre-carriage • In charge of Carrier (and usually forwarder)
• Named Place on Seller’s Side selection
• Control over Freight Costs
• Control of Documentation

C-Group Terms
Are considered to be Shipment Contracts
Are considered Seller Friendly
Seller Buyer
• Contracts for Main Carriage • Named Place is on Buyer’s side
• In charge of carrier (and usually forwarder) • Has risk of loss while goods are in transit with
selection carrier selected and paid for by seller
• Handles pre-carriage • Must rely heavily on Seller for data elements
• Has control over freight costs required for ocean shipments such as Importer
Security Filing (ISF)
• In control of documentation
• Passes risk of loss (delivers) to Buyer prior main
carriage If informed, should not consider “C” terms due
to downside described
• Handles export clearance

D-Group Terms
Are considered to be Arrival Contracts

Seller Buyer
• Contracts for Main Carriage • Named Place on Buyer’s side
• In charge of carrier (and usually forwarder) • Must rely heavily on Seller for data elements
selection required for ocean shipments such as Importer
• Handles pre-carriage Security Filing (known as ISF or 10+2)
• Has control over freight costs • Undertakes less risk than in “C” terms
• In control of documentation • If inexperienced, or does not have good
relationship with carriers, is served will by “D”
• Passes risk of loss (delivers) to Buyer at freight terms
arrival point
• Handles export clearance
• Seller may have revenue recognition issues since

“delivery” occurs on arrival side, meaning
revenue is recognized only upon arrival

Omni modal Transport

Ex Works (EXW) + (Named Place)
’s Location (or where product initially ships from)

Named Place is generally Seller’
Delivery – Seller delivers goods when placed at buyer’s disposal at the name place of delivery
Goods are packaged
Goods are NOT LOADED on the collecting vehicle
Seller Risks – Minimum obligation for seller; once packaged there is a loss of control over
transportation movement, where package is finally received, how export or import
documentation is presented to relevant governments
Buyer Risks – Buyer bears all costs and risks involved in taking the goods from the named
place
Carriage: Buyer responsibility to arrange for pre-carriage, main carriage, on-carriage
Insurance: Neither party required to insure goods
Export/Import Clearance: Buyer must handle all requirements, pay all associated duties and
fees
Note: Should NOT be used when the buyer cannot carry out export
requirements directly or indirectly

Free Carrier (FCA) + (Named Place) = FOB under UCC terms
UCC = Uniform Commercial Code (1952 & very restrictive)
Named Place is generally:

Seller’s Place of Business
Seller responsible for having goods available when promised, packaged to the extent known
or agree, loaded onto collecting vehicle
Buyer responsible for pre-carriage, main carriage, on-carriage
Another Location on Seller’s side (i.e., International Airport, Freight Forwarder Warehouse for
consolidation, another location agreed by Seller and Buyer)
Seller responsible for having goods available when promised, packaged to the extent known
or agree, loaded onto collecting vehicle, pre-carriage
Buyer responsible for unloading pre-carriage delivering vehicle, main carriage, on-carriage
To get more info on UCC: http://logistics.about.com/od/legalandgovernment/a/Uniform-Commercial-Code-Ucc.htm

FCA + (Named Place) cntd
Contract of Carriage: Buyer is responsible to make a contract of Carriage, however if

requested or the buyer does not give instruction in due time, the seller may contract for carriage
on usual terms at the buyer’s risk and expense.
Risks: passes to buyer at point of delivery
Export Clearance: Handled by Seller

Associated Licenses can be obtained and maintained under US Law
Automated Export System filings can be completed by Seller
Import Clearance: Handled by Buyer – responsible for the customs formalities and any
duties, fees, other charges due upon importation.
We use to say that FCA is the most versatile of the F terms

Carriage Paid To (CPT) + Named Place (on Buyer’
’s Side)
Delivery: Seller delivers goods to a carrier or another person nominated by the seller, at an
agreed place, for transportation to the named destination on the Buyer's side, appropriately
packaged
Carriage: Seller chooses and pays cost of carriage to bring the goods to the named destination
(the final location, not the destination port)
Risks: Seller bears all risks and costs incurred until the goods are delivered to the first carrier
on the Seller’s side
Export Clearance: handled by Seller
Import clearance: Buyer responsibility for paperwork and all costs
Insurance: Neither party required
Note: Risk of Loss passes on Seller’

’s side to Buyer BUT Cost is Seller’
’s
responsibility to named location on Buyer’ ’s side

Carriage and Insurance Paid To (CIP) + Named Place (on Buyer’
’s Side)
Delivery: Seller delivers goods to a carrier or another person nominated by the seller, at an
agreed place, for transportation to the named destination on the Buyer's side, appropriately
packaged
Carriage: Seller pays cost of carriage to bring the goods to the named destination (the final
location, not the destination port)
Risks: Seller bears all risks and costs incurred until the goods are delivered to the first carrier
on the Seller’s side
Export Clearance: handled by Seller
Import clearance: Buyer responsibility for paperwork and all costs
Insurance: Seller required to obtain minimum coverage
Note: Risk of Loss passes on Seller’

’s side to Buyer BUT Cost is Seller’
’s
responsibility to named location on Buyer’ ’s side

Delivered at Terminal – DAT + Named Place (Buyer’
’s side)
Replaces DEQ Term (previous nomenclature)
Delivery: Seller delivers goods to named destination terminal on Buyer’s side, packaged
appropriately and unloaded
Carriage:
Seller responsible for pre-carriage and main carriage
Buyer responsible for on-carriage
Risks: Transfer from Seller to Buyer once goods are unloaded on buyer’s side at terminal
Export Clearance: Seller Responsibility
Import Clearance: Buyer Responsibility – documentation and fees associated
Insurance: Neither party required to insure

Delivered at Place (DAP) + Named Place (Buyer’
’s Side)
Previously contained elements of DDU, DAF, DES terms (previous nomenclature)
Delivery: Seller delivers the goods to the buyer at the named place on the Buyer’s side,
appropriately packaged, but not unloaded
Carriage: Seller handles all carriage to named place on buyer’s side
Risks: Transfer from Seller to Buyer once goods are delivered to the named place on buyer’s
side
Export Clearance: Seller handles
Import Clearance: Buyer handles and pays associated costs
Insurance: neither party required to insure

Delivered Duty Paid (DDP) + Named Place (Buyer’
’s Side)
Delivery: Seller delivers goods to the Buyer, cleared for import on the arrival transportation,
but not unloaded at the final destination
Carriage: Seller handles all carriage to named place on Buyer’s side
Risks: Transfer from Seller to Buyer once goods are delivered to the named place on the
Buyer’s side
Export Clearance: Seller Handles
Import Clearance: Seller Handles & pays for any charges associated
Insurance: Neither party required to provide

DDP Caveats (warnings)
Should not be used if SELLER CANNOT clear goods in importing country
NOT recommended if Buyer wants control of import documents and declarations to Customs
DDP DOES NOT MEAN Buyer is absolved of all Customs Regulations & Responsibilities

Water Transport Only

Free Alongside Ship (FAS) +
Named Place (alongside vessel at port on Seller’
’s side)
Delivery: Seller delivers goods to Buyer alongside the vessel chosen by Buyer at the named
port of shipment, packed appropriately
Carriage:
Seller handles pre-carriage
Buyer handles main carriage and on-carriage
Risks: Pass from Seller to Buyer once goods place alongside the vessel on Seller’s side
Export Clearance: Seller Handles
Import Clearance: Buyer is responsible for requirement and fees associated

Free On Board (FOB) +
Named Place (loaded on vessel at a port on the Seller’
’s side)
Delivery: Seller delivers goods to Buyer on board the vessel chosen by the Buyer at the named
port of shipment, packaged for shipment
Carriage:
Seller handles pre-carriage
Buyer handles main carriage and on-carriage
Risks: Pass from Seller to Buyer once goods are placed on board the vessel on the Seller’s side
Insurance: Neither party is required to insure goods
Import Clearance: Handled by Buyer

Cost and Freight (CRF) +
Named Place (port on Buyer’
’s side)
Delivery: Seller delivers goods packaged for shipment on board the Seller-designated vessel at
the port on Seller’s side
Carriage:
Seller handles pre-carriage and main carriage
Buyer handles on-carriage following delivery to port on Buyer’s side
Risks: Passes from Seller to Buyer once goods are on board the vessel
Import clearance: Buyer is responsible for the customs requirements and associated costs
(fees, duties, etc.)
NOTE:
Even though risk passes from Seller to Buyer on Seller’ ’s side (once loaded
per contract), Seller contracts for and pays freight necessary to bring
goods to the named port on the Buyer’ ’s side

Cost Insurance Freight (CIF) +
Named Place (port on Buyer’
’s side)
Delivery: Seller delivers goods packaged for shipment on board the Seller-
designated vessel at the port on Seller’s side
Carriage:
Seller handles pre-carriage and main carriage
Buyer handles on-carriage following delivery to port on Buyer’s side
Risks: Passes from Seller to Buyer once goods are on board the vessel
Insurance: Seller required to procure minimum coverage against Buyer’s risk of

loss or damage to the goods during carriage
Import clearance: Buyer is responsible for the customs requirements and

associated costs (fees, duties, etc.)
NOTE: Even though risk passes from Seller to Buyer on Seller’ ’s side (once
loaded per contract), Seller contracts for and pays freight necessary to bring
goods to the named port on the Buyer’ ’s side
Same as CPT + Insurance coverage
Price Considerations with Incoterms 2010 & Cargo security
When negotiating a contract, keep in mind the following Basic Rule
The more responsibility the Seller takes on, the more they must charge the
Buyer
Control over who is arranging/paying for transportation when is critical to maintaining control over
data elements required by governmental entities.
Control over carriers (C-TPAT, AEO, PIP etc.)
Control over documentation (waybills, AES data reporting, ITAR licensing requirements)
Control over Importer Security Filing (ISF aka 10+2 in US), the EU is also implementing a similar
ocean shipment filing requirement shortly

Introduction : Logistics framework and definitions
Logistics objectives, Logistics in the Supply Chain process and Logistics operations
Transportation #1: Logistics Service(s) Providers / The 3PLs / Intnl Logistics routes
Introduction to the different Logistics players and intermediairies such as 3PLs & 4PLs.
3PLs selection process. Presentation of the different routes to market and the InCoTerms
Transportation #2 : Logistics Computing
Cargo container (TEU) outlook and its associated computing (CAF, BAF, THC…). Freight
forwarding
Order Processing – Warehousing – Cross-Docking
Contract logistics operations, Warehousing introduction, Goods fulfillment
Warehousing Management System (WMS)
WMS planning, Design, Efficiency & Inventory health

Transportation – part#2

Shipping charges (1/5) -> Dry container
The twenty-foot equivalent unit (often TEU or teu) is an
inexact unit of cargo capacity often used to describe the capacity
of container ships & Terminals.
It is based on the volume of a 20 foot-long (6.1m) intermodal

container, a standard-sized metal box which can be easily
transferred between different modes of transportation
1 TEU represents the cargo capacity of a standard intermodal

container: 20 feet long (6.10m) & 8 feet wide (2.44m) & 4 feet 3
inches height (1.30m) / 9 feet 6 inches (2.90m) / 8 feet 6 inches
(2.59m) which is the most common
Inside US :45’’
& 53’’ containers
2 TEU = a 45-foot container (13.7m)
1 TEU = 38.5 m3 & a 2TEU = 77 m3

Shipping charges (2/5) -> Reefer container

Shipping charges (3/5)
The most common dimensions for a 20-foot (6.1 m) container

are 20 feet (6.1 m) long, 8 feet (2.44 m) wide, and 8 feet 6 inches
(2.59 m) high, for a volume of 1,360 cubic feet (39 m3).
The maximum gross mass for a 20-foot (6.1 m) dry cargo

container is 24,000 kilograms = 24 Tons (in gnl 18T in carriage)
Similarly, the maximum gross mass for a 40-foot (12.2 m) dry

cargo container (including the 9-foot-6-inch-high (2.90 m) cube
container) is 30,480 kilograms = 30,48 Tons
- EUR-EPAL PALLET: 800mm (w) x 1200mm (l) & max 1500 kg

In a TEU: 9 pallets
In a 2 TEU: 22 pallets
Shipping charges (4/5)
Stacking possibilities (number side by side & empillement)
Semi-pallet : 800 x 600
US pallet : 1219 x 1016 = 48’’ x 40’’
In France: We load 600 millions pallet / year

Shipping charges: Pallet to Container (5/5)
Internal Dimensions of a 20ft container (6 m dry)
Length x Width X Height : 590cm x 235cm x 239cm
Ex: with a 110cm x 110cm x 120cm pallet with 1 TEU
1 – Divide container length by pallet length: 590 / 110 = 5,36
2 – Divide container width by pallet width: 235 / 110 = 2,13
3 – Divide container height by pallet height: 239 / 120 = 1,99
4 – Remove digits after coma & multiply your results
5 x 2 x 1 = 10 => 10 pallets in a TEU

From container to boat => Container carrier (1/2)
These vessels burn 120 tons of fuel per day
1 Litre of fuel = 0.87 kg
Annual fuel invoice : 4 B$
Average speed : 25 mm/h = 25 x 1,852 km/h = 46,3 km/h
Average horse-power : 94,000.00 (max 117,000.00)

From container to boat => Container carrier (2/2)
In activity : 3 500 container carriers – Traffic = +6% yty growth
2 main categories:
UCC -> Universal Container Carrier
FCC -> Fully Cellular Containership (for the big ones) (i.e previous page)
1968: First Container carrier shipping line = US East coast -> Europe. It is
called North Atlantic Road
Oct. 1968: Transpacific Road = Japan -> US West coast
1969: Europe -> Australia - 1971: Europe -> Far-East……etc….
Today: The longuest route is from Maersk Sealand = 15 weeks journey

US East – Mediterran – Suez Canal – Singapour – HK – Taiwan – US West
Then returns from Japan followed by previous stages
Cargo shipping vessels containers
© Copyright 2016 Strictly Private and Confidential Page

100
Shipping surcharges (1/7) -> To Be Computed
FCL (Full Container Load) # LCL (Less Than Container Load)
BAF : Bunker Adjustment Factor,cost of oil .

Exemple BAF : 320 euros/TEU
CAF : Currency Adjustement Factor
BAF & CAF : to be redefined every month
PSS : Peak Season Time
THC : Terminal Handling Charge or CSC (Container Service

Charge)
101
Shipping Surcharges (2/7)
All in rate - meaning that the cost of transportation includes

all the additional fees provided for under the conditions of
carriage. For example, in the case of freight under LILO, this
means that in the U.S., except for freight, loading and
unloading, also includes all related costs, such as BAF, CAF,
etc.
Basic Service Rate Additional (BSRA) is the charge levied

by shipping companies to importers for LCL cargo, including
the port charges, transport to an unpacking depot (see CFS)
subsequent sorting and storage of the goods and finally
loading onto a vehicle collecting the goods for delivery to the
buyer

102
Shipping surcharges (3/7)
Bunker Adjustment Factor (BAF) - an adjustment to

shipping companies' freight rates to take into account
fluctuations in the cost of fuel oil (bunkers) for their ships.
Currency Adjustment Factor (CAF) is an adjustment to

shipping companies' freight rates to take into account the
effect over time of fluctuations in currency exchange rates.
IMO surcharge is applied when transporting goods classified

by the UN as hazardous (in accordance with the IMDG code
(International Marine Dangerous Goods code)) , the shipping
company imposes a surcharge on the sea freight. This relates
to the additional handling required for planning the goods at
the terminal and onboard the ship.
I
103
ISPS or SEC - security charges
GRI (General Rate Increase) - planned increase of a base

rate from a certain date
ERS (Emergency Rate Surcharge)
THC (Terminal Handling Charge), THC are additional

costs, on top of the sea freight, charged by the shipping
company for the handling of containers at the container
terminal before being loaded onboard a vessel
-> Examples include the unloading of the container from a truck, stacking and
transport from the stacking location to just below the crane. This concerns
FCL (Full Container Load) shipments

104
Heavy Weight Charge is a surcharge tax for exceeding

certain weight. 20ft containers exceeding the weight of 14,000
kg tare (container) are subject to a heavy weight surcharge
(HWT). An empty 20ft container weighs approximately 2,300 kg.
40ft containers are not subject to a heavy weight surcharge. Both
20ft and 40ft containers can carry a load of more than 28,000 kg
Port Congestion Surcharge applied by shipping lines to cover

losses caused by congestion and idle time for vessels serving
that port. Shipping lines therefore have the right to impose a
surcharge on the freight to recover revenue lost. Another factor
which influences port congestion surcharge would be labour
disputes. Port congestion surcharges are calculated as a
percentage of the freight rate
105
PSS (Peak Season Surcharge) is added to cargo moving

from Asia/Pac. This fee remains in effect for the duration of a
typical Peak Season, currently from June 1 - October 31
Winter Surcharge is imposed for all containers to cover extra

costs related to serving the port due to harsh weather, convoy
restrictions, ice conditions etc. This surcharge is only effective
during winter period

106
Demurrage : A term of transportation law which refers to the

damages payable to a carrier as compensation for lost time
Demurrage penalties are imposed for excess use of container

from its unloading at the terminal until the return of empty
containers at the port (for imports) or from the date of receipt
of the empty container to be loaded before the loading of a
container loaded on a ship (for exports).
Administrative Fees

107
Shipping surcharges calculation (1/3)
They are expressed in percentages and underestimate the effect of

or increase freight - They are calculated only waterfall on freight
Computed from the Freight

BAF = x% Freight
CAF = x% (Freight+BAF)
Example: Cost of Freight : 1,500 $
BAF: +5% & CAF: -0,5%
What is the Total Freight???

108
Cost of Freight : 1,500.00 $
BAF = x% Freight => BAF = 5% x 1,500.00$= 75.00$
Revised Freight = 1,500.00$ + 75.00$ = 1,575.00$
CAF = -0,5% x 1,575.00$ = -7.875$
Total Freight : 1,575$ - 7.875$ = 1,567.125$

109
Computed from the Freight

BAF = x% Freight
Example :
FOB = 10 K$
Freight = 500 $
BAF = 5% & CAF = 1%
BAF = ???
CAF= ???
110
INCOTERMS

111
Calculation Example -> Customer’s price offer computing (1/11)
Objective: Compute a price in respect to a selected Incoterm
It should be added one at a cost that match this incoterm
1- Goods value or commodity prices: Quantity x price per unit
2- If there is a package => it is added…Be careful not to confuse

net weight (weight of goods only) & gross weight (weight of goods &
packaging)
The addition of these 2 elements give an EXW price

112
EXW price
• Pre-carriage from manufacturing to seaport or airport of DEPARTURE
• Customs clearance EXPORT
• FOB staging
• THC or CSC at DEPARTURE
• AWB (Air Way Bill) or SWB (Sea Way Bill) & B/L (Bill of Lading) with
COD (Collect On Delivery)
• MAWB = Master AWB (issued from the company)
• HAWB = House AWB (issued from the grouping house)
The addition of these elements give a FOB price

113
Then you Compute the FREIGHT to obtain CFR
• Always start by calculating:

• Gross Weight in tons
• Volume in m3
Look if it is a container shipment => 2 options
OPTION#1 – Freight without a container
OPTION#2 – Freight with a container

114
OPTION#1 = Freight without container
• Need to do Weight / Volume ratio Equivalence Rule

Ex: GW = 10T & V = 6m3
Equivalence Rule: 1T = 6m3 Sea: 1T = 1m3
Total W = 10T Air: 1T = 6m3
And choose the highest rate (here 10T)
• You must then apply the freight rate => 3
Road: 1T = 3m3
options
Option#3

115
OPTION#1: Single Freight rate given (ex:5$/T)
• Computing is very easy:

• Multiplying the given freight rate by the quantity
• Freight = 5$ x 10T = 50$
Freight = 50$

116
OPTION#2: Single Freight rate given (ex:5$/T) BUT

BAF (+3%) & CAF (-5%)
Must correct freight before computing on the 10T
• Freight with BAF included: 5$ + (5$ x 3%) = 5.15$
• CAF on revised freight: 5.15$ - (5.15$ x 5%) = 4.89$
Freight = 48.9$

117
OPTION#3: Pricing per range

[0-5T]=5$
[5T-15T]=4$
[15T-20T]=2$
Must apply the rule of PAYING FOR
• You compute on the range : 10T x 4$ = 40$
• You try the above : 15T x 2$ = 30$
• You choose the lowest price, here = 30$
Freight = 30$

118
OPTION#2 = Freight with container

××
• No Equivalence Rule to be applied
Need to find the container model or the appropriate
number to carry your goods…
For this -> Remember that a 1TEU is 24T / 39m3
Once the number and type of container found,
simply apply the shipping rate of container
Example: Freight for 1TEU = 1,550.00$
All the elements added EXW, FOB + Freight give CFR

119
Then you Compute the INSURANCE to obtain CIF
Question marked : How to compute the insurance????
Generally: A percentage of the CIF + 10%
YES…BUT…How to know the CIF amount???
CIF = CFR / ((1 - (1,1 x insurance)) & CIF = CFR + Insurance

Example : CFR = 80,909.00 & Insurance = 0.8%
((1 - (1,1 x insurance)) = (1-(1,1 x 8%)) = 0.9912
CIF = 80,909.00 / 0.9912 = 81,627.00
INSURANCE = CIF – CFR = 81,627.00 – 80,909.00 = 718.00

120
From CIF to DDP
1 - Customs duties calculation: RATE PROVIDED
-> Need to apply it on the CIF value if sea transportation
Ex: Computed CIF = 81,627.00 & CR = 7.8% => CD = 6,366.00
2 - VAT: RATE PROVIDED
-> Need to be applied on the above computing
Ex: VAT = 19.6% => VAT = (81,627.00 + 6,636.00) x 19.6% = 17,246.00$
3 - Post-Carriage : Provided & need to be applied on above
4 - THC or CSC at arrival
5 - Traction or haulage cost

121
ONCE ALL EXECUTED => PROFORMA INVOICE

122
Calculation example -> more info
FOB = (Production Cost+Profit+Expenses) + Transport to the Port

of Origin Costs
CIF = FOB + Freight from port of Origin to the Port of Destiny +

Insurance
So as you see CIF is including the cost of Freight, if you want to

calculate it... you would do like this
Freight = FOB - Insurance ( - Other Costs if applicable)
www.dutycalculator.com
www.exportarya.com

123
Logistics Management – OP, CD & WMS#1
Level#1

124
Order Processing
Definition (1/3)
Key element of Order Fulfillment
Order Processing operations or facilities are commonly called « Distribution

Centers » (DCs)
Generally used to describe the process of the work flow associated with 3 ops :
Picking
Packing
Delivery…of the packed item(s) to a shipping carrier
The « Order fulfillment process » (operational procedures) of DCs are

determined by many factors
Each DC has its own unique requirements

125
Order Processing
Definition (2/3)
There is no « ONE SIZE FITS ALL » process that universally provides the most
efficient operation…Some of the factors that determine the specific process flow
of a DC are:
The nature of the shipped product - shipping eggs and shipping shirts can require differing
fulfillment processes
The nature of the orders - the number of differing items and quantities of each item in orders
The nature of the shipping packaging - cases, totes, envelopes, pallets can create process
variations
Shipping costs - consolidation of orders, shipping pre-sort can change processing operations
Availability and cost and productivity of workforce - can create trade-off decisions in
automation and manual processing operations

126
Order Processing
Definition (3/3)
Timeliness of shipment windows - when shipments need to be completed based on

carriers can create processing variations
Availability of capital expenditure dollars - influence on manual verses automated

process decisions and longer term benefits
Value of product shipped - the ratio of the value of the shipped product and the
order fulfillment cost
Seasonality variations in outbound volume - amount and duration of seasonal peaks
Predictability of future volume, product and order profiles
Predictability of distribution network - whether or not the network itself is going to

change

127
Order Processing
Methodologies
OP = Key element of Order Fulfillment

Single item picking
Pick to Order
Batch pick to order
Batch pick and sort to order
Wave picking (= short interval scheduling for WMS/IM)
…
Introduction to SKU (Stock Keeping Unit)

128
Order Processing
SKU
In IM = a disctinct item with all its attributes associated that

distinguish it from all other items i.e: REFERENCE UNIT
For a product, the attributes include (not limited list):
Product description
Material, size, color, packaging, warranty…
When a business takes an Inventory

⇒ It counts the quantity of each SKU
SKUs are not always physical objects. Anything that can be sold separately
from anything else has a stock keeping unit, such as extended warranties,
delivery fees, licenses
FYI: Other entity tracking methods, with varying regulations, are for instance UPC
(Universal Product Code)
129
From Order Processing to OMS (Ordering Management System)
An OMS “may” encompass these modules
Product information (descriptions, attributes, locations, quantities)
Inventory availability (ATP) and sourcing
Vendors, purchasing, and receiving
Marketing (catalogs, promotions, pricing)
Customers and prospects
Order entry and customer service (including returns and refunds)
Financial processing (credit cards, billing, payment on account)
Order processing (selection, picking, packing, shipping)
Data analysis and reporting
Financials (accounts payable & receivable)

130
Order Processing
Distribution & Distribution Center (DC)
Encompasses all channels, processes, and functions, including

warehousing and transportation, that a product passes on its way
to final customer
A DC provides
Order fulfillment
process of ensuring on-time delivery of an order (OTD)
Logistics
transportation and distribution of goods and services
A DC must be Time Responsiveness

131
Order Processing…3 WAYS OF DISTRIBUTION
1. Traditional Warehousing/Distribution: vendors ship goods to

retail DCs, where the goods are stored until store orders need
fulfilled, where they are then picked (often using a "wave"
process" for batches of stores) and delivered to the stores
2. Crossdock DCs: shipments from inbound suppliers are moved

directly to outbound vehicles, with very little if any storage in
between. In the best possible situation, products never touch the
floor or a shelf, though some amount of staging is often used
3. Direct to Store Delivery: in which vendors ship goods directly

from their own facilities to retail store outlets

132
Cross Docking vs Traditional & Direct to Store delivery
Overview positioning (source of synopsis, Logistics Mngt, Atom, 2008)
Traditional
Crossdock
Direct to Store Delivery

133
Cross Docking
Cross-docking favors the timely distribution of freight and a

better synchronization with the demand
It is particularly linked with the retail sector (often within

large retailers), but can also be apply to manufacturing and
distribution
Cross-docking is mainly dependant on trucking

134
Cross Docking
Advantages
Minimization of warehousing and economies of scale in outbound

flows (from the DC to the customers)
The costly inventory function of a DC becomes minimal, while still

maintaining the value-added functions of consolidation and
shipping
Inbound flows (from suppliers) are thus directly transferred to

outbound flows (to customers) with little, if any, warehousing
Shipments typically spend less than 24 hours in the distribution center – in

some cases < 1 hour

135
Direct to Store delivery
LTL : Less than Truckload

136
Cross Docking delivery
TL : Full Truckload

137
Cross Docking delivery
Suppliers
Receiving
Sorting
Shipping
Customers
138
Logistics Management – WMS#1
Level#1

139
Order Processing
Distribution Center (DC) & Warehousing
DCs are some of the largest business facilities in many countries

(i.e US, France, Netherlands, China, UAE,…)
Trend is for more frequent orders in smaller quantities
Flow-through facilities & automated material handling
Postponement
final assembly and product configuration may be
done at the DC
140
Warehousing Management Systems
Overview – Introduction (1/4) => different operations
Highly automated system that runs day-to-day operations of a DC

Controls item putaway, picking, packing, and shipping
Features
transportation management
order management
yard management
labor management
warehouse optimization

141
WMS diagram

142
Overview – Introduction (2/4)
key part of the SC
Control the movement & storage of materials within a warehouse

and process the associated transactions (shipping, receiving,
putaway & picking)
A WMS monitors the progress of products through the

Warehouse
⇒It involves:
• Physical warehouse infratructure
• Tracking systems
• Communication between the different stations involved

143
More precisely, warehouse management involves the receipt,

storage and movement of goods, (normally finished goods), to
intermediate storage locations or to a final customer.
In the multi-echelon model for distribution, there may be multiple

levels of warehouses (i.e Waterfall):
Central warehouse
Regional warehouses (serviced by the central warehouse)
Local or Retail warehouses (serviced by the regional
warehouses)

144
Warehouse management systems often utilize automatic

identification & data capture technologies:
Barecode scanners
Mobile computers & WLANs
RFID (Radio Frequency ID)
How it works???
When data has been collected
=> there is synchro & transmission to DB
⇒ Status of goos in the warehouse

145
Objectives (1/2)
1 - helps companies cut expenses by minimizing the

amount of un-necessary parts & products in storage
2 - helps companies keep lost sales to a minimum

by having enough stock on hand to meet demand

146
Objectives (2/2)
3 - Modeling and managing the logical

representation of the physical storage facilities
(ex of racking & notion of grouping)
4 - Tracking where products are stocked, which

suppliers they come from, and the length of time
they are stored (IM)

147
Warehousing : Few words about…
Warehouse Management System : Evolution & Strategy
Internal Planning in Warehousing
Warehouse Design Concept
Warehouse Efficiency Factors
Warehouse Efficiency & Inventory Health

148
Warehousing : evolution to a STRATEGIC role
Warehouses were once viewed

as a necessary evil, used to
coordinate product supply with
customer demand
The explosion of the consumer

economy & today’s globalization
saw the rise of distribution
networks for consumer goods
Warehousing shifted from

passive storage to strategic
assortment

149
Strategic Warehousing : a way to reduce handling time
Warehousing is integral to just-

in-time (JIT) and stockless
production strategies
Requires strategically located
warehouses across the globe
An important goal in
warehousing is to maximize
flexibility
Respond to ever-changing
customer demand
Product assortments
Value-added services
Shipment sequencing

150
Strategic Warehousing : provides economic & service benefits
Economic benefits of warehousing

occur when overall logistics costs are
reduced
Consolidation and break-bulk
Sorting
Seasonal storage
Reverse logistics
Service benefits are justified by sales
improvements that more than offset
added cost (see next slide for details)
Spot-stocking
Full line stocking
Value-added services

151
Strategic Warehousing : Service Benefits
Spot-stocking is the
positioning of inventory for
seasonal or promotional
demand
Full line stocking provides

one-stop shopping capability
for goods from multiple
suppliers
Full Line Stocking at United Electric’s
Distribution Center
Value-added services Example of a full line stocking
include any work that creates
a greater value for
customers (home delivery,
RFID tags…)

152
Warehousing : manages 2 classes of storage
Active Storage: storage for

basic inventory replenishment
Focuses on quick movement
Includes flow-distri mngt
Extended Storage: storage for
inventory held in excess of
period for normal replenishment
Ex: seasonal, speculative, or even
commodities

153
Warehousing
Warehouse Management System (1/2)
The WMS controls two sets of operations:
1- On the inventory front: the system maintains inventory in the

warehouse at zone & individual location level, SKU level, pallet,
carton and unit level inventories for multiple customers and allows
specific inventory attributes and parameters to be built in to
manage, allocate or block the inventory
The system also provides options to adapt FIFO, LIFO or other

methods of inventory flow (i.e other queuing system methods)

154
Warehousing
Warehouse Management System (2/2)
2- On the Operations front: the system manages, controls and

directs all operations including receiving processes, put away
processes, order processing, inventory allocation, picking process,
packing process and finally shipment along with inventory updating
The system guides and helps Operations Manager to schedule and

manage all operations for various groups and teams simultaneously
depending upon the work load and pattern
=> OM manages resources allocation too

155
Warehousing
Internal Planning in Warehousing - 3PL - (1/5) -> Intro
Choosing a 3PL partner for your warehouse operations needs

thoughtful considerations and evaluation.
3PL -> helping in training and periodic assessments
Before you start looking for a 3PL partner, internal alignment with
management, clarity of the project and criteria for selecting 3PL
Partner is to be worked out in detail (see previous lecture on how
to select a 3PL)

156
Warehousing
Internal Planning in Warehousing (2/5)
1 - Internal Decisions
Outsourcing project should be clearly defined as to Scope of
Activity, Business Risks Identified. Decision to outsource with
definite timelines inline with business function should be
approved by Management
Budgetary approvals should be in place for the project

implementation as well as the monthly logistical service outflow
from concerned business functions and Management. Without
clarity, many times RFP & RFQs are floated and discarded
resulting in wastage of time and effort of all parties concerned

157
Warehousing
2 - Defining Project Scope and Responsibilities (who does what)

Plant Supply Warehouses, Regional Distribution Centers,
…projects are often very huge in size of operations as
compared to a flow through FG warehouse in a supply chain
network
Projects are characterized by huge capital outlay, multiple
process designs & involve complex IT system design
RFP / RFQ would need to define each element very clearly and
describe the scope of activity and responsibility on the part of
the buyer as well as the 3PL
The document should define clearly the capabilities and
competencies required for the project, the timelines and
deliverables
158
Warehousing
3 - Internal Guidelines to be cleared

An outsourcing project should have clear internal guidelines
with regard to the ownership of the project, individual program
owners, business unit who will own the project after
implementation coupled with operation management and
escalation process
This information can be shared with the 3PL in the RFQ and
one should expect similar structure from the 3PL in its response
document

159
Warehousing
4 - Defining Length of the Contract with possible scope for

extension and period of extension is essential to help 3PL work out
financials. It helps to define the methodology of costing template
along with the RFQ to ensure common platform
5 - Determining process for evaluation of vendor is very

essential. What are the capabilities that you look for in a 3PL, what is
the selection criteria, who are the internal team members to be
involved in selection process and decision making should be clearly
enumerated

160
Warehousing
Warehouse Design Concept (1/2)
SCM strategy will define overall network design for stock holding
and further channels of distribution
Logistics deals with the entire gamut of designing transportation

network, partnering with 3PLs to establish distribution centers
and warehouses, planning inventory management and
operations process including packing, promotional bundling etc,
primary, secondary distribution network and vendors and at the
end the complete documentation and information process for the
entire chain of activities

161
Warehousing
Warehouse Design Concept (2/2)
Site Selection
Design
Product-Mix Analysis
Expansion
Materials Handling
Layout
Sizing
WMS / IT
Accuracy and audit
Security
Safety and maintenance

162
Warehousing
Warehouse Efficiency Factors
1 – People
2 – Workforce: Qty & job structure
3 – Right skills set
4 – Attitude & Outlook

163
Warehousing
Warehouse Efficiency & Inventory Health (1/2)
Any warehouse operations are measured by service levels,

volume of transactions handled quality of transactions and most
importantly inventory health maintained
By Inventory health in a warehouse, we are

referring to Physical Inventory Accuracy, the way
inventory is physically kept in locations and
discipline maintained in transactions, inventory
maintained in the system
Inventory health is dependant upon system setup, floor layout
and infrastructure coupled with defined process, compliance and
regular inventory checking, audit and training

164
Warehousing
Warehouse Efficiency & Inventory Health (2/2)
The key to good warehouse operations is reflected in

availability of documented process covering all above mentioned
functions and documented proof of day to day compliance of
above tasks
All warehouse processes are documented in Standard

Operating Procedure (SOP) which is the guiding bible. These
processes are further broken down to work instructions for each
job function and task or activity

165
Warehousing
BENEFITS
Potential Improvements in: Potential Reductions of:

Inventory accuracy and turns Damage/Shrinkage
Space utilization, stock rotation Lost stock
Order, lot and serial number Safety stock
tracking
Backorder handling Search times and deadheading
Crossdocking Paperwork
Resource planning and scheduling Human error
Labor and equipment productivity Physical inventory taking
Performance measurement Labor, equipment and utility costs
Customer service Courier/Delivery costs
Outside warehousing

166
Spare parts, Reverse Logistics, Documents
Level#1

167
Spare Parts & Reverse Logistics - Documents
Spare Parts
Reverse Logistics
Warranty Management
Customs clearance documents
Payment documents

168
Spare Parts (1/6)
Spart Parts = The Service Support provided by the company
Brand image / market demand rides on the quality of the

product but also on the quality of service support
=> Service support is critical
In all cases : response time & availability of spares are critical
In all cases : corporate installations demanding onsite support

coupled with critical down time service level measurements have
pushed the suppliers to set up an efficient spare parts supply
chain

169
Spare Parts (2/6)
Critical and high value spare parts have to be made available in

a near by warehousing location and logistical arrangements are
required to be made to reach it to the site in a fastest and
quickest reach time
In all cases : all of the coordination and problem solving along

with logistics arrangements is required to happen in a matter of
hours. Such tight performance levels are documented in the
Service Level Agreements (SLA)

170
Spare Parts (3/6)
Most of the parts are high value parts and cannot be stocked or
warehoused in all locations as inventory
In most cases the essential spare parts are kept in stock at the
country level based on the number of installations or volumes of
sale under each category of product
In case of non availability the parts are called for on urgent

basis from a regional distribution center normally available at a
regional level servicing a continent and flown down on urgent
courier mode

171
Spare Parts (4/6)
Spare parts are delivered out of these outlets in two modes:

1. Under warranty service where the customer has bought a
warranty contract with the company including free
replacement of spare parts. In such situation, the good part is
issued by the warehouse in lieu of receipt of a defective spare
part
2. Sale of part where the customer pays for a spare part and
makes the purchase

172
Spare Parts (5/6)
In case of parts supply warehouses, commonly they contain two

different warehousing divisions:
1. Good parts store
2. Defective parts store
In case of Good spare parts, the warehouses maintain and

manage two separate inventory lines as well as separate
processes to manage original spare parts procured from vendors
and re furbished spare parts repaired locally through third party
repair vendors

173
Spare Parts (6/6)
Against each good part supplied, a defective part is taken back

which travels through the various stocking points to the
warehouse’s defective parts store. The defective parts stores issue
parts to identified vendors for repair and once repaired issue back
the refurbished parts to good store for inventory
In some cases the defective parts if still under warranty are

grouped together and re exported back to the vendor overseas for
free replacement under warranty

174
Reverse Logistics (1/2)
Reverse Logistics deals with the planning, process and

flow of FG inventory, packaging materials and parts of
finished product back from end customer to the product
company as sales return or warranty return or unsold
inventory with trading partners
Reverse Logistics planning further re-captures value from these

materials as much as possible by way of re salvaging, repair,
re-furbishing, re cycling etc
Green Logistics initiative has outlined detailed process for

the suppliers and manufacturers to adapt color coding
systems to identify different kinds of waste re usable,
recyclable, green waste etc.
175
Reverse Logistics (2/2)
Reverse Logistics offers several advantages to the company:

1. Companies are able to retrieve defective equipments and
parts which are either salvaged or refurbished and thus
reclaims value out of the defective parts
2. The packaging and defective materials are collected and
recycled thereby generating scrap value back for the company
3. Unsold and obsolete equipments are collected back from
point of sale which encourages the distributors and stockists to
confidently buy stocks from the company knowing that he can
always return unused inventory and not stand to loose in the
bargain. Distributors are more likely to be open to stocking all
fast moving as well as slow moving stocks

176
Warranty Management (1/3)
Warranty Management had been traditionally viewed by

companies as a cost of doing business
The costs of warranty management were found to be costing

between 4-5% of the total sales revenue / annum
Considered to be the cost of providing customer satisfaction /

relationship
BUT NOW -> Warranty Management is considered to be a

separate revenue stream

177
What is Warranty ?
Warranty is a statement of assurance or undertaking issued
by the manufacturer of a product with regard to the
performance of the product and parts supplied by him by way
of sale transaction to the customer, for a certain period of
time as stated in the Warranty Card accompanying the
product.
it is a performance guarantee for the product given by
the manufacturer. In case of any defective performance due
to the non performance of any part or defect in any part of
the product, will be made good by the supplier /
manufacturer with either replacement of the part or product
or repair of the product
178

179
Customs Clearance Documentation -> Import docs (2/2)
Commercial Invoice - This is the most important document that

certifies the sale as well as gives the description of the items as
well as reflects the pricing or the value of the cargo
Packing List - It is mandatory to put the shipping marks on all

the cargo covering each and every individual piece or parcel.
The details of the number of parcels in the consignment, their
dimension, the shipping marks, the gross and net weights of
each of the parcels along with the number of units contained in
each parcel is catalogued in the form of packing list. Packing
List is used to identify the parcels as belonging to the particular
consignment under the said Invoice

180
Customs Clearance Documentation -> Import docs (2/2)
Certificate of Origin (COO) - Certain bilateral agreements and

multi lateral agreements would enjoy favorable tariffs for import
duties. In such cases when the consignments are exported from
such member countries, the designated Export Agency issues
Certificate of Origin to the importer for submission to Customs.
Based on this certificate the Customs Department of the
Importing Country classifies the cargo under specific schedule.
Bill of Lading (BOL) - Bill of Lading is a negotiable multi modal

transport document issued by the Shipping Line certifying
carriage of the said cargo under the specific invoice on behalf of
the exporter or importer depending upon the terms of sale.

181
Customs Clearance Documentation -> Bill of Entry (1/4)
Bill of Entry (BOE) is the main key document on which the

Customs approves clearance of the cargo and the document is
crucial for availing duty credits if any by the Importer post
clearance. The Bill of Entry document is also required as an
important record for audit purposes and any further inspection
from any agencies
A declaration by an importer or exporter of the precise nature,

exact quantity and value of goods that have landed or are being
shipped out. This document is prepared by a qualified customs
broker, it is examined by customs authorities for its accuracy and
conformity with the tariff & regulations

182
BOE for Home Consumption When an import consignment is

required to be custom cleared and the importer wishes to take
delivery and use the cargo for internal consumption in his business
organization, the Bill of Entry for Home Consumption is filed
-> The Bill of Entry for Home Consumption is in white color

183
BOE for Bonding If the Importer does not wish to custom clear
the imported consignment right away and wishes it to be
warehoused at the Customs Bonded Warehouse, then the Bill of
Entry for Bonding is submitted, so that the customs can allow the
transfer of import shipment to be warehoused at the customs
bonded warehouse without payment of duty but on execution of a
bond by the importer and postpone the clearance to a future point
of time. The importer by filing the Yellow colored BOE for bonding
is able to defer the payment of duty until such time that he requires
clearing the consignment. When this BOE for bonding is filed, the
customs assess the consignment and determine the duty payable
and the importer executed a bond for the required value but is not
required to pay the actual customs duty.
Ex-Bond Bill of Entry When import consignments are not custom cleared
immediately on arrival and are warehoused 184 at the customs bonded warehouse,
Ex-Bond BOE When import consignments are not custom

cleared immediately on arrival and are warehoused at the customs
bonded warehouse, the importer can choose to custom clear the
entire consignment or in parts whenever he requires by filing Ex-
Bond Bill of Entry to clear the consignment from the warehouse on
payment of duty. The valuation under the Ex-Bond Bill of Entry will
take into account the prevailing rates of duty at the time of actual
removal of imported consignment from the warehouse and not the
duty assessed through Bonding BOE. In case there has been a
revision in the tariff, the prevalent tariff at the time of removal from
the bonded warehouse will prevail. Ex-Bond BOE is green in color
and is also called ‘Green Bill’.

185
Payment Documents
To receive payment, an exporter or shipper must present the

documents required by the letter of credit. Typically, the payee
presents a document proving the goods were sent instead of
showing the actual goods.
The Original BOL is normally the document accepted by banks as

proof of the goods have been shipped. However, the list and form of
documents is open to negotiation and may contain requirements to
proof quality of goods, place of manufacturing, …

186
Payment Documentation -> Requirement of 6 types of documents
Financial documents: Bill of Exchange
Commercial Documents: Invoice & Packing list
Shipping Documents: Carrier / transport document, Insurance

certificate, and all other Official documents
Official Documents: License, Embassy legalization, Origin

Certificate, Inspection Certificate
Transport Documents: BOL, Airway or Sea bill, Truck receipt,

Forward cargo receipt,…
Insurance documents: Insurance policy or Certificate of insurance

187
Payment Documentation -> Letter of Credit
International trade procedure in which the credit worthiness

of an importer is substituted by the guaranty of a bank for a
specific transaction.
Under DOCUMENTARY CREDIT arrangement (also called

LETTER OF CREDIT arrangement) a bank (usually in the
importer’s country) undertakes to pay for a shipment
…provided the exporter submits the required documents –
BOF, COO,…- within a specific period
In France this arrangement is called CREDOC
In US this arrangement is called Commercial LC

188
Payment Documentation -> Letter of Credit process
Letter of Credit : a 6 steps process
1. After a contract is concluded between a buyer and a seller, the

buyer's bank supplies a LC to the seller
2. The seller consigns the goods to a carrier in exchange for a BOL
3. The Seller provides BOL to bank in exchange for payment
4. Seller’s bank exchanges BOL for payment from buyer’s bank
5. Buyer’s bank exchanges BOL for payment from the buyer
6. Buyer provides BOL to carrier and takes delivery of goods

189

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Logistics Management - INCOTERMS

© Copyright 2016 Strictly Private and Confidential Page 1

Introduction : Logistics framework and definitions

Transportation #2 : Logistics Computing

Order Processing – Warehousing – Cross-Docking

Contract logistics operations, Warehousing introduction, Goods fulfillment

Warehousing Management System (WMS)

WMS planning, Design, Efficiency & Inventory health

© Copyright 2016 Strictly Private and Confidential Page 2

Inventory concepts, practices, systems. Types of inventories and classification (ABC

Spare parts - Reverse Logistics (claims, returns, pos)

www.inboudlogistics.com / www.logisticsmgmt.com / www.cma-cgm.com

www.maerskline.com / www.aircargoworld.com / www.fedex.com / www.dhl.com / www.ups.com

www.hapag-lloyd.com / www.alphaliner.com / www.logisticsbusiness.com

© Copyright 2016 Strictly Private and Confidential Page 4

© Copyright 2016 Strictly Private and Confidential Page 5

The word of logistics originates from the

Those activities that focus on getting the

© Copyright 2016 Strictly Private and Confidential Page 6

The Seven R’s

Ensuring the availability of the

© Copyright 2016 Strictly Private and Confidential Page 7

The practice of organizing the cost-effective

© Copyright 2016 Strictly Private and Confidential Page 8

Reliable and consistent delivery performance

Minimum product damage

© Copyright 2016 Strictly Private and Confidential Page 9

Logistics is the backbone on which Supply Chains are driven

Logistics refers to the

Management of flow of goods and supplies

Logistics play important role in post procurement function of delivery

© Copyright 2016 Strictly Private and Confidential Page 10

© Copyright 2016 Strictly Private and Confidential Page 11

© Copyright 2016 Strictly Private and Confidential Page 12

The flow of goods flows through a network of transportation by

The entire activity involves multi tier suppliers, agents and

Logistics therefore is an integral component

© Copyright 2016 Strictly Private and Confidential Page 13

In many cases Supply Chain is often referred to as

Supply Chain design in an organization would detail, plan and

While logistics planning would deal with the details of

Logistics deals with the entire gamut of designing

© Copyright 2016 Strictly Private and Confidential Page 15

Third Party Logistics Service Providers both at global levels and

A firm that provides multiple logistics services for use by

© Copyright 2016 Strictly Private and Confidential Page 16

Practice of unloading products from suppliers,

Firms that accumulate small shipments into

© Copyright 2016 Strictly Private and Confidential Page 17

Third-party logistics providers include freight forwarders,

Procurement Logistics, Manufacturing Logistics and

With the emerging trends and availability of third party

Third Party Logistics field is a multi-layer or multi-tier

In any Logistics Contract or Supply Chain Network, you will

© Copyright 2016 Strictly Private and Confidential Page 20

Logistics further also works with the concept of the 4Party

Normally in Logistics, the lead players front ending the

Freight forwarders are those agencies who consolidate

Freight forwarders do not own any mode of transportation