Lm slide chapter 6

LEARNING OBJECTIVESUpon completion of this chapter, students should be able to: ü Explain the role of transport in a Logistics system transportation services ü Compare different modes of

CHAPTER 6:

TRANSPORTATION MANAGEMENT

HO CHI MINH CITY UNIVERSITY OF TRANSPORT

LEARNING OBJECTIVES

Upon completion of this chapter, students should be able to:

ü Explain the role of transport in a Logistics system

transportation services

ü Compare different modes of transport

ü Understand the basic terms in the contract of carriage and transport

documents

CHAPTER OUTLINE

6.1 Role of Transportation in Logistics

6.2 Factors for selecting a carrier

6.3 Modes of transport

6.4 Multimodal Transport

6.5 Indirect and special participants in transport services

6.6 Transport economics and transportation services

6.7 Forms of ship operations and contracts of carriage

6.8 Bill of Lading

REFERENCE LIST

[4]-Douglas M.lambert James R.Stock,Lisa M Ellram, Fundamentals of Logistics Management, Mc grow

Hall,1998 – Chapter 7

[8]-Lê Phúc Hòa, “Vai trò của vận tải nói chung và vận tải biển nói riêng trong dây chuyền cung ứng”,

Báo cáo khoa học tại Hội nghị khoa học- khoa Kinh tế vận tải–ĐHGTVT Tp.HCM, tháng 4 năm 2006

[10]-Đặng Đình Hào, Trần Văn Bảo, Phạm Cảnh Huy, Đặng Thị Thúy Hằng (2018), Giáo trình Quản trị

logistics, Nxb Tài Chính – Chương 4

[15]-James C.Johnson, Donald F.Wood, Daniel L.Wardlow, Paul R.Murphy,Jr (1999), Contemporary

Logistics, Prentice Hall – Chapter 6, 7

[12]-Trường đại học Kinh tế Tp HCM (2012), Quản trị hậu cần, Nxb Đại học kinh tế quốc dân - Chương 5,6

[18]-Ronald H Ballou (1999), Business Logistics Management, Nxb Prentice Hall, 1999 – Chapter 6,7

6.1 ROLE OF TRANSPORTATION IN LOGISTICS

Definition:

Transport is an economic activity with a purpose to change the position of goods and people from

one place to another by means of transport

Role of transportation

Connecting nodes in the Logistics network

Creating more value in terms of time (Time utility) and place (Place utility)

Accounting for 1/3 to 2/3 of total logistics costs

Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 6

Importing Port Export Company

Importers Factory

EXAMPLE

6.2 FACTORS FOR SELECTING A CARRIER

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(Source: The Chartered Institute of Logistics and Transport, UK)

Mode of transport Selection Process

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Operational Factors

External Factor

Basic infrastructure, trade barriers, law and taxation, financial institutions and services, economic conditions, communication systems, culture,…

Customer characteristics

Service level requirements, delivery point constraints, credit rating, terms of sale preference, order size preference, customer importance, product knowledge, …

Supply points, production plant, warehouse and storage, supply philosophy, …

TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh 11

Sea freight

-Low transporting speed -Long transporting time -Cost economies for bulk goods and large consignments

-Susceptible to damage, piracy,…

-Cost economies for bulky and

heavy consignments in some cases

-Costly packaging needs

- Less requirement for packaging

- Competitive mode for certain

types of goods, such as: goods

with high value to weight ratio

- High transporting rates

Transport mode characteristics

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Cost and service requirements

Cost Services

distance

Trade-off

6.4 MULTIMODAL TRANSPORT

Unimodal

Transport

• Single mode of transports

• One or more carriers

• One set of BL through the whole route

• From 2 or more modes of transport

• One contract of carriage only

• Executed by one Multimodal Transport Operators - MTO

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- Definition: the involvement of different modes of transport and on the basis of a

single contract of carriage.

- Different types of multimodal transport services:

Pipeline Sea

Road

6.5 INDIRECT AND SPECIAL PARTICIPANTS IN TRANSPORT SERVICES

6.6 TRANSPORT ECONOMICS AND TRANSPORTATION SERVICES

- To develop an effective logistics strategy, it is necessary to understand the

elements and characteristics of transportation

- Successful contract of carriage negotiation requires a full understanding of

transport economics

- The overall transport economics and transportation service prices include 3

groups of factors:

+ Factors affecting the transportation cost;

+ Pricing strategy of carriers;

+ Rates and rating.

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Factors affecting the

transportation cost Pricing strategy of carriers Rates & Rating

- Liabilities: protection of cargo;

liability for compensation,…

- Market: supply and demand,

returned route cargo, material

cost, fuel costs, …

- Cost of service

- Value of service

- Combination pricing strategy:

Price is set at the averagebetween minimum servicecost and maximum servicevalue: the logistics managershould know the price range inorder to be able to negotiate

- The price is calculated in theamount per unit of goods, forexample: USD/MT, USD/TEU,USD/unit, USD/M3

- Classification of products:

when transported, productsare classified according to theircharacteristics, their packaging,

or their money value

6.7 TYPES OF SHIPPING ORGANIZATION

6.7.1- Types and characteristics of shipping organization

+ Fixed shipping terms

+ Fixed fare (including loading and unloading fee)

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vDefinition:

B/L is a transport document issued by the carrier to the consignor upon receipt

of the goods for transportation

vFunctions:

- Proof of Goods receipt

- Proof of ownership of the goods

- Proof of contract of carriage

v Usage of B/L:

- Make a payment

- Basis for calculating charges and fees

- Basis to get C/O

- Do customs formalities

- Create cargo manifest

- Monitoring the implementation of the contract sale of goods

- Receiving goods

6.7.2- Bill of Lading

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6.8 CONTRACTS OF CARRIAGE

v Types of voyage charter:

v Main content of a contract of carriage:

+ Single trip + Consecutive voyage charter - CVC

+ Round trip + Contract of Affreightment- COA

(1) Subject

(2) Cargo

(3) Ship

(4) LayCan:

- Laycan: the period when a chartered ship

must arrive to load a cargo;

Eg: 20 August/27 August

- Prompt: few days after signing

- Promptisimo: same day

- Spot prompt: few hours after signing

5) Loading/ discharging port

- Specify the name of the port

- Port must be safe(6) Loading and discharging charges

- Liner terms both ends/berth terms/gross terms

- FIOST: free in and out, stowage and trimming

- FILO: free in and liner out

- LIFO: liner in and free out

TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh

(7) Freight and payment

- Loading/discharging rate for a hold-day

- Loading/discharging rate for a day(10) Laytime

(11) Arbitration(12) Deviation(13) Owner’s responsibility(14) B/L

(15) Duties and fees(16) Agency and brokerage(17) General average

(18) Dispatch and demurrage(19) Lien Clause

(20) Cancelling(21) Other ………

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- WWDSHEX (weather working day, Sunday and holiday excepted)

- WPWDSHEX (weather permitting working day, Sunday and holiday excepted)

- WWDSHEX-UU (unless used)

- WWDSHEX-EU (even used)

- WWDSHEX-UU BOT (but only time used to count)

- WWDSHEX-UU BOH (but only half time used to count)

- WWDSH-INC (include)

- Running days

Abbreviations related to Laytime: