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Concepts of International Logistics

Question :

Logistics is the proper management of flowing things between the origin to the consumption point in order to meet customer requirements.

  1. Understanding key logistics and the supply chain management theories and concept.
  2. Understanding the role of logistics in the management of supply chain.
  3. How supply chain management strategies affect supplier relationships.
  4. Role of IT in enhancing  supply chain of companies.

Introduction

Logistics is known to be organisation as well as implementation of some complete operations. Generally, logistics is known to be proper management of flowing things between origin and consumption points for meeting customers or corporates requirement. The resources which are managed in the department logistic can be physical items which comprises of materials, food, animals, liquids as well as equipments (Christopher, 2016). There can be other sun operations which can include flow of information, material handling, packaging, production, warehousing, transportation as well as security.

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In the following report, it has been discussed about the current issues which the international transport and logistics is facing and their related effect on companies. All the tools as well as techniques which are used for these operations are been evaluated and the analysis of the benefits of effective logistic management has been done for the effective formulation for strategies. Advantages as well as disadvantages of several types of transportation are depicted for better understanding.

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TASK 1

1.1 Current issues in international transport and logistics and their effects

There are several current issues or challenges which are faced by international transports and logistics which are discussed as below:

Financial Crisis- Financial crisis lead to decrease of several trade activities which lead the consumption of the logistics and transport to be less. Due to this many industry were deeply impacted which lead to reduce investments in various seaports and other transport infrastructure for transit which include roads, posts, borders as well as dry posts. It lead to more focus on the achievement of economies of scale which resulted in enhancement of more combined volumes cargo.

Oil price Development- It is very necessary to secure a sustainable supply of energy for a long term which includes access of oil on reasonable cost along with least disruption to surroundings, trades which are globally done as well as the prospect of development among vulnerable nations. The prices of oil is a major concern for every transportation company. As hike in price can lead to decrease the amount of profitability and effectiveness in surrounding. It is very important to understand the interlink between transport cost, security related to energy as well as the level of price which is fundamental. Many countries have started implementing successful policy actions for promoting a cost effective transportation and logistical operations among countries.

Climatic change- Scientific evidences has compelled that the change in climatic conditions and emerged an urge to address all expected environmental, economical and social changes, their severity can vary according to the geographical locations (Fernie and Sparks, 2014). Freight as well as passenger transport are considered as a centre of these enormous challenges. Demands related to services of transport goes along with global economy. It is affected by cost and impact of climatic change factors which comprises of increase in sea level and commencement of extreme storms.

Security-It also affects the cost of transport, trade and connectivity whereas remaining high on an international agenda. An enhanced security measure in transportation and supply chain which is widely accepted. In many development countries the burden of additional cost may lead to create a disadvantage in a trade. These cost have many associated implications which are illustrated by many development factors which are introduced by legislation.

1.2 evaluation of the tools and techniques used to analyse international transport operations

Various techniques as well as tools which are used for international transport operations are as follows:

Inventory Analysis- One must have a timely analysis of the inventory in order to control it in a better way. It is known to be the concept of comprehending every mix in a business as well as being ware of related demands regarding certain goods or services. It leads to provide protection against valuable assets and leads to classify the policies. In transportation operations, ABC analysis is done for acknowledging the stock of inventories which will be transported or used as inventory for transportation. It concentrates on keeping up the low cost for producing every related resources and the optimal utilisation which can lead to provide an advantage of efficient usage of all material required from the accomplishment of successful transportation operations.

Workflow Analysis- It is considered to be the first step in order to improve the operations which are involved in transportations. It provides a streamline of every manual process which is used for making it more efficient. It leads to automate every procedures for business activities. It includes many steps such as reviewing and assessing current states which includes documentation of management system, workflow processes, requirement of security as well as identification of opportunities and challenges. Definitions of futuristics state requirements as well as strategies for workflow is made (Heaver, 2015). Some of the benefits can be increase in efficiency, utilisation of physical space and improvement in the customer services.

Benchmarking- It includes comparing of all processes and the metrics of performance to decided criteria and standards It includes the selection, planning as well as using the correct path for saving the time for transportation operations. The dimensions which are measure under these aspect can be time, quality and cost. It is also known to be an indicator for measuring performances.

Delphi Method- In this method a survey is conducted in which participation does not know each other and are tended to give respective suggestions and advices in order to improve certain operations regarding the transportation. It is kind of research system which is use for implementing new strategies as well as modifying certain procedures for improvement.

Problem Decision Planning- It is plan which includes following several steps which are involved in problem solving plans. It comprises of defining the problem along with identifying all its limiting factors; potential alternates are developed and analysed. After which best is selected and is implemented in decisions.

1.3 the benefits of having an effective logistic management system

Some of the benefits related to have effective logistic management are discussed as below:

High Efficiency Rate- when a business is successful in implementing logistic management system then it leads to deal with the demand effectively that leads to manage the strategies to cope up with fluctuated economies, short product life cycle as well as emergency markets.

Decrease in Cost effects- Some of the advantages of an effective transportation system is it facilitates the inventory system maintenance, it improves responsiveness of system to the actual requirement of a customer as well as improves relationship with vendors as well as distributors.

No more delay in process- As the logistics focuses on the effective timely transfer of all inventories or resources therefore there is availability of every input which is required that results in no delay of any task and all processes becomes time effective.

Enhancement of Supply Chain Networks- Supply chain deals with the proper resource management, its storage as well as transportation. Where logistics comes into an important role in which it provide logistical facilities to make these input reach where they are supposed to be. With the high access of resources it leads to increase the effectiveness and efficiency of Supply Chain Networks.

Cooperation level gets boost up- With a great management of logistics system the communication between every department becomes much stronger which leads to provide them an opportunity to remove wastage of time or factors which can affect operational department of any company (Li and et. al., 2016). Therefore, it is very important to maintain a good transportation system in order to boost cooperation level of a firm for a higher profitability.

2.1 Evaluate advantages and disadvantage of different modes of transportation

The mode of transportation is considered to be very important while shipping in an international logistics system. Apart from cost factor, there are other aspects which are considered to be important such as urgency for shipping, value related to goods as well as its weight and size which is needed to be evaluated while selecting the correct mode of transportation.

Ocean- Trades which are sea borne are mostly accounted for about 90 percent of total global trade. According to UNCTAD, 1687 million tons (estimated in 2016) are taken in 177.6 million amount of containers which covered 998 billion ton miles. Many business are focusing on increasing the shipment through sailing because it is meant for bulk commodities which leads to provide them a greater profit and less use of fuels for transporting various goods cross the world.

Advantages:

  • It is considered to be suitable for many products with a long lead of time.
  • Used for large volumes of goods as a single ship containing ultra- large containers can successfully carry twenty foot equivalent units.
  • Environmental friendly in comparison to other modes of transports.
  • Economical for firms as liner shipping is known to be most efficient for transporting goods.
  • There are multiple options for carriers for shippers

Disadvantages:

  • It is highly vulnerable to weather conditions
  • There is a requirement of high amount of investment which is done initially
  • It is known to be very slow process as compared to other transports.

Rail- It is known to be a 'green' option. There is less amount of fuel which is burnt by trains as compared to road vehicles. It mostly possess 100 wagon which requires only a one driver. There are some additional cot which are related with this journey, at every transit there is a need of road delivery which has some additional cost related to lifting as well as transferring various containers between rail and other road vehicles.

Advantages

  • Most reliable in case of transit times as well as schedules
  • They are most efficient form of land transport.
  • It facilitates deliveries which are needed to be fast as well as cost effective.

Disadvantages

  • There is a potential of goods to get damaged.
  • Apart from this shunting takes a lot time which is needed to be done frequently

Air – It is used by those companies who requires short lead times as well as advanced level of services. It is advisable for certain size or weight of products.

Advantages

  • Has a faster speed for delivers which have long distance
  • Perception of customers is high
  • It is the safest among other transports
  • Tends to reduce lead time for suppliers
  • facilitates in improvement of service level

Disadvantages

  • It is considered to be most risky transportation
  • It has a potential for many flight delays as well as cancellation
  • There are restrictions related to customs as well as excise
  • Limited routes are available and time tables are inflexible.

2.2 analyse the underlying operations and cost of the different modes of transportation.

Ocean- There is a need of buoyancy which leads to unite every watercraft. There is a need of navigation required for successful sailing of the ocean freight. A there is no particular direction available which is needed to be navigated according to the RADAR system (Mangan, Lalwani and Lalwani, 2016). There are many operation which are present in sea borne trade. Some of the operation which are included are

analysis of container port competition- It includes determining every information which is related to the container in which goods will stored so that suitable products are transferred.

interaction between transport- It tends to increase the connectivity between various transports which are ailing together in order to transfer the good at right time and every process get accomplished on estimated time period.

institutional management of a port system- It is very important to control a well coordinate every operation which occur at port in order to effective delivery of various goods on time and completing every task efficiently.

optimization of internal transport cycle- It is very essential to maintain the proper cycle of transportation in order to provide a timely return and sending of transport for increasing the efficiency of operations

drayage operations- It is regarded as the transport of good over shorter distance within port or the places which are near the port through mall vehicle or even animal carriages.

Rail- There are many operations which are involved in railways such a passenger, freight, locomotive operations. Among which freight operations are determined a follows:

Freight are loaded as well as unloaded in intermodal terminals and even at location of customers. Intermodal freights uses several processes such a containers which are standardised and are mostly handled by crane. Along with it, freight trains are appointed through rail yards to all sorted cars and train is assembled for particular destination. Shunter locomotives help to compose the whole train. A unit train tends to carries several blocks of cars which have similar origin as well as destination. After this train is send for the transportation.

Air- In the air transportation there are various steps involved which provided below :

Source of Cargo- It include the place from where particular cargo has to be imported in order to move it for further operations.

Regional Warehouse- It includes collection of all cargo of a related area and keeping it at a particular place to collect all of particular location.

Central warehouse- It is the storage area where all the cargo from regional warehouses are collected in order to process it for shipment.

Transshipment of Cargo- It includes completing all the analysis of factors which are related to the goods such a their size or weight, required time of delivery etc.

Freight Forwarding- It includes sending the transport for all destinations across the world in order to complete the transportation cycle.

Regional Warehousing- This step includes collecting the cargo in other areas for further redistributing it in the areas of that geographical location.

Destination- It is considered to be final operation which includes sending the cargos to their location through associated road transports.

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2.3 factors affecting the decision in selection of preferred modes of transport for the organisation.

Some of the factors which are needed to be taken in consideration while selecting the particular mode of transports are discussed as follows :

Cost of Services- The cost related to transports gets add upon the cost of particular good which is required to be sent. As there are are many operation involved in shipping particular item through a particular mode of transport which has many associated cost (Prajogo, Oke and Olhager, 2016). Therefore, Sea borne trades are preferred as they are considered to be the cheapest transportation choice and can lead to transfer huge bulks of goods.

Speed of transport- Some goods are required to be shipped at a smaller interval of time and for this air transport is the best available option. It is one of the essential factor which is needed to be taken in concern for sending items across the world in a shorter time period.

Flexibility- Every mode of transports has fixed route which cannot be changed in any circumstances. But sometimes flexibility is required to be achieved in order to ship items in any emergency scenario. For this only motor transport can be beneficial.

Safety- Safety a well as security of every goods in a transit process is very important and also influence the choices of the transporting mode. A one of the items can be very important therefore sea, air as well as railway are not opted as it tends to transport bulk in which there is chance of potential damage to those products for which motor transportation can be chosen.

Nature of Commodity- one of the product can be perishable in nature which require a quick delivery therefore it is needed to be send through air transportation as the speed of this mode is very effective and delivery is done on time.

3.1 export and import regulations in the transport service sector.

Some of the regulations regarding import in transport service sector :

Trade Tariff- These are the taxes which are applied on provided classification of goods and the detailed description of related item which are used for restricting import from increasing prices of related goods as well a services which are intended to be purchase across the world as well a making it less attractive for consumers.

Economic Operator Registration Identification (EORI)- It is regarded as unique number which is valid in European Union. It I registered by those states which requires to import products from different nations. It leads to provide commodity code for every good which is related with unique identification number. Against this number duty rate is assigned which leads to provide several list of taxes or duties which are needed to be fulfilled while importing these items.

Customer Procedure Code- It Leads to determine purpose of the shipment as well as provides information to customs regarding the duty which is needed to pay on those commodities (Rushton, Croucher and Baker, 2014). It is taken a deposit and repaid when goods are tended to be exported again.

Some of the regulations regarding export in transport service sector :

Export Taxes- Some of the taxes, which are required to be implied while exporting the commodities which includes duties, taxes as well as levies in accordance to EU. This commission tends to impose taxes in shorter notice on many goods. Any goods which is re exported are needed to be identified as well as declared properly. It include those commodities which are imported previously and worked or repaired accordingly.

Export Licenses- Licenses might issued in several electronic or in the form of paper which might provide grant for exporting many commodities. These might lead to facilitate the process of transporting. It hows the related permit of government of related authority to send it across various nations.

3.2 tariffs and duties in the transport of goods affect the prices of goods.

Tariff leads to increase the price of goods. Due to this, some of domestic producers are not being forced for reducing their prices in accordance to increased competition as well a consumers who are domestic are left to pay higher prices as a result. It also leads to reduce every efficiency by allowing firms than will not exist in more than one competitive market in order to remain open.

Following figure illustrate the effect of trade without tariff, where DS means domestic supply as well as DD means domestic demands. The price related to goods which are found at home at available Price P whereas P* is world price. At the lower level of price, the consumers who are native will lead to consume Qw worth related to goods as well as country only can produce to Qd, which should be imported between Qw-Qd worth related to goods.

When a particular tariff or other related policy of price increasing is put at a place, then the effect include increasing of price and limit in import volume. In the following figure prices tend to be increased from non tariff P* to P' ; this has occurred because price has lead to increase and firm are willingly producing products, therefore, Qd move towards right (Soysal and et.al., 2014). This has also leads to shift Qw towards left. The overall effect has been done due to reduction in import and has resulted in domestic production to get increased as well as high price of consumers.

3.3 health and safety procedures adopted by the transport service sector

Some of the safety and health procedures adopted by transport service sector are defined as below:

Safe Work Practices- It includes designing of transport in accordance to OHS consideration that comprises of entry as well a exit for drivers, noise and ride level. Safe operations related to plant as well as machinery. Handling of raw materials in safer way which involves shaping as well as size of loads. Adequate supply as well as proper use of equipments for safety measures.

Risk Control Plan- This plan comprises of identification of hazards comprising of identifying those things that are considered to be harmful, assessing these risk which are arisen due to these hazards and implying specific control of risk measures in every places. Eliminating these risk can lead to provide an effective management of safety measures.

Rehabilitation Policy- It leads to provide a correct outline of every steps which will be implemented while occurrence of any injury. It also leads to formulate potential injuries which can occur during processes. Apart from this occupational rehabilitation programs are organised which are accomplished along with consultation with workers. After this return- to work plan is made which facilitate the recovery of worker and making him return to work.

Safety inspections- It leads to prevent accident or any type of incidents which uses the experience and knowledge of an individual for effective maintenance and identification. There are every standards which are associated with management as well as staff. It involve examining of hazards which are known to be found as well a improvement which are needed to be made in order to response for previous injuries as well as incident. There must be scheduled maintenance check of every part regarding transportation and conducting it regularly before any failure happen. Waiting for any kind of failure is very dangerous and can be costly which can lead to create worst scenario in a company. There must be focus on manufacturing unit of transport which includes repairing and maintaining equipments related to successful.

Training and Induction- Every employee must be provided a proper training as well as induction programs that leads to provide them a proper knowledge of how to wear and carry several equipments and tackle emergencies in transport which includes handling uncontrollable transport, safe landing, protecting passengers.

4.1 the relationship between freight cost to the price of transported products

Transportation cost or freight cost are considered to be the part of cost related to purchased goods. The cot of any commodity includes every necessary cost in order to get that particular asset in a place as well as ready to use. These cost which are related to transportation cost can be allocated to all product which can be purchased a cling to those commodities. The freight rates as well as the product cost is related to many factors such as the high amount of ales volume can lead to provide a great efficiency.

Shipping rates are build on the amount of commodity which is needed to be shipped. The more far the distance will be it would lead to increase the cost of product accordingly (Wang and et. al., 2016). There are many reason behind the freight cost a transporting any product from one place to another involve many operation as well as use of transport which require several resources such as oil and other kind of workers. The movement of ,movement of freight is very costly as the prices which are related to fuel are very high as well as it require a lot of cost for repairing. It is a repercussion of many trade growth that has lead to decrease the availability of transport available for carrying the shipping process. Apart from these there are several trade taxes which are involved while importing or exporting good which are also involved in cost which is associated with goods. Every transport has to fulfil many duties and tolling which are needed to be covered in order to make operations to be successful.

4.2 customs procedures in the import and export of goods.

The custom procedure which is involved in importing and exporting of goods are described as follows :

While importing there is a need for intrastat declaration which is needed to be carried for dutiable goods which are liable for many custom duties and are needed to be traded within EU . If one tends to import regularly then they have to complete and register a general valuation of every statement. There is a 'SAFE' standard which is advocated by World Custom Organisation and also European union has developed and installed a new system which includes 'Import Control System' that has aimed for securing certain flow of good at the time of the entry in customs territory of EU. There are several other electronic declaration methods such a Customs Freight simplified procedure which are especially designed to provide enhancement and simplification of all custom procedures which are meant for clearing all goods which are imported at particular frontier. It all includes the action of removing a free zone as well as customer warehouse. There are many custom taxes which are needed to be fulfilled in order to provide a successful exporting or importing activities (Waters and Rinsler, 2014 ). Apart from these there are various documentation process which is needed to be accomplished that include obtaining several licenses as well as legal document which are required for maintaining a legalised permission for performing exporting as well as importing. Some of the duties which are needed to be fulfilled during the trade process are :

Custom duties which are present for collection of tariffs and also controlling flow of commodities which can be any type of items. It is generally considered as a tax which is implied on importation as well as exportation.

Apart from this there is Value Added Tax or goods or service tax which is is based on the increment amount of vale related to product or a kind of service at every stage associated with production as well as distribution.

Whereas there are various system which facilitate these processes and every company has to be provided membership to them which handles every operation in an effective manner that removes every barrier which hinders a successful export or import process (Managing Customs Compliance, 2018). Therefore it is very important to maintain a sufficient amount of memberships under several systems which are present to provide assistance to many trade operations by eliminating all the barriers which are associated with a successful commercial trade of commodities .

CONCLUSION

From the above report, it has been concluded that international logistic system plays an effective role for successful operations of several countries who aims to establish themselves across the globe providing their products as well as services. For facilitating these operation there are several mode of transportation which are needed to be used in accordance to their benefits as well a disadvantages. As for a cheaper mode of transportation one chooses sea borne trade,for a great speed one choose air transportation as it provides a faster delivery of services as well as commodities. Apart from these, there are various sub operation which are involved in the same for accomplishing a successful operations involved in many mode of transportation. Along with this, there are several factors which affect the decision of electing any mode of transport such a cot of services, flexibility, security, nature of commodity and the speed of transport. These leads to affect the preferential choices of a company for transporting any particular commodity.

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