International Trade

Assessment instructions for centre Learners should produce five technical reports completed under open book conditions. Each report should consist primarily of data presented in table or chart form with some explanatory text. This text for each report should not exceed 200 words. The reports should analyse and evaluate the international physical distribution function of an organisation for delivery and cost of the delivery of goods. They should be based on the following case study extensions. The reports should demonstrate the learner’s knowledge and/or skills in relation to: ¨ international transport modes ¨ consignment delivery terms ¨ consolidation and groupage arrangements ¨ the least total cost concept ¨ the integration of international distribution procedures and documentation Scottish Qualifications Authority 13 Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution April 2013 Assessment instructions for learners Read the extensions to the case study below and complete the assessment tasks which follow. Technical report 1 — International transport modes Case study extension Angus Glen Water asked its R&D department to research routes, modes of transport, transit times and costs for the carriage of the empty new glass bottles from the factory in Milan, Italy to their bottling site in Kirriemure Scotland. They were asked to give only shipping costs with no on-costs. Costs should also be calculated for individual modes based on only those parts of the route undertaken by that mode. They have also been asked to analyse one route for multi-mode transport. The department has decided to provide this information in table form along with comments on the advantages and disadvantages of using each mode of transport. The bottles will be loaded on 1,200 x 1,800 pallets. Rail and sea transport will be by 40ft container carrying 25 pallets. Direct road will be by curtain side rigid lorry carrying 20 pallets and air will be by airplane cargo hold, at a maximum of five pallets. You should complete a table similar to the one below along with a brief explanatory text. Notes 1 Total cost should be based on 1 x 40ft container load, 1 rigid curtain side lorry load or 1 airplane cargo hold depending on the mode. 2 The road element of multi-mode is by flat-bed lorry carrying 1x40ft container. 3 Multi-mode transit time should be the total of transit times for all included modes. Table — International transport modes Mode Total Cost Transit Mode Mode mode per time advantages disadvantages cost 1 pallet Sea Air Rail Direct road Multi- 2 3 mode Scottish Qualifications Authority Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution 14 April 2013 The basic data available is: Sea Genoa Calata Container Port to Felixstowe Container Port 3,258 km — £620 per container — Transit time 7 days — Shipped every 4 weeks Air Milan Malpensa Airport — Aberdeen Airport 2,049 km — £1,265 per 5 pallets — Transit time 4 hours — Shipped 4 times a day Rail Milan Smistamento Container Terminal - Coatbridge Railport 1,957 km — £1,275 per container — Transit time 2 days — Shipped 3 times a week Direct road Milan Glass Works — Kirriemuir Bottling Plant 2,171 km — £1,350 per Curtainside Rigid Lorry — Transit time 3 days — Shipped daily Multi-mode — Road Milan Glass Works to Genoa Calata Container Port 119 km — £125 per flat bed container lorry — Transit time 6 hours — Shipped daily Sea Genoa Calata Container Port to Felixstowe Container Port 4,258 km — £620 per container — Transit time 7 days — Shipped every 4 weeks Rail Felixstowe Container Port to Coatbridge Railport 664 km — £295 per container — Transit time 5 hours — Shipped daily Road Coatbridge Railport to Kirriemuir Bottling Plant 151 km — £145 per flat bed container lorry — Transit time 7 hours — Shipped daily Note — This data is for this assignment purposes only and should not be taken as accurate. Scottish Qualifications Authority 15 Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution April 2013 Technical report 2 — Consignment delivery terms Case study extension Angus Glen Water has been informed by the bottle suppliers in Milan Italy that they would wish to deliver the empty new glass bottle consignments CPT Genoa. The Organisation has also been informed by Ecosse Hotels that they would wish the Organisation to consign the bottled water DDP at Montreal. The Organisation’s management has asked its R&D department to give them a technical report which explains what these and other Incoterms mean and what the implications are in relation to the allocations of costs between the buyer and seller You should research Incoterms and their implications for both the buyer and seller and complete two tables similar to this below along with brief explanatory notes Table — Incoterms and their definition (The first row has been completed as an example) Initial Incoterm Description EXW Ex Works The buyer is responsible for uploading. This term (named place of places the maximum obligation on the buyer and delivery) minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn’t load the goods on collecting vehicles and doesn’t clear them for export. FCA CPT CIP DAT DAP DDP Scottish Qualifications Authority Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution 16 April 2013 Table — Allocations of cost buyer/seller according to Incoterms 2010 (The first and second rows have been completed as examples) Incoterm Export- Carriage Unloading Loading Carriage Unloading Loading Carriage to Insurance Import Import 2010 Customs to port of truck in charges (Sea Freight/ charges on truck place of customs taxes declaration of port of in port Air Freight) in port of in port of destination clearance export export of to port of import import export import EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FCA Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer CPT CIP DAT DAP DDP Note — Both tables are based on the 8th published set of pre-defined Incoterms 2010. Scottish Qualifications Authority 17 Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution April 2013 Technical report 3 — Consolidation and groupage arrangements Case study extension Swiftpallet, a European wide pallet transporter has approached Angus Glen Water to offer them the opportunity to use their pallet groupage and consolidation service to transport the new empty glass bottles, palletised from the Milan glass works to the Kirriemuir site on a door to door basis. They give a transit time of between 3 and 5 days with a pick up on the day following the order. They are offering a flat price per pallet of £108 excluding insurances, etc. The Organisation has agreed that the most economical means for transporting the bottles will be multi-modal but they have asked the newly appointed Physical Distribution Manager to produce a technical report advising in what circumstances Swiftpallet’s offer could be useful and at what level of pallet load it would be more cost effective than using the similar direct road option. You should complete a similar chart to that below by defining both groupage and consolidation, indicate in what circumstances they could be used and at what level of pallet load this would be cost effective over the direct road option. You should provide a brief note explaining how you reached the final cost effectiveness figure. Note — You should use to the information given and figures you produced in the Technical report 1. Chart — Consolidation and groupage arrangements Definition of Groupage Consolidation Circumstances when they could be used Cost effective pallet load level Scottish Qualifications Authority 18 Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution April 2013 Technical report 4 — Least total cost concept Case study extension Angus Glen Water has asked the Physical Distribution Manager to look carefully at the delivery side, the transport of filled bottles to Ecosse Hotel’s warehouse in Bouchville, Montreal, Canada. The decision has been made to use sea as the only alternative air is not an option. Ecosse Hotels will arrange, but not fund, transit from Port de Montreal to their warehouse. There is some debate about whether the company should use Tilbury or Southampton as the port of exit from the UK and which mode should be used to transport the containers holding the filled bottles to the exit port. Cost is crucial if the project is to provide the level of profit the Organisation expects. The Physical Distribution Manager has decided to use the least case cost model to identify which route and mode they will recommend. You should produce a brief report of not more than 200 words which explains the least total cost concept then, using the data from the table below, then complete a recommendation chart similar to the one below. Table — Transit costs Kirriemuir to Montreal Item Route from Route to and Cost per Transit extras average 40 ft transit time container Road by rigid Kirriemuir Coatbridge £145 On Load Kirriemuir £0 container flat Bottling Plant Railport (Bottling Company lift bed lorry 1 day truck and staff) Off Load Coatbridge £28 Road by rigid Kirriemuir Tilbury £505 On Load Kirriemuir £0 container flat Bottling Plant Container (Bottling Company lift bed lorry Terminal truck and staff) 2 days Off Load Tilbury £32 Demurrage Tilbury Average 8 days £15 per 24 hours First 48 hours free Rail by Coatbridge Southampton £315 On Load Coatbridge Tansfreight Railport Container £15 Terminal Demurrage Coatbridge 1 day Average 72hrs. £12 per 24hrs, first 24hrs free Off Load Southampton £24.50 Demurrage Southampton Average 14 days £55 per week (7 days) First week free Scottish Qualifications Authority Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution 19 April 2013 Item Route from Route to and Cost per Transit extras average 40ft transit time container Sea by Southampton Port de £1,880 On Load Container Container Montreal Southampton £24.50 vessel Terminal Canada Off Load 10 days Canada £34 equivalent Sea by Tilbury Port de £2,010 On Load Container Container Montreal Tilbury £32 vessel Terminal Canada Off Load 11 days Canada £34 equivalent Road by rigid Port de Ecosse Hotel £420 Demurrage container Montreal Warehouse, Port de Montreal flat-bed lorry Canada Boucherville, Average 2 days Canada £18 equivalent per day 1 day No Free period On Load Port de Montreal £32 equivalent Off Load Boucherville £0 (Hotel Company lift truck and staff) Notes 1 40ft Container Hire Costs £6.00 per day. 2 Insurance costs per container — Tilbury route £80, Southampton route Tilbury costs plus 10% surcharge. 3 This data is for this assignment purposes only and should not be taken as accurate. Recommendation chart Route Modes Least total cost (Excluding standard on costs such as customs, etc) Scottish Qualifications Authority Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution 20 April 2013 Technical report 5 — Procedures and documentation Case study extension The senior management of Angus Glen Water is now comfortable with the proposed routing of the containers carrying the filled water to Canada. However, they have no knowledge of what the relevant documentation and procedures will be. They have asked the Physical Distribution Manager to produce a report in table form giving this information. They are particularly interested in the following areas, transport, commerce and customs. You should complete a table similar to that below showing the information required. This should be accompanied by a brief explanatory note. Procedures and documentation table Area Procedures Documentation Transport Commerce Customs Scottish Qualifications Authority Assessment Support Pack/H316 35/ASP001 V1 SCQF level 8 International Physical Distribution 21 April 2013