Introduction of International Transport Management

International Transport
Management
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TProgramme HCMC/Vietnam May- June2019 (ThomasSIM)

Module Objectives:
This module aims to provide logistics industry and
other associated functions participants with :
 an understanding on the impact of global logistics &
supply chain on international transportation business
today
 an appreciation of the concept and application of
supply chain & logistics
 an understanding on the major similarities and
differences between domestic and global logistics
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Module Objectives:
 an understanding on the elements of transport
logistics and the development of international
seaborne trade
 an overview on the role of a shipbroker and the
different types of chartering – voyage, time and
demise or bareboat charters
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Module Objectives:
 an understanding on the liner service, value of
service and the liner conference systems
 an understanding on the concept and application of
International Air Transportation
 an overview on the concept of technology strategy
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Module Objectives:
 an understanding on the shipper and carrier
utilize strategies to manage their respective
networks
 an appreciation of the role of the logistics and
transportation in international supply chain
management
 an appreciation of macro trends that will impact
the international logistics and transportation
 management future
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Questions ?
vuongthibichnga.cs2@ftu.edu.vn
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International Transport
Management
Module
Chapter 1
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Chapter 1 Objectives:
• Appreciate the role of transportation in supply
chains
• Appreciate the impact of transportation on the
economy and the environment
• Understand the trade-offs in transportation
systems
• Review the concept of derived demand
• Appreciate INCOTERMS 2010 in transportation
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Modes of Transport:
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– Transportation represents the single most important
element in logistical costs for most firms
– Typically about a half of logistics costs are absorbed
by transport
– Transportation is the physical link connecting the
firm to its suppliers and customers
– The supply chain is a system of links between nodes
where goods are stored
– Hence, transportation bridges these gaps
Modes of Transport:
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• Transport and The Economy
– Transport is not just a movement of people and
products through space and time
– Transport procurement involves the purchase of
a “Bundle of services”
– 3 Factors:
• Movement service (speed, reliability and
frequency)
• Equipment used (freight and passengers)
• Costs
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Kahoot
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• Typical SCM Flow
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• Drivers of Supply Chains
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• Factors Affecting Customer Service
Customer service goals
Transport
strategy
Transport
deci sions
Inve ntory
strategy
Location strategy
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• Trade-offs
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• Business Decisions Affected by Transportation
– Production decision
• What product(s) to produce ?
– Market Area decision
• Where the product(s) should be sold ?
– Purchasing decision
• What to purchase ?
– Location decision
• Where plants, warehouse, offices, stores or other
business facilities should be located ?
– Pricing decision
• What are the costs ?
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Transportation
Inefficiencies
Product
Price
Target Markets
Purchasing
Facility Location
Business Decisions Affected by Transportation
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Business Decisions Affected by Transportation
TRANSPORTATION
Time
Utility
Place
Utility
Warehouse/Storage
Time in Transit,
Consistency of Svc
Place of
Consumption
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• Factors Affecting Transportation
– Degree of Intramode or Intermode competition
– Location of Markets (distance goods must be
transported)
– Balance or Imbalance of freight traffic in a
market
– Seasonality
– Domestic or International transportation
– Nature & Extent of Government Regulations
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Cost Speed
Transport
System
Dependability Resources
Task
Strategies
• Transport Management System
Mode of transportation to beused ?
What carriers in each mode ?
Own or outsource fleet ?
Own or outsource the management
expertise ?
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• Total Cost Analysis
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• Total Cost Analysis
– Business Logistics Approach
– Consider other elements of supply chain costs in
customer service, transportation, warehousing,
procurement and inventory
– Savings in one area may impact the costs in
another area…
Total Logistics Cost =
Transport Cost + Warehouse Cost + Stock Holding Cost +
Packaging Cost + Information Processing Cost +
Other Logistics Overheads
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CASE STUDY
LOGISTICS COST OF VIETNAMESE ENTERPRISES?
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07/08/2023 Foreign Trade University 25
Logistics Costs as a Percentage of GDP—
Selected Countries
Logistics Costs as a Percentage of GDP —Selected Countries
Country Percentage Country Percentage
Mexico 14.9 Portugal 12.7
Ireland 14.2 Canada 12.0
Singapore 13.9 Japan 11.3
Hong Kong 13.7 Netherlands 11.3
Germany 13.0 Italy 11.2
Taiwan 13.0 UK 10.6
Denmark 12.8 U.S. 10.5
Source: Compiled by Jacques Roy, HEC - Montréal

• Customer Perceived Value
Perceived Benefits
-------------------------------------------
Total Cost of Ownership
Perceived benefits include the tangible + intangible
Benefits are essentially perceptual, and that they will
differ by customer
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• Demand Elasticity
% change in quantity
= -------------------------------------
% change in price
Elasticity
 In general, the demand for freight
transportation is inelastic
 Transportation costs represents, in the
aggregate, less than 4% of a product’s landed
cost
 Substantial rate reductions would be required for
a meaningful increase in demand for the product
and consequently a demand for the
 transportation of the product
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• Pricing
– Cost of Service Pricing
• Covers at least actual expense of the service
• Typically for low cost goods
– Full Cost Pricing
• Covers at variable and fixed costs of the service
• Allows carrier to continue as an ongoing
concern as equipment costs replacement is
covered
– Value of Service Pricing
• Maximizes revenue regardless of costs
• Depends on what market will bear
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• Carrier Characteristics and Selection
– Carrier selection logically follows mode selection
– Having chosen a mode of transportation, the
integrated logistics manager must now decide
which carrier or carriers to use
– The choice will depend on which carrier best
manifests the characteristics of the mode
– Carrier’s selection is generally based on:
• Costs/Price
• Accessibility
• Responsiveness
• Claims Record
• Reliability
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• Pricing
– Other Pricing Variable
• Volume of cargo
• Handling requirements
• Liability
• Market factors
• Density and stowability of cargo
• Distance
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• Derived Demand
– Demand to transport a product to a given location
depends on the existence of a demand to consume
or use the product at that location
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• Incoterms 2010 – 11 Terms
The seller only makes the goods available to the
buyer at the seller's own premises (EXW)
The seller is called upon to deliver the goods to a
carrier appointed by the buyer (FCA, FAS and FOB)
The seller has to contract for carriage, but without
assuming the risk of loss of or damage to the goods or
additional costs due to events occurring after shipment
and dispatch (CFR, CIF, CPT and CIP) The seller has to
bear all costs and risks needed to bring the goods to
the place of destination (DAP, DAT, and DDP)
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Case study: Your company wants to
import electronic equipments from
Tianjin (China)- special Economic Zone.
1. Which terms of Incoterms 2010/2020
should be used?
2. Which modes of transport should be
used?
3. Should you outsource a LSP?

• QUESTION
YOUR COMPANY EXPORTS MEDICINES,
5 TONS OF PRODUCT TO BASEL PORT
OF SWISS.
ARRANGE TRANSPORTATION,
DELIVERY BEFORE 16TH March 2023.
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• QUESTION
A GERMAN COMPANY EXPORTED CARS TO
VIETNAM: 100 SECONDHAND CARS, CIF
CATLAI, HCMC INCOTERMS 2020. AT THE
PORT OF LOADING, THERE WERE ONLY 90
CARS ON BOARD. THE CARRIER ISSUED A
BILL OF LADING, STATING 10 CARS LEFT. THE
SHIPPER REQUIRED THE MASTER TO SIGN A
CLEAN BILL (100 CARS) AND OFFERRED A LOI.
ADVICE THE MASTER
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• Conclusion
– Transportation is an essential service to
physically brings cargo from one point to the
another within the supply chains
– It plays an important role in the economic
growth of a region / country
– Firms have the choice of the different types of
modes
– Shippers need to apply Incoterms and the risks
associated with each term
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Questions ?
Prepared & Edited by Thomas SIM – June 2019
Vuongthibichnga.cs2@ftu.edu.vn
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07/08/2023
Foreign
Trade
41
Comparison of Transportation Modes
Economic Characteristics
Motor Rail Air Water Pipeline
Cost Moderate Low High Low Low
Market
coverage
Point -to-
point
Terminal -to-
terminal
Terminal -to-
terminal
Terminal -to-
terminal
Terminal -
to-terminal
Number of
competitors
Many Moderate Moderate Few Few
Predominant
traffic
All types Low-moderate
value,
moderate -
high - density
High value,
low
moderate
density
Low value,
high density
Low value,
high density
Average length
of haul
Short to long Medium to
long
Medium to
long
Medium to
long
Medium to
long
Equipment
capacity (tons)
10 -25 50 -12,000 5 -
125 1,000 -60,000 30,000 -
2,500,000

07/08/2023 Foreign Trade University 42
Comparison of Transportation Modes
(cont.)
Service Characteristics Motor Rail Air Water Pipeline
Speed Moderate Slow Fast Slow Slow
Availability High Moderate Moderate Low Low
Consistency
(delivery time
variability)
High Moderate High Low-
moderate
High
Loss and damage Low Moderate-
high
Low Low-
moderate
Low
Fl exibility
(adjustment to
shipper’s needs)
High Moderate Low-
moderate
Low Low

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