Lm slide chapter 6

HO CHI MINH CITY UNIVERSITY OF TRANSPORT CHAPTER 6: TRANSPORTATION MANAGEMENT TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh LEARNING OBJECTIVES Upon completion of this chapter, students should be able to: ü Explain the role of transport in a Logistics system ü List the factors for choosing a carrier and parties involved in transportation services ü Compare different modes of transport ü Understand the basic terms in the contract of carriage and transport documents Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 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 Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh REFERENCE LIST [4]-Douglas M.lambert James R.Stock,Lisa M Ellram, Fundamentals of Logistics Management, Mc grow Hall,1998 – Chapter [8]-Lê Phúc Hòa, “Vai trò vận tải nói chung vận tải biển nói riêng dây chuyền cung ứng”, Báo cáo khoa học Hội nghị khoa học- khoa Kinh tế vận tải–ĐHGTVT Tp.HCM, tháng 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 [15]-James C.Johnson, Donald F.Wood, Daniel L.Wardlow, Paul R.Murphy,Jr (1999), Contemporary Logistics, Prentice Hall – Chapter 6, [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 Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 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 Connecting nodes in the Logistics network Role of transportation 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 EXAMPLE Farmers Exporting Port Export Company Importing Port Factory Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh Importers 6.2 FACTORS FOR SELECTING A CARRIER Figure 6.2: An example of Factor-rating method ü Transport costs ü Transport time ü Reliability ü Capability ü Accessibility ü Security Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 6.3 MODES OF TRANSPORT Mode of transport Characteristics of goods Advantages Disadvantages Road transport Sea transport Rail transport Air transport Pipeline transport TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh Mode of transport Selection Process (Source: The Chartered Institute of Logistics and Transport, UK) TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 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, … Operational Factors Physical nature of product Other logistics components TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh Volume to weight ratio, value to weight ratio, substitutability, special characteristics, … Supply points, warehouse and philosophy, … production storage, plant, supply 10 - Air Freight High speed Lead-time economy Less requirement for packaging Competitive mode for certain types of goods, such as: goods with high value to weight ratio High transporting rates Sea freight -Low transporting speed -Long transporting time -Cost economies for bulk goods and large consignments -Susceptible to damage, piracy,… Transport mode characteristics Rail freight -Cost economies for bulky and heavy consignments in some cases -Costly packaging needs -Loads handling -Limited route, low speed -Compatibility issue TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh - Road freight Quick service Competitive cost for unit loads with single origin & destination Less packaging cost Flexibility 11 Routeing and through transit Transport distance Consignment factors Information about the cargo Frequency of shipment TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh 12 Cost and service requirements Trade-off Some elements of service include: - Speed of delivery - Service reliability Services TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh Cost The cost factor can be weighed against a relationship between different factors, for example, between order size and shipping distance 13 6.4 MULTIMODAL TRANSPORT Unimodal Transport Intermodal Transport Multimodal Transport • Single mode of transports • One or more carriers • One set of BL through the whole route • Different modes of transport • Different carriers • Multiple single contracts of carriage • From or more modes of transport • One contract of carriage only • Executed by one Multimodal Transport Operators - MTO TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 14 - Definition: the involvement of different modes of transport and on the basis of a single contract of carriage - Different types of multimodal transport services: Air Rail Road Sea Pipeline TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 15 6.5 INDIRECT AND SPECIAL PARTICIPANTS IN TRANSPORT SERVICES § Small package carriers § Consolidators § Freight forwarders Non-operating intermediaries § Brokers § Shipper’s associations and Agents TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 16 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 groups of factors: + Factors affecting the transportation cost; + Pricing strategy of carriers; + Rates and rating TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 17 Factors affecting the transportation cost Pricing strategy of carriers Rates & Rating - Distance of transport - Cost of service - The price is calculated in the Load size, or load weight amount per unit of goods, for - Value of service example: USD/MT, USD/TEU, Product density USD/unit, USD/M3 Stowability - Combination pricing strategy: Price is set at the average Handling equipment - Classification of products: between minimum service Liabilities: protection of cargo; when transported, products cost and maximum service liability for compensation,… are classified according to their value: the logistics manager - Market: supply and demand, characteristics, their packaging, should know the price range in returned route cargo, material or their money value order to be able to negotiate cost, fuel costs, … TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 18 6.7 TYPES OF SHIPPING ORGANIZATION 6.7.1- Types and characteristics of shipping organization vLiner services Characteristics: + Fixed route + Small shipment is allowed + Fixed schedule + Fixed shipping terms + Fixed fare (including loading and unloading fee) vVoyage Chartering Characteristics : + Flexible route + Flexible schedule + Large shipment + Agreed general terms and conditions and agreed rates TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 19 6.7.2- Bill of Lading 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 TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 20 vClassifications q By declaration on B/L: • Clean B/L • Unclean B/L q By issuing time: • Received for shipment B/L • Shipped on Board B/L q By method of execution: • Straight B/L • Order B/L • Bearer B/L q By validation status: • Original B/L • Copy B/L q By method of operations: • Direct B/L • Multimodal B/L • Through B/L q By carriers: • Master B/L or Ocean B/L • House B/L q By shipping organization: • Voyage Charter B/L • Liner B/L TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 21 6.8 CONTRACTS OF CARRIAGE v Types of voyage charter: + Single trip + Consecutive voyage charter - CVC + Round trip + Contract of Affreightment- COA v Main content of a contract of carriage: (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 22 (7) Freight and payment (9)Loading/discharging rate - Currency - Loading/discharging rate for a hold-day - Freight rate - Loading/discharging rate for a day - Cargo quantity to calculate freight (intaken (10) Laytime quantity/delivered quantity) (11) Arbitration - Freight payment + Freight prepaid (12) Deviation + Collection: (13) Owner’s responsibility • Freight payable before breaking bulk (14) B/L • Freight payable concurrent with discharge • Freight payable on right and true delivery of (15) Duties and fees cargo (16) Agency and brokerage (8) NOR - Commencement of laytime - Condition of NOR (17) General average (18) Dispatch and demurrage (19) Lien Clause (20) Cancelling (21) Other …………… TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 23 Abbreviations related to Laytime: - 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 TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 24 ... MSc Nguyen Thi Bao Khanh 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... 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 Dr Le Phuc Hoa, MSc Nguyen... Contemporary Logistics, Prentice Hall – Chapter 6, [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