Chapter 3 transport operation

HO CHI MINH CITY UNIVERSITY OF TRANSPORT

Chapter 3:
Transport operation
PRESENTED BY: BICH HOAI, MSc.

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Contents
• International trade
• Outsourcing and self-operation
• Cost and pricing issue
• Transportation of OOG

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Aspects of International Trade
Parties and Tasks

Agent

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Aspects of International Trade
Parties and Tasks
Types of Agents on the Trading of Goods:
• Factors, persons in possession of goods belonging to their Principal to
be sold for the benefit of the Principal;

• Brokers, namely persons who conduct negotiations on behalf of Buyers
and Sellers;
• Commission Agents, namely persons who enter into contracts with third
parties in their own name, although they do not do so as agents;
• Confirming Houses, namely persons who take on the role of an agent
for an overseas buyer who is interested in buying goods from a seller in
the country;
• Del Credere Agents, namely persons who take on additional risks
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Aspects of International Trade
Parties and Tasks
Roles of an Agent on the Trading of Goods
•
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to market a particular product;
to penetrate a market known especially to the Agent;
to secure sub-agents to sell the product;
to elicit information relevant to the Principal’s business;

to represent the Principal;
to secure credit on behalf of the Principal;
to procure certain goods or services for the Principal;
to procure freight space;
to procure finance from banks and lenders;
to secure insurance for the goods;
to secure legal advice in a foreign country.
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Aspects of International Trade
Parties and Tasks
Types of Agents on the Carriage of Cargo:
• Loading Brokers, who conduct loading operations;
• Forwarding Agents, whose duties are determined by the contract.
Their role and duties are open to agreement.

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INTERRELATION BETWEEN INTERNATIONAL TRADE AND FORWARDING
ACTIVITIES
Legal position of the Freight Forwarder
Two different legal positions of a freight forwarder
are possible:
• Acting as an Intermediary organizing the transport and ancillary
services and choosing the carriers and service providers in its own
name for and on account of the customer (= traditional freight
forwarder) or
• Acting as Principal by undertaking in its own name and on its own

account to secure the movement of goods from A to B for a
customer but then entering into a series of contracts with
performing carriers to fulfil the head contract.


INTERRELATION BETWEEN INTERNATIONAL TRADE AND FORWARDING ACTIVITIES
Classic Transport:
Shipper

Forwarder

Trucker

Warehouse

Airline

Railway
Ship-owner

Forwarder acts as
intermediate

Multimodal Transport:
Shipper

MTO

Trucker

Warehouse

Airline

Railway
Shipowner

MTO acts as
carrier


Incoterms

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WHAT ARE INCOTERMS?

INCOTERMS 2000: There are
thirteen (13) terms of delivery.
The latest edition of these
terms is the INCOTERMS 2010,
11 Rules.
Coming up INCOTERMS 2020

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WHY ARE INCOTERMS SO IMPORTANT?

Avoiding misunderstanding of different
cultures and languages.
INCOTERMS tell us what to do in respect
to:

• Carriage of goods from seller to
buyer.
• Export and import clearance.
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WHATARE
ARE INCOTERMS
INCOTERM SO IMPORTANT?
WHY

INCOTERMS also explains the division
of costs and risks between the seller
and buyer.

The importer is possible to calculate
the true landed cost of a product

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HISTORY OF INCOTERMS

 1936
 1953

 1967
 1976
 1980
 1990
 2000
 2010
 2020
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THE TWO GROUPS OF INCOTERMS

Group 1 - Rules for any Mode and Modes of Transport
EXW: Ex Works (named place)
FCA: Free Carrier (named place)
CPT : Carriage Paid To (named destination)
CIP: Carriage and Insurance Paid to (named destination)
DAT: Delivered At Terminal (named port or place) / (DPU:
Delivery at place Unloaded, Incoterms 2020)
DAP: Delivered at Place (named place)
DDP: Delivered Duty Paid (named destination place)

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THE TWO GROUPS OF INCOTERMS

Group 2 – Rules for Sea and Inland Waterway Transport Only
FAS :Free Alongside Ship (named loading port)
FOB: Free On Board (named loading port)

CFR: Cost and Freight (named destination port)
CIF: Cost, Insurance and Freight (named destination port)

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Incoterms
Principles
Delivery conditions, not payment conditions!
Seller and buyer agree on the delivery of goods.
Usually, they refer to standardized terms.
This speeds up the process and increases the transparency and mutual understanding.
Incoterms (= International Commercial Terms), are
prepared by the International Chamber of Commerce.
They do not apply unless they are expressly incorporated into the contract. They have
no binding force of law.
More info: www.incoterms.com

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Incoterms
Principles

Relationship: between seller and buyer,
not between seller / buyer and carrier!
Forwarders, shipbrokers, stevedores and carriers
are intermediaries, who instructed by the seller or the
buyer,
contribute towards the carrying out of these terms.

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Incoterms
Principles

Critical Point =
The moment in the route of the goods
at which the responsibilities are transfered
from the seller to the buyer.
We distinguish 3 critical points:
1.
2.
3.

Transfer of Costs;
Transfer of Risk;
Transfer of Documents.

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Logistics and Outsourcing
Logistics Input
Natural
resource

Information
resource

Executive

Logistics management
Raw
material

Semiproducts

Product

Logistics activities
•Customer service
•Forecast
•Inventory
•Logistics Information
•Material handling
•Order processing
•Supported activities

Advantage
competitive

Control

•Placing
•Acquisition
•Packaging
•Reverse Logistics
•Transport

•Warehousing

Customers

Financial
resource

Planning

Suppliers

Human
resource

Logistics Output

Management

Time and place
added value
Efficient
transport

Owner asset

Source: International logistics
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Relationship between main and support activities

Customer
service

Acquisition
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Outsourcing
• Transfer part of the functions and
tasks of the enterprise to outsource
• Principles:
• Keep your self the jobs that you
know you will perform better than
others
• Transfer to third parties what they do
better than yourself and others
• Outsource activities what you are
able to manage

10/5/2020

By: Bích Hồi, MSc.- UT

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Why outsource?
• Cost save
• Effectiveness ensure

• Little working space
• Time save
• Quality ensure
• Ensure works
continuously.

10/5/2020

By: Bích Hồi, MSc.- UT

run

smoothly/

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Outsourcing of Logistics
Tasks and parties

Tasks
Strategic: Design

Tactical:

Chain management

Operational

Assets, Execution

10/5/2020

Parties
1PL

2PL

3PL

4PL

Shipper

Shipper

Shipper

Consultant

Shipper

Shipper

LSP

LSP

Shipper

Subcontractors

Subcontractors

Subcontractors

MSc. Bích Hồi UT

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2PL
Facility logistics
1PL
Work place logistics
10/5/2020

1980’s
1970’s

3PL
Corporate logistics

Supply chain management
Manage a complex service
chain

1960’s

4PL

Supply chain Logistics

Manage all stakeholders in a
supply chain by electronic data

Traditional warehouse and
Transport management

1950’s

5PL
Global
Logistics

1990’s

Logistics’ levels

Self-logistics

By: Bích Hồi, MSc.- UT

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Low

• Efficiency: Produce at the
lowest price or provide the
product with the highest

value difference.

Service value

• Competitive
advantage:
From a cost or value
advantage in product or
service or both.

high

Logistics and competitive advantage

Lợi thế về dịch vụ và
chi phí
Cost and value
advantage

Lợi thế về dịch vụ
service advantage

Lợi thế về chi phí
Cost advantage

Thị trường bão hịa
Market saturation

Low
10/5/2020

By: Bích Hoài, MSc.- UT

Cost

High
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